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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Massachusetts Mutual Life Insurance Company (MM), et al. [Notices] [01/05/2000]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Massachusetts Mutual Life Insurance Company (MM), et al. [01/05/2000]

[PDF Version]

Volume 65, Number 3, Page 532-536


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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.<SUP>1</SUP> 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.<SUP>2</SUP> 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