prosecutors' letter about lloyd blankfein

8/7/2019 Prosecutors' Letter About Lloyd Blankfein

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United States AttorneySouthern District a/New York

V.S. Department of Justice

The S i lv io J. Mo ll o Bu il dt ngO ne S ain t A nd rew 's P la zaN ell' Y ork, N ew Y ork 100 07

March 21,2011By Hand DelivelYThe Honorable Richard J. HolwellUnited States District JudgeSouthern District of New York500 Pearl StreetNew York, NY 10007

Re: United States v. Raj Rajaratnam,S2 09 Cr. 1184 (RJH)

Dear Judge Holwell:The Government respectfully submits this letter in order to move to preclude the

defendant from cross-examining a Government witness, Lloyd Blankfein, on (i) whetherGoldman Sachs bears responsibility for the 2008 financial crisis, and (ii) whether Goldman Sachsis presently the subject of any pending investigations by either the Department of Justice ("DOJ")or the U.S. Securities and Exchange Commission (the "SEC"). The Government makes thisapplication pursuant to Federal Rules of Evidence 402 and/or 403.

The Government intends to call Lloyd Blankfein, the CEO of Goldman Sachs, totestify on the subjects of Rajat Gupta's service on the Goldman Sachs Board of Directors, theduties of confidentiality that Gupta owed to Goldman Sachs, and certain confidential informationthat Gupta obtained through his service on Goldman's Board in 2008.

On March 7,2010, Raj Rajaratnam served a trial subpoena on Goldman Sachsrequesting, among other things, "documents sufficient to show currently active investigationsbeing conducted by" the DOJ, SEC and the U.S. Attorney's Office for the Southem District ofNew York that concern Goldman Sachs. A copy ofthis subpoena is attached hereto as ExhibitA. The Government's understanding is that Goldman Sachs conferred with Rajaratnamregarding the subpoena and responded by referring Rajaratnam to its Annual Report on Form 10-K for Fiscal Year Ended December 31, 2010, which was filed on February 28,2011. Therelevant portions of this FOlID10-K (pages 191-201) are attached hereto as Exhibit B.

The Form 10-K contains references to approximately 20 different "legal proceedings,"among them "Financial Crisis-Related Matters," "Mortgage-Related Matters," and "Fannie Mae


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Honorable Richard J. HolwellMarch 21, 2011Page 2Litigation." Importantly, not one of the 20 different legal proceedings concerns Raj Rajaratnam,the Galleon Group, or Rajat Gupta. Nor does the Form 10-K indicate that any of the various"legal proceedings" bears upon the credibility of Mr. Blankfein.

On March 20, 2011, Rajaratnam sent a letter to the Government (attached as ExhibitC) requesting the production of documents sufficient to identify all "open investigations" ofGoldman Sachs by the DOJ or SEC. Infurtherance of this request, Rajaratnam cites UnitedStates v. Chitty, 760 F.2d 425, 428 (2d Cir, 1985), a case in which prosecutors failed to notify thedefense that one of the Government's witnesses had been notified that he was the target of aninvestigation by the United States Attorney's office. This case is wholly inapposite for thefollowing reason: This Office has not notified Mr. Blankfein or Goldman Sachs that either is atarget (or, for that matter, a subject) of any pending criminal investigation. There is simply norisk that Mr. Blankfein might alter his testimony to affect the outcome of an investigation sinceGoldman Sachs has received no such notification from this Office.

Pending Legal Proceedings. Second, this COUltshould preclude cross-examinationof Mr, Blankfein on the various legal proceedings described in the Form 1O-K. Thoseproceedings are of no relevance to this matter, since those proceedings do not relate toRajaratnam, Galleon, Gupta, or Mr. Blankfein's credibility. The only conceivable relevancewould be general impeachment of Mr. Blankfein. Rajaratnam might suggest, for example, thatbecause Goldman Sachs is tied up in many different legal proceedings, the film - and byextension its CEO, Mr. Blankfein - is not to be busted. But this claim is totally unfounded andwould threaten confusion ofthe issues, since the legal proceedings described in the Form 10-Krelate to the conduct of Goldman Sachs, and not Mr. Blankfein personally. Moreover, the Form10-K states (at pg. 191) that "[m]any of these proceedings are at preliminary stages." The veryfact that the proceedings are ongoing means that Goldman Sachs's conduct (or potentialmisconduct) is as yet undetermined,

Alternatively, Rajaratnam might attempt to imply that Mr. Blankfein is testifying inthis matter in hopes of obtaining a better resolution of some separate, ongoing legal proceedinginvolving Goldman Sachs. There is absolutely no support for such a claim, it is entirely false,and the limited probative value of any cross-examination along these lines would be substantiallyoutweighed by its prejudice. The Government has made no promise, explicit or implicit, director indirect, express or implied, that Mr. Blankfein or Goldman Sachs will receive anything at allin exchange for his testimony. Indeed, Mr. Blankfein has been subpoenaed to testify and istherefore legally required to appear. Mr. Blankfein's testimony is limited in scope. Were Mr.Blankfein's testimony regarding the actions of one Board member, Rajat Gupta, to become thevehicle through which he is called upon to answer questions regarding any number of unrelatedpending proceedings, there would be a serious danger of prejudice and confusion.


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Honorable Richard 1. HolwellMarch 21, 2011Page 3

Goldman Sachs' Role in the 2008 Financial Crisis. Second, this Court shouldpreclude the defendant from suggesting to the jury through questions or otherwise that GoldmanSachs or Mr. Blankfein was responsible for the 2008 financial crisis. Any such attempt toimpeach Mr. Blankfein in this manner should be precluded pursuant to Federal Rules ofEvidence 402 and 403. Whether Goldman Sachs played any role in that crisis is whollyirrelevant to Mr. Blankfein's testimony about Mr. Gupta. Moreover, even if such issues weresomehow relevant, the probative value of such evidence is substantially outweighed by thedanger of unfair prejudice. Many individuals, including, potentially, the jurors, have strongfeelings about that crisis. Itwas for this very reason that defense counsel requested that theGovernment not put on evidence that Rajaratnam was in any way responsible for the crisis (andthe Government agreed that it would not do so). Were defense counsel to suggest through cross-examination or otherwise that Mr. Blankfein or his firm was responsible for the fiscal crisis,there would be a risk of undue, unwarranted juror prejudice against Mr. Blankfein's testimony.Goldman Sachs is not on trial in this matter, The cross-examination of Mr. Blankfein is simplynot the appropriate forum to delve into the highly complex causes of the 2008 financial crisis orthe ensuing economic recession.

Respectfully submitted,PREETBHARARAUnited States Attorney for theSouthern District of New York

by: - - - " , , - - , { ) ( . . . _ _ _ : : _ . _ i L _JONATHAN STREETERREED BRODSKYAssistant United States AttorneysANDREW MICHAELSONSpecial Assistant United States Attorney

cc (by email): John M. Dowd, Esq.Terence 1. Lynam, Esq.


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A O 89 (R ev. 08/09) S ub po en a t o T e sti fy a t a H ea rin g o r T r ia ! i n a C rim in a! C as e

UNITED STATES DISTRICT COURTfor the

Southern District ofNew YorkUnited States of America

v .R AJ R AJA RA TN AM

)))))

Case No. S2 09 Cr. 1184 (R JH)Defendant

SUBPOENA TO TESTIFY AT A HEARING OR TRIAL IN A CRIMINAL CASETo: The Goldman Sachs Group, Inc.

clo S te ve Peik inSulilvan & C rom well, LLP125 Broad Street N ew York, N ew York 10004-2498

YOU ARE COMMANDED to appear in the United States district c ou rt a t the time, date, and place shownbelow to testify in this criminal case. When you arrive, you must remain at the court until the judge or a court officerallows you to leave.Place of Appearance: U nite d S tate s D istrict C ou rt Courtroom No.: 178Southern Distric t of N ew Y ork Date and Time:500 Pea rl S tre et 03/15/2011 9:00 am

You must also bring with you the following documents, electronically stored information, or objects (blank ifnotapplicable):

A s described In the attached E xhibit A

(SEAL) "..~}S~. ...: '.' .'Date: .~~By~.~Jl~~C'

CLERlfOJ? C ;OURT .(,'1( :...,h)if.\~~ ,i....._~ ~~;.>.: ~.-~ --, - S~ 'gnall/re cjClerk. or Deputy Clerk

...' ",0.)"."

, i ,- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ , - - - - - ~ - - - - - - - - - - - - - - - - - - - - -The name, address) e-mail, and telephone number of the attorney representing (na/~~ofparty)_ ~ ~ ~ ~ _ ~ > who requests this subpoena, are:

Ra j Ra ja ra tn am

J oh n M . D ow d O dow d@akin gump .co m)Terence J. Lynam ( tl [email protected])William E. White (wwhi [email protected])A kin Gump Strauss Hauer & F eld LLP1333 N ew Hampshire Avenue N .W .W ashington, DC 20036202.887.4386


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o Iserved the subpoena by delivering a copy to the named person as follows:

A O 8 9 ( Re v. 0 81 09 ) S u bp oen a to T es tify at a H earin g o r T rial in a C rim in al C ase (P ag e 2 )Case No. 8209 Cr. 1184 (RJH)

PROOF OF SERVICEThis subpoena for ( nam e o f i nd iv id ua l a nd t it le , if any)

------------------------------------~~was received by me on (date)

on (date)----------------------------------------

; oro Ireturned the subpoena unexecuted because:

My fees are $ for travel and $ for services. for a total of $--------- 0.00

Unless the subpoena was issued on behalf of the United States, or one of its officers or agents, Ihave alsotendered to the witness fees for one day's attendance, and the mileage allowed by law, in the amount of$

I declare under penalty of perjury that this information is true.

S e rv e r' s a dd re s s

Date:S e rv e r' s s ig na tu r e

P rin te d n am e a nd title

Additional information regarding attempted service, etc:


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[ EXHIBIT A


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RULES OF CONSTRUCT ION1 . A ny te rm th at re fe re nc es a c or po ra tio n, p ar tn er sh ip . p ro pr ie to rs hip , a ss oc ia tio n,o rg an iz atio n, g ov ernm en tal en tity , g ro up o f P erso ns , o r an y o th er b usin ess o r leg al en titys ha ll b e d eemed to i nc lu de re fe re nc e t o i ts a ge nts , a cc ou nta nt s, a dv is or s; emplo ye es ,a tt orneys , o ff ic er s, d ir ec to rs , d ir ec t o r i nd ir ec t s ha reho ld er s, member s, r ep re sen ta ti ve s,a ffil ia te s, s ub sid ia ri es , p re de ce ss or s, s uc ce ss or s, a ss ig ns , o r a ny o th er P er so n a ctin g o rp urp ortin g to a ct o n its b eh alf.2 . T he term s (a) "an d" an d "o r" shall be co nstrued either disjun ctiv ely o r co njun ctiv ely asn ec essary to b rin g w ith in th e sc op e o f th e d isc ov ery req ue st all re sp on se s th at m ig htotherw ise be co nstrued to be o utside o f its sco pe; an d (b) "each" an d "all" shall beco nstrued as all an d each.3. T he use of (a) any singular noun shall be construed to include the plural, and vice versa,and (b) a verb inan y ten se shall be c on strued as the use o f the v erb in all o ther ten ses.

DEFINITIONS1 . " Commun ic atio n" m ea ns th e tran sm ittal o f in fo rm a tio n (inth e fo rm o f fac ts, id ea s,inqu ir ie s o r o the rw ise ).2 . "D ocum ent" m eans every w riting or record of w hatever type and descrip tion in thep osse ssio n, c usto dy o r c on tro l o f th e C omp an y o r a ny o f its d irec to rs, o ffic ers,em p lo ye es, o r ag en ts, h ow ev er m ad e, a nd in clu des all h an dw ritten . ty ped , p rin te d,r ec ord ed , t ra ns cr ib ed , ta pe d, filmed , g ra ph ic o r s ou nd r ep ro du ctio n ma te ria l, ma gn eticc ard s o r c artr id ge s, o pti ca l s to ra ge d ev ic es , a nd c ompute r re co rd s, p rin to uts , ru ns , c ard s,tap es, o r disk s (to geth er w ith a ll p ro gramm in g in stru ctio ns an d o th er m a terial n ec essa ryfo r their use). "D oc um en t" in cludes ev ery co py o f ev ery do cum en t w here suc h c op y is

n ot id en tic al to th e o ri gi na l b ec au se o f a ny a dd itio n, d el eti on , a lte ra tio n, o r n ota tio n."Do cumen t" s pe cif ic ally in cl ud es , b ut is n ot lim i te d to , e le ctro nic ma il, h an dw ritt enn ot es ; s ta temen ts o r c ha rts o f o rg an iz atio n; te le ph on e a nd p er so nn el d ire cto rie s; p re ssr ele as es ; a nn ou nc ements ; n oti ce s; s ta temen ts o f p ro ce du re a nd p olic y; b io gra ph ie s a ndp ers on ne l fil es ; i nd iv id ua l a pp oin tme nt c ale nd ars a nd s ch ed ule s; c ar d fi le s; d ia rie s;c ale nd ar an d d ia ry en tries; te lep ho ne lo gs; ro utin g slip s; rec ord s o r ev id en ce o f in com in ga nd o utg oin g te le ph on e c alls ; it in er ar ie s; a ctiv ity r ep or ts ; tr av el v ou ch er s a nd a cc ou ntin g;b an k rec ord s; ac co un tin g a nd bo ok kee pin g rec ord s an d ma teria ls; fin an cia l re co rd s an ds ta tement s; e xt erna l o r i nt erna l co rr es pondence; c ab le s; t el ex es ; t el et yp e s; t el eg rams ;te le co pie s; la be li ng ; p ho to gr ap hs ; s lid es ; v er ba l o r w ri tte n c ommun ic atio ns ; w o rdp ro ce ssin g sy stem memory in a ny fo rm ; g uid elin es; sta nd ard s; m emora nd a; le tte rs;me ss ag es ; re po rts ; p la ns ; f ore ca sts ; s umma rie s; b rie fin g ma te ri als ; s tu die s; n ot es ;w o rk in g p ap er s; g ra ph s; ma ps ; c ha rts ; d ia gr ams ; a ge nd as ; m i nu te s; tra ns cr ip ts , re co rd s,o r s umma ries o f a ny me etin g, c on versatio n, c on fe re nc e o r c ommu nic atio n; an d a llattachm en ts to an y o f the item s set fo rth in this p arag rap h.

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3. "Identify ' (w ith respect to persons). W hen referring to a person, "to identify" m eans tog iv e, to the exten t kn ow n; the perso n's full n am e, p resen t o r last kn ow n address, an d


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when referring to a natural person, additionally, the present or last known place ofemployment. Once a person has been identified in accordance with this subparagraph,only the name of that person need be listed in response to subsequent discoveryrequesting the identification of that person.4. "Identify" (with respect to documents). "Whenreferring to documents, "to identify"

means to give, to the extent known, the (i) type of document; (ii) general subject matter;(iii) date of the document; and (iv) authorfs), addressee(s) and recipient(s).5. "Parties." With respect to "parties," the term "defendant" as well as a party's full orabbreviated name or a pronoun referring to a party mean the party and, where applicable,its officers, directors, employees, partners, corporate parent, subsidiaries or affiliates.This definition is not intended to impose a discovery obligation on any person who is nota party to the litigation.6. "Person" is defined as any natural person or any business, legal or governmental entity orassociation.7. "Concerning" means relating to, referring to, describing, evidencing or constituting.8. "You" or "Your" Of "Goldman Sachs" shall mean The Goldman Sachs Group, Inc., their

subsidiaries, affiliates, and joint ventures, and any and all of their predecessors,successors, and assigns, and all such entities' past or present officers, employees,directors, partners, members; managers, representatives, attorneys, or agents.9. "Galleon" is the Galleon Group of hedge funds, Galleon Management, LP, and anyaffiliated entity.10, "Berkshire Hathaway" shall mean Berkshire Hathaway Inc., their subsidiaries, affiliates,and joint ventures, and any and all of their predecessors, successors, and assigns, and all

such entities' past or present officers, employees, directors, partners, members, managers,representatives, attorneys, or agents.11. "SEC," "DOJ," and "FBI," shall mean, respectively, the United States Securities andExchange Commission, the United States Department of Justice, and the Federal Bureauoflnvestigation, including but not limited to any of their divisions, subdivisions, officers,directors, representatives, trustees, agents, employees, affiliates; predecessors, orsuccessors.12. "Security" or "securities" means any note, stock, treasury stock, security future, bond,debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, pre-organization certificate or SUbscription,

transferable share, investment contract, voting-trust certificate, certificate of deposit for asecurity, any put, call, straddle, option, or any privilege on any security, certificate ofdeposit, or group or index of securities (including any interest therein or based on thevalue thereof), or any put, call, straddle, option, or in general any interest or instrumentcommonly known as a "security," or any certificate of interest or participation in,

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tem p orary o r in te rim c ertific ate fo r, re ce ip t fo r, g ua ra nte e o f, o r w arra nt o r rig ht tos ub sc rib e o r p urc ha se , a ny o f th e fo re go in g.1 3. "Ea rn in g s" me an s e ar ni ng s, r ev en ue s, g uid an ce , ma rg in s, s ale s, o rd ers , o r o th er f in an ci alin fo rm a tio n re gu la rly c omp ile d a nd re po rte d o n a q uarterly a nd /o r a nn ua l b as is tos ha re ho ld ers , t he SEC , o r o th er r eg ul at or y o r s el f-r eg ul ato ry e nti ty .14 , "N A SD A Q," "N A SD ," "N YS E," an d "F IN R A" shall m ean , resp ec tiv ely, the N A SD A QS to ck M ark et, th e N atio na l A ss oc ia te o f S ec uritie s D ea le rs, th e N ew York S to ckExchange, a nd the F in anc ia l I ndu st ry Regul at ory Au tho ri ty , t he ir s ub si di ar ie s, a ff il ia te s,a nd jo in t v en tu re s, a nd an y an d a ll o f th eir p re de ce sso rs, su cc ess ors, a nd a ssig ns , a nd a lls uc h e nti tie s' p as t o r p re se nt o ff ic er s, emp lo ye es , d ir ec to rs , p ar tn er s, memb er s, ma n ag ers ,r ep re sen ta ti ve s, o r a g en ts ,

INSTRUCTIONS1. T hese requests fo r p ro du ctio n ap ply to all in fo rm atio n in y our p ossessio n, c usto dy , o rc on tro l, in clu din g in fo rm a tio n to w hic h y ou h av e a cc ess o r th e rea so na ble ab ility toobtain.2 , A ll d oc um en ts an d tan gible thin gs are to be p ro duc ed in their o rig in al file fo lders, fileja ck ets , e nv elo p es , o r c ov ers , o r a n a cc ur ate r ep ro du ctio n th er eo f,3 . S hould a claim be m ade that any requested do cum ent or tang ible th ing is n ot subject tod isc ov ery b y re aso n o f p riv ile ge o r o th erw is e, y ou a re re qu este d to id en tify se pa rate lyeac h d oc um en t o r th in g fo r w hic h suc h a p riv ileg e is claim ed , the p artic ular requ est tow hich such a docum ent or thing is respon siv e, an d a statem ent of the basis o n w hich thed oc ume nt is w ith he ld s uffic ie nt to a sse ss th e c laim o f p riv ile ge ,4. A s to an y do cum en t o r thin g p rev io usly destro yed, sp ecify the au tho r thereo f, its date, its

c on ten t, the iden tity o f p erso ns w ho rec eiv ed c op ies, an d w hen an d un der w hatc ir cumst an ce s t he d oc umen t w a s d es tr oy ed .5, T he R elev an t T im e P erio d fo r these do cu men t requ ests , un less o th erw ise sp ec ified, shallbe from A pril 1, 20 08 to D ecem ber 31, 2008 .6 . E ach requ est seeks p ro duc tio n o f all d oc um en ts an d thin gs d esc ribed alo ng w ith an ya tt achmen ts , d ra ft s, o r non -i den ti ca l cop ie s.7. A ll elec tro nic d oc um en ts, in cludin g but n ot lim ited to em ails, sh all be p ro duc ed in n ativ eformat .8 . If an y p ortio n o f an y do cum en t is resp on siv e, the en tire do cu men t shall be p ro duc ed . Ifo nly p art o f a do cum en t is p ro tected by an y p riv ileg e, th e d oc um en t shall be p ro duc edw ith o nl y th e p riv ile ge d ma tte r r ed ac te d.9 . D ocum ents shall be produced in the order in w hich they are ordinarily kept and shall notbe rearran ged in an y w ay,

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DOCUMENT REQUESTS1. Minutes of meetings of the Goldman Sachs board of directors or of any sub-group thereofthat occurred on July 17,2008 and/or October 23,2008.2. Documents or other materials distributed to Goldman Sachs board members before or

during meetings that occurred on July 17,2008 and/or October 23, 2008.3. Interview memoranda or notes of interviews of Rajat K. Gupta, Lloyd C. Blankfein, GaryD. Cohn, and David A. Viniar related to any investigation by Goldman Sachs concerningthe disclosure of non-public information to Raj Rajaratnam.4. Documents sufficient to show currently active investigations being conducted by theUnited States Securities and Exchange Commission that concern Goldman Sachs,5. Documents sufficient to show currently active investigations being conducted by theOffice of the United States Attorney for the Southern District of New York that concernGoldman Sachs.6. Documents sufficient to show currently active investigations being conducted by theUnited States Department of Justice (except those in the Southern District of New York)that concern Goldman Sachs.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

(I.R.S. EmployerIdentif ication No.)

Form 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number: 001-14965For the fiscal year ended December 31,2010

The Goldman Sachs Group, Inc.(Exact name of registrant as specified In Its char ter)Delaware 134019460

(State or other jurisdiction ofincorporation or organization)

200 West StreetNew York, N.Y.(Address of principal executive of fices)

10282(Zip Code)(212) 9021000(Regist rant 's telephone number, Including area code)

Securities registered pursuant to Section 12(b) of the Act:Title of each class:Common stock, par value $.01 per shareDepositary Shares, Each Representing 1/ 1, O O O th Interest In a Share of Floating RateNon-Cumulative Preferred Stock, Ser ies ADepositary Shares, Each Representing 1/1,OOOlh Interest In a Share of 6.20%NonCumulatlve Preferred Stock, SerIes BDepositary Shares, Each Representing 1/1,00Oth Interest In a Share of Floating RateNon-Cumulative Preferred Stock, Ser ies CDepositary Shares, Each Representing 1/1,000lh Interest In a Share of Floating RateNon-Cumulative Preferred Stock, Ser ies D5.793% Flxedto-Floatlng Rate Normal Automatic Preferred Enhanced Capital Securities ofGoldman Sachs Capital II (and Registrant's guarantee with respect thereto)Floating Rate Normal Automatic Preferred Enhanced Capital Securilles of Goldman SachsCapital III (and Registrant's guarantee with "respect thereto)MedlumTerm Notes, Ser ies B, Index-LInked Notes due February 2013; Index-Linked Notesdue April 2013; Index-LInked Notes due May 2013; and Index-Linked Notes due 2011Medium-Term Notes, Series B, Floating Rate Notes due 2011Medium-Term Notes, Series A, Index-LInked Notes due 2037 of GS Finance Corp.(and Registrant 's guarantee with respect thereto)Medium-Term Notes, Series B, Index-LInked Notes due 2037Medium-Term Notes, Series D, 7.50% Notes due 20196.125% Notes due 2060

Name of each exchange on which registered:New York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock ExchangeNew York Stock Exchange

NYSE AmexNew York Stock Exchange

NYSE ArcaNYSE ArcaNew York Stock Exchange

New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark If the registrant Is a wel l-known seasoned issuer, as defined in Rule 405 of the Securttles Act.Yes [81 No 0Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.Yes 0 No [81Indicate by check mark whether the registrant (1) has f iled all reports required to be fi led by Section 13 or 15(d) of the Securl tles Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) , and (2) has been subject to such filingrequirements for the past 90 days.Yes [81 No 0Indicate by check mark whether the regist rant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired 10 be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12months (or for such shorter period that the registrant wasrequired to submit and post such fi les).Yes [81 No 0Indicate by check mark ifdisclosure of delinquent f ilers pursuant to Item 405 of Regulation S-K is not conlained herein, and wil l not be contained, to thebest of registrant's knowledge, In definit ive proxy or information statements incorporated by reference in Part Ulof the Annual Report on Form 10-K or anyamendment to the Annual Report on Form 10-K. [81Indlcate by check mark whether the registrant Isa large acceIerated filer, an accel erated filer, a nen-aces lerated filer, or a smaller reporting company. Seethe definit ions of "large accelerated filer," "accelerated filer" and "smaller reporting company" In Rule 12b-2 of the Exchange Act.Large accelerated filer 181 Accelerated lifer 0 Non-accelerated filer (00 not check ifa smaller reporling company) 0 Smaller reporting company 0Indicate by check mark whelher the registrant is a shell company (as defined In Rule 12b-2 of the Exchange Act). Yes 0 No [ 5 I JAs of June 30, 2010, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant was approximately$66.7 billion.As of February 11, 2011, there were 520,507,295 shares of the registrant's common stock outstanding.Documents incorporated by reference: Portions of The Goldman Sachs Group, Inc.'s Proxy Statement for its 2011 Annual Meeting of Shareholdersto be held on May 6, 2011 are incorporated by reference in the Annual Report on Form 10-K in response to Part lll, Items 10, 11, 12, 13 and 14.


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THE GOLDMAN SACHS GROUP, INC.ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010

INDEX

Form 10-K Item Number Page No....................................... H ".,'


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IPO Process Matters. Group Inc. and GS&Co. areamong the numerous financial services companies thathave been named as defendants in a variety of lawsuitsalleging improprieties in the process by which thosecompanies participated In the underwrit ing of publicofferings in recent years.GS&Co. has, together with other underwriters in certainofferings as well as the issuers and certain of theirofficers and directors, been named as a defendant in anumber of related lawsuits filed in the U.S. District Courtfor the Southern District of New York alleging, amongother things, that the prospectuses for the offeringsviolated the federal securities laws by failing todisclose the existence of alleged arrangements tyingallocations in certain offerings to higher customerbrokerage commission rates as well as purchaseorders in the aftermarket, and that the allegedarrangements resulted in market manipulation. OnOctober 5, 2009, the district court approved asettlement agreement entered into by the parties. Thefirm has paid into a settlement fund the full amount thatGS&Co. would contribute in the proposed settlement. OnOctober 23, 2009, certain objectors filed a petition in theU.S. Court of Appeals for the Second Circuit seekingreview of the district court's certification of a class forpurposes of the settlement, and various objectorsappealed certain aspects of the settlement's approval.Certain of the appeals have been withdrawn, and onDecember 8, 2010, January 14, 2011 andFebruary 3, 2011, plaintiffs moved to dismiss theremaining appeals.GS&Co. is among numerous underwriting firms namedas defendants in a number of complaints filedcommencing October 3, 2007, in the U.S. DistrictCourt for the Western District of Washington allegingviolations of Section 16 of the Exchange Act inconnection with offerings of securities for 15 issuersduring 1999 and 2000. The complaints generally assertthat the underwriters, together with each issuer'sdirectors, officers and principal shareholders, enteredinto purported agreements to tie allocations In theofferings to increased brokerage commissions andaftermarket purchase orders. The complaints furtherallege that, based upon these and other purportedagreements, the underwriters violated the reportingprovisions of, and are subject to short-swing profitrecovery under, Section 16 of the Exchange Act. Thedistrict court granted defendants' motions to dismiss bya decision dated March 12, 2009. OnDecember 2, 2010,the appellate court affirmed inpart and reversed in part, upholding the dismissal of

THE GOLDMAN SACHS GROUP, INC. and SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 30. Legal ProceedingsThe firm is involved ina number ofjudicial, regulatory andarbitration proceedings (including those describedbelow) concerning matters arising in connection withthe conduct of the firm's businesses. Many of theseproceedings are at preliminary stages, and many ofthese cases seek an indeterminate amount of damages.With respect to matters described below, managementhas estimated the upper end of the range of reasonablypossible loss as being equal to (l) the amount of moneydamages claimed, where applicable, (Ii) the amount ofsecurities that the firm sold in cases involvingunderwritings where the firm is being sued bypurchasers and is not being indemnified by a partythat the firm believes will pay any judgment, or (Iii) Incases where the purchasers are demanding that thefirm repurchase securit ies, the price that purchaserspaid for the securities less the estimated value, ifany, asof December 2010 of the relevant securities. As ofDecember 2010, the firm has estimated theaggregate amount of reasonably possible losses forthese matters to be approximately $3.4 bill ion.Under ASC 450 an event is "reasonably possible" if ''thechance of the future event or events occurring Is morethan remote but less than likely" and an event is"remote" if "the chance of the future event or eventsoccurring is slight". Thus, references to the upper end ofthe range of reasonably possible loss for cases inwhichthe firm is able to estimate a range of reasonablypossible loss mean the upper end of the range ofloss for cases for which the firm believes the risk ofloss is more than slight. The amounts reserved againstsuch matters are not significant as compared to theupper end of the range of reasonably possible loss.Management is unable to estimate a range ofreasonably possible loss for cases described below inwhich damages have not been specified and (1 ) theproceedings are in early stages, (ii) there isuncertainty as to the likelihood of a class beingcertified or the ultimate size of the class, (iii) there isuncertainty as to the outcome of pending appeals ormotions, (iv) there are significant factual issues to beresolved, and/or (v) there are novel legal issuespresented. However, for these cases, managementdoes not believe, based on currently availableinformation, that the outcomes of these proceedingswill have a material adverse effect on the firm's financialcondition, though the outcomes could be material to thefirm's operating results for any particular period,depending, in part, upon the operating results forsuch period.

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the offering materials and that the market was artificiallyinflated by improper public statements and stabilizationactivities. Goldman Sachs and ABN AMRO Rothschildserved as joint global coordinators of the approximately2.9 billion offering. GSI underwrote 20,268,846 sharesand GS&Co. underwrote 6,756,282 shares for a totaloffering price of approximately 1.16 billion.The district court rejected the claims against GSI andABN AMRO, but found World Online liable inan amountto be determined. On appeal, the Netherlands Court ofAppeals affirmed in part and reversed in part thedecision of the district court holding that certain of thealleged disclosure deficiencies were actionable as toGSI and ABN AMRO. On further appeal, theNetherlands Supreme Court on November 27, 2009affirmed the rulings of the Court of Appeals, exceptfound certain additional aspects of the offeringmaterials actionable and held that GSI and ABNAMRO could potentially be held responsible forcertain public statements and press releases byWorld Online and its former CEO. OnNovember 18, 2010, the parties reached a settlementin principle, subject to documentation, pursuant towhich GSI will contribute .up to 48 million to asettlement fund. The firm has reserved the fullamount of GSI's proposed contribution to thesettlement.Research Matters. GS&Co. is one of severalinvestment firms that have been named asdefendants in substantively identical purported classactions filed in the U.S. District Court for the SouthernDistrict of New York alleging violations of the federalsecurities laws in connection with research coverage ofcertain issuers and seeking compensatory damages.One such action, relating to coverage of RSLCommunications, lnc., commenced on July 15, 2003.The parties entered into a settlement agreement onAugust 23, 2010, which received final court approvalon February 23, 2011. Under the settlement agreement,GS&Co. paid approximately $3.38 million.Group Inc. and GS&Co. were named as defendants inapurported class action filed onJuly 18, 2003 on behalf ofpurchasers of Group Inc. stock from July 1, 1999through May 7, 2002. The complaint in theU.S. District Court for the Southern District of NewYork, alleged that defendants breached their fiduciaryduties and violated the federal securities laws inconnection with the firm's research activities andsought, among other things, unspecifiedcompensatory damages and/or rescission. OnJuly 12, 2010, the parties entered into a settlementagreement pursuant to which the settlement has


seven of the actions in which GS&Co. is a defendant butremanding the remaining eight actions inwhich GS&Co.is a defendant for consideration of other bases fordismissal. On December 16, 2010, the underwritersand the plaintiff filed petitions for rehearing and/orrehearing en banc, which were denied onJanuary 18, 2011. The issuance of the mandate hasbeen stayed to permit the parties to seek SupremeCourt review.GS&Co. has been named as a defendant in an actioncommenced on May 15, 2002 in New York SupremeCourt, New York County, by an official committee ofunsecured creditors on behalf of eToys, Inc., allegingthat the firm intentionally underpriced eToys, Inc.'s initialpublic offering. The action seeks, among other things,unspecified compensatory damages resulting from thealleged lower amount of offering proceeds. The courtgranted GS&Co.'s motion to dismiss as to five of theclaims; plaintiff appealed from the dismissal of the fiveclaims, and GS&Co. appealed from the denial of itsmotion as to the remaining claim. The New YorkAppellate Division, First Department aff irmed in partand reversed in part the lower court's ruling on the firm'smotion to dismiss, permitting all claims to proceedexcept the claim for fraud, as to which the appellatecourt granted leave to replead, and the New York Courtof Appeals affirmed in part and reversed in part,dismissing claims for breach of contract, professionalmalpractice and unjust enrichment, but permittingclaims for breach of fiduciary duty and fraud tocontinue. On remand to the lower court, GS&Co.moved to dismiss the surviving claims or, in thealternative, for summary judgment, but the motionwas denied by a decision dated March 21, 2006, andthe court subsequently permitted plaintiff to amend thecomplaint again. On November 8, 2010, GS&Co.'smotion for summary judgment was granted by thelower court; plaintiff has appealed.Group Inc. and certain of its affiliates have, together withvarious underwriters in certain offerings, receivedsubpoenas and requests for documents andinformation from various governmental agencies andself-regulatory organizations in connection withinvestigations relating to the public offering process.Goldman Sachs has cooperated with theseinvestigations.World Online Litigation. In March 2001, a Dutchshareholders association initiated legal proceedingsfor an unspecified amount of damages against GSIand others in Amsterdam District Court In connectionwith the initial public offering of World Online inMarch 2000, alleging misstatements and omissions in

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On March 30, 2004, certain specialist firms on theNYSE, including SLKS, without admitting or denyingthe allegations, entered into a final global settlementwith the SEC and the NYSE covering certain activitiesduring the years 1999 through 2003. The SLKSsettlement involves, among other things, (I) findingsby the SEC and the NYSE that SLKS violated certainfederal securities laws and NYSE rules, and in somecases failed to supervise certain individual specialists,in connection with trades that allegedly disadvantagedcustomer orders, (ii) a cease and desist order againstSLKS, (iii) a censure of SLKS, (lv) SLKS' agreement topay an aggregate of $45.3 million indisgorgement and apenalty to be used to compensate customers,(v) certain undertakings with respect to SLKS'systems and procedures, and (vi) SLKS' retention ofan independent consultant to review and evaluatecertain of SLKS' compliance systems, policies andprocedures. Comparable findings were made andsanctions imposed in the settlements with otherspecialist firms. The settlement did not resolve therelated private civil actions against SLKS and otherfirms or regulatory investigations involving individualsor conduct on other exchanges.SLKS, Spear, Leeds & Kellogg, LP. and Group Inc. areamong numerous defendants named in purported classactions brought beginning inOctober 2003 on behalf ofinvestors in the U.S. District Court for the SouthernDistrict of New York alleging violations of the federalsecurities laws and state common law in connectionwith NYSE floor specialist activities. The actions, whichhave been consolidated, seek unspecifiedcompensatory damages, restitution and disgorgementon behalf of purchasers and sellers of unspecifiedsecurities between October 17, 1998 andOctober 15, 2003. By a decision datedMarch 14, 2009, the district court granted plaintiffs'motion for class certification. The defendants' petitionwith the U.S. Court of Appeals for the Second Circuitseeking review of the certification ruling was denied byan order dated October 1, 2009. The specialistdefendants' petition for a rehearing and/or rehearingen banc was denied on February 24, 2010.


been funded by the firm's insurers. The settlementreceived court approval on December 15, 2010 andhas become final.Group Inc. and certain of its affiliates are subject to anumber of investigations and reviews by variousgovernmental and regulatory bodies andself-regulatory organizations relating to researchpractices, including communications among researchanalysts, sales and trading personnel and clients.Goldman Sachs is cooperating with the investigationsand reviews.Adelphia Communications Fraudulent ConveyanceLitigation. GS&Co. is among numerous entitiesnamed as defendants in two adversary proceedingscommenced in the U.S. Bankruptcy Court for theSouthern District of New York, one on July 6, 2003 bya creditors committee, and the second on or aboutJuly 31, 2003 by an equity committee of AdelphiaCommunications, Inc. Those proceedings have nowbeen consolidated in a single amended complaintfiled by the Adelphia Recovery Trust onOctober 31, 2007. The complaint seeks, among otherthings, to recover, as fraudulent conveyances,payments made allegedly by AdelphiaCommunications, Inc. and its affiliates to certainbrokerage firms, including approximately $62.9 millionallegedly paid to GS&Co., in respect of margin callsmade in the ordinary course of business on accountsowned bymembers of the family that formerly controlledAdelphia Communications, Inc. By a decision datedJune 15, 2009, the district court required plaintiff toamend its complaint to specify the source of themargin payments to GS&Co. By a decision datedJuly 30, 2009, the district court held that thesufficiency of the amended claim would bedetermined at the summary judgment stage. OnMarch 2, 2010, GS&Co. moved for summary judgment.Specialist Matters. Spear, Leeds & KelloggSpecialists LLC (SLKS) and certain affiliates havereceived requests for information from variousgovernmental agencies and self-regulatoryorganizations as part of an industry-wide investigationrelating to activities of floor specialists in recent years.Goldman Sachs has cooperated with the requests.

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Refco Securities Litigation. GS&Co. and the otherlead underwriters for the August 2005 initial publicoffering of 26.5 million shares of common stock ofRefco Inc. are among the defendants in variousputative class actions filed in the U.S. District Courtfor the Southern District of New York beginning inOctober 2005 by investors in Refco Inc. in responseto cerlain publicly reported events that culminated in theOctober 17, 2005 filing by Refco Inc. and certainaffiliates for protection under U.S. bankruptcy laws.The actions, which have been consolidated, allegeviolations of the disclosure requirements of thefederal securities laws and seek compensatorydamages. In addition to the underwriters, theconsolidated complaint names as defendants RefcoInc. and certain of its affiliates, certain officers anddirectors of Refco Inc., Thomas H. Lee Partners, L.P.(which held a majority of Refco lnc.s equity throughcertain funds it manages), Grant Thornton (Retco Inc.'soutside auditor), and BAWAG P.S.K.Bankfur Arbeit undWirtschaft und Osterreichische PostsparkasseAktiengesellschaft (BAWAG). Lead plaintiffs enteredinto a settlement with BAWAG, which was approvedfollowing certain amendments on June 29, 2007.GS&Co. underwrote 5,639,200 shares of commonstock at a price of $22 per share for a total offeringprice of approximately $124 mill ion. On April 20, 2010,certain underwriting defendants including GS&Co.entered into a settlement of the action, pursuant towhich they will contribute $49.5 million to asettlement fund. The settlement received courtapproval on October 27,2010 and has become final.GS&Co. has, together with other underwriters of theRefco Inc. initial public offering, received requests forinformation from various governmental agencies andself-regulatory organizations. GS&Co. has cooperatedwith those requests.Fannie Mae Litigation. GS&Co. was added as adefendant in an amended complaint filed onAugust 14, 2006 in a purported class action pendingin the U.S. District Court torihe District of Columbia. Thecomplaint asserts violations of the federal securit ieslaws generally arising from allegations concerningFannie Mae's accounting practices in connection withcertain Fannie Mae-sponsored REMIC transactionsthat were allegedly arranged by GS&Co. Thecomplaint does not specify a dollar amount ofdamages. The other defendants include Fannie Mae,certain of its past and present officers and directors, andaccountants. By a decision dated May 8, 2007, the


Treasury Matters. GS&Co. has been named as adefendant in a purported class action filed onMarch 10, 2004 in the U.S. District Court for theNorthern District of Illinois on behalf of holders ofshort positions in so-year U.S. Treasury futures andoptions on the morning of October 31, 2001. Thecomplaint alleges that the firm purchased 30-yearbonds and futures prior to a forthcoming Treasuryrefunding announcement that morning based onnon-public information about that announcement, andthat such purchases increased the costs of coveringsuch short poslttons. The complaint also names asdefendants the, Washington, D.C.-based politicalconsultant who allegedly was the source of theinformation, a former GS&Co. economist whoallegedly received the information, and anothercompany and one of its employees who alsoallegedly received and traded on the information priorto its public announcement. The complaint allegesviolations of the federal commodities and antitrustlaws, as well as Illinois statutory and common law,and seeks, among other things, unspecified damagesincluding treble damages under the antitrust laws. Thedistrict court dismissed the antitrust and Illinois statelaw claims but permitted the federal commodities lawclaims to proceed. Plaintiff's motion for classcertification was denied by a decision datedAugust 22, 2008. GS&Co. moved for summaryjudgment, and the district court granted the motionbut only insofar as the claim relates to the trading oftreasury bonds. On October 13, 2009, the parties filedan offer of judgment and notice of acceptance withrespect to plaintiff's individual claim. OnDecember 11, 2009, the plaintiff purported to appealwith respect to the district court's prior denial of classcertification, and GS&Co. moved to dismiss the appealon January 25, 2010. By an order dated April 13, 2010,the U.S. Court of Appeals for the Seventh Circuit ruledthat GS&Co:s motion would be entertained togetherwith the merits of the appeal.Mutual Fund Matters. GS&Co. and certain mutualfund affil iates have received subpoenas and requestsfor information from various governmental agenciesand self-regulatory organizations including the SECas part of the industry-wide investigation relating tothe practices of mutual funds and their customers.GS&Co. and its aff iliates have cooperated with suchrequests.

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amended complaint, which added purported direct(l.e., non-derivative) claims based on substantially thesame theory. The plaintiff filed a further amendedcomplaint on March 24, 2010, and the defendants'motion to dismiss this further amended complaintwas granted on September 30, 2010. OnOctober 22, 2010, the plaintiff filed a notice of appealfrom the dismissal of his complaint.On March 24, 2009, the same plaintiff filed an action inNew York Supreme Court, New York County againstGroup lnc., its directors and certain senior executivesalleging violation of Delaware statutory and commonlaw in connection with substantively similar allegationsregarding stock option awards. On April 14, 2009,Group Inc. removed the action to the U.S. DistrictCourt for the Southern District of New York and hasmoved to transfer to the district court judge presidingover the other actions described in this section and todismiss. The action was transferred on consent to theU.S. District Court for the Eastern District of New York,where defendants moved to dismiss on April 23, 2009.OnJuly 10, 2009, plaintiff moved to remand the action tostate court, and this motion was granted onJuly 29, 2010. On January 7, 2011, the plaintiff filedan amended complaint.Purported shareholder derivative actions have beencommenced in New York Supreme Court, New YorkCounty and Delaware Court of Chancery beginning onDecember 14, 2009, alleging that the Board breached itsfiduciary duties in connection with setting compensationlevels for the year 2009 and that such levels areexcessive. The complaints name as defendantsGroup lnc., the Board and certain senior executives.The complaints seek, in ter e ue , unspecified damages,restitution of certain compensation paid, and an orderrequiring the firm to adopt corporate reforms. In theactions in New York state court, on April 8, 2010, theplaintiffs f iled a motion indicating that they no longerintend to pursue their claims but are seeking an awardof attorney's fees in connection with bringing the suit,which the defendants have opposed. In the actionsbrought in the Delaware Court of Chancery, thedefendants moved to dismiss on March 9, 2010, andthe plaintiffs amended their complaint onApril 28, 2010 toInclude, among other things, the allegations included inthe SEC's action described in the "Mortgage-RelatedMatters" section below. The defendants moved todismiss this amended complaint on May 12, 2010. Inlieu of responding to defendants' motion, plaintiffs movedon December 8, 2010 for permission to file a further


district court granted GS&Co.'s motion to dismiss theclaim against it. The time for an appeal will not begin torun until disposition of the claims against otherdefendants.Beginning in September 2006, Group Inc. and/orGS&Co. were named as defendants in four FannieMae shareholder derivative actions in the U.S. DistrictCourt for the District of Columbia. The complaintsgenerally allege that the Goldman Sachs defendantsaided and abetted a breach of fiduciary duty by FannieMae's directors and officers in connection with certainFannie Mae-sponsored REMIC transactions and one ofthe complaints also asserts a breach of contract claim.The complaints also name as defendants certain formerofficers and directors of Fannie Mae as well as anoutside accounting firm. The complaints seek, interalia, unspecified damages. The Goldman Sachsdefendants were dismissed without prejudice from thefirst f iled of these actions, and the remaining claims inthat action were dismissed for failure to make a demandon Fannie Mae's board of directors. That dismissal hasbeen affirmed on appeal. The district court dismissedthe remaining three actions on July 28, 2010. Theplaintiffs filed motions for reconsideration, which weredenied on October 22, 2010, and have revised theirnotices of appeal in these actions.Compensation-Related Litigation. OnJanuary17,2008,Group Inc., its Board, executive officers and membersof its management committee were named asdefendants in a purported shareholder derivativeaction in the U.S. District Court for the EasternDistrict of New York predicting that the firm's 2008Proxy Statement will violate the federal securitieslaws by undervaluing certain stock option awards andalleging that senior management received excessivecompensatlon for 2007. The complaint seeks, amongother things, an Injunction against the distribution of the2008 Proxy Statement, the voiding of any election ofdirectors in the absence of an injunction and anequitable accounting for the allegedly excessivecompensation. On January 25, 2008, the plaintiffmoved for a preliminary injunction to prevent the2008 Proxy Statement from using options valuationsthat the plaintiff alleges are incorrect and to require theamendment of SEC Form 4s filed by certain of theexecutive officers named in the complaint to reflectthe stock option valuations alleged by the plaintiff.Plaintiff's motion for a preliminary injunction wasdenied, and plaintiff's appeal from this denial wasdismissed. On February 13, 2009, the plaintiff filed an

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amended complaint, which the defendants had opposed.The court granted plaintiffs' motion to amend onJanuary 19, 2011, and the defendants m o v e d todismiss the second amended complaint onFebruary 4, 2011.Group Inc. and certain of its affiliates are subject to anumber of Investigations and rev iews from var iousgovernmental agencies and self-regulatoryorganizations regarding the firm's compensationprocesses. The firm is cooperating with theinvestigations and rev iews.Mortgage-Related Matters. On April 16, 2010, theSEC brought an action (SEC Action) under theU.S. federal securities laws in the U.S. District Courtfor the Southern District of New York against GS&Co.and Fabrice Tourre, one of its employees, in connectionwith a COO offering made in early 2007 (ABACUS2007-AC1 transaction), alleging that the defendantsmade materially false and misleading statements toinvestors and seeking, among other things,unspecified monetary penalties. Investigations ofGS&Co. by FINRA and of GSI by the U.K. FinancialServices Authority (FSA) were subsequently initiated,and Group Inc. and certain of its affiliates h a v e receivedrequests for information from other regulators,regarding COO offerings, including the ABACUS2007-AC1 transaction, and related matters.On July 14, 2010, GS&Co. entered into a consentagreement with the SEC, settling all claims madeagainst GS&Co. in the SEC Action (SEC Settlement),pursuant to which, GS&Co. paid $550 million ofdisgorgement and civil penalties, and which wasapproved by the U.S. District Court for the SouthernDistrict of New York on July 20, 2010.On September 9, 2010, the FSA announced asettlement with GSI pursuant to which the FSA foundthat GSI violated certain FSA principles by falling to(i) provide notification about the SEC Wells Noticeissued to Mr. Tourre (who worked on the ABACUS2007-AC1 transaction but subsequently transferred toGSI and became registered with the FSA) and ( 1 1 ) haveprocedures and controls to ensure that GSJ'sCompliance Department would be alerted to variousaspects ofthe SEC investigation so as to bein a positionto determine whether any aspects were reportable tothe FSA. The FSA assessed a fine of 17.5 million.On November 9, 2010, FINRA announced a settlementwith GS&Co. relating to GS&Co.'s failure to file Form U4updates within 30 days of learning of the receipt ofWells

Notices by Mr. Tourre and another employee aswell asdeficiencies in the firm's systems and controls for suchfilings. FINRA assessed a fine of $650,000 and GS&Co.agreed to undertake a review and remediation of theapplicable systems and controls.On January 6, 2011, ACA Financial Guaranty Corp.filed an action against GS&Co. in respect of theABACUS 2007-AC1 transaction in New YorkSupreme Court, New York County. The complaintincludes allegations of fraudulent inducement,fraudulent concealment and unjust enrichment andseeks at least $30 million in compensatory damages,at least $90 million Inpunitive damages and unspecifieddisgorgement.Since April 22, 2010, a number of putative shareholderderivative actions have been filed in New YorkSupremeCourt, New York County, and the U.S. District Court forthe Southern Distr ict of New York against Group Inc.,the Board and certain officers and employees ofGroup Inc. and its affiliates In connection withmortgage-related matters between 2004 and 2007,including the ABACUS 2007-AC1 transaction andother COO offerings. These derivative complaintsgenerally include allegations of breach of fiduciaryduty, corporate waste, abuse of control,mismanagement, unjust enrichment, misappropriationof information, securities fraud and insider trading, andchallenge the accuracy and adequacy of Group Inc.'sdisclosure. These derivative complaints seek, amongother things, declaratory relief, unspecifiedcompensatory damages, restitution and certaincorporate governance reforms. The New YorkSupreme Court has consolidated the two actionspending in that court. Certain plaintiffs in the federalcourt cases h ave m oved to consolidate these actionsand to appoint lead plaintiff and lead counsel. Inaddition, as described in the "Compensation-RelatedLitigation" section above, the plaintiffs in thecompensation-related Delaware Court of Chanceryactions have amended their complaint to assert,among other things, allegations similar to those in thederivative claims referred to above, the defendantsm o v e d to dismiss this amended complaint, and theplaintiffs then sought permission to amend further,which the court granted on January 19, 2011. Thedefendants m o v e d to dismiss the second amendedcomplaint on February 4, 2011.

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to the plaintiff's Section 12(a)(2) claims onSeptember 22, 2010, and granted as to the plaintiff 'sSection 11 claims on October 15, 2010, and theplaintiff's motion for reconsideration was denied onNovember 17, 2010. On December 9, 2010, theplaintlff filed a motion for entry of final judgment orcertification of an interlocutory appeal as to plaintiff'sSection 11 claims, which was denied onJanuary 11, 2011. On June 3, 2010, another investor(who had unsuccessfully sought to intervene in theaction) filed a separate putative class action assertingsubstantively similar allegations relating to an additionaloffering pursuant to the 2007 registration statement.The defendants moved to dismiss this separateaction on November 1, 2010. GS&Co. underwroteapproximately $951 million principal amount ofcertificates to all purchasers in the offerings at issuein the complaint (excluding those offerings for which theclaims have been dismissed).Group Inc., GS&Co., Goldman Sachs MortgageCompany and GS Mortgage Securities Corp. areamong the defendants in a separate putative classaction commenced on February 6, 2009 in theU.S. District Court for the Southern District of NewYork brought on behalf of purchasers of variousmortgage pass-through certificates and asset-backedcertif icates issued by various securit ization trusts in2006 and underwritten by GS&Co. The otherdefendants include three current or former GoldmanSachs employees and various rating agencies. Thesecond amended complaint generally alleges that theregistration statement and prospectus supplements forthe certificates vIolated the federal securities laws, andseeks unspecified compensatory and rescissionarydamages. Defendants moved to dismiss the secondamended complaint. On January 12, 2011, the districtcourt granted the motion to dismiss with respect toofferings in which plaintiff had not purchasedsecurities, but denied the motion to dismiss withrespect to a single offering in which the plaintiffallegedly purchased securities. GS&Co. underwroteapproximately $698 million principal amount ofcertif icates to all purchasers in the offerings at issuein the complaint (excluding those offerings for which theclaims have been dismissed).On September 30, 2010, a putative class action wasfiled in the U.S. District Court for the Southern District ofNew York against GS&Co., Group Inc. and two formerGS&Co. employees on behalf of investors in notesissued in 2006 and 2007 by two synthetic COOs(Hudson Mezzanine 2006-1 and 2006-2). The


Since April 23, 2010, the Board has received lettersfrom shareholders demanding that the Board takeaction to address alleged misconduct by GS&Co., theBoard and certain officers and employees of Group Inc.and its affiliates. The demands generally allegemisconduct in connection with the ABACUS2007-AC1 transaction, the alleged failure byGroup Inc. to adequately disclose the SECinvestigation that led to the SEC Action, andGroup Inc.'s 2009 compensation practices. Thedemands include a letter from a Group Inc.shareholder, which previously made a demand thatthe Board investigate and take action in connectionwith auction products matters, and has nowexpanded its demand to address the foregoingmatters. The Board previously rejected the demandsrelating to auction products matters.In addition, beginning April 26, 2010, a number ofpurported securities law class actions have been filedinthe U.S.District Court for the Southern District of NewYork challenging the adequacy of Group lnc.s publicdisclosure of, among other things, the firm's activities inthe COO market and the SEC investigation that led tothe SEC Action. The purported class action complaints,which name as defendants Group Inc. and certainofficers and employees of Group Inc. and itsaffil iates, generally allege violations of Sections 10(b)and 20(a) of the Exchange Act and seek unspecifieddamages. On June 25, 2010, certain shareholders andgroups of shareholders moved to consolidate theseactions and to appoint lead plaintiffs and lead counsel.GS&Co., Goldman Sachs Mortgage Company and GSMortgage Securities Corp. and three current or formerGoldman Sachs employees are defendants in a putativeclass action commenced on December 11, 2008 in theU.S. District Court for the Southern District of New Yorkbrought on behalf of purchasers of various mortgagepass-through certificates and asset-backed certificatesissued by various securitization trusts In 2007 andunderwritten by GS&Co. The second amendedcomplaint generally alleges that the registrationstatement and prospectus supplements for thecertificates violated the federal securit ies laws, andseeks unspecified compensatory damages andrescission or recessionary damages. Defendants'motion to dismiss the second amended complaintwas granted on January 28, 2010 with leave toreplead certain claims. On March 31, 2010, theplaintiff filed a third amended complaint relating totwo offerings, which the defendants moved to dismisson June 22,2010. This motion to dismiss was denied as

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complaint, which was amended on February 4, 2011,asserts federal securities law and common law claims,and seeks unspecified compensatory, punitive andother damages.Various alleged purchasers of, and counterpartiesinvolved in transactions relating to, mortgagepass-through certificates, COOs and othermortgage-related products (including the Federal HomeLoan Banks of Seattle, Chicago and Indianapolis, theCharles Schwab Corporation, Cambridge PlaceInvestment Management Inc., Basis Yield Alpha Fund(Master) and Landesbank Baden-Wurttemberg, amongothers) have filed complaints in state and federal courtagainst firm affiliates, generally alleging that the offeringdocuments for the securities that they purchasedcontained untrue statements of material facts andmaterial omissions and generally seeking rescissionand damages. Certain of these complaints also nameother firms as defendants. Additionally, the NationalCredit Union Administration (NCUA) has stated that itintends to pursue similar claims on behalf of certain creditunions for which it acts as conservator, and the firm andthe NCUA have entered into an agreement tolling therelevant statutes of limitation. A number of other entitieshave threatened to assert claims against the firm inconnection with various mortgage-related offerings,and the firm has entered into agreements with anumber of these entities to toll the relevant statute oflimitations. The firm estimates, based on currentlyavailable information, that the aggregate cumulativelosses experienced by the plaintiffs with respect to thesecurities at issue inactive cases brought against the firmwhere purchasers are seeking rescission of mortgage-related securities was approximately $457 million as ofDecember 2010. This amount was calculated as theaggregate amount by which the initial purchase pricefor the securities allegedly purchased by the plaintiffsexceeds the estimated December 2010 value of thosesecurities. This estimate does not include the potentialNCUA claims or any claims by other purchasers in thesame or other mortgage-related offerings that have notactually brought claims against the firm.The firm has also received requests for information fromregulators relating to the mortgage-related securitizationprocess, subprime mortgages, COOs, syntheticmortgage-related products, particular transactions, andservicing and foreclosure activities, and is cooperatingwith the requests.The firm expects to be the subject of additional putativeshareholder derivative actions, purported class actions,rescission and "put back" claims and other litigation,

additional investor and shareholder demands, andadditional regulatory and other investigations andactions with respect to mortgage-related offerings,loan sales, COOs, and servicing and foreclosureactivities. See Note 18 for further informationregarding mortgage-related contingencies.GS&Co., alongwith numerous other financial institutions,isa defendant inan actionbrought bythe City ofClevelandalleging that the defendants' activities in connection withsecuritizations of subprime mortgages created a "publicnuisance" in Cleveland. The action is pending in theU.S. District Court for the Northern District of Ohio, andthe complaint seeks, among other things, unspecifiedcompensatory damages. The district court granteddefendants' motion to dismiss by a decision datedMay 15, 2009. The City appealed on May 18, 2009.The appellate court affirmed the complaint's dismissalby a decision dated July 27, 2010 and, onOctober 14, 2010, denied the City's petition forrehearing en bancoOn January 12, 2011, the City fileda petition for writ of certiorari with the U.S.Supreme Court.Auction Products Matters. On August 21, 2008,GS&Co. entered into a settlement in principle with theOffice of the Attorney General of the State of New Yorkand the illinois Securities Department (on behalf of theNorth American Securities Administrators Association)regarding auction rate securities. Under the agreement,Goldman Sachs agreed, among other things, (i) to offer torepurchase at par the outstanding auction rate securitiesthat its private wealth management clients purchasedthrough the firm prior to February 11, 2008, with theexception of those auction rate securitieswhere auctionsare clearing, (ii) to continue towork with issuers and otherinterested parties, including regulatory and governmentalentities, to expeditiously provide liquidity solutions forinstitutional investors, and (iii) to pay a $22.5 million fine.The settlement is subject to definitive documentation andapprovalby the various states. On June 2, 2009, GS&Co.entered into an Assurance of Discontinuancewith the NewYorkStateAttorney General. On March 19, 2010, GS&Co.entered into an Administrative Consent Order with theIllinois Secretary of State, Securities Department, whichhad conducted an investigation on behalf of states otherthan New York. GS&Co has entered into similar consentorders with most states and is in the process of doing sowith the remaining states.On August 28, 2008, a putative shareholder derivativeaction was filed in the U.S. District Court for theSouthern District of New York naming as defendantsGroup Inc., the Board, and certain senior officers. Thecomplaint alleges generally that the Board breached its

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April 26, 2010, the plaintiffs moved for leave toproceed with a second phase of discoveryencompassing additional transactions. OnAugust 18, 2010, the court permitted discovery oneight addit ional transactions, and the plaintiffs filed afourth amended complaint on October 7, 2010. Thedefendants filed a motion to dismiss certain aspects ofthe fourth amended complaint on October 21,2010, andthe court granted that motion on January 13,2011.Washington Mutual Securities Litigation. GS&Co.is among numerous underwriters named as defendantsin a putative securities class action amended complaintf lied on August 5, 2008 in the U.S. District Court for theWestern District of Washington. As to the underwriters,plaintiffs allege that the offering documents in connectionwith various securities offerings by Washington Mutual,Inc. failed to describe accurately the company'sexposure to mortgage-related activities in violation ofthe disclosure requirements of the federal securitieslaws. The defendants include past and presentdirectors and officers of Washington Mutual, thecompany's former outside auditors, and numerousunderwriters. By a decision dated May 15, 2009, thedistrict court granted in part and denied in part theunderwriter defendants' motion to dismiss, with leaveto replead and, on June 15, 2009, plaintiffs filed anamended complaint. By a decision datedOctober 27, 2009, the federal district court grantedand denied in part the underwriters' motion to dismiss.On October 12, 2010, the court granted classcertification (except as to one transaction). OnDecember 1, 2010, the defendants moved for partialjudgment on the pleadings as to two of the offerings.By a decision dated January 28, 2011, the district courtdenied the defendants' motion for partial judgment on thepleadings.GS&Co. underwrote approximately $520 millionprincipal amount of securit ies to all purchasers in theofferings at issue in the complaint (excluding thoseofferings for which the claims have been dismissed).OnSeptember 25,2008, the FDIC took over the primarybanking operations of Washington Mutual, Inc. and thensold them. On September 27, 2008, WashingtonMutual, Inc. filed for Chapter 11 bankruptcy in theU.S. bankruptcy court in Delaware.


fiduciary duties and committed mismanagement inconnection with its oversight of auction rate securitiesmarketing and trading operations, that certain individualdefendants engaged in insider selling by selling sharesof Group lnc., and that the firm's public filings were"falseand misleading inviolation of the federal securities lawsby failing to accurately disclose the alleged practicesinvolving auction rate securities. The complaint seeksdamages, injunctive and declaratory relief, restitution,and an order requiring the firm to adopt corporatereforms. On May 19, 2009, the district court granteddefendants' motion to dismiss, and on July 20, 2009denied plaintiffs' motion for reconsideration. Followingthe dismissal of the shareholder derivative action, thenamed plaintiff in such action sent the Board a letterdemanding that the Board investigate the allegationsset forth in the complaint, and the Board ultimatelyrejected the demand.On September 4, 2008, Group Inc. was named as adefendant, together with numerous other financialservices firms, in two complaints filed in theU.S. District Court for the Southern District of NewYork alleging that the defendants engaged in aconspiracy to manipulate the auction securities marketin violation of federal antitrust laws. The actions werefiled, respectively, on behalf of putative classes of issuersof and investors in auction rate securities and seek,among other things, treble damages in an unspecifiedamount. Defendants' motion to dismiss was granted onJanuary 26, 2010. On March 1,2010, the plaintiffs filed anotice of appeal from the dismissal of their complaints.Private Equity-Sponsored Acquisit ions Litigation.Group Inc. and "GS Capital Partners" are amongnumerous private equity firms and investment banksnamed as defendants in a federal antitrust action filedin the US. District Court for the District of MassachusettsinDecember 2007. As amended, the complaint generallyalleges that the defendants have colluded to limitcompetition in bidding for private equity-sponsoredacquisitions of public companies, thereby resulUng inlower prevailing bids and, by extension, lessconsideration for shareholders of those companies inviolation of Section 1 of the U.S. Sherman Antitrust Actand common law. The complaint seeks, among otherthings, treble damages in an unspecified amountDefendants moved to dismiss on August 27, 2008.The district court dismissed claims relating to certaintransactions that were the subject of releases as part ofthe settlement of shareholder actions challenging suchtransactions, and by an order dated December 15, 2008otherwIse denied the motion to dismiss. On

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On September 15, 2010, a putative class action wasfiled in the U.S. District for the Southern District of NewYork by three former female employees alleging thatGroup Inc. and GS&Co. have systematicallydiscriminated against female employees in respect ofcompensation, promotion, assignments, mentoring andperformance evaluations. The complaint alleges a classconsisting of all female employees employed atspecified levels by Group Inc. and GS&Co. sinceJuly 2002, and asserts claims under federal and NewYork City discrimination laws. The complaint seeksclass action status, injunctive relief and unspecif iedamounts of compensatory, punitive and otherdamages. On November 22, 2010, Group Inc. andGS&Co. filed a motion to stay the claims of one ofthe named plaintiffs and to compel individualarbitration with that individual, based on an arbitrationprovision contained In an employment agreementbetween Group Inc. and the individual.Transactions with the Hellenic Republic (Greece).Group Inc. and certain of its affiliates are subject to anumber of investigations and reviews by variousgovernmental and regulatory bodies andself-regulatory organizations in connection with thefirm's transactions with the Hellenic Republic (Greece),including financing and swap transactions. GoldmanSachs is cooperating with the investigations and reviews.Sales, Trading and Clearance Practices. Group Inc.and certain of ils affiliates are subject to a number ofinvestigations and reviews by various governmental andregulatory bodies and self-regulatory organizationsrelating to the sales, trading and clearance ofcorporate and government securities and otherfinancial products, including compliance with theSEC's short sale rule, algorithmic and quantitativetrading, futures trading, securities lending practices,trading of credit derivative instruments, commoditiestrading and the effectiveness of insider trading controlsand internal information barriers. Goldman Sachs iscooperating with the investigations and reviews.


IndyMac Pass-Through Certificates Litigation.GS&Co. is among numerous underwriters named asdefendants in a putative securities class action filed onMay 14, 2009 in the U.s. Distr ict Court for the SouthernDistrict of NewYork.As to the underwriters, plaintiffsallegethat the offering documents in connection with varioussecuritizations of mortgage-related assets Violated thedisclosure requirements of the federal securities laws.The defendants include IndyMac-related entities formedin connection with the securitizations, the underwriters ofthe offerings, certain ratings agencieswhich evaluatedthecredit quality of the securities, and certain former officersand directors of IndyMac affiliates.On November 2, 2009,the underwriters moved to dismiss the complaint. Themotion was granted in part on February 17, 2010 to theextent of dismissing claims based on offerings inwhich noplaintiff purchased, and the court reserved judgment as tothe other aspects of the motion. By a decision datedJune 21, 2010, the district court formally dismissed allclaims relating to offerings in which no named plaintiffpurchased certificates (including all offerings underwrittenbyGS&Co.), and both grantedand denied the defendants'motions to dismiss in various other respects. OnMay 17, 2010, four additional investors filed a motionseeking to intervene in order to assert claims based onadditional offerings (including two underwritten byGS&Co.). On July 6, 2010, another additional investorfiled a motion to intervene in order to assert claims basedon additional offerings (none of which were underwrittenby GS&Co.).GS&Co. underwrote approximately $751 millionprincipal amount of securities to all purchasers in theofferings at issue in the May 2010 motion to intervene.On July 11, 2008, IndyMac Bank was placed under anFDIC receivership, and on July 31, 2008, IndyMacBancorp, Inc. filed for Chapter 7 bankruptcy in theU.S. Bankruptcy Court in Los Angeles, California.Employment-Related Matters. On May 27, 2010, aputative class action was filed in the U.S. District Courtfor the Southern District of New York by severalcontingent technology workers who were employeesof third-party vendors. The plaintiffs are seekingovertime pay for alleged hours worked In excess of40 per work week. The complaint alleges that theplaintiffs were de facto employees of GS&Co. andthat GS&Co. is responsible for the overtime payunder federal and state overtime laws. The complaintseeks class action status and unspecified damages.

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several individual California municipal plaintiffs wasdenied. All of these complaints against Group lnc.,GSMMDP and GS Bank USA generally allege that theGoldman Sachs defendantsparticipated ina conspiracy toarrange bids, fix prices and divide up the market forderivatives used by municipalities in refinancing andhedging transactions from 1992 to 2008. Thecomplaints assert claims under the federal antitrust lawsand either California's Cartwright Act or New York'sDonnelly Act, and seek, among other things, trebledamages under the antitrust laws in an unspecifiedamount and injunctive relief.Financial Crisis-Related Matters. Group Inc. andcertain of its affiliates are subject to a number ofinvestigations and reviews by various governmentaland regulatory bodies and self-regulatoryorganizations relating to the 2008 financial crisis,including the establishment and unwind of creditdefault swaps between Goldman Sachs andAmerican International Group, Inc. (AIG) and othertransactions with, and in the securities of, AIG, TheBear Stearns Companies Inc., Lehman BrothersHoldings Inc. and other firms. Goldman Sachs iscooperating with the investigations and reviews.


Municipal Securities Matters. Group Inc. and certainof its affil iates are subject to a number of investigationsand reviews by various governmental and regulatorybodies and self-regulatory organizations relating totransactions involving municipal securities, includingwall-cross procedures and conflict of interest disclosurewith respect to state and municipal clients, the trading ofmunicipal derivative instruments in connection withmunicipal offerings, political contribution rules and thepossible impact of credit default swap transactions onmunicipal issuers. Goldman Sachs is cooperating withthe investigations and reviews.Group Inc" Goldman Sachs Mitsui Marine DerivativeProducts, L . P . (GSMMDP) and GS Bank USA areamong numerous financial services firms that havebeen named as defendants in numerous substantiallyidentical individual antitrust actions filed beginning onNovember 12, 2009 that have been coordinated withrelated antitrust class action litigation and Individualactions, in which no Goldman Sachs affiliate is named,for pre-trial proceedings in the U.S. District Court for theSouthern District of New York. The plaintiffs includeindividual California municipal entities and three NewYork non-profit entities. On April 26, 2010, the GoldmanSachs defendants' motion to dismiss complaints filed by

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AKIN GUMPSTRAUSS HAUER & FELDLLP

JOHN M. DOWD2028874386/fax: 2028874288jdol'[email protected]

________ Attorneys at law

Marc h 2 0,2 01 1V ia e -ma ilA ssistan t U .S . A tto rn ey Jo nath an S treeterA ssistan t U .S . A ttorney R eed B ro dskyS pec ial A ssistan t U .S . A tto rn ey A nd rew M ich aelso nT he S ilv io J. Mo llo B u ild in gU nited S tates A tto rn ey 's O ffic eO ne Sain t A ndrew s PlazaNew York, New York 10007

Re: United States v.Raj Rajaratnam, 09 C r. 118 4 (R JH )D ear M essrs. S treeter, B ro dsk y an d M ich aelso n,

W e are writing on behalf of R aj R ajaratnam to request the im mediate production ofdocum ents suffic ien t to identify all open investigations of G oldm an Sachs and/or any of itsofficers or directors by the D epartm ent of Justice, Securities and Exchange C om mission, or otheragency of the federal governm ent, G iven that the governm ent has signaled its in ten tion to callL loyd B lankfein as a w itness as early as this week, the im mediate production of this m aterial isclearly req uired by Brady v. Maryland, 373 U .s. 83 (1963), G iglio v. United States, 405 U .S. 150(1972), and progeny, including the Second C ircuit's decision in United States v, Chitty, 7 60 F .2 d425,428 (2d C ir. 1985) (Brady requires the governm ent to disclose the fact that a w itness is thesubject of an investigation because that fact "provide[ s] a m otive to testify favorably to theGove rnmen t. '') ,

P lease advise w hether your office w ill produce this m ateria! no later than 5:00 p.m . onM on day M arc h 2 1,2 01 1. If yo u will not, the defense w ill m ove the C ourt to com pel itsproduction.