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Employee Benefits Security Administration

EBSA Federal Register Notice

Notice of a Proposed Amendment to Prohibited Transaction Exemption (PTE) 2000-58, 65 FR 67765 (November 13, 2000) and PTE 2002- 41, 67 FR 54487 (August 22, 2002) I [01/24/2007]

[PDF Version]

Volume 72, Number 15, Page 3152-3159


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Notice of a Proposed Amendment to Prohibited Transaction 
Exemption (PTE) 2000-58, 65 FR 67765 (November 13, 2000) and PTE 2002-
41, 67 FR 54487 (August 22, 2002) Involving Bear, Stearns & Co. Inc., 
Prudential Securities Incorporated, et al. to Add Dominion Bond Rating 
Service Limited and Dominion Bond Rating Service, Inc. to the 
Definition of ``Rating Agency'' (D-11370)

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Notice of a Proposed Amendment to the Underwriter 
Exemptions.\1\

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SUMMARY: This document contains a notice of pendency before the 
Department of Labor (the Department) of a proposed amendment to the 
Underwriter Exemptions. The Underwriter Exemptions are individual 
exemptions that provide relief for the origination and operation of 
certain asset pool investment trusts and the acquisition, holding and 
disposition by employee benefit plans (Plans) of certain asset-backed 
pass-through certificates representing undivided interests in those 
investment trusts. The proposed amendment, if granted, would expand the 
definition of ``Rating Agency'' in section III. X of the Underwriter 
Exemptions to include Dominion Bond Rating Service Limited (DBRS 
Limited) and Dominion Bond Rating Service, Inc. (DBRS, Inc.). The 
proposed amendment, if granted, would affect the participants and 
beneficiaries of the Plans participating in such transactions and the 
fiduciaries with respect to such plans.
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    \1\ The term ``Underwriter Exemptions'' refers to the following 
PTEs: PTE 89-88, 54 FR 42582 (October 17, 1989); PTE 89-89, 54 FR 
42569 (October 17, 1989); PTE 89-90, 54 FR 42597 (October 17, 1989); 
PTE 90-22, 55 FR 20542 (May 17, 1990); PTE 90-23, 55 FR 20545 (May 
17, 1990); PTE 90-24, 55 FR 20548 (May 17, 1990); PTE 90-28, 55 FR 
21456 (May 24, 1990); PTE 90-29, 55 FR 21459 (May 24, 1990); PTE 90-
30, 55 FR 21461 (May 24, 1990); PTE 90-31, 55 FR 23144 (June 6, 
1990); PTE 90-32, 55 FR 23147 (June 6, 1990); PTE 90-33, 55 FR 23151 
(June 6, 1990); PTE 90-36, 55 FR 25903 (June 25, 1990); PTE 90-39, 
55 FR 27713 (July 5, 1990); PTE 90-59, 55 FR 36724 (September 6, 
1990); PTE 90-83, 55 FR 50250 (December 5, 1990); PTE 90-84, 55 FR 
50252 (December 5, 1990); PTE 90-88, 55 FR 52899 (December 24, 
1990); PTE 91-14, 55 FR 48178 (February 22, 1991); PTE 91-22, 56 FR 
03277 (April 18, 1991); PTE 91-23, 56 FR 15936 (April 18, 1991); PTE 
91-30, 56 FR 22452 (May 15, 1991); PTE 91-62, 56 FR 51406 (October 
11, 1991); PTE 93-31, 58 FR 28620 (May 5, 1993); PTE 93-32, 58 FR 
28623 (May 14, 1993); PTE 94-29, 59 FR 14675 (March 29, 1994); PTE 
94-64, 59 FR 42312 (August 17, 1994); PTE 94-70, 59 FR 50014 
(September 30, 1994); PTE 94-73, 59 FR 51213 (October 7, 1994); PTE 
94-84, 59 FR 65400 (December 19, 1994); PTE 95-26, 60 FR 17586 
(April 6, 1995); PTE 95-59, 60 FR 35938 (July 12, 1995); PTE 95-89, 
60 FR 49011 (September 21, 1995); PTE 96-22, 61 FR 14828 (April 3, 
1996); PTE 96-84, 61 FR 58234 (November 13, 1996); PTE 96-92, 61 FR 
66334 (December 17, 1996); PTE 96-94, 61 FR 68787 (December 30, 
1996); PTE 97-05, 62 FR 1926 (January 14, 1997); PTE 97-28, 62 FR 
28515 (May 23, 1997); PTE 97-34, 62 FR 39021 (July 21, 1997); PTE 
98-08, 63 FR 8498 (February 19, 1998); PTE 99-11, 64 FR 11046 (March 
8, 1999); PTE 2000-19, 65 FR 25950 (May 4, 2000); PTE 2000-33, 65 FR 
37171 (June 13, 2000); PTE 2000-41, 65 FR 51039 (August 22, 2000); 
PTE 2000-55, 65 FR 37171 (November 13, 2000); PTE 2002-19, 67 FR 
14979 (March 28, 2002); PTE 2003-31, 68 FR 59202 (October 14, 2003); 
and PTE 2006-07, 71 FR 32134 (June 2, 2006), each as subsequently 
amended by PTE 97-34, 62 FR 39021 (July 21, 1997) and PTE 2000-58, 
65 FR 67765 (November 13, 2000) and for certain of the exemptions, 
amended by PTE 2002-41, 67 FR 54487 (August 22, 2002).
    In addition, the Department notes that it is also proposing 
individual amendments for: Deutsche Bank AG, New York Branch and 
Deutsche Morgan Grenfell/C.J. Lawrence Inc., Final Authorization 
Number (FAN) 97-03E (December 9, 1996); Credit Lyonnais Securities 
(USA) Inc., FAN 97-21E (September 10, 1997); ABN AMRO Inc., FAN 98-
08E (April 27, 1998); Ironwood Capital Partners Ltd., FAN 99-31E 
(December 20, 1999) (supersedes FAN 97-02E (November 25, 1996)); 
William J. Mayer Securities LLC, FAN 01-25E (October 15, 2001); 
Raymond James & Associates Inc. & Raymond James Financial Inc., FAN 
03-07E ( June 14, 2003); WAMU Capital Corporation, FAN 03-14E 
(August 24, 2003); and Terwin Capital LLC, FAN 04-16E (August 18, 
2004); which received the approval of the Department to engage in 
transactions substantially similar to the transactions described in 
the Underwriter Exemptions pursuant to PTE 96-62, 61 FR 39988 (July 
31, 1996).

DATE: Written comments and requests for a hearing should be received by 
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the Department by February 23, 2007.

ADDRESSES: All written comments and requests for a public hearing 
(preferably, three copies) should be sent to the Office of Exemption 
Determinations, Employee Benefits Security Administration, Room N-5700, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210, (Attention: Exemption Application Number D-11370 ). Interested 
persons are invited to submit comments and/or hearing requests to the 
Department by the end of the scheduled comment period either by 
facsimile to (202) 219-0204 or by electronic mail to 
moffitt.betty@dol.gov. The application pertaining to the proposed 

amendment (Application) and the comments received will be available for 
public inspection in the Public Disclosure Room of the Employee 
Benefits Security Administration, U.S. Department of Labor, Room N-
1513, 200 Constitution Avenue, NW., Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Wendy M. McColough of the Department, 
telephone (202) 693-8540. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: Notice is hereby given of the pendency 
before the Department of a proposed exemption to amend the Underwriter 
Exemptions. The Underwriter Exemptions are a group of individual 
exemptions that provide substantially identical relief for the 
operation of certain asset-backed or mortgage-backed investment pools 
and the acquisition and holding by Plans of certain securities 
representing interests in those investment pools. These exemptions 
provide relief from certain of the prohibited transaction restrictions 
of sections 406(a), 406(b) and 407(a) of the Employee Retirement Income 
Security Act of 1974, as amended (ERISA or the Act) and from the taxes 
imposed by section 4975(a) and (b) of the Internal Revenue Code of 
1986, as amended (the Code), by reason of certain provisions of section 
4975(c)(1) of the Code. All of the Underwriter Exemptions were amended 
by PTE 97-34, 62 FR 39021 (July 21, 1997) and PTE 2000-58, 65 FR 67765 
(November 13, 2000) and certain of the Underwriter Exemptions were 
amended by PTE 2002-41, 67 FR 54487 (August 22, 2002).
    The Department is proposing this amendment to the Underwriter 
Exemptions pursuant to section 408(a) of the Act and section 4975(c)(2) 
of the Code, and in accordance with the procedures set forth in 29 CFR 
part 2570, subpart B (55 FR 32836, 32847, August 10, 1990).\2\ In 
addition, the Department is proposing to provide the same individual 
exemptive relief to: Deutsche Bank AG, New York Branch and Deutsche 
Morgan Grenfell/C.J. Lawrence Inc., Final Authorization Number (FAN) 
97-03E (December 9, 1996); Credit Lyonnais Securities (USA) Inc., FAN 
97-21E (September 10, 1997); ABN AMRO Inc., FAN 98-08E (April 27, 
1998); Ironwood Capital Partners Ltd., FAN 99-31E (December 20, 1999) 
(supersedes FAN 97-02E (November 25, 1996)); William J. Mayer 
Securities LLC, FAN 01-25E (October 15, 2001); Raymond James & 
Associates Inc. & Raymond James Financial Inc., FAN 03-07E ( June 14, 
2003); WAMU Capital Corporation, FAN 03-14E (August 24, 2003); and 
Terwin Capital LLC, FAN 04-16E (August 18, 2004); which previously 
received the approval of the Department to engage in transactions 
substantially similar to the transactions

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described in the Underwriter Exemptions pursuant to PTE 96-62, 61 FR 
39988 (July 31, 1996).
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    \2\ Section 102 of Reorganization Plan No. 4 of 1978 (5 U.S.C. 
App. 1 [1996]) generally transferred the authority of the Secretary 
of the Treasury to issue exemptions under section 4975(c)(2) of the 
Code to the Secretary of Labor.
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    1. The Underwriter Exemptions permit Plans to purchase certain 
securities representing interests in asset-backed or mortgage-backed 
investment pools. The securities generally take the form of 
certificates issued by a trust (Trust). The Underwriter Exemptions 
permit transactions involving a Trust (including the servicing, 
management and operation of the Trust) and certificates evidencing 
interests therein (including the sale, exchange or transfer of 
certificates in the initial issuance of the certificates or in the 
secondary market for such certificates). The securities acquired by a 
Plan have been rated in one of the three highest rating categories (or 
four in the case of Designated Transactions \3\) by a rating agency as 
defined in the Underwriter Exemptions (Rating Agency). The Rating 
Agency, in assigning a rating to such securities, takes into account 
the fact that the Issuer \4\ may hold interest rate swaps or yield 
supplement agreements with notional principal amounts or, in Designated 
Transactions, securities may be issued by an Issuer holding residential 
and home equity loans with LTV ratios in excess of 100%. Section III.X. 
of the Underwriter Exemptions defines ``Rating Agency'' as Standard & 
Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., 
Moody's Investors Services, Inc., Fitch Inc., or any successors 
thereto.
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    \3\ ``Designated Transaction'' means a securitization 
transaction in which the assets of the Issuer (see below) consist of 
secured consumer receivables, secured credit instruments or secured 
obligations that bear interest or are purchased at a discount and 
are: (i) Motor vehicle, home equity and/or manufactured housing 
consumer receivables; and/or (ii) motor vehicle credit instruments 
in transactions by or between business entities; and/or (iii) 
single-family residential, multi-family residential, home equity, 
manufactured housing and/or commercial mortgage obligations that are 
secured by single-family residential, multi-family residential, 
commercial real property or leasehold interests therein.
    \4\ ``Issuer'' means an investment pool, the corpus or assets of 
which are held in trust (including a grantor or owner Trust) or 
whose assets are held by a partnership, special purpose corporation 
or limited liability company (which Issuer may be a Real Estate 
Mortgage Investment Conduit (REMIC) or a Financial Asset 
Securitization Investment Trust (FASIT) within the meaning of 
section 860D(a) or section 860L, respectively, of the Code.
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    2. Section II of the original Underwriter Exemptions, PTE 89-88, 54 
FR 42582 (October 17, 1989); PTE 89-89, 54 FR 42569 (October 17, 1989); 
and PTE 89-90, 54 FR 42597 (October 17, 1989), sets forth the general 
conditions which must be met in order for an investing Plan to avail 
itself of the relief provided by one of the exemptions. Section II.A(3) 
requires that any certificate acquired by a plan in reliance on the 
exemption must have received a rating at the time of acquisition that 
is in one of the three highest categories from either Standard & Poor's 
Corporation, Moody's Investors Services, Inc. or Duff & Phelps. The 
Department proposed an amendment to this condition by notice at 55 FR 
25914 (June 25, 1990) in response to a request from the three 
individual exemption applicants that Fitch Investors Service, Inc. 
(Fitch Inc.) be added to the rating agencies described in section 
II.A.(3) of PTE 89-88, PTE 89-89, and PTE 89-90.\5\
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    \5\ Since the granting of these three exemptions on October 17, 
1989, the Department had granted several other Underwriter 
Exemptions that included Fitch Inc. as an acceptable rating agency.
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    To support this request, Fitch Inc. submitted letters to the 
Department which provided information on Fitch Inc's rating programs in 
general and its experience in rating asset backed securities in 
particular. Based on the information provided by Fitch Inc., the 
requests submitted on behalf of the applicants and the Department's 
previous consideration of Fitch Inc. in conjunction with several other 
Underwriter Exemptions, the Department amended PTE 89-88, PTE 89-89, 
and PTE 89-90 by notice at 55 FR 48939 (November 23, 1990) to include 
Fitch Inc. as an acceptable rating agency for the rating of 
certificates described in the exemptions.\6\
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    \6\ The final paragraph of section III.B of these exemptions was 
also amended to include Fitch Inc. as an acceptable rating agency.
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    3. The proposed amendment was requested by Application, dated April 
5, 2006, on behalf of the Securities Industry and Financial Markets 
Association (SIFMA) \7\, the American Securitization Forum (ASF), DBRS 
Limited and DBRS, Inc. (collectively, the Co-Applicants). The Co-
Applicants request that the Department amend the Underwriter Exemptions 
to add DBRS Limited and DBRS, Inc. to the group of entities included in 
the definition of ``Rating Agency'' in section III.X. of the 
Underwriter Exemptions. The Co-Applicants provide that DBRS Limited was 
recognized as a nationally recognized statistical rating organization 
(NRSRO) for purposes of Rule 15c3-1 under the Securities Exchange Act 
of 1934 by virtue of receiving a ``no action'' letter from the 
Securities and Exchange Commission (SEC) on February 24, 2003. As the 
Co-Applicants explain below, the Co-Applicants believe that DBRS, Inc., 
its affiliate, is also considered to be covered under this no action 
letter. Accordingly, ``DBRS'' shall hereinafter refer both to DBRS 
Limited and DBRS, Inc., except where the context indicates otherwise. 
The Co-Applicants state that SIFMA and ASF agreed to make this request 
on behalf of their member underwriters for the reasons outlined below 
and because The Bond Market Association (TBMA), now merged into SIFMA, 
was the original entity that requested the exemptive relief granted by 
the Department pursuant to PTE 97-34, 62 FR 39021 (July 21, 1997), PTE 
2000-58, 65 FR 67765 (Nov.13, 2000) and PTE 2002-41, 67 FR 54487 
(August 22, 2002). ASF was formed in February 2002, as an adjunct forum 
for TBMA to more specifically represent the interests of underwriters 
and other organizations related to the securitization markets (although 
ASF is part of the same legal entity as TBMA).
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    \7\ On November 15, 2006, the Co-Applicants informed the 
Department that on October 31, 2006, The Bond Market Association and 
the Securities Industry Association merged into a new entity, SIFMA. 
SIFMA is a Delaware nonstock corporation that was incorporated in 
June 2006 for purposes of the merger. Its members are approximately 
650 securities firms, banks and asset managers. Its mission is to 
promote policies and practices that expand and perfect markets, 
foster the development of new products and services and create 
efficiencies for member firms, while preserving and enhancing the 
public's trust and confidence in the markets and the industry. The 
Bond Market Association no longer exists, having merged into SIFMA. 
The ASF is now a forum of SIFMA, and it is still a joint applicant.
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    4. The Co-Applicants represent that, if the requested amendment is 
not granted, possible violations of the prohibited transaction 
provisions of sections 406(a), 406(b) and 407(a) of ERISA (and the 
corresponding provisions of sections 4975(c)(1)(A) through (F) of the 
Code) resulting from: (a) The purchase and sale of securities by a Plan 
to which any of the other parties is a party in interest; \8\ and (b) 
the servicing, management and operation of an issuer may occur if DBRS 
Limited or DBRS, Inc. ratings are used for such transactions. The Co-
Applicants believe that, if the requested amendment is not granted, 
this would result in the loss of opportunities for an investing Plan to 
achieve a current market return through investment in securities that 
have received a rating from an NRSRO as high as or higher than that of 
comparable instruments in which the Plan is clearly permitted to 
invest. The Co-Applicants assert that it is in the interests of Plan 
participants and beneficiaries that a Plan has the opportunity to 
diversify its investment portfolio by purchasing securities rated

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by a wide variety of rating agencies subject to a significant amount of 
competition.
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    \8\ The term ``party in interest'' also includes, where 
applicable, a ``disqualified person'' within the meaning of section 
4975(e)(2) of the Code.
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    5. The Co-Applicants believe that the proposed amendment would be 
administratively feasible because the proposed requirements generally 
mirror those deemed administratively feasible in the asset-backed and 
mortgage-backed securities (ABS and MBS, respectively) exemptions 
previously issued by the Department. The transactions may be audited 
easily by a Plan fiduciary and all the records necessary to review 
these transactions will be kept for six years. The Co-Applicants state 
that no further action would be required by the Department. The Co-
Applicants consider that the requested amendment would be in the 
interest of the Plans and its participants and beneficiaries because it 
increases the number of available investment options, enhances 
diversification and liquidity and promotes a greater ability to assess 
credit risk and the rating process. The Co-Applicants state that the 
amendment would be protective of the rights of the Plans since the sale 
of the securities will be conducted under all of the safeguards 
contained in the existing Underwriter Exemptions for the sale of asset 
and mortgage-backed pass-through securities. Additionally, the Co-
Applicants believe that expanding the number of rating agencies with 
experience in rating the type of obligations covered under the 
Underwriter Exemptions would significantly benefit the Plans. The 
number of NRSROs that had been included within the definition of Rating 
Agency under the Underwriter Exemptions as of 1990 has been reduced 
from four to three since Duff & Phelps Inc. (D & P) and Fitch Inc. 
merged in 2000 and became FitchRatings, Inc. (Fitch). There may be 
additional mergers in the future. The Co-Applicants believe that this 
could make the number of Rating Agencies available to rate Underwriter 
Exemption-eligible MBS and ABS even fewer; resulting in fewer and less 
liquid securities available for Plans to purchase. The Co-Applicants 
further note that, when the Department considered First Boston 
Corporation's original application for its Underwriter Exemption in the 
proposed exemption to PTE 89-90 at 53 FR 52851 (December 29, 1988), 
First Boston requested that any certificate receiving a rating in the 
three highest rating categories from any NRSRO receive exemptive 
relief. According to the Applicants, while the Department recognized 
that rating agencies other than Standard & Poor's Corporation 
(currently, Standard & Poor's Rating Services, a division of The McGraw 
Hill Companies, Inc. (S & P)), Moody's Investor Services, Inc. 
(Moody's) and D&P qualified as NRSROs, it decided that only those three 
should qualify as Rating Agencies under the Underwriter Exemptions, 
based on their respective experience in rating certain types of MBS/
ABS.\9\ Fitch Inc. was later specifically named as an additional Rating 
Agency for purposes of the Underwriter Exemptions beginning in 1989. 
The Co-Applicants believe that if the Department were to add DBRS 
Limited and DBRS, Inc. to the group of Rating Agencies permitted to 
rate Underwriter Exemption-eligible securities, it would benefit Plan 
investors in several ways, including: (a) Investors would have access 
to additional information and additional opinions about the 
creditworthiness of issuers and securities; (b) competition among 
rating agencies would result in improved accuracy and timeliness of 
ratings, thereby allowing investors to assess risk with greater 
certainty; and (c) competition among rating agencies would encourage 
different methods of analyzing credit risk.
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    \9\ 53 FR 52851 at p. 52857, footnote 7 (December 29, 1988). 
There are currently five entities which were recognized by the SEC 
through the no-action letter process as NRSROs: S&P, Moody's, Fitch, 
DBRS and A.M. Best Company, Inc.
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    6. The Co-Applicants assert that DBRS has extensive experience in 
rating every type of obligation that is eligible for exemptive relief 
under the Underwriter Exemptions and listed under the definition of an 
``Issuer'' in section III.B of the Underwriter Exemptions; and, 
therefore, meets a major criterion for recognition as a Rating Agency 
for purposes of the Underwriter Exemptions. In reviewing the 
information submitted to the Department by S&P and Fitch Inc. at that 
time, the Department was given information regarding how these agencies 
rated securities and the credentials of the senior management of their 
securitization groups. In this regard, DBRS has reviewed the 
description of the rating process in both the D&P submission and the 
proposed exemption for PTE 2000-58 and feels that its rating process is 
comparable to these. The Co-Applicants submitted the biographies of 
senior management for the DBRS Limited and DBRS, Inc. Structured 
Finance Departments to the Department with their Application.
    7. In order for the SEC to recognize DBRS Limited as an NRSRO in 
2003, DBRS Limited had to satisfy certain established criteria. The 
single most important criterion was that DBRS Limited be widely 
accepted in the U.S. as an issuer of credible and reliable ratings by 
the predominant users of securities ratings. In addition, the following 
aspects of DBRS Limited's operational capability and reliability were 
reviewed: (i) Its organizational structure, (ii) its financial 
resources, to determine, among other things, whether it is able to 
operate independently of economic pressures or control from the 
companies its rates, (iii) the size and experience and training of its 
staff to determine if it is capable of thoroughly and competently 
evaluating an issuer's credit, (iv) its independence from the entities 
it rates, (v) its rating procedures to determine whether it has 
systematic procedures designed to produce credible and accurate ratings 
and (vi) whether it has internal procedures to prevent the misuse of 
non-public information and whether those procedures are followed. On 
April 5, 2006, the Co-Applicants provided the following update of the 
statistics set forth in the SEC's no action letter dated February 24, 
2003 regarding DBRS's business. DBRS now has a total staff of 175, 110 
of which are analysts. Of those analysts, 51 rate securitization 
transactions. The Co-Applicants also provided biographical information 
about the senior management team for that latter group. As of the 
application date, the principal amount of asset-backed securities 
(ABS), residential mortgage-backed securities (RMBS) and commercial 
mortgage-backed securities (CMBS) transactions that DBRS has rated and 
that are currently outstanding are: Can. $128.3 billion of ABS for 
Canadian issuers (representing 158 transactions); U.S. $192.1 billion 
of RMBS and ABS for U.S. issuers (representing 207 transactions); and 
U.S. $20.5 billion of CMBS for U.S. issuers (representing 14 
transactions). DBRS's Structured Finance Department has also written 
over 95 industry reports and 442 rating reports.
    8. The Co-Applicants state that DBRS Limited is a Canadian rating 
agency that has been in existence for almost 30 years, having been 
incorporated in 1976 under the Ontario Business Corporations Act. DBRS 
Limited was originally founded and owned by Walter Schroeder, who 
remains its President. DBRS Limited operates primarily through its 
Toronto office and DBRS Limited's U.S. affiliate, DBRS, Inc., which has 
offices in New York and Chicago.\10\ On February 24, 2003 when the SEC 
issued its no action letter

[[Page 3155]]

identifying DBRS Limited as an NRSRO, DBRS Limited conducted all of its 
credit rating activities from its Toronto Ontario headquarters and 
rated issuers and securities both in Canada and in the United States. 
Subsequently, DBRS Limited decided to establish a physical presence in 
the United States. The New York and Chicago offices were incorporated 
as DBRS, Inc. on August 21, 2003. The U.S. operations were organized 
for tax reasons as a separate Delaware affiliate corporation instead of 
as a branch of the Canadian company. The Co-Applicants assert that, 
although technically it is principally DBRS, Inc. that rates U.S. 
issuers and securities and DBRS Limited that rates Canadian issuers and 
securities, the ratings activities of Dominion Bond Rating Service 
worldwide are conducted in a seamless fashion and both DBRS Limited and 
DBRS, Inc. are considered to be covered by the SEC's NRSRO no-action 
letter. The Co-Applicants add that DBRS, Inc. employs the same rating 
process that DBRS Limited uses; its ratings are approved by the same 
rating committees that approve DBRS Limited's ratings; its staff are 
subject to the same code of conduct that applies to DBRS Limited's 
staff; all ratings are ``DBRS'' ratings without attribution to one 
corporate entity or the other, DBRS Limited stands behind the ratings 
issued by DBRS, Inc. and the officers of DBRS Limited supervise the 
ratings process conducted by DBRS, Inc. In this regard, the Co-
Applicants submitted a letter dated November 1, 2005 from Mari-Anne 
Pisarri, Esq. of Pickard and Djinis, LLP, counsel to DBRS Limited to 
Mr. Michael A. Macchiaroli, Associate Director, Division of Market 
Regulation at the SEC discussing the NRSRO status of the ratings 
activities of DBRS, Inc.
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    \10\ DBRS also recently opened offices in London, Paris and 
Frankfurt through another affiliate, DBRS (Europe) Limited.
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    9. On September 29, 2006, the President signed into law S. 3850, 
the Credit Rating Agency Reform Act of 2006 (CRARA). CRARA was 
introduced as a bill to improve ratings quality for the protection of 
investors and in the public interest by fostering accountability, 
transparency, and competition in the credit rating agency industry. The 
law will restructure the existing regulation of credit rating agencies 
by the SEC. Under CRARA, a credit rating agency can obtain the NRSRO 
designation through an application process unless the SEC determines 
that the agency lacks adequate financial and managerial resources to 
consistently produce credit ratings with integrity and to comply with 
its stated methodologies and procedures (CRARA subsection 4(a)(2)(C)). 
The Securities Exchange Act of 1934 is amended at section 3(a) and by 
the addition of new section 15E. Registration of Nationally Recognized 
Statistical Rating Organizations. Section 3(a) is amended by adding 
certain new definitions relevant to this proposed amendment (CRARA 
section 3):

    (60) CREDIT RATING--The term `credit rating' means an assessment 
of the creditworthiness of an obligor as an entity or with respect 
to specific securities or money market instruments.
    (61) CREDIT RATING AGENCY--The term `credit rating agency' means 
any person--
    (A) Engaged in the business of issuing credit ratings on the 
Internet or through another readily accessible means, for free or 
for a reasonable fee, but does not include a commercial credit 
reporting company;
    (B) Employing either a quantitative or qualitative model, or 
both, to determine credit ratings; and
    (C) Receiving fees from either issuers, investors, or other 
market participants, or a combination thereof.
    (62) NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION--The 
term `nationally recognized statistical rating organization' means a 
credit rating agency that--
    (A) Has been in business as a credit rating agency for at least 
the 3 consecutive years immediately preceding the date of its 
application for registration under section 15E;
    (B) Issues credit ratings certified by qualified institutional 
buyers, in accordance with section 15E(a)(1)(B)(ix), with respect 
to--
    (i) Financial institutions, brokers, or dealers;
    (ii) Insurance companies;
    (iii) Corporate issuers;
    (iv) Issuers of asset-backed securities (as that term is defined 
in section 1101(c) of part 229 of title 17, Code of Federal 
Regulations, as in effect on the date of enactment of this 
paragraph);
    (v) Issuers of government securities, municipal securities, or 
securities issued by a foreign government; or
    (vi) A combination of one or more categories of obligors 
described in any of clauses (i) through (v); and
    (C) Is registered under section 15E.

    CRARA establishes a registration and oversight scheme for NRSROs 
under the Securities Exchange Act of 1934 (Exchange Act). This regime 
replaces the SEC's current no-action letter process for designating 
NRSROs and removes NRSROs from the jurisdiction of the Investment 
Advisers Act of 1940 (Advisers Act). The new regulatory regime takes 
effect when the SEC promulgates the rules necessary to implement CRARA, 
or in 270 days after CRARA's enactment date, whichever is sooner. Thus, 
the new registration requirements will apply by June 26, 2007. However, 
because the SEC has 90 days to consider an NRSRO application (or 
longer, if the applicant consents), the first NRSRO registration may 
not occur until the end of September 2007. Although the NRSRO no-action 
letters will be void after the effective date of the new law, the 5 
existing NRSROs will be allowed to function as NRSROs while the SEC 
considers their applications.
    10. The Co-Applicants represent that DBRS Limited and DBRS, Inc. 
each: (a) Will qualify as a ``Nationally Recognized Statistical Rating 
Organization'' within the meaning of new section 3(a)(62) of the 
Exchange Act as amended by the legislation, as each will be in business 
for at least three years prior to its applying for registration under 
the new statutory procedures, (b) rate the specified types of 
securities listed under such section, and (c) intend to register at the 
first date DBRS is able to register under new section 15E of the 
legislation and the applicable regulations and procedures to be 
promulgated by the SEC. The Co-Applicants state that DBRS Limited and 
DBRS, Inc. will each be able to supply the information and meet the 
implied substantive criteria set forth in the legislation in new 
section 15E(a)(1)(B) of the Exchange Act as demonstrated in the chart 
below, provided by the Co-Applicants, that compares the requirements 
for NRSRO registration under the legislation to existing requirements 
and the Co-Applicants confirm that each rating agency would comply. The 
Co-Applicants assert that the criteria for registration under the new 
law are not substantively different from what DBRS and the other 
current NRSROs already comply with. DBRS has also adopted and adheres 
to the International Organization of Securities Commissions' (IOSCO) 
Code of Conduct Fundamentals for Credit Rating Agencies issued in 
December 2004 (IOSCO Code of Conduct). Additionally, the Co-Applicants 
have provided the Department with copies of the DBRS Code of Conduct, 
the Report of Compliance to the DBRS Code of Conduct and the DBRS 
Corporate Default Study 1977-2005, which are pertinent to this 
analysis.

------------------------------------------------------------------------
  CRA Reform Act requirement     Existing requirement    DBRS complies?
------------------------------------------------------------------------
Under Exchange Act Sec.   15E
 (a) (1)(B), NRSRO
 applications must include:

[[Page 3156]]


    (i) Applicant's credit      IOSCO Code Sec.  Sec.   Yes. Corporate
     rating performance           1.2, 3.8.              Default Study
     measurement statistics.                             shows
                                                         performance
                                                         1977-2004.
    (ii) Procedures &           Required as part of     Yes.
     methodologies Applicant     NRSRO no-action
     uses in determining         letter designation
     credit ratings.             process; IOSCO Code,
                                 Sec.  Sec.   1.A,
                                 3.2, 3.5, 3.10.
    (iii) Policies and          Advisers Act, Sec.      Yes.
     procedures to prevent the   204A IOSCO Code, Sec.
     misuse of inside              3.B.
     information.
    (iv) The organizational     Required as part of     Yes.
     structure of the            NRSRO no-action
     Applicant.                  letter designation
                                 process; information
                                 on organization
                                 required on Form ADV;
                                 IOSCO Code, Sec.
                                 Sec.   2.5, 2.10,
                                 2.11, 2.12.
    (v) Whether or not          Advisers Act Rule 204A- Yes.
     Applicant has a code of     1 requires a Code of
     ethics, and if not, why     Ethics; IOSCO Code,
     not.                        Sec.  Sec.   1.C, 2,
                                 4.1.
    (vi) Any conflict of        Advisers Act Rule 204A- Yes.
     interest relating to the    1 requires advisers'
     Applicant's issuance of     codes of ethics to
     credit ratings; Sec.        address conflicts;
     15E(h) also requires        IOSCO Code, Sec.
     NRSROs to maintain          2.B.
     written policies and
     procedures to address and
     manage any conflicts of
     interest.
    (ix) Written                Does not apply to       N/A.
     certifications from         current NRSROs.
     Qualified Institutional     However, DBRS already
     Buyers (QIBs) who use       supplied this type of
     Applicant's ratings.        information to the
                                 SEC to prove its
                                 ``national
                                 recognition'' under
                                 the no-action letter
                                 designation process.
Exchange Act Sec.   15E(j)      Advisers Act Rule       Yes.
 requires NRSROs to designate    206(4)-7 requires the
 an individual responsible for   appointment of a
 administering its compliance    Chief Compliance
 policies and procedures.        Officer; IOSCO Code
                                 Sec.   1.15 requires
                                 that a person be
                                 specified as
                                 responsible for
                                 overseeing compliance
                                 with applicable laws
                                 and regulations.
Exchange Act Sec.   15E(i)      Advisers Act Rule 204A- Yes.
 directs the SEC to adopt        1; IOSCO Code Sec.
 rules prohibiting unfair        Sec.   1.C, 2.3, 2.4,
 business practices by NRSROs.   2.5, 2.11, 2.12, 2.15.
------------------------------------------------------------------------

    11. The Co-Applicants assert that under the new legislation, there 
would be no period of time when DBRS would not maintain its status as 
an NRSRO. They note that under new section 15E(l)(2)(A) of the Exchange 
Act, a rating agency is entitled to rely on its no-action letter from 
the SEC to be treated as an NRSRO and act as an NRSRO while the SEC is 
considering its registration application pursuant to the new procedures 
and thereafter on and after its application is approved. The no-action 
letters that the SEC has issued to date to the five rating agencies 
including DBRS will become void under section 15E(1)(2)(B) upon the 
earlier of (i) 270 days following the date of enactment of the 
legislation (September 29, 2006) or (ii) the date the regulations are 
issued by the SEC in final form. This theoretically means that if the 
SEC fails to issue the regulations on a timely basis, all five rating 
agencies would lose their NRSRO status. However, if this were to occur, 
it would also affect Moody's, Standard & Poor's, Fitch and A.M. Best 
Company, Inc. in the same manner as DBRS, and this would have 
disastrous results in the capital markets. Presumably this issue would 
have to be addressed by an amendment to the legislation.
    12. The Co-Applicants request that the Department grant DBRS Rating 
Agency status under the Underwriter Exemptions at this time and that it 
not wait until the SEC issues a final rule. Waiting until the SEC 
issues a final rule could take a substantial period of time which can 
only be disadvantageous for Plan investors. The Co-Applicants represent 
that DBRS Limited and DBRS, Inc. are already fully recognized together 
as an NRSRO and also meet the new proposed requirements. Accordingly, 
the Co-Applicants believe that there is no reason to wait for the SEC 
to issue the regulations and procedures for registration under CRARA as 
it will not affect DBRS's status. The Co-Applicants believe that 
although CRARA provides that any no-action letter previously granted by 
the SEC would be revoked, DBRS's NRSRO status would be quickly 
reinstated as it would meet all of the qualifications under the new 
registration requirements. The Co-Applicants assert that DBRS also 
complies with the substantive standards that the Department has 
previously established under the Underwriter Exemptions. Second, CRARA 
also will affect S&P, Moody's and Fitch, which have already been 
granted status as Rating Agencies under the Underwriter Exemptions, in 
exactly the same way as it would affect DBRS if the Department were to 
grant this application. All four rating agencies would have their NRSRO 
status revoked and replaced with a new form of NRSRO registration. 
Accordingly, the Department would still be required to make its own 
determinations as to whether it considers a rating agency eligible to 
be covered under a particular type of exemption.
    13. The Co-Applicants believe that the Department also intended to 
look to the SEC's proposed definition of NRSROs as published in Part 
240 of its General Rules and Regulations under the Exchange Act for 
guidance in determining who should qualify as a ``Rating Agency'' for 
purposes of the broad exemptive relief that has been previously granted 
by the Department. Prior to the enactment of CRARA, the Department had 
indicated that it would consider DBRS' status as a Rating Agency under 
the Underwriter Exemptions based on the criteria set forth in the SEC's 
proposed rule regarding the definition of an NRSRO published in the 
Federal Register on April 25, 2005 (70 FR 21306). In proposing the new 
definition, the SEC indicated that it believes that the five rating 
agencies to which it has already issued NRSRO no-action letters, 
including DBRS, would meet the proposed definition. The Co-Applicants 
assert that DBRS would meet the proposed definition of an NRSRO as set 
forth in the SEC's proposed rule that the entity: (a) Issues publicly 
available credit ratings that are current assessments of the credit 
worthiness of obligors with respect to specific securities or money 
market instruments; (b) is generally accepted in the financial markets 
as an issuer of credible and reliable ratings, including ratings for a 
particular industry or geographic segment by the predominant users of 
securities ratings; and (c) uses

[[Page 3157]]

systematic procedures designed to ensure credible and reliable ratings, 
manage potential conflicts of interest and prevent the misuse of 
nonpublic information, and has sufficient financial resources to ensure 
compliance with those procedures.
    The Co-Applicants submitted the following review of the standards 
the SEC discussed in its proposal to demonstrate DBRS' status as an 
NRSRO prior to CRARA.
    a. Publicly Available Credit Ratings: DBRS makes its credit ratings 
available on its Web site at http://www.dbrs.com. The basic rationale 

behind the ratings is also available to the public through press 
releases. Both types of information are available at no charge.
    b. Issue-Specific Credit Opinions: DBRS rates specific securities, 
as well as issuers.
    c. Current Credit Opinions: DBRS issues ratings that represent 
current assessments of the securities ratings, as it has procedures in 
place to have at least two analysts be familiar with, and responsible 
for, all current and recent events relating to an issuer after DBRS 
issues its initial rating of the securities. A rating is fully reviewed 
and a meeting arranged with each sponsor's \11\ senior management on at 
least an annual basis. Follow up meetings occur where there have been 
material changes to the sponsor associated with the issuer or 
amendments to the initial program parameters and/or the program 
structure. In addition, if events occur that materially affect the 
credit performance of the issuer, a rating will be changed on a more 
frequent basis. A rating may also be placed ``Under Review'' if a 
significant event which impacts credit quality occurs and DBRS is 
unable to provide an objective forward looking opinion. In order to 
maintain the currency and accuracy of structured debt ratings, DBRS has 
several surveillance departments located in offices both in the United 
States and Canada. The analysts working in these departments are 
responsible for the collection, entry, analysis, and reporting related 
to the monitoring of structured finance transactions. Analysts are 
expected to analyze the data being reported by issuers and sponsors, 
identify transactions that require remediation or additional follow-up, 
and work with other analysts to determine the most appropriate course 
of action.
---------------------------------------------------------------------------

    \11\ The Co-Applicants note that the term ``sponsor'' is used in 
their Application in the same way as the term ``sponsor'' is defined 
in the Underwriter Exemptions under Section III.D. ``Sponsor'' may 
also be deemed to refer to an originator of loans, if deemed 
necessary and/or appropriate by DBRS for its ratings analyses with 
respect to securities issued by a specific issuer.
---------------------------------------------------------------------------

    d. General Acceptance in the Financial Markets: DBRS credibility 
and reasonable reliance of the marketplace have already been 
established by the SEC's grant of DBRS Limited's February 24, 2003 no-
action letter, as this is the most important criterion cited by the SEC 
in such a grant.
    e. Limited Coverage NRSROs: DBRS Limited received a no-action 
letter with respect to its ability to rate all securities and issuers 
with no limitations. The Co-Applicants believe this letter also applies 
to DBRS, Inc. as discussed above.
    f. Analyst Experience and Training: DBRS requires that its analysts 
have the requisite experience and training to rate issuers and 
securities competently. The SEC in previously making this determination 
for its no-action letter, mentioned that generally, all of DBRS' 
analysts have degrees in business administration or accounting and many 
have professional designations such as MBAs, JDs and CFAs.
    g. Number of Ratings per Analyst: DBRS maintains reasonable 
workloads for its analysts so that their analytical abilities to rate 
securities remain high, while not overloading them so that their work 
suffers in quality. The statistics of the number of ABS/RMBS/CMBS 
transactions and the number of securitization analysts have been given 
herein. In general, DBRS analysts work within groups, with each group 
containing approximately two to six analysts who cover issuers from 
industries that are as related as possible. Each issuer is normally 
covered directly by two analysts, who work together on the rating, 
arrange for and attend meetings with the sponsor's senior management, 
and make a recommendation with regard to the rating action for the 
entity. The ``primary analyst'' is responsible for preparing and for 
conducting the interview with the sponsor's management, for writing the 
initial draft rating report, and for making the presentation to the 
rating committee. The ``secondary'' or backup analyst is responsible 
for supporting the primary analyst with these duties. Other analysts 
from the group can be available to provide additional support prior to 
the rating committee recommendations. The group head will review the 
report prior to the rating committee. Thus, there are generally at 
least two analysts that are familiar with, and responsible for, all 
current and recent events for that issuer. Since each issuer and 
sponsor is under continuous surveillance, all ratings are current.
    h. Information Sources Used in the Ratings Process: DBRS has 
procedures in place to verify financial information it receives from 
any given sponsor with respect to itself and the issuer. In many cases, 
DBRS will also require third party reports on the sponsor and with 
respect to the issuer as well as comparisons that have been done for 
comparable sponsors and issuers. All opinions expressed at the 
sponsor's senior management level during meetings are scrutinized to 
deal with any inherent biases that may have affected sponsor's 
perceptions of their relative strengths and weaknesses in absolute 
terms or in comparison to their competition. For both initial ratings 
and subsequent maintenance of such ratings, DBRS obtains a wide variety 
of information from third party sources. Public documents include 
regulatory filings, newspaper subscriptions, electronic news from 
services such as Reuters and Bloomberg, equity research from investment 
banks, and a wide variety of industry, sponsor and issuer specific news 
from the internet. DBRS also subscribes to publications such as Forbes, 
the Wall Street Journal, the Financial Post, Value Line, Business Week 
and the Economist. Most groups at DBRS have additional subscriptions 
related to their own specific area of interest. The general market 
intelligence that each analyst gains from conferences, DBRS sponsored 
seminars and luncheons, industry contacts, other independent reading 
and speeches are additional sources of information that assist in 
DBRS's analysis.
    i. Contacts: As discussed above, DBRS meets with senior management 
of the sponsors related to the issuers of securities it rates.
    j. Organizational Structure: DBRS Limited, DBRS, Inc. and DBRS 
(Europe) Limited are not affiliated with any other organizations or 
engaged in any other businesses that could create conflicts of interest 
or cause the misuse of nonpublic information.
    k. Conflicts of Interest: (i) Reliance on Issuer Fees--DBRS does 
not have any one sponsor accounting for a meaningful percentage of its 
overall revenues, so no one sponsor can exert untoward pressure on 
DBRS's rating activities. (ii) Internal Policies--DBRS encourages 
analysts to strive for good long-term relationships with its sponsor 
clients, while at the same time being mindful of maintaining 
objectivity. For example, when dealing with sponsors, DBRS expects 
analysts to be familiar with the CFA Institute Standards of Practice 
Handbook (the Handbook), which sets forth rules of ethics and 
professional responsibility for certified financial analysts, and to 
comply with

[[Page 3158]]

its Code of Ethics, regardless of analysts' CFA status. As mandated by 
the Code of Ethics, analysts are warned to always be conscious about 
accepting gifts from a sponsor that could be considered significant 
enough to impair objectivity. Analysts are also prohibited from 
soliciting money, gifts, cash or favors from anyone with whom DBRS does 
business. As stated above, DBRS has adopted and adheres to the IOSCO 
Code of Conduct and has published a DBRS Code of Conduct that 
summarizes how its extensive range of policies, procedures and internal 
controls meet the IOSCO Code of Conduct. (iii) Consulting or Advisory 
Fees from Issuers--DBRS does not engage in a separate consulting or 
advisory for fee services business. (iv) Preferential Access to 
Information--DBRS does not allow subscribers to be given access to 
potential DBRS rating actions before they become public or to any 
nonpublic information. (v) Proprietary Associations with Rated Issuers: 
DBRS does not allow any employee, analyst or consultant to invest in 
any company or subsidiary that DBRS rates or benchmarks except for 
``grandfathered securities.'' \12\ DBRS also requires employees, 
analysts and consultants to report their investment activities to the 
Compliance Department each calendar quarter (i) by completing a signed 
transaction report or forwarding copies of brokerage statements if they 
have ``reportable securities transactions;'' (ii) by completing a 
signed statement indicating that they have reportable securities but 
did not engage in any ``reportable securities transactions;'' (iii) by 
email if they hold only ``excluded securities;'' and (iv) by email if 
they hold no investments. Excluded securities are mutual funds, GIC's, 
CD's, etc.; reportable securities include all securities that are not 
specifically excluded.
---------------------------------------------------------------------------

    \12\ ``Grandfathered securities'' are securities of companies 
that DBRS rates or benchmarks but that a staff member already owns 
at the time they become newly employed by DBRS and those securities 
that a staff member held prior to DBRS undertaking the company as a 
rated or benchmarked entity. Grandfathered securities must not be 
sold unless and until written permission is obtained from the Chief 
Compliance Officer.
---------------------------------------------------------------------------

    l. Misuse of Information: DBRS prohibits employees from discussing 
nonpublic information with anyone other than the sponsor being rated or 
other DBRS employees. In addition, DBRS staff and consultants must 
annually review and sign an ``Annual Statement of Understanding'' 
concerning DBRS's Code of Ethics which among other areas contains 
sections on confidentiality and nonpublic information.
    m. Financial Resources: DBRS has sufficient financial resources to 
maintain appropriate staffing levels to continuously monitor the 
sponsors and the issuers whose securities it rates. As mentioned above, 
it believes that conflicts of interests with sponsors and subscribers 
are minimized as none alone provide a significant source of business 
for it.
    n. Standardized Rating Symbols: DBRS uses the same generic 
substantive rating categories as the other four existing NRSROs and the 
SEC is not proposing to change the ``sub-symbols'' (i.e., ``plus'' or 
``minus'' versus ``high'' or ``low'').
    o. Statistical Models: Statistical models are only one of the 
methods used by DBRS to rate issuers or securities.
    14. The Plans affected by the requested amendment are those Plans 
that will participate in a trust established under a pooling and 
servicing agreement. One or more Plans may invest in the securities to 
be issued with respect to a given issuer. Every Plan which intends to 
invest in an issuer will be able to review the form of the pooling and 
servicing agreement prior to acquiring a security. Each Plan will be an 
``accredited investor'' as defined in Rule 501(a)(1) of Regulation D 
under the Securities Act of 1933, as amended. The proposed amendment 
involves a class of prospective transactions with Plans. In its 
capacity as a rating agency, DBRS has no Plan clients or potential Plan 
clients.\13\ Therefore, the Co-Applicants request that the publication 
of this proposed exemption in the Federal Register serve as the Notice 
to Interested Persons for purposes of this request.
---------------------------------------------------------------------------

    \13\ Although not relevant to this application, some Plans 
subscribe to DBRS's subscription service.
---------------------------------------------------------------------------

    15. The Co-Applicants request that the relief, if granted, be made 
retroactive to the date that they originally filed their request on 
April 5, 2006. DBRS had originally been prepared to file its 
application prior to April 5th; however, the SEC issued its proposed 
rules defining an NRSRO and this caused a delay in filing the 
application. The application was further delayed by the submission of 
additional information in response to the enactment of CRARA on 
September 29, 2006. Retroactive relief is requested to cover those 
transactions that have occurred or will occur over the next few months 
where DBRS was or is the only rating agency that gave or will give an 
investment-grade rating to certificates. If the relief is granted 
retroactively, Plans would be able to purchase certificates in the 
secondary market relying upon the Underwriter Exemptions once exemptive 
relief is granted, even if the transactions originally closed or will 
close prior to the date the final exemption, if granted by the 
Department, is published in the Federal Register.

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 section 4975(c)(2) of the Code does not 
relieve a fiduciary or other party in interest or disqualified person 
from certain other provisions of the Act and the Code, including any 
prohibited transaction provisions to which the exemption does not apply 
and the general fiduciary responsibility provisions of section 404 of 
the Act, which require, among other things, a fiduciary to discharge 
his or her 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 
requirements of section 401(a) of the Code that the plan operate for 
the exclusive benefit of the employees of the employer maintaining the 
plan and their beneficiaries;
    2. Before an exemption can be granted under section 408(a) of the 
Act and section 4975(c)(2) of the Code, the Department must find that 
the exemption is administratively feasible, in the interest of the 
plans and of their participants and beneficiaries and protective of the 
rights of participants and beneficiaries of the plans; and
    3. The proposed amendment, if granted, will be supplemental to, and 
not in derogation of, any other provisions of the Act and/or the Code, 
including statutory or administrative exemptions and transitional 
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.

Written Comments and Hearing Requests

    All interested persons are invited to submit written comments or 
requests for a hearing on the pending amendment to the address above, 
within the time frame set forth above, after the publication of this 
proposed amendment in the Federal Register. All comments will be made a 
part of the record. Comments received will be available for public 
inspection with the

[[Page 3159]]

Application at the address set forth above.

Proposed Exemption

    Based on the facts and representations set forth in the 
application, under the authority of section 408(a) of the Act and 
section 4975(c)(2) of the Code and in accordance with the procedures 
set forth in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 
1990), the Department proposes to modify the following individual 
Prohibited Transaction Exemptions (PTEs), as set forth below: PTE 89-
88, 54 FR 42582 (October 17, 1989); PTE 89-89, 54 FR 42569 (October 17, 
1989); PTE 89-90, 54 FR 42597 (October 17, 1989); PTE 90-22, 55 FR 
20542 (May 17, 1990); PTE 90-24, 55 FR 20548 (May 17, 1990); PTE 90-28, 
55 FR 21456 (May 24, 1990); PTE 90-29, 55 FR 21459 (May 24, 1990); PTE 
90-30, 55 FR 21461 (May 24, 1990); PTE 90-32, 55 FR 23147 (June 6, 
1990); PTE 90-36, 55 FR 25903 (June 25, 1990); PTE 90-39, 55 FR 27713 
(July 5, 1990); PTE 90-59, 55 FR 36724 (September 6, 1990); PTE 90-83, 
55 FR 50250 (December 5, 1990); PTE 90-84, 55 FR 50252 (December 5, 
1990); PTE 90-88, 55 FR 52899 (December 24, 1990); PTE 91-14, 55 FR 
48178 (February 22, 1991); PTE 91-22, 56 FR 03277 (April 18, 1991); PTE 
91-23, 56 FR 15936 (April 18, 1991); PTE 91-30, 56 FR 22452 (May 15, 
1991); PTE 91-62, 56 FR 51406 (October 11, 1991); PTE 93-31, 58 FR 
28620 (May 5, 1993); PTE 93-32, 58 FR 28623 (May 14, 1993); PTE 94-29, 
59 FR 14675 (March 29, 1994); PTE 94-64, 59 FR 42312 (August 17, 1994); 
PTE 94-70, 59 FR 50014 (September 30, 1994); PTE 94-73, 59 FR 51213 
(October 7, 1994); PTE 94-84, 59 FR 65400 (December 19, 1994); PTE 95-
26, 60 FR 17586 (April 6, 1995); PTE 95-59, 60 FR 35938 (July 12, 
1995); PTE 95-89, 60 FR 49011 (September 21, 1995); PTE 96-22, 61 FR 
14828 (April 3, 1996); PTE 96-84, 61 FR 58234 (November 13, 1996); PTE 
96-92, 61 FR 66334 (December 17, 1996); PTE 96-94, 61 FR 68787 
(December 30, 1996); PTE 97-05, 62 FR 1926 (January 14, 1997); PTE 97-
28, 62 FR 28515 (May 23, 1997); PTE 98-08, 63 FR 8498 (February 19, 
1998); PTE 99-11, 64 FR 11046 (March 8, 1999); PTE 2000-19, 65 FR 25950 
(May 4, 2000); PTE 2000-33, 65 FR 37171 (June 13, 2000); PTE 2000-41, 
65 FR 51039 (August 22, 2000); PTE 2000-55, 65 FR 37171 (November 13, 
2000); PTE 2002-19, 67 FR 14979 (March 28, 2002); PTE 2003-31, 68 FR 
59202 (October 14, 2003); and PTE 2006-07, 71 FR 32134 (June 2, 2006), 
each as subsequently amended by PTE 97-34, 62 FR 39021 (July 21, 1997) 
and PTE 2000-58, 65 FR 67765 (November 13, 2000) and for certain of the 
exemptions, amended by PTE 2002-41, 67 FR 54487 (August 22, 2002).
    In addition, the Department notes that it is also proposing 
individual exemptive relief for: Deutsche Bank A.G., New York Branch 
and Deutsche Morgan Grenfell/C.J. Lawrence Inc., Final Authorization 
Number (FAN) 97-03E (December 9, 1996); Credit Lyonnais Securities 
(USA) Inc., FAN 97-21E (September 10, 1997); ABN AMRO Inc., FAN 98-08E 
(April 27, 1998); Ironwood Capital Partners Ltd., FAN 99-31E (December 
20, 1999) (supersedes FAN 97-02E (November 25, 1996)); William J. Mayer 
Securities LLC, FAN 01-25E (October 15, 2001); Raymond James & 
Associates Inc. & Raymond James Financial Inc., FAN 03-07E ( June 14, 
2003); WAMU Capital Corporation, FAN 03-14E (August 24, 2003); and 
Terwin Capital LLC, FAN 04-16E (August 18, 2004); which received the 
approval of the Department to engage in transactions substantially 
similar to the transactions described in the Underwriter Exemptions 
pursuant to PTE 96-62, 61 FR 39988 (July 31, 1996).
    The definition of ``Rating Agency'' under section III.X. of the 
Underwriter Exemptions is amended to read:
    ``Rating Agency'' means Standard & Poor's Ratings Services, a 
division of The McGraw-Hill Companies, Inc.; Moody's Investors Service, 
Inc.; FitchRatings, Inc.; Dominion Bond Rating Service Limited, or 
Dominion Bond Rating Service, Inc.; or any successors thereto.
    If granted, the amendment would be effective for transactions 
occurring on or after April 5, 2006.
    The availability of this amendment, if granted, is subject to the 
express condition that the material facts and representations contained 
in the Application are true and complete and accurately describe all 
material terms of the transactions. In the case of continuing 
transactions, if any of the material facts or representations described 
in the Application change, the amendment will cease to apply as of the 
date of such change. In the event of any such change, an application 
for a new amendment must be made to the Department.

    Signed at Washington, DC, this 17th day of January, 2007.
Ivan L. Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
 [FR Doc. E7-969 Filed 1-23-07; 8:45 am]

BILLING CODE 4510-29-P