Skip to page content
Secretary of Labor Thomas E. Perez
Cross-Trades of Securities by Investment Managers [Notices] [12/15/1999]

Cross-Trades of Securities by Investment Managers [12/15/1999]

[PDF Version]

Volume 64, Number 240, Page 70070-70071

-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

 
Cross-Trades of Securities by Investment Managers

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of hearing.

-----------------------------------------------------------------------

SUMMARY: This document provides notice of a public hearing regarding 
standards and safeguards upon which exemptive relief should be 
conditioned for cross-trades of securities by investment managers with 
respect to any account, portfolio or fund holding ``plan assets'' 
subject to the fiduciary responsibility provisions of Part 4 of Title I 
of the Employee Retirement Income Security Act of 1974, as amended 
(ERISA). The public hearing will focus primarily on the area of 
``active'' cross-trading of securities by investment managers. The 
Department is also publishing today in the Federal Register a Notice of 
Proposed Class Exemption relating to cross-trades of securities by 
``passively'' managed funds.

DATES: The hearing will be held on February 10, 2000, and on February 
11th if necessary, beginning at 10 a.m. and ending at 4 p.m. each day.

ADDRESSES: The hearing will be held in Room N-5437, of the Department 
of Labor Building, 200 Constitution Avenue, NW, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Louis J. Campagna or E.F. Williams, 
Office of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor, Room N-5649, 200 Constitution 
Avenue, NW, Washington, DC, 20210, (202) 219-8883 or 219-8194, 
respectively (these are not toll free numbers); or Michael Schloss, 
Plan Benefits Security Division, Office of Solicitor, (202) 219-4600, 
ext. 105 (not a toll-free number).

SUPPLEMENTARY INFORMATION: On March 20, 1998, the Department of Labor 
(the Department) published a notice (the Notice) in the Federal 
Register (63 FR 13696) requesting information to assist it in 
determining upon what standards and safeguards exemptive relief for 
cross-trades by investment managers should be conditioned. In that 
Notice, the Department invited all interested persons to submit written 
comments concerning its request for information on or before May 19, 
1998. The Department received a total of 29 written comments on the 
Notice, many

[[Page 70071]]

of which were from major industry groups and plan fiduciaries.
    In response, in part, to the information received by the Department 
to the Notice, the Department has published in today's Federal Register 
a separate notice of proposed class exemption which would, if granted, 
provide an exemption for cross-trades of securities by Index and Model-
Driven Funds. In the notice of proposed class exemption, the Department 
states that it is not proposing relief for cross-trades of securities 
by actively-managed plan accounts or funds at the present time. In 
actively-managed programs, trading decisions are made by individuals 
that have been hired to select particular securities as professional 
investment managers for ``actively-managed'' accounts. The Department 
notes in the proposed class exemption that information obtained from 
investment managers in response to the Notice regarding cross-trade 
practices and procedures for actively-managed accounts will be 
considered separately.
    In view of the importance of this issue, the Department has decided 
to hold a public hearing regarding potential future individual or class 
exemptions for the cross-trades of securities by investment managers 
for actively-managed plan accounts or pooled funds containing ``plan 
assets'' subject to Title I of ERISA.
    This hearing will be held on February 10, 2000, and February 11th 
if necessary, beginning at 10 a.m. and ending at 4 p.m., in Room N-5437 
of the Department of Labor Building, 200 Constitution Avenue, NW, 
Washington, DC 20210.
    Any interested person who wishes to be assured of an opportunity to 
present oral comments at the hearing should submit the following 
information by January 20, 2000: (1) A written request to be heard; and 
(2) An outline (preferably five copies) of the topics to be discussed, 
indicating the time allocated to each topic. The request to be heard 
and accompanying outline should be sent to the Office of Exemption 
Determinations, Pension and Welfare Benefits Administration, U.S. 
Department of Labor, Room N-5649, 200 Constitution Avenue, NW, 
Washington, DC 20210, and marked ``Attention: Cross-Trades of 
Securities by Investment Managers Hearing.'' Individuals who did not 
file written comments regarding the Notice published by the Department 
in the Federal Register on March 20, 1998 may nonetheless submit a 
request to make oral comments at the hearing.
    The Department will prepare an agenda indicating the order of 
presentation of oral comments at the hearing. In the absence of special 
circumstances, each commentator will be allotted fifteen minutes in 
which to complete his or her presentation and answer questions that may 
be posed by a panel of Pension and Welfare Benefits Administration 
employees. Information about the agenda may be obtained on or after 
January 27, 2000, by telephoning Fil Williams of the Office of 
Exemption of Determinations at (202) 219-8194 (this is not a toll free 
number).
    Individuals not listed in the agenda will be allowed to make oral 
comments at the hearing to the extent time permits. Those individuals 
who make oral comments at the hearing should be prepared to answer 
questions regarding their comments. The hearing will be transcribed.
    Individuals with disabilities, who need special accommodations, 
should notify Mr. Williams on or before January 20, 2000.

Notice of Public Hearing

    Notice is hereby given that a public hearing will be held on 
February 10, 2000, and February 11th if necessary, regarding potential 
future individual or class exemptions for cross-trades of securities by 
investment managers for actively-managed plan accounts or pooled funds 
containing ``plan assets'' subject to ERISA. The hearing will be held 
beginning at 10 a.m. in Room N-5437 of the Department of Labor 
Building, 200 Constitution Avenue, NW, Washington, DC, 20210.

    Signed at Washington, DC, this 9th day of December, 1999.
Alan D. Lebowitz,
Deputy Assistant Security of Program Operations, Pension and Welfare 
Benefits Administration, U.S. Department of Labor.
[FR Doc. 99-32403 Filed 12-14-99; 8:45 am]
BILLING CODE 4510-29-P