Supplement No. 3 to Offering Circular, dated June 29, 2015 The Goldman Sachs Group, Inc. Euro Medium-Term Notes, Series H - PDF

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Supplement No. 3 to Offering Circular, dated June 29, 2015 The Goldman Sachs Group, Inc. Euro Medium-Term Notes, Series H This Supplement No. 3 (the Supplement ) to the European Offering Circular, dated
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Supplement No. 3 to Offering Circular, dated June 29, 2015 The Goldman Sachs Group, Inc. Euro Medium-Term Notes, Series H This Supplement No. 3 (the Supplement ) to the European Offering Circular, dated June 29, 2015 (the Offering Circular ), constitutes a supplement to the Offering Circular for the purposes of the Luxembourg Law on Prospectuses for Securities dated July 10, 2005, as amended (the Prospectus Law ), and should be read in conjunction therewith and with Supplement No. 1, dated December 11, 2015 and Supplement No. 2, dated January 26, The terms defined in the Offering Circular have the same meaning when used in this Supplement. This Supplement has been approved by the Luxembourg Stock Exchange in its capacity as competent authority under Part IV of the Prospectus Law. To the extent that there is any inconsistency between (a) any statement in this Supplement and (b) any other statement in or incorporated by reference in the Offering Circular and Supplement Nos. 1-2, the statements in (a) above will prevail. The following amendments to the Offering Circular are hereby made: On p. 13 of the Offering Circular, immediately preceding the heading Considerations Relating to Indexed Notes the following risk factors section is inserted: Considerations Relating to Regulatory Resolution Strategies and Long-Term Debt Requirements The application of regulatory resolution strategies could create greater risk of loss for holders of our debt securities in the event of the resolution of The Goldman Sachs Group Inc. Your ability to recover the full amount that would otherwise be payable on our debt securities in a proceeding under the U.S. Bankruptcy Code may be impaired by the exercise by the Federal Deposit Insurance Corporation (FDIC) of its powers under the orderly liquidation authority under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) or regulations that may be promulgated based on the Financial Stability Board s November 2015 standard to enhance the total loss-absorbing capacity of Global Systemically Important Banks (G- SIBs), which, like the single point of entry strategy described below, is intended to impose losses at the top-tier holding company level in the resolution of a G-SIB such as The Goldman Sachs Group Inc. Title II of the Dodd-Frank Act created a new resolution regime known as the orderly liquidation authority to which financial companies, including bank holding companies such as The Goldman Sachs Group Inc., can be subjected. Under the orderly liquidation authority, the FDIC may be appointed as receiver for a financial company for purposes of liquidating the entity if, upon the recommendation of applicable regulators, the Secretary of the Treasury determines, among other things, that the entity is in severe financial distress, that the entity s failure would have serious adverse effects on the U.S. financial system and that resolution under the orderly liquidation authority would avoid or mitigate those effects. Absent such determinations, The Goldman Sachs Group Inc., as a bank holding company, would remain subject to the U.S. Bankruptcy Code. If the FDIC is appointed as receiver under the orderly liquidation authority, then the orderly liquidation authority, rather than the U.S. Bankruptcy Code, would determine the powers of the receiver and the rights and obligations of creditors and other parties who have transacted with The Goldman Sachs Group Inc. There are substantial differences between the rights available to creditors in the orderly liquidation authority and in the U.S. Bankruptcy Code, including the right of the FDIC under the orderly liquidation authority to disregard the strict priority of creditor claims in some circumstances (which would otherwise be respected by a bankruptcy court) and the use of an administrative claims procedure to determine creditors claims (as opposed to the judicial procedure utilized in bankruptcy proceedings). In certain circumstances under the orderly liquidation authority, the FDIC could elevate the priority of claims that it determines necessary to facilitate a smooth and orderly liquidation without the need to obtain creditors consent or prior court review. In addition, the FDIC has the right to transfer claims to a third party or bridge entity under the orderly liquidation authority. The FDIC has announced that a single point of entry strategy may be a desirable strategy to resolve a large financial institution such as The Goldman Sachs Group Inc. in a manner that would, among other things, impose losses on shareholders, debt holders (including, in our case, holders of our debt securities) and other creditors of the top-tier holding company (in our case, The Goldman Sachs Group Inc.), while permitting the holding company s subsidiaries to continue to operate. In addition, the Board of Governors of the Federal Reserve System (Federal Reserve Board) has proposed requirements that U.S. G-SIBs, including The Goldman Sachs Group Inc., maintain minimum amounts of long-term debt and total loss-absorbing capacity to facilitate the application of the single point of entry resolution strategy. It is possible that the application of the single point of entry strategy in which The Goldman Sachs Group Inc. would be the only legal entity to enter resolution proceedings could result in greater losses to holders of our debt securities (including holders of our fixed rate, floating rate and indexed debt securities), than the losses that could result from the application of a bankruptcy proceeding or a different resolution strategy for The Goldman Sachs Group Inc. Assuming The Goldman Sachs Group Inc. entered resolution proceedings and that support from The Goldman Sachs Group Inc. to its subsidiaries was sufficient to enable the subsidiaries to remain solvent, losses at the subsidiary level would be transferred to The Goldman Sachs Group Inc. and ultimately borne by The Goldman Sachs Group Inc. s security holders, thirdparty creditors of The Goldman Sachs Group Inc. s subsidiaries would receive full recoveries on their claims, and The Goldman Sachs Group Inc. s security holders (including holders of our debt securities and other unsecured creditors) could face significant losses. The orderly liquidation authority also provides the FDIC with authority to cause creditors and shareholders of the financial company such as The Goldman Sachs Group Inc. in receivership to bear losses before taxpayers are exposed to such losses, and amounts owed to the U.S. government would generally receive a statutory payment priority over the claims of private creditors, including senior creditors. In addition, under the orderly liquidation authority, claims of creditors (including holders of our debt securities) could be satisfied through the issuance of equity or other securities in a bridge entity to which The Goldman Sachs Group Inc. s assets are transferred. If such a securities-for-claims exchange were implemented, there can be no assurance that the value of the securities of the bridge entity would be sufficient to repay or satisfy all or any part of the creditor claims for which the securities were exchanged. While the FDIC has issued regulations to implement the orderly liquidation authority, not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is likely. The application of The Goldman Sachs Group Inc. s proposed resolution strategy could result in greater losses for holders of our debt securities. As required by the Dodd-Frank Act and regulations issued by the Federal Reserve Board and the FDIC, we are required to provide to the Federal Reserve Board and the FDIC a plan for our rapid and orderly resolution in the event of material financial distress affecting the firm or the failure of The Goldman Sachs Group Inc. In our resolution plan, The Goldman Sachs Group Inc. would be resolved under the U.S. Bankruptcy Code. The strategy described in our resolution plan is a variant of the single point of entry strategy: The Goldman Sachs Group Inc. would recapitalize and provide liquidity to certain major subsidiaries, including through the forgiveness of intercompany indebtedness, the extension of the maturities of intercompany indebtedness and the extension of additional intercompany loans. If this strategy were successful, creditors of some or all of The Goldman Sachs Group Inc. s major subsidiaries would receive full recoveries on their claims, while holders of The Goldman Sachs Group Inc. s debt securities (including holders of our fixed rate, floating rate and indexed debt securities) could face significant losses. If this strategy were not successful, The Goldman Sachs Group Inc. s financial condition would be adversely impacted and S-2 holders of our debt securities may as a consequence be in a worse position than if the strategy had not been implemented. In all cases, any payments to holders of our debt securities are dependent on our ability to make such payments and are therefore subject to our credit risk. The ultimate impact of the Federal Reserve Board s recently proposed rules requiring U.S. G-SIBs to maintain minimum amounts of long-term debt meeting specified eligibility requirements is uncertain. On October 30, 2015, the Federal Reserve Board released for comment proposed rules (the TLAC Rules) that would require the eight U.S. G-SIBs, including The Goldman Sachs Group Inc., among other things, to maintain minimum amounts of long-term debt i.e., debt having a maturity greater than one year from issuance (LTD) satisfying certain eligibility criteria commencing January 1, As proposed, the TLAC Rules would disqualify from eligible LTD, among other instruments, senior debt securities that permit acceleration for reasons other than insolvency or payment default, as well as debt securities defined as structured notes in the TLAC Rules (e.g., many of our indexed debt securities) and debt securities not governed by U.S. law. The currently outstanding senior LTD of U.S. G-SIBs, including The Goldman Sachs Group Inc., typically permits acceleration for reasons other than insolvency or payment default and, as a result, neither such outstanding senior LTD nor any subsequently issued senior LTD with similar terms would qualify as eligible LTD under the proposed rules. The Federal Reserve Board has requested comment on whether currently outstanding instruments should be allowed to count as eligible LTD despite containing features that would be prohibited under the proposal. The U.S. G-SIBs, including The Goldman Sachs Group Inc., may need to take steps to come into compliance with the final TLAC Rules depending in substantial part on the ultimate eligibility requirements for senior LTD and any grandfathering provisions. On p. 28 the section heading Considerations Relating to Notes Linked to LIBOR Underlyers is hereby amended to read Considerations Relating to Notes Linked to Benchmark Underlyers such as LIBOR On p. 28 of the Offering Circular, immediately following the heading Considerations Relating to Notes Linked to Benchmark Underlyers such as LIBOR the following section, which was previously added in Prospectus Supplement No. 2 under the section on p. 31 entitled Recent Developments, is inserted: Regulation and reform of benchmarks , including LIBOR, EURIBOR and other interest rate, equity, commodity, foreign exchange rate and other types of benchmarks may cause such benchmarks to perform differently than in the past, or to disappear entirely, or have other consequences which cannot be predicted The London Inter-Bank Offered Rate ( LIBOR ), the Euro Interbank Offered Rate ( EURIBOR ) and other interest rate, equity, commodity, foreign exchange rate and other types of indices which are deemed to be benchmarks are the subject of recent national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective whilst others are still to be implemented. These reforms may cause such benchmarks to perform differently than in the past, or to disappear entirely, or have other consequences which cannot be predicted. Any such consequence could have a material adverse effect on any notes linked to such a benchmark . Key international proposals for reform of benchmarks include IOSCO's Principles for Financial Market Benchmarks (July 2013) (the IOSCO Benchmark Principles ) and the proposed EU S-3 Regulation on indices used as benchmarks in certain financial instruments and financial contracts (the Proposed Benchmark Regulation ). The IOSCO Benchmark Principles aim to create an overarching framework of principles for benchmarks to be used in financial markets, specifically covering governance and accountability as well as the quality and transparency of benchmark design and methodologies. A review published by IOSCO in February 2015 of the status of the voluntary market adoption of the IOSCO Benchmark Principles noted that, as the benchmarks industry is in a state of change, further steps may need to be taken by IOSCO in the future, but that it is too early to determine what those steps should be. The review noted that there has been a significant market reaction to the publication of the IOSCO Benchmark Principles, with widespread efforts being made to implement the IOSCO Benchmark Principles by the majority of administrators surveyed. On 9 December 2015, the European Council approved the final compromise text of the Proposed Benchmark Regulation. The text of the Proposed Benchmark Regulation is subject to EU Parliamentary approval and publication in the Official Journal, expected by mid While still unclear, it appears that the Proposed Benchmark Regulation is unlikely to be implemented before the first quarter of Assuming that the current text is passed without change (as appears likely), the Proposed Benchmark Regulation would apply to contributors , administrators and users of benchmarks in the EU, and would, among other things, (i) require benchmark administrators to be authorised (or, if non-eu-based, to have satisfied certain equivalence conditions in its local jurisdiction, to be recognised by the authorities of a Member State pending an equivalence decision or to be endorsed for such purpose by an EU competent authority) and to comply with requirements in relation to the administration of benchmarks and (ii) ban the use of benchmarks of unauthorised administrators. The scope of the Proposed Benchmark Regulation is wide and, in addition to socalled critical benchmark indices such as LIBOR and EURIBOR, could also potentially apply to many other interest rate indices, as well as equity, commodity and foreign exchange rate indices and other indices (including proprietary indices or strategies) which are referenced in certain financial instruments (securities or OTC derivatives listed on an EU regulated market, EU multilateral trading facility (MTF), EU organised trading facility (OTF) or systematic internaliser ), certain financial contracts and investment funds. Different types of benchmark are subject to more or less stringent requirements, and in particular a lighter touch regime may apply where a benchmark is not based on interest rates or commodities and the value of financial instruments, financial contracts or investment funds referring to a benchmark is less than 50bn, subject to further conditions. The Proposed Benchmark Regulation could have a material impact on notes linked to a benchmark rate or index, including in any of the following circumstances: a rate or index which is a benchmark could not be used as such if its administrator does not obtain authorisation or is based in a non-eu jurisdiction which (subject to applicable transitional provisions) does not satisfy the equivalence conditions, is not recognised pending such a decision and is not endorsed for such purpose. In such event, depending on the particular benchmark and the applicable terms of the notes, the notes could be de-listed, adjusted, redeemed prior to maturity or otherwise impacted; and the methodology or other terms of the benchmark could be changed in order to comply with the terms of the Proposed Benchmark Regulation, and such changes could have the effect of reducing or increasing the rate or level or affecting the volatility of the S-4 published rate or level, and could lead to adjustments to the terms of the notes, including Calculation Agent determination of the rate or level in its discretion. Any of the international, national or other proposals for reform or the general increased regulatory scrutiny of benchmarks could increase the costs and risks of administering or otherwise participating in the setting of a benchmark and complying with any such regulations or requirements. Such factors may have the effect of discouraging market participants from continuing to administer or contribute to certain benchmarks , trigger changes in the rules or methodologies used in certain benchmarks or lead to the disappearance of certain benchmarks . The disappearance of a benchmark or changes in the manner of administration of a benchmark could result in adjustment to the terms and conditions, early redemption, discretionary valuation by the calculation agent, delisting or other consequence in relation to notes linked to such benchmark . Any such consequence could have a material adverse effect on the value of and return on any such notes. References to the Offering Circular in the Offering Circular shall hereafter mean the Offering Circular as supplemented by this Supplement. The Goldman Sachs Group, Inc. has taken all reasonable care to ensure that the information contained in the Offering Circular, as supplemented by this Supplement, is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import and accepts responsibility accordingly. This Supplement is not for use in, and may not be delivered to or inside, the United States. Supplement, dated February 29, 2016 S-5 Supplement No. 2 to Offering Circular, dated June 29, 2015 The Goldman Sachs Group, Inc. Euro Medium-Term Notes, Series H This Supplement No. 2 (the Supplement ) to the European Offering Circular, dated June 29, 2015 (the Offering Circular ), constitutes a supplement to the Offering Circular for the purposes of the Luxembourg Law on Prospectuses for Securities dated July 10, 2005, as amended (the Prospectus Law ), and should be read in conjunction therewith and with Supplement No. 1, dated December 11, The terms defined in the Offering Circular have the same meaning when used in this Supplement. This Supplement has been approved by the Luxembourg Stock Exchange in its capacity as competent authority under Part IV of the Prospectus Law. To the extent that there is any inconsistency between (a) any statement in this Supplement and (b) any other statement in or incorporated by reference in the Offering Circular and Supplement No. 1, the statements in (a) above will prevail. The following amendments to the Offering Circular are hereby made: On p. 31 of the Offering Circular under the heading and text which was added in Supplement No. 1 entitled Recent Developments, the following section is inserted: Regulation and reform of benchmarks , including LIBOR, EURIBOR and other interest rate, equity, commodity, foreign exchange rate and other types of benchmarks The London Inter-Bank Offered Rate ( LIBOR ), the Euro Interbank Offered Rate ( EURIBOR ) and other interest rate, equity, commodity, foreign exchange rate and other types of indices which are deemed to be benchmarks are the subject of recent national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective whilst others are still to be implemented. These reforms may cause such benchmarks to
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