SECURITIES AND EXCHANGE COMMISSION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF

CORPORATION FINANCE

January 24, 2012

Mr. Craig A. Stewart

Arnold & Porter LLP

399 Park Avenue

New York, NY 10022

Re:

In the Matter of Certain GIC Brokers (P-01118)

General Electric Capital Corporation, Inc. – Waiver Request of Ineligible Issuer Status

under Rule 405 of the Securities Act

Dear Mr. Stewart:

This is in response to your letter dated January 17, 2012, written on behalf of General Electric Capital

Corporation, Inc. (GE Capital), parent company of GE Funding Capital Market Services (GE Funding

CMS) and constituting an application for relief from GE Capital being considered an “ineligible

issuer” under Rule 405(1)(vi) of the Securities Act of 1933 (Securities Act). On December 23, 2011,

the Commission filed a civil injunctive complaint (Complaint), in the United States District Court for

New Jersey, against GE Funding CMS. The complaint alleges that GE Funding CMS violated

Section 17(a) of the Securities Act. GE Funding CMS filed a consent in which it agreed, without

admitting or denying the allegations of the Complaint, to the entry of a Final Judgment against it.

Among other things, the Final Judgment, as entered on January 23, 2012, provides for a permanent

injunction from committing future violations of Section 17(a) of the Securities Act.

Based on the facts and representations in your letter, and assuming GE Capital and GE Funding CMS

comply with the Final Judgment, the Commission, pursuant to delegated authority, has determined

that GE Capital has made a showing of good cause under Rule 405(2) and GE Capital will not be

considered an ineligible issuer by reason of the entry of the Final Judgment. Accordingly, the relief

described above from GE Capital being an ineligible issuer under Rule 405 of the Securities Act is

hereby granted, and the effectiveness of such relief is as of the date of the entry of the Final

Judgment. Any different facts from those represented or non-compliance with the Final Judgment

might require us to reach a different conclusion.

Sincerely,

/s/

Mary Kosterlitz

Chief, Office of Enforcement Liaison

Division of Corporation Finance

ARNOLD & PORTER LLP

Craig A. Stewart

Craig.Stewart@aporter.com

212.715.1142

212.715.1399 Fax

399 Park Avenue

New York, NY 10022-4690

January 17,2012

VIA -FEDERAL EXPRESS AND E-MAIL

Mary J. Kosterlitz, Esq.

Chief, Office of Enforcement Liaison

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N .E.

Washington, DC 20549

Re:

Securities and Exchange Commission v. GE Funding Capital Market

Services, Inc., Case No. 2:11-cv-07465-WJM-MF

Dear Ms. Kosterlitz:

This letter is submitted on behalf of our client, General Electric Capital Corporation ("GE

Capital"), indirect parent company of GE Funding Capital Market Services ("GE Funding

CMS"), in connection with the anticipated settlement of the above-captioned proceeding by the

Securities and Exchange Commission (the "Commission). The settlement would result in the

entry of a final judgment against GE Funding CMS in an action to be filed by the Commission in

the United States District Court for New Jersey (the "District COUl1"), as described below (the

"Final Judgment"). GE Capital is not a party to the above-captioned proceedings.

Pursuant to Rule 405 promulgated under the Securities Act of 1933 (the "Securities

Act"), GE Capital hereby requests that the Commission determine that for good cause shown it is

not necessary under the circumstances that GE Capital be considered an "ineligible issuer" under

Rule 405. GE Capital requests that this determination be effective upon the entry of the Final

Judgment. The staff of the Division of Enforcement has informed us that it does not object to the

grant ofthe requested waiver.

BACKGROUND

On December 23, 2011 the Commission filed a complaint against GE Funding CMS (the

"Complaint") in the District Court. The Complaint alleges that GE Funding CMS engaged in

misrepresentations in connection with bidding on certain temporary investment of proceeds from

the sale of certain tax-exempt municipal securities by state and local governmental entities in the

United States. The Complaint also alleges that GE Funding CMS made misrepresentations in

connection with bidding for certain investments, violating Section 17(a) of the Securities Act.

ARNOLD & PORTER LLP

January 17,2012

Page 2

Simultaneous with the filing of the Complaint, GE Funding CMS consented to the entry of the

Final Judgment, neither admitting nor denying the allegations in the Complaint (other than those

relating to the jurisdiction of the District Court over it and the subject matter of the action). The

Final Judgment will, upon entry, permanently enjoin GE Funding CMS from violating Section

17(a) of the Securities Act and requires GE Funding CMS to pay disgorgement in the amount of

$10,625,799.64, prejudgment interest in the amount of $3,775,989, and a civil monetary penalty

of $1 0,500,000.

DISCUSSION

In 2005, the Commission revised the registration, communications, and offering

processes under the Securities Act.! As part of this offering reform, the Commission revised

Securities Act Rule 405, creating a new category of issuer, the "well-known seasoned issuer,"

("WKSI") and a new category of offering communication, the "free writing prospectus." A

WKSI is eligible for important reforms that have changed the way corporate finance transactions

for larger issuers are planned and structured. These reforms include the ability to "file-and-go"

(i.e., eligibility for automatically effective shelf registration statements) and "pay-as-you-go'"

(i.e., the ability to pay filing fees as the issuer sells securities off the shelf). These reforms have

removed the risk of regulatory delay in connection with capital formation. In addition, WKSIs

are provided with the most flexibility in terms of communications, including the ability to use

free writing prospectuses in advance of filing a registration statement.

These benefits are unavailable to issuers that are classified as "ineligible issuers"

pursuant to Rule 405. The definition of Ineligible Issuer includes any issuer which itself or any of

its subsidiaries has had within the past three years been "made the subject of any judicial or

administrative decree or order arising out of a government action that . . . [p ]rohibits certain

conduct or activities regarding, including future violations of, the anti-fraud provisions of the

federal securities laws.,,2 Ineligible issuers are excluded from the definition of WKSI and are

ineligible to make communications through free writing prospectuses, except in limited

circumstances. 3 As a result, an ineligible issuer that would otherwise be a WKSI does not have

access to file-and-go or pay-as-you-go, and cannot use most free writing prospectuses. However,

Rule 405 authorizes the Commission to determine, "upon a showing of good cause, that it is not

1 See Securities Offering Reform, Securities Act Release No. 8591, Exchange Act Release No. 52,056,

Investment Company Act Release No. 26,993, 70 Fed. Reg. 44,722,44,790 (Aug. 3,2005).

2 17 C.F.R. §230A05(l)(v)(i)(A).

3 See Securities Act Rules 164(e), 405 & 433,17 C.F.R. §§ 230. 164(e), 230.405 & 230.433.

ARNOLD & PORTER LLP

January 17,2012

Page 3

necessary under the circumstances that the issuer be considered an ineligible issuer.,,4 The

Commission has delegated the function of granting or denying such applications to the Director

of the Division of Corporation Finance. 5

We understand that the entry of the Final Judgment would make GE Capital an ineligible

issuer under Rule 405. If GE Capital is not an ineligible issuer, it would continue to qualify as a

WKSI, and, therefore, have access to file-and-go and other reforms available to well-known

seasoned issuers.

GE Capital respectfully requests a determination that, for good cause shown, GE

Capital should not be classified as an "ineligible issuer" under Rule 405. Applying the

ineligibility provisions to GE Capital would be disproportionately and unduly severe for the

following reasons:

1. The conduct addressed in the Complaint does not pertain to activities undertaken by

GE Capital or its subsidiaries in connection with their role as an issuer of securities

(or any disclosure related thereto) or any of their filings with the Commission.

4

2.

The anticipated Final Judgment will be the result of substantial negotiations between

GE Funding CMS and the Commission's Division of Enforcement. Its terms will

have been carefully crafted to meet and balance the competing concerns of all

involved. Under the anticipated Final Judgment, GE Funding CMS will pay a

substantial penalty and will be subject to an injunctive order. Applying ineligible

issuer status to GE Capital would, in effect, unfairly impose an additional punishment

beyond the agreed-upon settlement terms negotiated by GE Funding CMS in good

faith.

3.

The Commission has made similar determinations in comparable situations. 6

Securities Act Rule 405, 17 C.F.R. § 230.405.

5 17 C.F.R. § 200.30-1 (a) (1 0).

See, e.g., JP Morgan Chase & Co. (pub. avail. July 11,2011); UBS Financial Services (pub. avail. May 6,

2011); Bank of America Corporation (pub. avail. Feb 15,2011); Bank of America Corporation (pub. avail.

Dec. 7,2010); Deutsche Bank Securities, Inc. (pub. avail. June 16,2009); Bank of America Corporation

(pub. avail. June 11,2009); RBC Capital Markets Corporation (pub. avail. June 11,2009); Wachovia

Securities, LLC (pub. avail. Feb. 26, 2009); Knight Capital Group, Inc. (pub. avail. July 1,2008); Morgan

Stanley & Co., Inc. (pub. avail. May 11,2007).

6

ARNOLD & PORTER LLP

January 17,2012

Page 4

In light of these considerations, we believe there is good cause to determine that GE

Capital should not be considered an ineligible issuer under Rule 405. We respectfully request

the Commission to make that determination.

Please do not hesitate to contact me at the above-listed telephone number if you should

have any questions regarding this request.

Sincerely,

Craig A. Stewart