Goldman Sachs Announces Investment Research Initiatives

NEW YORK – The Goldman Sachs Group, Inc. (NYSE: GS) announced today that it was implementing a series of initiatives within its Global Investment Research division to underscore the firm's continuing commitment to providing investment research of the highest quality and integrity. These moves are in addition to instituting the rule changes of the National Association of Securities Dealers (NASD) and the New York Stock Exchange, that were recently approved by the U.S. Securities and Exchange Commission, and any other regulatory requirements.

"We believe that investment research of the highest quality and integrity is an important component in a diversified, global financial firm, but it is critical that the public have confidence in the rigor and independence of analysts' views," said Henry M. Paulson, Jr., Chairman and Chief Executive Officer. "These initiatives affirm Goldman Sachs' commitment to strong, objective research, and to working with the industry and our regulators to help restore confidence in our markets and institutions."

The initiatives announced today are:

The implementation of a statement of Investment Research principles that clearly delineate Goldman Sachs' investment research philosophy, and underscore the analytic rigor, broad insights and objectivity that are the hallmark of significant fundamental research. Consistent with these principles, our executive management fully supports our investment analysts in providing their independent and informed opinions.

In addition, the appointment of E. Gerald Corrigan to the new position of investment research Ombudsman, reporting directly to the Chairman of the Board and Chief Executive Officer, Henry M. Paulson, Jr., and to the Chairman of the Audit Committee, Lord Browne of Madingley. Mr. Corrigan will be available to all members of the global investment research division with respect to any and all issues regarding conflicts, whether they are perceived as coming from within the firm, or from external sources. Before joining Goldman Sachs, Mr. Corrigan had a distinguished career in the public financial sector, most recently as President and Chief Executive Officer of The Federal Reserve Bank of New York, and he remains a recognized leader in both public and private sector initiatives.

Third, as part of their continuing compliance and control related oversight role, the Board Audit Committee, which is made up of independent outside directors, will have responsibility for reviewing and monitoring the adequacy of the structures, policies and procedures that the firm has developed to assure the integrity of its research. The Audit Committee will meet regularly with the Investment Research Ombudsman, the Co-heads of Investment Research and others charged with oversight of the Research Divisions.

Finally, as part of its continuing compensation oversight role, the Board Compensation Committee, which is also made up of independent directors, and is chaired by James A. Johnson, will review the compensation process for investment research professionals. Goldman Sachs has never compensated its investment research analysts based on a formulaic percentage of investment banking revenues, and the firm believes it has managed the issues around analyst compensation properly. Goldman Sachs is mindful, however, that compensation has been a focal point of the debate over analyst integrity. This new level of oversight is intended to assure investor clients of the appropriateness of compensation policies going forward.

Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.