[Federal Register Volume 65, Number 3 (Wednesday, January 5, 2000)]
[Notices]
[Pages 532-536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-220]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 99-49; Exemption Application No. D-
10244, et al.]
Grant of Individual Exemptions; Massachusetts Mutual Life
Insurance Company (MM), et al.
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Grant of individual exemptions.
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SUMMARY: This document contains exemptions issued by the Department of
Labor (the Department) from certain of the prohibited transaction
restrictions of the Employee Retirement Income Security Act of 1974
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
Notices were published in the Federal Register of the pendency
before the Department of proposals to grant such exemptions. The
notices set forth a summary of facts and representations contained in
each application for exemption and referred interested persons to the
respective applications for a complete statement of the facts and
representations. The applications have been available for public
inspection at the Department in Washington, D.C. The notices also
invited interested persons to submit comments on the requested
exemptions to the Department. In addition the notices stated that any
interested person might submit a written request that a public hearing
be held (where appropriate). The applicants have represented that they
have complied with the requirements of the notification to interested
persons. No public comments and no requests for a hearing, unless
otherwise stated, were received by the Department.
The notices of proposed exemption were issued and the exemptions
are being granted solely by the Department because, effective December
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR
47713, October 17, 1978) transferred the authority of the Secretary of
the Treasury to issue exemptions of the type proposed to the Secretary
of Labor.
Statutory Findings
In accordance with section 408(a) of the Act and/or section
4975(c)(2) of the Code and the procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon
the entire record, the Department makes the following findings:
(a) The exemptions are administratively feasible;
(b) They are in the interests of the plans and their participants
and beneficiaries; and
(c) They are protective of the rights of the participants and
beneficiaries of the plans.
Massachusetts Mutual Life Insurance Company (MM) Located in
Springfield, MA
[Prohibited Transaction Exemption 99-49; Exemption Application No. D-
10244]
Exemption
Section I. Covered Transactions
The restrictions of sections 406(a), 406(b)(1) and (b)(2) and
407(a) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(A) through
(E) of the Code, shall not apply to: the sale and/or exchange by MM of
a partial or complete interest in certain properties (the Properties)
from its general investment account assets to one or more separate
investment accounts (Separate Accounts), or other types of entities
(such as limited partnerships or limited liability companies, hereafter
referred to as ``Other Entities'' as defined in Section III) managed by
MM or an affiliate which are deemed to hold plan assets under 29 CFR
section 2510.3-101 (the Plan Asset Regulation), for which MM shall
receive as consideration cash and/or a corresponding interest in such
Separate Account or Separate Accounts or Other Entities, provided the
conditions set forth in section II are satisfied.
Section II. Conditions
(A) The sale and exchange of the Properties is a one-time
transaction with respect to each Separate Account or Other Entity of MM
which will be established for the Properties; i.e., all Properties
transferred in that transaction will be conveyed at the same time, and
no further properties will be transferred from MM to such Separate
Account or Other Entity;
(B) In no event shall MM provide any financing with respect to any
sale or exchange transaction which is the subject of this exemption;
(C) Before the subject transaction is consummated, (i) an
independent appraisal firm will have valued each Property to be
transferred by MM to one or more Separate Accounts or Other Entities;
(ii) if the appraisal is more than one year old, the value of each
Property so appraised will be updated by the appraiser as of a date not
less than two weeks prior to the issuance of interests to third party
investors in the Separate Accounts or Other Entities, and if a material
change has occurred the appraiser will revise its appraisal to reflect
that new value; (iii) an independent fiduciary for each employee
benefit plan subject to the Act (collectively, the Plans) will, prior
to agreeing to invest in the Separate Account or Other Entity, be
provided with all information regarding the Properties to be sold to
the Separate Account or Other Entity, including third party appraisals
and a private placement memorandum or other offering document, which
will describe the legal structure and include risk disclosures, a
summary of principal terms and a schedule of fees; and (iv) such
independent fiduciary will have reviewed all pertinent terms of the
sale and exchange of the Properties to the Separate Accounts or Other
Entities and will have concluded that the transaction is in the best
interest of the Plan;
(D) Any Covered Transaction will be effected at fair market value
as of the time of the transaction; and
(E) Only Plans with total assets having an aggregate fair market
value of at least $50 million are permitted to engage in the Covered
Transactions, provided, however, that--
(1) In the case of two or more Plans which are maintained by the
same employer, controlled group of corporations or employee
organization,
[[Page 533]]
whose assets are commingled for investment purposes in a single master
trust or any other entity the assets of which are ``plan assets'' under
the Plan Asset Regulation, which entity engages in a Covered
Transaction, the foregoing $50 million requirement shall be deemed
satisfied if such trust or other entity has aggregate assets which are
in excess of $50 million; provided that if the fiduciary responsible
for making the investment decision on behalf of such group trust or
other entity is not the employer or an affiliate of the employer, such
fiduciary has total assets under its management and control, exclusive
of the $50 million threshold amount attributable to plan investment in
the commingled entity, which are in excess of $100 million.
(2) In the case of two or more Plans which are not maintained by
the same employer, controlled group of corporations or employee
organization, whose assets are commingled for investment purposes in a
group trust or any other form of entity the assets of which are ``plan
assets'' under the Plan Asset Regulation, which engages in a Covered
Transaction, the foregoing $50 million requirement is satisfied if such
trust or other entity has aggregate assets which are in excess of $50
million (excluding the assets of any Plan with respect to which the
fiduciary responsible for making the investment decision on behalf of
such group trust or other entity or any member of the controlled group
of corporations including such fiduciary is the employer maintaining
such Plan or an employee organization whose members are covered by such
Plan). However, the fiduciary responsible for making the investment
decision on behalf of such group trust or other entity--
(i) Has full investment responsibility with respect to Plan assets
invested therein; and
(ii) Has total assets under its management and control, exclusive
of the $50 million threshold amount attributable to Plan investment in
the commingled entity, which are in excess of $100 million. (In
addition, none of the entities described above are formed for the sole
purpose of engaging in the Covered Transactions.)
Section III. Definitions
(A) The term ``Other Entities'' means any investment advisory
account, trust, limited partnership or other investment account or fund
managed by MM or its affiliate, as defined below in (C), that is
neither a separate account managed by MM or its affiliate, nor a
general account maintained by MM or its affiliate,
(B) The terms ``general account'' or ``general investment account''
mean the general asset account of MM and any of its affiliates, as
defined below in (C), which are insurance companies licensed to do
business in at least one State, as defined in section 3(10) of the Act.
(C) The term ``affiliate'' of MM includes:
(i) Any person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control
with MM,
(ii) Any officer, director, or employee of MM or person described
in (C)(i), and
(iii) Any partnership in which MM is a partner.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the notice of proposed exemption (the Notice) published on August 11,
1999 at 64 FR 43738.
Written Comments
The only written comments received by the Department were submitted
by the applicant, MM. These comments sought several changes to the
Notice, each of which is discussed below.
First, the exemption as proposed had permitted transfers of partial
or complete interests in real property from MM to one or more separate
investment accounts. The applicant requested that the exemption be
expanded to include transfers to one or more other types of entities,
such as limited partnerships or limited liability companies, managed by
MM or its affiliates, so long as these Other Entities are deemed to
hold ``plan assets'' under the Plan Asset Regulation. MM stated that it
was requesting this change to provide Plans with the opportunity to
invest in vehicles which are most advantageous to the particular type
of real estate investment involved in the transaction. Since the Plan
fiduciary would still receive all pertinent information about the
investment and have adequate opportunity to evaluate the terms of the
Plan's investment, the Department has agreed to expand the Covered
Transactions of Section I of the exemption to include Other Entities as
requested by MM.
In addition, the Department has added a definition of the term
``Other Entities'' as well as definitions of the terms ``general
account'' and ``affiliate'' of MM in order to clarify the meaning of
these terms with respect to the Covered Transactions in Section I.
These definitions are included in Section III of this exemption and are
based on similar definitions included in a prior exemption for MM
covering the sale or transfer of an interest in a shared investment
between two or more accounts (subject to the conditions described
therein). In this regard, interested persons should see Prohibited
Transaction Exemption 98-28 (63 FR 33727, June 19, 1998).
With respect to the appraisals of the Properties to be furnished to
the independent Plan fiduciaries, the applicant had represented in the
Notice that the value of each Property so appraised will be confirmed
by the appraiser as of a date not more than two weeks prior to the
issuance of interests to third party investors in the Separate
Accounts, and if a material change has occurred, the appraiser will
revise its appraisal to reflect that new value. The applicant in its
comment letter noted that the updated appraisal should be provided to
the independent fiduciary not later than two weeks before the issuance
of interests to third party investors in the Separate Accounts (or
Other Entities) in order to provide the independent fiduciaries
adequate opportunity to review the updated appraisals and re-evaluate
their investment decisions by the closing date. The applicant also
confirmed that any Covered Transaction will be effected at fair market
value as of the time of the transaction.
Accordingly, the Department has agreed to this change, and has
revised Section II.(C)(ii) of the granted exemption to require that if
the appraisal is more than one year old, the value of each Property so
appraised will be updated by the appraiser as of a date not less than
two weeks prior to the issuance of interests to third party investors
in the Separate Accounts or Other Entities, and if a material change
has occurred the appraiser will revise its appraisal to reflect that
new value. The Department has added Section II.(D) to reflect MM's
representation that any Covered Transaction will be effected at fair
market value as of the time of the transaction. The Department notes
that Section II.(D) would not be satisfied if the appraisal did not
accurately represent the fair market value of each Property at the time
of the transaction. It is the responsibility under the granted
exemption for MM to have the appraisals updated as necessary to reflect
fair market value.
MM also sought clarification with respect to the requirement
contained in Section II.(C)(iii) of the Notice that independent
appraisals of the Properties will be provided to the independent
fiduciaries for the Plans prior to their agreement to invest in a
Separate Account. MM commented that in an investment vehicle with a
large number
[[Page 534]]
of Properties, the appraisals may contain thousands of pages.
Accordingly, MM asked the Department to confirm that Section
II.(C)(iii) will be satisfied if executive summaries of the appraisals
of each Property are delivered to the independent fiduciary for each
Plan, with the full text of any appraisal available upon request by the
independent fiduciary for the Plan, and the appraisals and accompanying
exhibits readily available for inspection and copying by such fiduciary
at a central site. The Department has agreed that this procedure would
satisfy the condition contained in Section II.(C)(iii). The Department
notes that such executive summaries should be reasonably comprehensive
and convey sufficient information to enable a Plan fiduciary to
determine whether a review of the full text of an appraisal is
necessary.
In its comment letter, MM also noted a correction to Representation
2 of the Summary of Facts and Representations contained in the Notice
(the Summary). MM stated that its life and health insurance business
was sold on March 31, 1996. After a transition period under the
purchase and sale agreement, MM will no longer offer group life and
health insurance. Also, with respect to Representation 3 of the
Summary, MM stated that effective June 1, 1999, the defined benefit
plan for Connecticut Mutual Life Insurance Company employees was merged
into the MassMutual Employee Pension Plan.
The Department has considered the entire record and has determined
to grant the exemption with the revisions noted herein.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Bankers Trust Company (BT) Located in New York, NY
[Prohibited Transaction Exemption 99-50; Exemption Application No. D-
10756]
Exemption
Section I. Covered Transactions
The restrictions of sections 406(a)(1)(A) through (D) and 406(b)(1)
and (2) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(A) through
(E) of the Code, shall not apply to (1) the lending of securities to
affiliates of BT, a wholly owned subsidiary of Deutsche Bank AG (DB),
which are (i) either banks, supervised by the United States or by a
State within the United States, or broker-dealers registered under the
Securities Exchange Act of 1934 (the 1934 Act), or (ii) certain foreign
affiliates (the Foreign Affiliates) of BT and DB which are broker-
dealers or banks in jurisdictions specified in this exemption
(collectively, the Affiliated Borrowers), by employee benefit plans
(the Client Plans), including commingled investment funds holding
Client Plan assets, for which BT, DB, or either of their current or
future affiliates or successors acts as securities lending agent (or
sub-agent) (the DB Lending Agent); and (2) the receipt of compensation
by the DB Lending Agent in connection with these transactions, provided
the general conditions set forth below in Section II are met.
Section II. General Conditions
(a) For each Client Plan, neither the DB Lending Agent nor an
Affiliated Borrower, nor an affiliate of either, has or exercises
discretionary authority or control with respect to the investment of
Client Plan assets involved in the transaction, or renders investment
advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to
those assets.
(b) Any arrangement for a DB Lending Agent to lend Client Plan
securities to an Affiliated Borrower in either an agency or sub-agency
capacity is approved in advance by a Client Plan fiduciary who is
independent of the DB Lending Agent.1 In this regard, the
independent Client Plan fiduciary also approves the general terms of
the securities loan agreement (the Loan Agreement) between the Client
Plan and the Affiliated Borrowers, although the specific terms of the
Loan Agreement are negotiated and entered into by the DB Lending Agent
and the DB Lending Agent acts as a liaison between the lender and the
borrower to facilitate the lending transaction.
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\1\ The Department, herein, is not providing exemptive relief
for securities lending transactions engaged in by primary lending
agents, other than the DB Lending Agent, beyond that provided
pursuant to Prohibited Transaction Exemption (PTE) 81-6 (46 FR 7527,
January 23, 1981, as amended at 52 FR 18754, May 19, 1987) and PTE
82-63 (47 FR 14804, April 6, 1982).
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(c) The terms of each loan of securities by a Client Plan to the
Affiliated Borrowers is at least as favorable to such Client Plans as
those of a comparable arm's length transaction between unrelated
parties.
(d) A Client Plan may terminate the agency or sub-agency
arrangement at any time without penalty to such Client Plan on five
business days notice, whereupon the Affiliated Borrowers will deliver
securities identical to the borrowed securities (or the equivalent in
the event of reorganization, recapitalization or merger of the issuer
of the borrowed securities) to the Client Plan within (1) the customary
delivery period for such securities, (2) five business days, or (3) the
time negotiated for such delivery of by the Client Plan and the
Affiliated Borrowers, whichever is less.
(e) The Client Plan receives from the Affiliated Borrower (either
by physical delivery or by book entry in a securities depository
located in the United States, wire transfer or similar means) by the
close of business on or before the day the loaned securities are
delivered to the Affiliated Borrower, collateral consisting of cash,
securities issued or guaranteed by the United States Government or its
agencies or instrumentalities, or irrevocable United States bank
letters of credit issued by a person other than the DB Lending Agent or
an affiliate thereof, or any combination thereof, or other collateral
permitted under PTE 81-6, as it may be amended or superseded.
(f) As of the close of business on the preceding business day, the
fair market value of the collateral initially equals at least 102
percent of the market value of the loaned securities and, if the market
value of the collateral falls below 100 percent, the applicable
Affiliated Borrower delivers additional collateral on the following day
such that the market value of the collateral is again at least equal to
102 percent.
(g) Prior to entering into the lending program, the Affiliated
Borrower furnishes the DB Lending Agent its most recently available
audited and unaudited statements, which are, in turn, provided to a
Client Plan, as well as a representation by such Affiliated Borrower,
that as of each time it borrows securities, there has been no material
adverse change in its financial condition since the date of the most
recently-furnished statement that has been disclosed to such Client
Plan; provided, however, that in the event of a material adverse
change, the DB Lending Agent does not make any further loans to such
Affiliated Borrower unless an independent fiduciary of the Client Plan
is provided notice of any material adverse change and approves the loan
in view of the changed financial condition.
(h) In return for lending securities, the Client Plan either--
(1) Receives a reasonable fee, which is related to the value of the
borrowed securities and the duration of the loan; or
(2) Has the opportunity to derive compensation through the
investment of cash collateral. (Under such circumstances, the Client
Plan may pay
[[Page 535]]
a loan rebate or similar fee to an Affiliated Borrower, if such fee is
not greater than the fee the Client Plan would pay in a comparable
arm's length transaction with an unrelated party.)
(i) All procedures regarding the securities lending activities
conform to the applicable provisions of PTE 81-6 and PTE 82-63 as such
class exemptions may be amended or superseded as well as to applicable
securities laws of the United States or the jurisdiction in which the
Foreign Affiliate is domiciled, as appropriate.
(j) The DB Lending Agent or an affiliate which is domiciled in the
United States will indemnify and hold harmless each lending Client Plan
in the United States against any shortfall in the collateral, as set
forth in the applicable Loan Agreement, plus interest and any
transaction costs incurred (including attorney's fees of the Client
Plan arising out of the default on the loans or the failure to
indemnify properly under this provision) which the Client Plan may
incur or suffer directly arising out of the lending of securities of
such Client Plan to such Affiliated Borrower, to the extent permitted
by law.2 In the event that an Affiliated Borrower defaults
on a loan, the DB Lending Agent will liquidate the loan collateral to
purchase identical securities for the Client Plan. If the collateral is
insufficient to accomplish such purchase, the DB Lending Agent or the
applicable affiliate will indemnify the Client Plan for any shortfall
in the collateral, as set forth in the Loan Agreement, plus interest on
such amount and any transaction costs incurred (including attorney's
fees of the Client Plan arising out of the default on the loans or the
failure to indemnify properly under this provision). Alternatively, if
such identical securities are not available on the market, the DB
Lending Agent or the applicable affiliate will pay the Client Plan cash
equal to (1) the market value of the borrowed securities as of the date
they should have been returned to the Client Plan, plus (2) all the
accrued financial benefits derived from the beneficial ownership of
such loaned securities as of such date, plus (3) interest from such
date to the date of payment.
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\2\ Where the law prohibits such indemnification by the DB
Lending Agent, the Affiliated Borrower will provide the identical
indemnification.
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(k) The Client Plan receives the equivalent of all distributions
made to holders of the borrowed securities during the term of the loan,
including, but not limited to, cash dividends, interest payments,
shares of stock as a result of stock splits and rights to purchase
additional securities, or other distributions.
(l) The DB Lending Agent provides to Client Plans, prior to any
Client Plan's approval of the lending of its securities to an
Affiliated Borrower, copies of the notice of proposed exemption (the
Notice) and the final exemption.
(m) Each Client Plan receives monthly reports with respect to its
securities lending transactions, including, but not limited to, the
information described in Representation 31 of the Notice (published on
October 22, 1999 at 64 FR 57142, 57150), so that an independent
fiduciary of the Client Plan may monitor such transactions with
Affiliated Borrowers.
(n) Only Client Plans with total assets having an aggregate market
value of at least $50 million are permitted to lend securities to
Affiliated Borrowers; provided, however, that--
(1) In the case of two or more Client Plans which are maintained by
the same employer, controlled group of corporations or employee
organization (i.e., the Related Client Plans), whose assets are
commingled for investment purposes in a single master trust or any
other entity the assets of which are ``plan assets'' under 29 CFR
2510.3-101 (the Plan Asset Regulation), which entity is engaged in
securities lending arrangements with a DB Lending Agent, the foregoing
$50 million requirement shall be deemed satisfied if such trust or
other entity has aggregate assets which are in excess of $50 million;
provided that if the fiduciary responsible for making the investment
decision on behalf of such master trust or other entity is not the
employer or an affiliate of the employer, such fiduciary has total
assets under its management and control, exclusive of the $50 million
threshold amount attributable to plan investment in the commingled
entity, which are in excess of $100 million.
(2) In the case of two or more Client Plans which are not
maintained by the same employer, controlled group of corporations or
employee organization (i.e., the Unrelated Client Plans), whose assets
are commingled for investment purposes in a group trust or any other
form of entity the assets of which are ``plan assets'' under the Plan
Asset Regulation, which entity is engaged in securities lending
arrangements with a DB Lending Agent, the foregoing $50 million
requirement is satisfied if such trust or other entity has aggregate
assets which are in excess of $50 million (excluding the assets of any
Client Plan with respect to which the fiduciary responsible for making
the investment decision on behalf of such group trust or other entity
or any member of the controlled group of corporations including such
fiduciary is the employer maintaining such Plan or an employee
organization whose members are covered by such Plan). However, the
fiduciary responsible for making the investment decision on behalf of
such group trust or other entity--
(i) Has full investment responsibility with respect to plan assets
invested therein; and
(ii) Has total assets under its management and control, exclusive
of the $50 million threshold amount attributable to plan investment in
the commingled entity, which are in excess of $100 million.
In addition, none of the entities described above are formed for
the sole purpose of making loans of securities.
(o) With respect to each successive two-week period, on average, at
least 50 percent or more of the outstanding dollar value of securities
loans negotiated on behalf of Client Plans will be to unrelated
borrowers.
(p) In addition to the above, all loans involving a Foreign
Affiliate have the following supplemental requirements:
(1) As applicable, such Foreign Affiliate is registered as a
broker-dealer or bank with--
(i) The Securities and Futures Authority (the SFA) or the Financial
Services Authority (the FSA) in the United Kingdom;
(ii) The Deutsche Bundesbank and/or the Federal Banking Supervisory
Authority, i.e., der Bundesaufsichsamt fuer das Kreditwesen (the BAK)
or the Bundesaufsichtsamt fur den Wertpapierhandel (the BAWe) in
Germany;
(iii) The Ministry of Finance (the MOF) and/or the Tokyo Stock
Exchange in Japan;
(iv) The Ontario Securities Commission (the OSC) and/or the
Investment Dealers Association (the IDA), or the Office of the
Superintendent of Financial Institutions (the OSFI) in Canada;
(v) The Swiss Federal Banking Commission in Switzerland; and (vi)
The Australian Prudential Regulation Authority (APRA) or the Australian
Securities and Investments Commission (ASIC), and/or the Australian
Stock Exchange Limited (ASEL) in Australia.
(2) Such broker-dealer or bank is in compliance with all applicable
provisions of Rule 15a-6 (17 CFR 240.15a-6) under the 1934 Act which
provides for foreign broker-dealers a limited exemption from United
States registration requirements;
(3) All collateral is maintained in United States dollars or
dollar-denominated securities or letters of
[[Page 536]]
credit (unless an applicable exemption provides otherwise);
(4) All collateral is held in the United States (unless an
applicable exemption provides otherwise) and the situs of the
Securities Loan Agreements are maintained in the United States under an
arrangement that complies with the indicia of ownership requirements
under section 404(b) of the Act and the regulations promulgated under
29 CFR 2550.404(b)-1; and
(5) Each Foreign Affiliate provides the DB Lending Agent a written
consent to service of process in the United States and to the
jurisdiction of the courts of the United States for any civil action or
proceeding brought in respect of the securities lending transaction,
which consent provides that process may be served on such borrower by
service on the DB Lending Agent.
(q) The DB Lending Agent and its affiliates maintain, or cause to
be maintained within the United States for a period of six years from
the date of such transaction, in a manner that is convenient and
accessible for audit and examination, such records as are necessary to
enable the persons described in paragraph (r)(1) to determine whether
the conditions of the exemption have been met, except that--
(1) A prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of the DB Lending
Agent and/or its affiliates, the records are lost or destroyed prior to
the end of the six year period; and
(2) No party in interest other than the DB Lending Agent and/or its
affiliates shall be subject to the civil penalty that may be assessed
under section 502(i) of the Act, or to the taxes imposed by section
4975(a) and (b) of the Code, if the records are not maintained, or are
not available for examination as required below by paragraph (r)(1).
(r)(1) Except as provided in subparagraph (r)(2) of this paragraph
and notwithstanding any provisions of subsections (a)(2) and (b) of
section 504 of the Act, the records referred to in paragraph (q) are
unconditionally available at their customary location during normal
business hours by:
(i) Any duly authorized employee or representative of the
Department, the Internal Revenue Service or the Securities and Exchange
Commission;
(ii) Any fiduciary of a participating Client Plan or any duly
authorized representative of such fiduciary;
(iii) Any contributing employer to any participating Client Plan or
any duly authorized employee representative of such employer; and
(iv) Any participant or beneficiary of any participating Client
Plan, or any duly authorized representative of such participant or
beneficiary.
(r)(2) None of the persons described above in paragraphs
(r)(1)(ii)-(r)(1)(iv) of this paragraph (r)(1) are authorized to
examine the trade secrets of the DB Lending Agent or commercial or
financial information which is privileged or confidential.
III. Definitions
For purposes of this exemption,
(a) The term ``affiliate'' means any entity now or in the future,
directly or indirectly controlling, controlled by or under common
control with BT, DB or their successors.
(b) The term ``Affiliated Borrower'' means an affiliate of BT or DB
that is a bank, as defined in section 202(a)(2) of the Investment
Advisers Act of 1940 (the Advisers Act), that is supervised by the
United States or a State, or a broker-dealer registered under the 1934
Act, or any Foreign Affiliate.
(c) The term ``Foreign Affiliate'' means an affiliate of BT or DB
that is a broker-dealer or bank that is supervised by (1) the SFA or
the FSA in the United Kingdom; (2) the Deutsche Bundesbank and/or the
BAK, or the BAWe in Germany; (3) the MOF and/or the Tokyo Stock
Exchange in Japan; (4) the OSC, the IDA and/or OSFI in Canada; (5) the
Swiss Federal Banking Commission in Switzerland; and (6) APRA, ASIC
and/or ASEL in Australia.
EFFECTIVE DATE: This exemption is effective as of April 9, 1999.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the Notice published on October 22, 1999 at 64 FR 57142.
FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under section 408(a) of the Act and/or section 4975(c)(2) of the Code
does not relieve a fiduciary or other party in interest or disqualified
person from certain other provisions to which the exemptions does not
apply and the general fiduciary responsibility provisions of section
404 of the Act, which among other things require a fiduciary to
discharge his duties respecting the plan solely in the interest of the
participants and beneficiaries of the plan and in a prudent fashion in
accordance with section 404(a)(1)(B) of the Act; nor does it affect the
requirement of section 401(a) of the Code that the plan must operate
for the exclusive benefit of the employees of the employer maintaining
the plan and their beneficiaries;
(2) These exemptions are supplemental to and not in derogation of,
any other provisions of the Act and/or the Code, including statutory or
administrative exemptions and transactional rules. Furthermore, the
fact that a transaction is subject to an administrative or statutory
exemption is not dispositive of whether the transaction is in fact a
prohibited transaction; and
(3) The availability of these exemptions is subject to the express
condition that the material facts and representations contained in each
application are true and complete and accurately describe all material
terms of the transaction which is the subject of the exemption. In the
case of continuing exemption transactions, if any of the material facts
or representations described in the application change after the
exemption is granted, the exemption will cease to apply as of the date
of such change. In the event of any such change, application for a new
exemption may be made to the Department.
Signed at Washington, D.C., this 30th day of December, 1999.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 00-220 Filed 1-4-00; 8:45 am]
BILLING CODE 4510-29-P
