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Code · REGISTER · 2006-11-24 · Employee Benefits Security Administration, U.S. Department of Labor · Notices

Notices. Notice of proposed individual exemption

19,015 words·~86 min read·/register/2006/11/24/06-9359

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 4410-01-M DEPARTMENT OF LABOR Employee Benefits Security Administration [Application No. D-11381] Notice of Proposed Individual Exemption Involving the Bear Stearns Companies, Inc. (BS), Bear Stearns Asset Management, Inc. (BSAM), and Bear, Stearns & Co., Inc.
(BSC)(collectively, the Applicants) Located in New York, NY AGENCY: Employee Benefits Security Administration, U.S. Department of Labor. ACTION: Notice of proposed individual exemption. SUMMARY: This document contains a notice of pendency before the Department of Labor (the Department) of a proposed individual exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (the Act) and the Internal Revenue Code of 1986 (the Code). If granted, the proposed exemption would permit the purchase of certain securities (the Securities), by an asset management affiliate of BS from any person other than such asset management affiliate of BS or any affiliate thereof, during the existence of an underwriting or selling syndicate with respect to such Securities, where a broker-dealer affiliated with BS (the Affiliated Broker-Dealer) is a manager or member of such syndicate and the asset management affiliate of BS purchases such Securities, as a fiduciary:
(a)On behalf of an employee benefit plan or employee benefit plans (Client Plan(s)); or
(b)on behalf of Client Plans, and/or in-house plans (In-House Plans) which are invested in a pooled fund or in pooled funds (Pooled Fund(s)); provided certain conditions as set forth, below are satisfied (an affiliated underwriter transaction (AUT)). 1 The proposed exemption, if granted, would affect Client Plans and In-House Plans and their participants and beneficiaries. 1 For purposes of this proposed exemption an In-House Plan may engage in AUT's only through investment in a Pooled Fund. DATES: *Effective Date:* If granted, this proposed exemption will be effective as of the date the final exemption is published in the **Federal Register** . Written Comments and Hearing Requests All interested persons are invited to submit written comments and/or requests for a public hearing on the pending exemption to the address, as set forth below, within the time frame, as set forth below. All comments and requests for a public hearing will be made a part of the record. Comments and hearing requests should state the reasons for the writer's interest in the proposed exemption. A request for a public hearing must also state the issues to be addressed and include a general description of the evidence to be presented at the hearing. Comments and hearing requests received will also be available for public inspection with the referenced application at the address, as set forth below. DATES: Written comments and requests for a public hearing on the proposed exemption should be submitted to the Department within 45 days from the date of publication of this **Federal Register** Notice. ADDRESSES: All written comments and requests for a public hearing concerning the proposed exemption should be sent to the Office of Exemptions Determinations, Employee Benefits Security Administration, Room N-5700, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210, Attention: Application No. D-11381. Alternatively, interested persons are invited to submit comments or hearing requests to the Department by e-mail to *leblanc.angelena@dol.gov* or by facsimile at
(202)219-0204. Notice to Interested Persons Notice of the proposed exemption will be provided to all interested persons in the manner agreed upon by the Applicants and the Department within 15 days of the date of publication in the **Federal Register** . Such notice shall include a copy of the notice of proposed exemption as published in the **Federal Register** and shall inform interested persons of their right to comment and to request a hearing (where appropriate). SUPPLEMENTARY INFORMATION: This document contains a notice of proposed individual exemption from the restrictions of section 406 of the Act and section 4975(c)(1)(A)-(F) of the Code. The proposed exemption has been requested in an application filed by BS, BSAM, and BSC, 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, August 10, 1990). 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 requested to the Secretary of Labor. Accordingly, this proposed exemption is being issued solely by the Department. The application pertaining to the proposed exemption contains representations with regard to the proposed exemption which are summarized below. Interested persons are referred to the application on file with the Department for a complete statement of the facts and representations. The application pertaining to the proposed exemption 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: Ms. Angelena C. Le Blanc, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, telephone
(202)693-8540. (This is not a toll-free number.) Summary of Facts and Representations 1. The Applicants for the proposed exemption are BS, BSAM, and BSC. BSAM is an investment advisor registered with the Securities and Exchange Commission
(SEC)under the Investment Advisors Act of 1940. BSC is registered with the SEC as both a broker-dealer and an investment advisor. BSAM and BSC are affiliates of BS. 2. It is represented that the Applicants and their various affiliates are regulated by federal government agencies, such as the SEC, as well as by state government agencies, and industry self-regulatory organizations ( *e.g.* , the New York Stock Exchange and the National Association of Securities Dealers). 3. The Applicants request an exemption permitting the purchase of certain Securities by an asset management affiliate of BS, acting on behalf of Client Plans, subject to the Act or Code, and acting on behalf of Client Plans and In-House Plans which are invested in certain Pooled Funds for which an asset management affiliate of BS acts as a fiduciary, from any person other than such asset management affiliate of BS or any affiliate thereof, during the existence of an underwriting or selling syndicate with respect to such Securities, where an Affiliated Broker-Dealer is a manager or member of such syndicate. Further, the Affiliated Broker-Dealer will receive no selling concessions in connection with the securities sold to such plans. 4. The Applicants represent that in accordance with Prohibited Transaction Class Exemption 75-1, 40 FR 50845 (October 31, 1975) (PTCE 75-1), an asset management affiliate of BS may purchase underwritten securities for plans, where an Affiliated Broker-Dealer is a member of an underwriting or selling syndicate. In this regard, Part III of PTCE 75-1 provides limited relief from the prohibited transaction provisions of the Act for plan fiduciaries that purchase securities from an underwriting or selling syndicate of which the fiduciary or an affiliate is a member. However, such relief is not available if the Affiliated Broker-Dealer manages the underwriting or selling syndicate. 5. Further, PTE 75-1 does not provide relief for the purchase of unregistered securities. This includes those securities purchased by an underwriter for resale to a “qualified institutional buyer”
(QIB)pursuant to the SEC's Rule 144A under the Securities Act of 1933 (the 1933 Act). It is represented that Rule 144A is commonly utilized in connection with sales of securities issued by foreign corporations to U.S. investors that are QIBs. Notwithstanding the unregistered nature of such shares, it is represented that syndicates selling securities under Rule 144A (Rule 144A Securities) are the functional equivalent of those selling registered securities. 6. The Applicants represent that the Affiliated Broker-Dealer regularly serves as a manager of underwriting or selling syndicates for registered securities, and as a manager or a member of underwriting or selling syndicates for Rule 144A Securities. Accordingly, the asset management affiliate of BS is currently unable to purchase on behalf of Client Plans Securities sold in a Rule 144A Offering, resulting in such Client Plans being unable to participate in significant investment opportunities. 7. It is represented that since 1975, there has been a significant consolidation in the financial services industry in the United States. As a result, there are more situations in which a plan fiduciary may be affiliated with the manager of an underwriting syndicate. Further, many plans have expanded investment portfolios in recent years to include securities issued by foreign corporations. As a result, the exemption provided in PTCE 75-1, Part III, is often unavailable for purchases of domestic and foreign securities that may otherwise constitute appropriate plan investments. 8. The Applicants represent that the asset management affiliate of BS makes its investment decisions on behalf of, or renders investment advice to, Client Plans pursuant to the governing document of the particular Client Plan or Pooled Fund and the investment guidelines and objectives set forth in the management or advisory agreement. Because the Client Plans are covered by Title I of the Act, such investment decisions are subject to the fiduciary responsibility provisions of the Act. 9. The Applicants state, therefore, that the decision to invest in a particular offering is made on the basis of price, value, and a Client Plan's investment criteria, not on whether the securities are currently being sold through an underwriting or selling syndicate. The Applicants further state that, because the compensation paid to the asset management affiliate of BS for its services is generally based upon assets under management, the asset management affiliate of BS has little incentive to purchase securities in an offering in which the Affiliated Broker-Dealer is an underwriter unless such a purchase is in the interests of Client Plans. If the assets under management do not perform well, the asset management affiliate of BS will receive less compensation and could lose clients, costs which far outweigh any gains from the purchase of underwritten securities. The Applicants point out that under the terms of the proposed exemption, the Affiliated Broker-Dealer may receive no compensation or other consideration, direct or indirect, in connection with any transaction that would be permitted under the proposed exemption. 10. The Applicants state that the asset management affiliate of BS generally purchases securities in large blocks because the same investments will be made across several accounts. If there is a new offering of an equity or fixed income security that the asset management affiliate of BS wishes to purchase, it may be able to purchase the security through the offering syndicate at a lower price than it would pay in the open market, without transaction costs and with reduced market impact if it is buying a relatively large quantity. This is because a large purchase in the open market can cause an increase in the market price and, consequently, in the cost of the securities. Purchasing from an offering syndicate can thus reduce the costs to the Client Plans. 11. The Applicants point out that absent this proposed exemption, if the Affiliated Broker-Dealer is a manager of a syndicate that is underwriting a securities offering, the asset management affiliate will be foreclosed from purchasing any securities on behalf of its Client Plans from that underwriting syndicate. In this regard, the asset management affiliate would have to purchase the same securities in the secondary market. In such a circumstance, the Client Plans may incur greater costs both because the market price is often higher than the offering price, and because of transaction and market impact costs. In turn, this may cause the asset management affiliate to forego other investment opportunities because the purchase price of the underwritten security in the secondary market exceeds the price that the asset management affiliate would have paid to the selling syndicate. 12. The Applicants represent that the Affiliated Broker-Dealer currently manages and participates in firm commitment underwriting syndicates for registered offerings of both equity and debt securities. While equity and debt underwritings may operate differently with regard to the actual sales process, the basic structures are the same. In a firm commitment underwriting, the underwriting syndicate acquires the securities from the issuer and then sells the securities to investors. 13. The Applicants represent that while, as a legal matter, a selling syndicate assumes the risk that the underwritten securities might not be fully sold, as a practical matter, this risk is reduced, in marketed deals, through “building a book” ( *i.e.* , taking indications of interest from potential purchasers) prior to pricing the securities. Accordingly, there is no incentive for the underwriters to use their discretionary accounts (or the discretionary accounts of their affiliates) to buy up the securities as a way to avoid underwriting liabilities. 14. It is represented that each selling syndicate has a lead manager, who is the principal contact between the syndicate and the issuer and who is responsible for organizing and coordinating the syndicate. The syndicate may also have co-managers, who generally assist the lead manager in working with the issuer to prepare the registration statement to be filed with the SEC and in distributing the underwritten securities. While equity syndicates typically include additional members that are not managers, more recently, membership in many debt syndicates has been limited to lead and co-managers. 15. It is represented that if more than one underwriter is involved in a selling syndicate, the lead manager, who has been selected by the issuer of the underwritten securities, contacts other underwriters, and the underwriters enter into an “Agreement Among Underwriters.” Most lead managers have a standing form of agreement. This document is then supplemented for the particular deal by sending an “invitation telex” or “terms telex” that sets forth particular terms to the other underwriters. 16. The arrangement between the syndicate and the issuer of the underwritten securities is embodied in an underwriting agreement, which is signed on behalf of the underwriters by one or more of the managers. In a firm commitment underwriting, the underwriting agreement provides, subject to certain closing conditions, that the underwriters are obligated to purchase the underwritten securities from the issuer in accordance with their respective commitments. This obligation is met by using the proceeds received from the buyers of the securities in the offering, although there is a risk that the underwriters will have to pay for a portion of the securities in the event that not all of the securities are sold. 17. The Applicants represent that, generally, the risk that the securities will not be sold is small because the underwriting agreement is not executed until after the underwriters have obtained sufficient indications of interest to purchase the securities from a sufficient number of investors to assure that all the securities being offered will be acquired by investors. Once the underwriting agreement is executed, the underwriters immediately begin contacting the investors to confirm the sales, at first by oral communication and then by written confirmation. Sales are finalized within hours and sometimes minutes. In registered transactions, the underwriters are particularly anxious to complete the sales as soon as possible because until they “break syndicate,” they cannot enter the market. In many cases, the underwriters will act as market-makers for the security. A market-maker holds itself out as willing to buy or sell the security for its own account on a regular basis. 18. The Applicants represent that the process of “building a book” or soliciting indications of interest occurs as follows: In a registered equity offering, after a registration statement is filed with the SEC and, while it is under review by the SEC staff, representatives of the issuer of the securities and the selling syndicate managers conduct meetings with potential investors, who learn about the company and the underwritten securities. Potential investors also receive a preliminary prospectus. The underwriters cannot make any firm sales until the registration statement is declared effective by the SEC. Prior to the effective date, while the investors cannot become legally obligated to make a purchase, they indicate whether they have an interest in buying, and the managers compile a “book” of investors who are willing to “circle” a particular portion of the issue. These indications of interest are sometimes referred to as a “soft circle” because investors cannot be legally bound to buy the securities until the registration statement is effective. However, the Applicants represent that investors generally follow through on their indications of interest, and would be expected to do so, barring any sudden adverse developments (in which case it is likely that the offering would be withdrawn or the price range modified and the process restarted), because, if the investors that gave an indication of interest do not follow through, the underwriters may be reluctant to include them in future offerings. 19. Assuming that the marketing efforts have produced sufficient indications of interest, the Applicants represent that the issuer of the securities and the selling syndicate managers together will set the price of the securities and ask the SEC to declare the registration effective. After the registration statement becomes effective and the underwriting agreement is executed, the underwriters contact those investors that have indicated an interest in purchasing securities in the offering to execute the sales. The Applicants represent that offerings are often oversubscribed, and many have an over-allotment option that the underwriters can exercise to acquire additional shares from the issuer. Where an offering is oversubscribed, the underwriters decide how to allocate the securities among the potential purchasers. However, if an issue is a “hot issue,” ( *i.e.* , it is selling in the market at a premium above its offering price) the underwriters may not hold this hot issue in their own accounts, nor sell it to their employees, officers and directors. Subject to certain exceptions, a hot issue may also not be sold to the personal accounts of those responsible for investing for others, such as officers of banks, insurance companies, mutual funds, and investment advisers. 20. The Applicants represent that debt offerings may be “negotiated” offerings, “competitive bid” offerings, or “bought deals.” “Negotiated” offerings, which often involve non-investment grade securities, are conducted in the same manner as an equity offering with regard to when the underwriting agreement is executed and how the securities are offered. “Competitive bid” offerings, in which the issuer determines the price for the securities through competitive bidding rather than negotiating the price with the underwriting syndicate, are performed under “shelf” registration statements pursuant to the SEC's Rule 415 under the 1933 Act (17 CFR 230.415). 2 2 Rule 415 permits an issuer to sell debt as well as equity securities under an effective registration statement previously filed with the SEC by filing a post-effective amendment or supplemental prospectus. 21. In a competitive bid offering, prospective lead underwriters will bid against one another to purchase debt securities, based upon their determinations of the degree of investor interest in the securities. Depending on the level of investor interest and the size of the offering, a bidding lead underwriter may bring in co-managers to assist in the sales process. Most of the securities are frequently sold within hours, or sometimes even less than an hour, after the securities are made available for purchase. 22. It is represented that because of market forces and the requirements of Rule 415, the competitive bid process is generally available only to issuers of investment-grade securities who have been subject to the reporting requirements of the Securities Exchange Act of 1934 (the 1934 Act) for at least one
(1)year. 23. Occasionally, in highly-rated debt issues, underwriters “buy” the entire deal off of a “shelf registration” before obtaining indications of interest. These “bought” deals involve issuers whose securities enjoy a deep and liquid secondary market, such that an underwriter has confidence without pre-marketing that it can identify purchasers for the bonds. 24. The Applicants represent that there are internal policies in place that restrict contact and the flow of information between investment management personnel and non-investment management personnel in the same or affiliated financial service firms. These policies are designed to protect against “insider trading,” *i.e.* , trading on information not available to the general public that may affect the market price of the securities. Diversified financial services firms must be concerned about insider trading problems because one part of the firm— *e.g.* , the mergers and acquisitions group—could come into possession of non-public information regarding an upcoming transaction involving a particular issuer, while another part of the firm— *e.g.* , the investment management group—could be trading in the securities of that issuer for its clients. 25. The Applicants represent that their business separation policies and procedures are also structured to restrict the flow of any information to or from the asset management affiliate of BS that could limit its flexibility in managing client assets, and of information obtained or developed by the asset management affiliate of BS that could be used by other parts of the organization, to the detriment of the clients of the asset management affiliate of BS. 26. The Applicants represent that major clients of the Affiliated Broker-Dealer include investment management firms that are competitors of the asset management affiliate of BS. Similarly, the asset management affiliate of BS deals on a regular basis with broker-dealers that compete with the Affiliated Broker-Dealer. If special consideration were shown to an affiliate, such conduct would likely have an adverse effect on the relationships of the Affiliated Broker-Dealer and the asset management affiliate of BS with firms that compete with such affiliate. Therefore, a goal of the Applicants' business separation policies is to avoid any possible perception of improper flows of information between the Affiliated Broker-Dealer and the asset management affiliate of BS, in order to prevent any adverse impact on client and business relationships. 27. The Applicants represent that the underwriters are compensated through the “spread,” or difference, between the price at which the underwriters purchase the securities from the issuer and the price at which the securities are sold to the public. The spread is divided into three components. 28. The first component includes the management fee, which generally represents an agreed upon percentage of the overall spread and is allocated among the lead manager and co-managers. Where there is more than one managing underwriter, the way the management fee will be allocated among the managers is generally agreed upon between the managers and the issuer prior to soliciting indications of interest. Thus, the allocation of the management fee is not reflective of the amount of securities that a particular manager sells in an offering. 29. The second component is the underwriting fee, which represents compensation to the underwriters (including the non-managers, if any) for the risks they assume in connection with the offering and for the use of their capital. This component of the spread is also used to cover the expenses of the underwriting that are not otherwise reimbursed by the issuer of the securities. 30. The first and second components of the “spread” are received without regard to how the underwritten securities are allocated for sales purposes or to whom the securities are sold. The third component of the spread is the selling concession, which generally constitutes 60% or more of the spread. The selling concession compensates the underwriters for their actual selling efforts. The allocation of selling concessions among the underwriters generally follows the allocation of the securities for sales purposes. However, a buyer of the underwritten securities may designate other broker-dealers (who may be other underwriters, as well as broker-dealers outside the syndicate) to receive the selling concessions arising from the securities they purchase. 31. Securities are allocated for sales purposes into two categories. The first and larger category is the “institutional pot,” which is the pot of securities from which sales are made to institutional investors. Selling concessions for securities sold from the institutional pot are generally designated by the purchaser to go to particular underwriters or other broker-dealers. If securities are sold from the institutional pot, the selling syndicate managers sometimes receive a portion of the selling concessions, referred to as a “fixed designation” or an “auto pot split” attributable to securities sold in this category, without regard to who sold the securities or to whom they were sold. For securities covered by this proposed exemption, however, the Affiliated Broker-Dealer may not receive, either directly or indirectly, any compensation or consideration that is attributable to the fixed designation generated by purchases of securities by the asset management affiliate of BS on behalf of its Client Plans. 32. The second category of allocated securities is “retail,” which are the securities retained by the underwriters for sale to their retail customers. The underwriters receive the selling concessions from their respective retail retention allocations. Securities may be shifted between the two categories based upon whether either category is oversold or undersold during the course of the offering. 33. The Applicants represent that the inability of the Affiliated Broker-Dealer to receive any selling concessions, or any compensation attributable to the fixed designations generated by purchases of securities by the Client Plans of the asset management affiliate of BS, removes the primary economic incentive for the asset management affiliate of BS to make purchases that are not in the interests of its Client Plans from offerings for which the Affiliated Broker-Dealer is an underwriter. The reason is that the Affiliated Broker-Dealer will not receive any additional fees as a result of such purchases by the asset management affiliate of BS. 34. The Applicants represent that a number of the offerings of Rule 144A Securities in which the Affiliated Broker-Dealer participates represent good investment opportunities for the Client Plans of the asset management affiliate of BS. Particularly with respect to foreign securities, a Rule 144A offering may provide the least expensive and most accessible means for obtaining these securities. However, as discussed above PTE 75-1, Part III, does not cover Rule 144A Securities. Therefore, absent an exemption, the asset management affiliate of BS is foreclosed from purchasing such securities for its Client Plans in offerings in which the Affiliated Broker-Dealer participates. 35. The Applicants state that Rule 144A acts as a “safe harbor” exemption from the registration provisions of the Securities Act for sales of certain types of securities to QIBs. QIBs include several types of institutional entities, such as employee benefit plans and commingled trust funds holding assets of such plans, which own and invest on a discretionary basis at least $100 million in securities of unaffiliated issuers. 36. Any securities may be sold pursuant to Rule 144A except for those of the same class or similar to a class that is publicly traded in the United States, or certain types of investment company securities. This limitation is designed to prevent side-by-side public and private markets developing for the same class of securities and is the reason that Rule 144A transactions are generally limited to debt securities. 37. Buyers of Rule 144A Securities must be able to obtain, upon request, basic information concerning the business of the issuer and the issuer's financial statements, much of the same information as would be furnished if the offering were registered. This condition does not apply, however, to an issuer filing reports with the SEC under the 1934 Act, for which reports are publicly available. The condition also does not apply to a “foreign private issuer” for whom reports are furnished to the SEC under Rule 12g3-2(b) of the 1934 Act (17 CFR 240.12g3-2(b)), or to issuers who are foreign governments or political subdivisions thereof and are eligible to use Schedule B under the 1933 Act (which describes the information and documents required to be contained in a registration statement filed by such issuers). 38. Sales under Rule 144A, like sales in a registered offering, remain subject to the protections of the anti-fraud rules of federal and state securities laws. These rules include Section 10(b) of the 1934 Act and Rule 10b-5 thereunder (17 CFR 240.10b-5) and Section 17(a) of the 1933 Act (15 U.S.C. 77a). Through these and other provisions, the SEC may use its full range of enforcement powers to exercise its regulatory authority over the market for Rule 144A Securities, in the event that it detects improper practices. 39. The Applicants represent that this potential liability for fraud provides a considerable incentive to the issuer of the securities and the members of the selling syndicate to insure that the information contained in a Rule 144A offering memorandum is complete and accurate in all material respects. Among other things, the lead manager typically obtains an opinion from a law firm, commonly referred to as a “l0b-5” opinion, stating that the law firm has no reason to believe that the offering memorandum contains any untrue statement of material fact or omits to state a material fact necessary in order to make sure the statements made, in light of the circumstances under which they were made, are not misleading. 40. The Applicants represent that Rule 144A offerings generally are structured in the same manner as underwritten registered offerings. The major difference is that a Rule 144A offering uses an offering memorandum rather than a prospectus that is filed with the SEC. The marketing process is the same in most respects, except that the selling efforts are limited to contacting QIBs and there are no general solicitations for buyers ( *e.g.* , no general advertising). In addition, the role of the Affiliated Broker-Dealer in these offerings is typically that of a lead or co-manager. Generally, there are no non-manager members in a Rule 144A selling syndicate. However, the Applicants request that the proposed exemption extend to authorization for situations where the Affiliated Broker-Dealer acts only as a syndicate member, not as a manager. 41. The proposed exemption is administratively feasible. In this regard, compliance with the terms and conditions of the proposed exemption will be verifiable and subject to audit. 42. The proposed exemption is in the interest of participants and beneficiaries of Client Plans that engage in the covered transactions. In this regard, it is represented that the proposed exemption will increase investment opportunities and will reduce administrative costs for Client Plans. 43. The proposed exemption is protective of the rights of the participants and beneficiaries of affected Client Plans. In this regard, the notification and other requirements in the proposed exemption are similar to conditions set forth in other exemptions published by the Department in similar circumstances. 44. In summary, it is represented that the proposed transactions meet the statutory criteria for an exemption under section 408(a) of the Act and section 4975(c)(2) of the Code because:
(a)The Client Plans will gain access to desirable investment opportunities;
(b)in each offering, the asset management affiliate of BS will purchase the securities for its Client Plans from an underwriter or broker-dealer other than the Affiliated Broker-Dealer;
(c)conditions similar to those of PTE 75-1, Part III, will restrict the types of securities that may be purchased, the types of underwriting or selling syndicates and issuers involved, and the price and timing of the purchases;
(d)the amount of securities that the asset management affiliate of BS may purchase on behalf of Client Plans will be subject to percentage limitations;
(e)the Affiliated Broker-Dealer will not be permitted to receive, either directly, indirectly or through designation, any selling concession with respect to the securities sold to the asset management affiliate of BS for the account of a Client Plan;
(f)prior to any purchase of securities, the asset management affiliate of BS will make the required disclosures to an independent fiduciary (Independent Fiduciary) of each Client Plan and obtain written authorization to engage in the covered transactions;
(g)the asset management affiliate of BS will provide regular reporting to an Independent Fiduciary of each Client Plan with respect to all securities purchased pursuant to the proposed exemption;
(h)each Client Plan will be subject to net asset requirements, with certain exceptions for Pooled Funds; and
(i)the asset management affiliate of BS must have total assets under management in excess of $5 billion and shareholders' or partners' equity in excess of $1 million, in addition to qualifying as a QPAM, pursuant to Part V(a) of PTE 84-14. Proposed Exemption Based on the facts and representations set forth in the application, the Department of Labor (the Department) is considering granting an exemption under the authority of section 408(a) of the Employee Retirement Income Security Act of 1974 (the Act) and section 4975(c)(2) of the Internal Revenue Code of 1986 (the Code) and in accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990) as follows: Section I—Transactions If the proposed exemption is granted, the restrictions of section 406 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
(F)of the Code, shall not apply to the purchase of certain securities (the Securities), as defined, below in Section III(h), by an asset management affiliate of BS, as “affiliate” is defined, below, in Section III(c), from any person other than such asset management affiliate of BS or any affiliate thereof, during the existence of an underwriting or selling syndicate with respect to such Securities, where a broker-dealer affiliated with BS (the Affiliated Broker-Dealer), as defined, below, in Section III(b), is a manager or member of such syndicate and the asset management affiliate of BS purchases such Securities, as a fiduciary:
(a)on behalf of an employee benefit plan or employee benefit plans (Client Plan(s)), as defined, below, in Section III(e); or
(b)on behalf of Client Plans, and/or In-House Plans, as defined, below, in Section III(q), which are invested in a pooled fund or in pooled funds (Pooled Fund(s)), as defined, below, in Section III(f); provided that the conditions as set forth, below, in Section II, are satisfied (An affiliated underwriter transaction (AUT)). 3 3 For purposes of this proposed exemption an In-House Plan may engage in AUT's only through investment in a Pooled Fund. Section II—Conditions The proposed exemption is conditioned upon adherence to the material facts and representations described herein and upon satisfaction of the following requirements: (a)(1) The Securities to be purchased are either—
(i)Part of an issue registered under the Securities Act of 1933 (the 1933 Act) (15 U.S.C. 77a et. seq.). If the Securities to be purchased are part of an issue that is exempt from such registration requirement, such Securities:
(A)Are issued or guaranteed by the United States or by any person controlled or supervised by and acting as an instrumentality of the United States pursuant to authority granted by the Congress of the United States,
(B)Are issued by a bank,
(C)Are exempt from such registration requirement pursuant to a federal statute other than the 1933 Act, or
(D)Are the subject of a distribution and are of a class which is required to be registered under section 12 of the Securities Exchange Act of 1934 (the 1934 Act) (15 U.S.C. 781), and are issued by an issuer that has been subject to the reporting requirements of section 13 of the 1934 Act (15 U.S.C. 78m) for a period of at least ninety
(90)days immediately preceding the sale of such Securities and that has filed all reports required to be filed thereunder with the Securities and Exchange Commission
(SEC)during the preceding twelve
(12)months; or
(ii)Part of an issue that is an Eligible Rule 144A Offering, as defined in SEC Rule 10f-3 (17 CFR 270.10f-3(a)(4)). Where the Eligible Rule 144A Offering of the Securities is of equity securities, the offering syndicate shall obtain a legal opinion regarding the adequacy of the disclosure in the offering memorandum;
(2)The Securities to be purchased are purchased prior to the end of the first day on which any sales are made, pursuant to that offering, at a price that is not more than the price paid by each other purchaser of the Securities in that offering or in any concurrent offering of the Securities, except that—
(i)If such Securities are offered for subscription upon exercise of rights, they may be purchased on or before the fourth day preceding the day on which the rights offering terminates; or
(ii)If such Securities are debt securities, they may be purchased at a price that is not more than the price paid by each other purchaser of the Securities in that offering or in any concurrent offering of the Securities and may be purchased on a day subsequent to the end of the first day on which any sales are made, pursuant to that offering, provided that the interest rates, as of the date of such purchase, on comparable debt securities offered to the public subsequent to the end of the first day on which any sales are made and prior to the purchase date are less than the interest rate of the debt Securities being purchased; and
(3)The Securities to be purchased are offered pursuant to an underwriting or selling agreement under which the members of the syndicate are committed to purchase all of the Securities being offered, except if—
(i)Such Securities are purchased by others pursuant to a rights offering; or
(ii)Such Securities are offered pursuant to an over-allotment option.
(b)The issuer of the Securities to be purchased has been in continuous operation for not less than three years, including the operation of any predecessors, unless—
(1)Such Securities are non-convertible debt securities rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization, *i.e.* , Standard & Poor's Rating Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating Co., or Fitch IBCA, Inc., or their successors (collectively, the Rating Organizations); or
(2)Such Securities are issued or fully guaranteed by a person described, above, in Section II(a)(1)(i)(A); or
(3)Such Securities are fully guaranteed by a person described, above, in Section II(a)(1)(i)(B), (C), or (D), who has issued the Securities and who has been in continuous operation for not less than three years, including the operation of any predecessors.
(c)The aggregate amount of Securities of an issue purchased, pursuant to this exemption, by the asset management affiliate of BS with:
(i)The assets of all Client Plans; and
(ii)the assets, calculated on a *pro-rata* basis, of all Client Plans and In-House Plans investing in Pooled Funds managed by the asset management affiliate of BS; and
(iii)the assets of plans to which the asset management affiliate of BS renders investment advice within the meaning of 29 CFR 2510.3-21(c) does not exceed:
(1)10 percent (10%) of the total amount of the Securities being offered in an issue, if such Securities are equity securities;
(2)35 percent (35%) of the total amount of the Securities being offered in an issue, if such Securities are debt securities rated in one of the four highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations rates such Securities in a category lower than the fourth highest rating category; or
(3)25 percent (25%) of the total amount of the Securities being offered in an issue, if such Securities are debt securities rated in the fifth or sixth highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations rates such Securities in a category lower than the sixth highest rating category; and
(4)The assets of any single Client Plan (and the assets of any Client Plans and any In-House Plans investing in Pooled Funds) may not be used to purchase any Securities being offered, if such Securities are debt securities rated lower than the sixth highest rating category by any of the Rating Organizations;
(5)Notwithstanding the percentage of Securities of an issue permitted to be acquired, as set forth in Section II(c)(1), (2), and (3), above, of this exemption, the amount of Securities in any issue (whether equity or debt securities) purchased, pursuant to this exemption, by the asset management affiliate of BS on behalf of any single Client Plan, either individually or through investment, calculated on a *pro-rata* basis, in a Pooled Fund may not exceed three percent (3%) of the total amount of such Securities being offered in such issue, and;
(6)If purchased in an Eligible Rule 144A Offering, the total amount of the Securities being offered for purposes of determining the percentages, described above, in Section II(c)(1)-(3) and (5), is the total of:
(i)The principal amount of the offering of such class of Securities sold by underwriters or members of the selling syndicate to “qualified institutional buyers” (QIBs), as defined in SEC Rule 144A (17 CFR 230.144A(a)(1)); plus
(ii)The principal amount of the offering of such class of Securities in any concurrent public offering.
(d)The aggregate amount to be paid by any single Client Plan in purchasing any Securities which are the subject of this exemption, including any amounts paid by any Client Plan or In-House Plan in purchasing such Securities through a Pooled Fund, calculated on a *pro-rata* basis, does not exceed three percent (3%) of the fair market value of the net assets of such Client Plan or In-House Plan, as of the last day of the most recent fiscal quarter of such Client Plan or In-House Plan prior to such transaction.
(e)The covered transactions are not part of an agreement, arrangement, or understanding designed to benefit the asset management affiliate of BS or an affiliate.
(f)The Affiliated Broker-Dealer does not receive, either directly, indirectly, or through designation, any selling concession, or other compensation or consideration that is based upon the amount of Securities purchased by any single Client Plan, or that is based on the amount of Securities purchased by Client Plans or In-House Plans through Pooled Funds, pursuant to this exemption. In this regard, the Affiliated Broker-Dealer may not receive, either directly or indirectly, any compensation or consideration that is attributable to the fixed designations generated by purchases of the Securities by the asset management affiliate of BS on behalf of any single Client Plan or any Client Plan or In-House Plan in Pooled Funds. (g)(1) The amount the Affiliated Broker-Dealer receives in management, underwriting, or other compensation or consideration is not increased through an agreement, arrangement, or understanding for the purpose of compensating the Affiliated Broker-Dealer for foregoing any selling concessions for those Securities sold pursuant to this exemption. Except as described above, nothing in this Section II(g)(1) shall be construed as precluding the Affiliated Broker-Dealer from receiving management fees for serving as manager of the underwriting or selling syndicate, underwriting fees for assuming the responsibilities of an underwriter in the underwriting or selling syndicate, or other compensation or consideration that is not based upon the amount of Securities purchased by the asset management affiliate of BS on behalf of any single Client Plan, or on behalf of any Client Plan or In-House Plan participating in Pooled Funds, pursuant to this exemption; and
(2)The Affiliated Broker-Dealer shall provide to the asset management affiliate of BS a written certification, signed by an officer of the Affiliated Broker-Dealer, stating the amount that the Affiliated Broker-Dealer received in compensation or consideration during the past quarter, in connection with any offerings covered by this exemption, was not adjusted in a manner inconsistent with Section II(e), (f), or
(g)of this exemption.
(h)The covered transactions are performed under a written authorization executed in advance by an independent fiduciary of each single Client Plan (the Independent Fiduciary), as defined, below, in Section III(g).
(i)Prior to the execution by an Independent Fiduciary of a single Client Plan of the written authorization described, above, in Section II(h), the following information and materials (which may be provided electronically) must be provided by the asset management affiliate of BS to such Independent Fiduciary:
(1)A copy of the Notice of Proposed Exemption (the Notice) and a copy of the final exemption as published in the **Federal Register** ; and
(2)Any other reasonably available information regarding the covered transactions that such Independent Fiduciary requests the asset management affiliate of BS to provide.
(j)Subsequent to the initial authorization by an Independent Fiduciary of a single Client Plan permitting the asset management affiliate of BS to engage in the covered transactions on behalf of such single Client Plan, the asset management affiliate of BS will continue to be subject to the requirement to provide within a reasonable period of time any reasonably available information regarding the covered transactions that the Independent Fiduciary requests the asset management affiliate of BS to provide. (k)(1) In the case of an existing employee benefit plan investor (or existing In-House Plan investor, as the case may be) in a Pooled Fund, such Pooled Fund may not engage in any covered transactions pursuant to this exemption, unless the asset management affiliate of BS provides the written information, as described, below, and within the time period described, below, in this Section II(k)(2), to the Independent Fiduciary of each such plan participating in such Pooled Fund (and to the fiduciary of each such In-House Plan participating in such Pooled Fund).
(2)The following information and materials (which may be provided electronically) shall be provided by the asset management affiliate of BS not less than 45 days prior to such asset management affiliate of BS engaging in the covered transactions on behalf of a Pooled Fund, pursuant to this exemption:
(i)A notice of the intent of such Pooled Fund to purchase Securities pursuant to this exemption, a copy of this Notice, and a copy of the final exemption, as published in the **Federal Register** ;
(ii)Any other reasonably available information regarding the covered transactions that the Independent Fiduciary of a plan (or fiduciary of an In-House Plan) participating in a Pooled Fund requests the asset management affiliate of BS to provide; and
(iii)A termination form expressly providing an election for the Independent Fiduciary of a plan (or fiduciary of an In-House Plan) participating in a Pooled Fund to terminate such plan's (or In-House Plan's) investment in such Pooled Fund without penalty to such plan (or In-House Plan). Such form shall include instructions specifying how to use the form. Specifically, the instructions will explain that such plan (or such In-House Plan) has an opportunity to withdraw its assets from a Pooled Fund for a period of no more than 30 days after such plan's (or such In-House Plan's) receipt of the initial notice of intent, described, above, in Section II(k)(2)(i), and that the failure of the Independent Fiduciary of such plan (or fiduciary of such In-House Plan) to return the termination form to the asset management affiliate of BS in the case of a plan (or In-House Plan) participating in a Pooled Fund by the specified date shall be deemed to be an approval by such plan (or such In-House Plan) of its participation in the covered transactions as an investor in such Pooled Fund. Further, the instructions will identify BS, the asset management affiliate of BS, and the Affiliated Broker-Dealer and will provide the address of the asset management affiliate of BS. The instructions will state that this exemption may be unavailable, unless the fiduciary of each plan participating in the covered transactions as an investor in a Pooled Fund is, in fact, independent of BS, the asset management affiliate of BS, and the Affiliated Broker-Dealer. The instructions will also state that the fiduciary of each such plan must advise the asset management affiliate of BS, in writing, if it is not an “Independent Fiduciary,” as that term is defined, below, in Section III(g). For purposes of this Section II(k), the requirement that the fiduciary responsible for the decision to authorize the transactions described, above, in Section I of this exemption for each plan be independent of the asset management affiliate of BS shall not apply in the case of an In-House Plan. (l)(1) In the case of each plan (and in the case of each In-House Plan) whose assets are proposed to be invested in a Pooled Fund after such Pooled Fund has satisfied the conditions set forth in this exemption to engage in the covered transactions, the investment by such plan (or by such In-House Plan) in the Pooled Fund is subject to the prior written authorization of an Independent Fiduciary representing such plan (or the prior written authorization by the fiduciary of such In-House Plan, as the case may be), following the receipt by such Independent Fiduciary of such plan (or by the fiduciary of such In-House Plan, as the case may be) of the written information described, above, in Section II(k)(2)(i) and (ii).
(2)For purposes of this Section II(l), the requirement that the fiduciary responsible for the decision to authorize the transactions described, above, in Section I of this exemption for each plan proposing to invest a Pooled Fund be independent of BS and its affiliates shall not apply in the case of an In-House Plan, as defined, below, in Section III(l).
(m)Subsequent to the initial authorization by an Independent Fiduciary of a plan (or by a fiduciary of an In-House Plan) to invest in a Pooled Fund that engages in the covered transactions, the asset management affiliate of BS will continue to be subject to the requirement to provide within a reasonable period of time any reasonably available information regarding the covered transactions that the Independent Fiduciary of such plan (or the fiduciary of such In-House Plan, as the case may be) requests the asset management affiliate of BS to provide.
(n)At least once every three months, and not later than 45 days following the period to which such information relates, the asset management affiliate of BS shall furnish:
(1)In the case of each single Client Plan that engages in the covered transactions, the information described, below, in this Section II(n)(3)-(7), to the Independent Fiduciary of each such single Client Plan.
(2)In the case of each Pooled Fund in which a Client Plan (or in which an In-House Plan) invests, the information described, below, in this Section II(n)(3)-(6) and (8), to the Independent Fiduciary of each such Client Plan (and to the fiduciary of each such In-House Plan) invested in such Pooled Fund.
(3)A quarterly report (the Quarterly Report) (which may be provided electronically) which discloses all the Securities purchased pursuant to the exemption during the period to which such report relates on behalf of the Client Plan, In-House Plan, or Pooled Fund to which such report relates, and which discloses the terms of each of the transactions described in such report, including:
(i)The type of Securities (including the rating of any Securities which are debt securities) involved in each transaction;
(ii)The price at which the Securities were purchased in each transaction;
(iii)The first day on which any sale was made during the offering of the Securities;
(iv)The size of the issue of the Securities involved in each transaction;
(v)The number of Securities purchased by the asset management affiliate of BS for the Client Plan, In-House Plan, or Pooled Fund to which the transaction relates;
(vi)The identity of the underwriter from whom the Securities were purchased for each transaction;
(vii)The underwriting spread in each transaction ( *i.e.* , the difference, between the price at which the underwriter purchases the securities from the issuer and the price at which the securities are sold to the public);
(viii)The price at which any of the Securities purchased during the period to which such report relates were sold; and
(ix)The market value at the end of the period to which such report relates of the Securities purchased during such period and not sold;
(4)The Quarterly Report contains:
(i)a representation that the asset management affiliate of BS has received a written certification signed by an officer of the Affiliated Broker-Dealer, as described, above, in Section II(g)(2), affirming that, as to each AUT covered by this exemption during the past quarter, the Affiliated Broker-Dealer acted in compliance with Section II(e), (f), and
(g)of this exemption, and
(ii)a representation that copies of such certifications will be provided upon request;
(5)A disclosure in the Quarterly Report that states that any other reasonably available information regarding a covered transaction that an Independent Fiduciary (or fiduciary of an In-House Plan) requests will be provided, including, but not limited to:
(i)The date on which the Securities were purchased on behalf of the Client Plan (or the In-House Plan) to which the disclosure relates (including Securities purchased by Pooled Funds in which such Client Plan (or such In-House Plan) invests;
(ii)The percentage of the offering purchased on behalf of all Client Plans (and the *pro-rata* percentage purchased on behalf of Client Plans and In-House Plans investing in Pooled Funds); and
(iii)The identity of all members of the underwriting syndicate;
(6)The Quarterly Report discloses any instance during the past quarter where the asset management affiliate of BS was precluded for any period of time from selling Securities purchased under this exemption in that quarter because of its status as an affiliate of an Affiliated Broker-Dealer and the reason for this restriction;
(7)Explicit notification, prominently displayed in each Quarterly Report sent to the Independent Fiduciary of each single Client Plan that engages in the covered transactions that the authorization to engage in such covered transactions may be terminated, without penalty to such single Client Plan, within five
(5)days after the date that the Independent Fiduciary of such single Client Plan informs the person identified in such notification that the authorization to engage in the covered transactions is terminated; and
(8)Explicit notification, prominently displayed in each Quarterly Report sent to the Independent Fiduciary of each Client Plan (and to the fiduciary of each In-House Plan) that engages in the covered transactions through a Pooled Fund that the investment in such Pooled Fund may be terminated, without penalty to such Client Plan (or such In-House Plan), within such time as may be necessary to effect the withdrawal in an orderly manner that is equitable to all withdrawing plans and to the non-withdrawing plans, after the date that that the Independent Fiduciary of such Client Plan (or the fiduciary of such In-House Plan, as the case may be) informs the person identified in such notification that the investment in such Pooled Fund is terminated.
(o)For purposes of engaging in covered transactions, each Client Plan (and each In-House Plan) shall have total net assets with a value of at least $50 million (the $50 Million Net Asset Requirement). For purposes of engaging in covered transactions involving an Eligible Rule 144A Offering, 4 each Client Plan (and each In-House Plan) shall have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or such In-House Plan, as the case may be) (the $100 Million Net Asset Requirement). 4 SEC Rule 10f-3(a)(4), 17 CFR 270.10f-3(a)(4), states that the term “Eligible Rule 144A Offering” means an offering of securities that meets the following conditions:
(i)The securities are offered or sold in transactions exempt from registration under section 4(2) of the Securities Act of 1933 [15 U.S.C. 77d(d)], rule 144A there under [§ 230.144A of this chapter], or rules 501-508 there under [§§ 230.501-230-508 of this chapter];
(ii)The securities are sold to persons that the seller and any person acting on behalf of the seller reasonably believe to include qualified institutional buyers, as defined in § 230.144A(a)(1) of this chapter; and
(iii)The seller and any person acting on behalf of the seller reasonably believe that the securities are eligible for resale to other qualified institutional buyers pursuant to § 230.144A of this chapter. For purposes of a Pooled Fund engaging in covered transactions, each Client Plan (and each In-House Plan) in such Pooled Fund shall have total net assets with a value of at least $50 million. Notwithstanding the foregoing, if each such Client Plan (and each such In-House Plan) in such Pooled Fund does not have total net assets with a value of at least $50 million, the $50 Million Net Asset Requirement will be met, if 50 percent (50%) or more of the units of beneficial interest in such Pooled Fund are held by Client Plans (or by In-House Plans) each of which has total net assets with a value of at least $50 million. For purposes of a Pooled Fund engaging in covered transactions involving an Eligible Rule 144A Offering, each Client Plan (and each In-House Plan) in such Pooled Fund shall have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or such In-House Plan, as the case may be). Notwithstanding the foregoing, if each such Client Plan (and each such In-House Plan) in such Pooled Fund does not have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or In-House Plan, as the case may be), the $100 Million Net Asset Requirement will be met if 50 percent (50%) or more of the units of beneficial interest in such Pooled Fund are held by Client Plans (or by In-House Plans) each of which have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or such In-House Plan, as the case may be), and the Pooled Fund itself qualifies as a QIB, as determined pursuant to SEC Rule 144A (17 CFR 230.144A(a)(F)). For purposes of the net asset requirements described, above, in this Section II(o), where a group of Client Plans is maintained by a single employer or controlled group of employers, as defined in section 407(d)(7) of the Act, the $50 Million Net Asset Requirement (or in the case of an Eligible Rule 144A Offering, the $100 Million Net Asset Requirement) may be met by aggregating the assets of such Client Plans, if the assets of such Client Plans are pooled for investment purposes in a single master trust.
(p)The asset management affiliate of BS qualifies as a “qualified professional asset manager” (QPAM), as that term is defined under Part V(a) of PTE 84-14. Notwithstanding the fact that the asset management affiliate of BS satisfies the requirements, as set forth in Part V(a) of PTE 84-14, such asset management affiliate of BS must also have total client assets under its management and control in excess of $5 billion, as of the last day of its most recent fiscal year and shareholders' or partners' equity in excess of $1 million. Furthermore, the requirement that the asset management affiliate of BS must have total client asset under its management and control in excess of $5 billion, as of the last day of it most recent fiscal year and shareholders' or partners' equity in excess of $1 million, as set forth in this Section II(p), applies whether such asset management affiliate of BS, qualifies as a QPAM, pursuant to Part V(a)(1), (a)(2), (a)(3) or (a)(4) of PTE 84-14.
(q)No more than 20 percent of the assets of a Pooled Fund at the time of a covered transaction, are comprised of assets of In-House Plans for which BS, the asset management affiliate of BS, the Affiliated Broker-Dealer, or an affiliate exercises investment discretion.
(r)The asset management affiliate of BS, and the Affiliated Broker-Dealer, as applicable, maintain, or cause to be maintained, for a period of six
(6)years from the date of any covered transaction such records as are necessary to enable the persons, described, below, in Section II(s), to determine whether the conditions of this exemption have been met, except that—
(1)No party in interest with respect to a plan which engages in the covered transactions, other than BS, the asset management affiliate of BS, and the Affiliated Broker-Dealer, as applicable, shall be subject to a civil penalty under section 502(i) of the Act or the taxes imposed by section 4975(a) and
(b)of the Code, if such records are not maintained, or not available for examination, as required, below, by Section II(s); and
(2)A prohibited transaction shall not be considered to have occurred if, due to circumstances beyond the control of the asset management affiliate of BS, or the Affiliated Broker-Dealer, as applicable, such records are lost or destroyed prior to the end of the six-year period. (s)(1) Except as provided, below, in Section II(s)(2), and notwithstanding any provisions of subsections (a)(2) and
(b)of section 504 of the Act, the records referred to, above, in Section II(r) are unconditionally available at their customary location for examination during normal business hours by—
(i)Any duly authorized employee or representative of the Department, the Internal Revenue Service, or the SEC; or
(ii)Any fiduciary of any plan that engages in the covered transactions, or any duly authorized employee or representative of such fiduciary; or
(iii)Any employer of participants and beneficiaries and any employee organization whose members are covered by a plan that engages in the covered transactions, or any authorized employee or representative of these entities; or
(iv)Any participant or beneficiary of a plan that engages in the covered transactions, or duly authorized employee or representative of such participant or beneficiary;
(2)None of the persons described, above, in Section II(s)(1)(ii)-(iv) shall be authorized to examine trade secrets of the asset management affiliate of BS, or the Affiliated Broker-Dealer, or commercial or financial information which is privileged or confidential; and
(3)Should the asset management affiliate of BS, or the Affiliated Broker-Dealer refuse to disclose information on the basis that such information is exempt from disclosure, pursuant to Section II(s)(2), above, the asset management affiliate of BS shall, by the close of the thirtieth
(30th)day following the request, provide a written notice advising that person of the reasons for the refusal and that the Department may request such information. Section III—Definitions
(a)The term, “the Applicants,” means BS, BSAM, and BSC.
(b)The term, “Affiliated Broker-Dealer,” means any broker-dealer affiliate, as “affiliate” is defined, below, in Section III(c), of the Applicants, as “Applicants” are defined, above, in Section III(a), that meets the requirements of this exemption. Such Affiliated Broker-Dealer may participate in an underwriting or selling syndicate as a manager or member. The term, “manager,” means any member of an underwriting or selling syndicate who, either alone or together with other members of the syndicate, is authorized to act on behalf of the members of the syndicate in connection with the sale and distribution of the Securities, as defined, below, in Section III(h), being offered or who receives compensation from the members of the syndicate for its services as a manager of the syndicate.
(c)The term “affiliate” of a person includes:
(1)Any person directly or indirectly through one or more intermediaries, controlling, controlled by, or under common control with such person;
(2)Any officer, director, partner, employee, or relative, as defined in section 3(15) of the Act, of such person; and
(3)Any corporation or partnership of which such person is an officer, director, partner, or employee.
(d)The term, “control,” means the power to exercise a controlling influence over the management or policies of a person other than an individual.
(e)The term, “Client Plan(s),” means an employee benefit plan(s) that is subject to the Act and/or the Code, and for which plan(s) an asset management affiliate of BS exercises discretionary authority or discretionary control respecting management or disposition of some or all of the assets of such plan(s), but excludes In-House Plans, as defined, below, in Section III(l).
(f)The term, “Pooled Fund(s),” means a common or collective trust fund(s) or a pooled investment fund(s):
(i)In which employee benefit plan(s) subject to the Act and/or Code invest,
(ii)which is maintained by an asset management affiliate of BS, (as the term, “affiliate” is defined, above, in Section III(c)), and
(iii)for which such asset management affiliate of BS exercises discretionary authority or discretionary control respecting the management or disposition of the assets of such fund(s). (g)(1) The term, “Independent Fiduciary,” means a fiduciary of a plan who is unrelated to, and independent of BS, the asset management affiliate of BS, and the Affiliated Broker-Dealer. For purposes of this exemption, a fiduciary of a plan will be deemed to be unrelated to, and independent of BS, the asset management affiliate of BS, and the Affiliated Broker-Dealer, if such fiduciary represents that neither such fiduciary, nor any individual responsible for the decision to authorize or terminate authorization for the transactions described, above, in Section I of this exemption, is an officer, director, or highly compensated employee (within the meaning of section 4975(e)(2)(H) of the Code) of BS, the asset management affiliate of BS, or the Affiliated Broker-Dealer, and represents that such fiduciary shall advise the asset management affiliate of BS within a reasonable period of time after any change in such facts occur.
(2)Notwithstanding anything to the contrary in this Section III(g), a fiduciary of a plan is not independent:
(i)If such fiduciary directly or indirectly controls, is controlled by, or is under common control with BS, the asset management affiliate of BS, or the Affiliated Broker-Dealer;
(ii)If such fiduciary directly or indirectly receives any compensation or other consideration from BS, the asset management affiliate of BS, or the Affiliated Broker-Dealer for his or her own personal account in connection with any transaction described in this exemption;
(iii)If any officer, director, or highly compensated employee (within the meaning of section 4975(e)(2)(H) of the Code) of the asset management affiliate of BS responsible for the transactions described, above, in Section I of this exemption, is an officer, director, or highly compensated employee (within the meaning of section 4975(e)(2)(H) of the Code) of the sponsor of the plan or of the fiduciary responsible for the decision to authorize or terminate authorization for the transactions described, above, in Section I. However, if such individual is a director of the sponsor of the plan or of the responsible fiduciary, and if he or she abstains from participation in:
(A)The choice of the plan's investment manager/adviser; and
(B)the decision to authorize or terminate authorization for transactions described, above, in Section I, then Section III(g)(2)(iii) shall not apply.
(3)The term, “officer,” means a president, any vice president in charge of a principal business unit, division, or function (such as sales, administration, or finance), or any other officer who performs a policy-making function for BS or any affiliate thereof.
(h)The term, “Securities,” shall have the same meaning as defined in section 2(36) of the Investment Company Act of 1940 (the 1940 Act), as amended (15 U.S.C. 80a-2(36)(1996)). For purposes of this exemption, mortgage-backed or other asset-backed securities rated by one of the Rating Organizations, as defined, below, in Section III(k), will be treated as debt securities.
(i)The term, “Eligible Rule 144A Offering,” shall have the same meaning as defined in SEC Rule 10f-3(a)(4) (17 CFR 270.10f-3(a)(4)) under the 1940 Act).
(j)The term, “qualified institutional buyer,” or the term, “QIB,” shall have the same meaning as defined in SEC Rule 144A (17 CFR 230.144A(a)(1)) under the 1933 Act).
(k)The term, “Rating Organizations,” means Standard & Poor's Rating Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating Co., or Fitch IBCA, Inc., or their successors.
(l)The term, “In-House Plan(s),” means an employee benefit plan(s) that is subject to the Act and/or the Code, and that is sponsored by the Applicants, as defined, above, in Section III(a) for their own employees. The availability of this exemption is subject to the express condition that the material facts and representations contained in the application for exemption 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 applications change, the exemption will cease to apply as of the date of such change. In the event of any such change, an application for a new exemption must be made to the Department. 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 does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions of the Act, 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;
(2)Before an exemption can be granted under section 408(a) of the Act, the Department must find that the exemption is administratively feasible, in the interest of the plan and of its participants and beneficiaries and protective of the rights of participants and beneficiaries of the plan; and
(3)The proposed exemption, if granted, will be supplemental to, and not in derogation of, any other provisions of the Act, including statutory or administrative exemptions. 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. Signed at Washington, DC, this 20th day of November, 2006. Ivan L. Strasfeld, Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor. [FR Doc. E6-19826 Filed 11-22-06; 8:45 am] BILLING CODE 4510-29-P DEPARTMENT OF LABOR Employee Benefits Security Administration [Exemption Application Nos. D-11375, and D-11392] Prohibited Transaction Exemptions 2006-17 and 2006-18; Grant of Individual Exemptions involving; D-11375, Frank D. May and D-11392, Amendment to Prohibited Transaction Exemption PTE 2001-32 Involving Development Company Funding Corporation AGENCY: Employee Benefits Security Administration, Labor. ACTION: Grant of individual exemptions. 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 (ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code). A notice was published in the **Federal Register** of the pendency before the Department of a proposal to grant such exemption. The notice set forth a summary of facts and representations contained in the application for exemption and referred interested persons to the application for a complete statement of the facts and representations. The application has been available for public inspection at the Department in Washington, DC. The notice also invited interested persons to submit comments on the requested exemption to the Department. In addition the notice stated that any interested person might submit a written request that a public hearing be held (where appropriate). The applicant has represented that it has complied with the requirements of the notification to interested persons. No requests for a hearing were received by the Department. Public comments were received by the Department as described in the granted exemption. The notice of proposed exemption was issued and the exemption is being granted solely by the Department because, effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), 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 exemption is administratively feasible;
(b)The exemption is in the interests of the plan and its participants and beneficiaries; and
(c)The exemption is protective of the rights of the participants and beneficiaries of the plan. Frank D. May, D.M.D., P.A. 401(k) Profit Sharing Plan and Trust (the Plan), Located in Port St. Joe, Florida [Exemption Application No. D-11375; Prohibited Transaction Exemption 2006-17] Exemption The restrictions of sections 406(a), 406(b)(1), and 406(b)(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 1 shall not apply to the sale of shares of stock (the Stock) in Diente Y Clavo, S.A.
(DyC)from the individually directed account in the Plan of Frank D. May, D.M.D. (the Account) to Frank D. May, D.M.D. (Dr. May), a party in interest with respect to the Account, provided the following conditions are satisfied: 1 For purposes of this exemption, references to specific provisions of Title I of the Act, unless otherwise specified, refer also to the corresponding provisions of the Code. a. The sale of the Stock to Dr. May is a one-time transaction for cash; b. Dr. May purchases the Stock for a purchase price that reflects the fair market value of the underlying assets of DyC; c. The fair market value of the underlying assets of DyC is determined by an independent, qualified appraiser, as of the date the transaction is entered; d. The Account is not responsible for and does not pay any fees, commissions, or other costs, or expenses associated with the sale of the Stock, including the cost of filing the application and notifying interested persons; e. Dr. May is the only participant in the Plan whose Account is affected by the transaction, and the sales proceeds from the transaction will be credited to such Account simultaneously with the transfer of title to the Stock to Dr. May; and f. The terms and conditions of the sale of the Stock are at least as favorable to the Account as terms and conditions obtainable under similar circumstances negotiated at arm's length with an unrelated third party. Written Comments In the Notice of Proposed Exemption (the Notice), the Department of Labor (the Department) invited all interested persons to submit written comments and requests for a hearing on the proposed exemption within thirty
(30)days of the date of the publication of the Notice in the **Federal Register** on September 27, 2006. All comments and requests for a hearing were due by October 27, 2006. During the comment period, the Department received no requests for a hearing. However, the Department did receive one comment letter from the applicant. The applicant notified the Department that there is a typographical error in footnote no. 2, as set forth in the Notice in the Summary of Facts and Representations, at 71 FR 56561. In this regard, the date, “March 3, 3005,” should have read, “March 3, 2005.” 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 September 27, 2006, at 71 FR 56559. FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the Department, telephone
(202)693-8540. (This is not a toll-free number.) Amendment to Prohibited Transaction Exemption
(PTE)2001-32 Involving Development Company Funding Corporation, Located in the District of Columbia [Prohibited Transaction Exemption 2006-18; Application Number D-11392] 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 amends PTE 2001-32 as set forth below: Section I. Transactions A. Effective August 25, 2000, the restrictions of sections 406(a) 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
(D)of the Code, shall not apply to the following transactions involving Trusts and Certificates evidencing interests therein:
(1)The direct or indirect sale, exchange or transfer of Certificates in the initial issuance of Certificates between the Underwriter of the Certificates and an employee benefit plan when the SBA, the Fiscal Agent, the Selling Agent, the Central Servicing Agent, the Trustee, the Underwriter, or an Obligor is a party in interest with respect to such plan;
(2)The direct or indirect acquisition or disposition of Certificates by a plan in the secondary market for such Certificates; and
(3)The continued holding of Certificates acquired by a plan pursuant to subsection I.A.(1) or (2). Notwithstanding the foregoing, Section I.A. does not provide an exemption from the restrictions of sections 406(a)(1)(E), 406(a)(2) and 407 of the Act for the acquisition or holding of a Certificate on behalf of an Excluded Plan, by any person who has discretionary authority or renders investment advice with respect to the assets of that Excluded Plan. 2 2 Section I.A. provides no relief from sections 406(a)(1)(E), 406(a)(2) and 407 of the Act for any person rendering investment advice to an Excluded Plan within the meaning of section 3(21)(A)(ii) of the Act and regulation 29 CFR section 2510.3-21(c). B. Effective August 25, 2000, the restrictions of section 406(b)(1) and (b)(2) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(E) of the Code, shall not apply to:
(1)The direct or indirect sale, exchange or transfer of Certificates in the initial issuance of Certificates between the Underwriter and a plan, when the person who has discretionary authority or renders investment advice with respect to the investment of plan assets in the Certificates is
(a)an Obligor with respect to 5 percent or less of the fair market value of the 504 Program Loans underlying the Debentures related to that Series of Certificates, or
(b)an affiliate of a person described in (a); if
(i)The plan is not an Excluded Plan;
(ii)Solely in the case of an acquisition of Certificates in connection with the initial issuance of the Certificates, at least 50 percent of each Series of Certificates in which plans have invested is acquired by persons independent of the members of the Restricted Group, and at least 50 percent of the aggregate interest in the Series is acquired by persons independent of the Restricted Group.
(iii)A plan's investment in each Series of Certificates does not exceed 25 percent of all of the Certificates of that Series outstanding at the time of the acquisition; and
(iv)Immediately after the acquisition of the Certificates, no more than 25 percent of the assets of a plan with respect to which the person has discretionary authority or renders investment advice are invested in Certificates representing an interest in a Trust containing assets sold or serviced by the same entity. 3 For purposes of this subparagraph
(iv)only, an entity will not be considered to service assets contained in a Trust if it is merely a subservicer of that Trust. 3 For purposes of this exemption, each plan participating in a commingled fund (such as a bank collective trust fund or insurance company pooled separate account) shall be considered to own the same proportionate undivided interest in each asset of the commingled fund as its proportionate interest in the total assets of the commingled fund as calculated on the most recent preceding valuation date of the fund.
(2)The direct or indirect acquisition or disposition of Certificates by a plan described in paragraph B.(1) in the secondary market for such Certificates, provided that conditions set forth in paragraphs B.(1)(i),
(iii)and
(iv)are met; and
(3)The continued holding of Certificates acquired by a plan pursuant to subsection I.B.(1) or (2). C. Effective August 25, 2000, the restrictions of sections 406(a), 406(b) 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) of the Code, shall not apply to transactions in connection with the servicing, management and operation of a Trust, provided:
(1)Such transactions are carried out in accordance with the terms of a binding Trust Agreement; and
(2)The Trust Agreement is provided to, or described in all material respects in the offering circular or other disclosure document provided to the investing plans before they purchase Certificates issued by the Trust. 4 4 The offering circular or other disclosure document must contain substantially the same information that would be disclosed in a prospectus if the offering of the Certificates were made in a registered public offering under the Securities Act of 1933. In the Department's view, the offering circular or other disclosure document must contain sufficient information to permit plan fiduciaries to make informed investment decisions. D. Effective August 25, 2000, the restrictions of sections 406(a) 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
(D)of the Code, shall not apply to any transaction to which those restrictions or sanctions would otherwise apply merely because a person is deemed to be a party in interest or disqualified person (including a fiduciary) with respect to a plan by virtue of providing services to the plan (or by virtue of having a relationship to such service provider described in section 3(14)(F), (G), (H), or
(I)of the Act or section 4975(e)(2)(F), (G), (H),
(I)of the Code), solely because of the plan's ownership of Certificates. Section II. Conditions The relief provided under Section I is available only if the following conditions are met: A. The acquisition of Certificates by a plan is on terms (including the Certificate price) that are at least as favorable to the plan as such terms would be in an arm's-length transaction with an unrelated party; B. The rights and interests evidenced by the Certificates are not subordinated to the rights and interests evidenced by other Certificates in the same Series; C. The Certificates and Debentures are guaranteed as to the timely payment of principal and interest by the SBA, and are therefore backed by the full faith and credit of the United States; D. The Trustee is not an affiliate of any other member of the Restricted Group, other than, effective on or after October 1, 2006, the Central Servicing Agent. Section III. Definitions For purposes of this exemption: A. “Certificate” means a certificate:
(1)That represents a beneficial ownership interest in a discrete pool of Debentures and all payments thereon, held in Trust by the Trustee pursuant to the Trust Agreement;
(2)That entitles the holder to pass-through payments of principal, interest, and/or other payments made with respect to the discrete pool of Debentures held as part of such Trust; and
(3)That is issued by the Trustee as agent for the SBA and guaranteed by the SBA as to timely payment of principal and interest pursuant to section 505 of the Small Business Investment Act of 1958, as amended (the Small Business Investment Act). B. “Trust” means the trust created pursuant to the Trust Agreement, under which, with respect to each Series of Certificates, the Trustee holds in Trust for the benefit of the certificateholders of the Series the following property:
(1)The discrete pool of Debentures related to the Series;
(2)A debenture guarantee agreement executed by the SBA pursuant to section 503 of the Small Business Investment Act pursuant to which the SBA guarantees timely payment of principal and interest on the Debentures related to the Series; and
(3)The certificate account maintained by the Central Servicing Agent for such Series into which the Central Servicing Agent deposits payments due in respect of the Debentures on each semiannual debenture payment date. C. “Debentures” means debentures issued by a certified development company and guaranteed as to timely payment of principal and interest by the SBA pursuant to section 503 of the Small Business Investment Act. D. “504 Program Loans” means loans made by a certified development company to a small business concern and funded with the proceeds of a Debenture pursuant to section 503 of the Small Business Investment Act. E. “SBA” refers to the U.S. Small Business Administration. F. “Underwriter” means an entity which has received an individual prohibited transaction exemption from the Department that provides relief for the operation of asset pool investment trusts that issue “asset-backed” pass-through securities to plans, that is similar in format and structure to this exemption (the Underwriter Exemptions); 5 any person directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with such entity; and any member of an underwriting syndicate or selling group of which such firm or person described above is a manager or co-manager with respect to the Certificates. 5 For a listing of the Underwriter Exemptions, see the description provided in footnote 1 of PTE 2002-41, 67 FR 54487 (August 22, 2002). G. “Fiscal Agent” means the entity that has contracted with the SBA to assess the financial markets, arrange for the production of required documents, and monitor the performance of the Trustee and the Underwriter. H. “Selling Agent” means the entity appointed by a certified development company to select Underwriters, negotiate the terms and conditions of Debenture offerings with the Underwriters, and direct and coordinate Debenture sales. I. “Central Servicing Agent” means the entity that has entered into a master servicing agreement with the SBA to support the orderly flow of funds among borrowers, certified development companies and the SBA. J. “Trustee” means an entity that is the trustee of the Trust. K. “Obligor” means any person that is obligated to make payments under a Section 504 Loan related to a Debenture contained in the Trust. L. “Excluded Plan” means any employee benefit plan with respect to which any member of the Restricted Group is a “plan sponsor” within the meaning of section 3(16)(B) of the Act. M. “Restricted Group” with respect to a class of Certificates means:
(1)Each Underwriter;
(2)The Fiscal Agent;
(3)The Selling Agent;
(4)The Trustee;
(5)The Central Servicing Agent;
(6)Any Obligor with respect to loans relating to Debentures included in the Trust constituting more than 5 percent of the aggregate unamortized principal balance of the assets in the Trust, determined on the date of the initial issuance of Certificates by the Trust;
(7)The SBA; or
(8)Any affiliate of a person described in (1)-(7) above. N. “Affiliate” of another person includes:
(1)Any person, directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with such other person;
(2)Any officer, director, partner, employee, relative (as defined in section 3(15) of the Act), brother, sister, or spouse of a brother or sister of such other person; and
(3)Any corporation or partnership of which such other person is an officer, director or partner. O. “Control” means the power to exercise a controlling influence over the management or policies of a person other than an individual. P. A person will be “independent” of another person only if:
(1)Such person is not an affiliate of that other person; and
(2)The other person, or an affiliate thereof, is not a fiduciary that has investment management authority or renders investment advice with respect to assets of such person. Q. “Sale” includes the entrance into a Forward Delivery Commitment, provided:
(1)The terms of the Forward Delivery Commitment (including any fee paid to the investing plan) are no less favorable to the plan than they would be in an arm's-length transaction with an unrelated party;
(2)The offering circular or other disclosure document is provided to an investing plan prior to the time the plan enters into the Forward Delivery Commitment; and
(3)At the time of the delivery, all conditions of this exemption applicable to Sales are met. R. “Forward Delivery Commitment” means a contract for the purchase or sale of one or more Certificates to be delivered at an agreed future settlement date. The term includes both mandatory contracts (which contemplate obligatory delivery and acceptance of the Certificates) and optional contracts (which give one party the right but not the obligation to deliver Certificates to, or demand delivery of Certificates from, the other party). S. “Trust Agreement” means that trust agreement by and among the SBA, the Fiscal Agent and the Trustee, as amended, establishing the Trust and, with respect to each Series of Certificates, the supplement to the trust agreement pertaining to such Series. T. “Series” means any particular series of Certificates issued pursuant to the Trust Agreement that, in the aggregate, represent the entire beneficial interest in a discrete pool of Debentures held by the Trustee pursuant to the Trust Agreement. For a more complete statement of the facts and representations supporting the Department's decision to grant this amendment, refer to the notice of proposed exemption published on September 27, 2006 at 71 FR 56563. FOR FURTHER INFORMATION CONTACT: Wendy McColough of the Department, telephone
(202)693-8540. (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 exemption 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)This exemption is 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 this exemption is subject to the express condition that the material facts and representations contained in the application accurately describes all material terms of the transaction which is the subject of the exemption. Signed at Washington, DC, this 20th day of November, 2006. Ivan Strasfeld, Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor. [FR Doc. E6-19827 Filed 11-22-06; 8:45 am] BILLING CODE 4510-29-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-60,126] Michelin North America Inc., BF Goodrich Tire Manufacturing, Opelika, AL; Notice of Affirmative Determination Regarding Application for Reconsideration By application dated November 1, 2006, a company official requested administrative reconsideration of the Department of Labor's Notice of Negative Determination Regarding Eligibility to Apply for Worker Adjustment Assistance, applicable to workers and former workers of the subject firm. The determination was issued on October 19, 2006. On November 6, 2006, the Department's Notice of determination was published in the **Federal Register** (71 FR 65004). The negative determination was based on the Department's finding that the subject firm did not separate or threaten to separate a significant number or proportion of workers as required by the Trade Act of 1974. A significant number or proportion of the workers in a firm or appropriate subdivision means at least three workers in a workforce of fewer than 50 workers, five percent of the workers in a workforce of over 50 workers, or at least 50 workers. In the request for reconsideration, the company official provided additional information regarding worker separations. The Department has carefully reviewed the company's request for reconsideration and has determined that the Department will conduct further investigation. Conclusion After careful review of the application, I conclude that the claim is of sufficient weight to justify reconsideration of the Department of Labor's prior decision. The application is, therefore, granted. Signed at Washington, DC, November 15, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-19792 Filed 11-22-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration Modine Manufacturing, Blythewood, SC; Notice of Affirmative Determination Regarding Application for Reconsideration By application postmarked October 31, 2006, a worker requested administrative reconsideration of the Department of Labor's Notice of Negative Determination Regarding Eligibility to Apply for Worker Adjustment Assistance, applicable to workers and former workers of the subject firm. The determination was issued on October 12, 2006. On October 25, 2006, the Department's Notice of determination was published in the **Federal Register** (71 FR 62490). The negative determination was based on the Department's findings that the subject firm did not shift production abroad during the relevant period, that subject firm sales increased from 2004 to 2005 while production remained constant, and that there were no decline in either sales or production in January through August 2006 compared to the same period in 2005. In the request for reconsideration, the worker provided additional information regarding the subject firm's closure (July 20, 2006 WARN letter: “It is anticipated that the plant closing will commence on September 15 2006 and will continue into 2007”). The Department has carefully reviewed the request for reconsideration and has determined that the Department will conduct further investigation. Conclusion After careful review of the application, I conclude that the claim is of sufficient weight to justify reconsideration of the Department of Labor's prior decision. The application is, therefore, granted. Dated: November 16, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-19796 Filed 11-22-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration [TA-W-59,884] Rexnord Industries, LLC, Industrial Chain and Conveyor Division, Milwaukee, WI; Notice of Revised Determination on Reconsideration of Alternative Trade Adjustment Assistance By letter dated October 18, 2006, United Steelworkers Local 1527 AFL-CIO requested administrative reconsideration regarding Alternative Trade Adjustment Assistance
(ATAA)applicable to workers of the subject firm. The negative determination was signed on September 7, 2006, and was published in the **Federal Register** on September 21, 2006 (71 FR 55218). The workers of Rexnord Industries, LLC, Industrial Chain and Conveyor Division, Milwaukee, Wisconsin, were certified eligible to apply for Trade Adjustment Assistance
(TAA)on September 7, 2006. The initial ATAA investigation determined that the skills of the subject worker group are easily transferable to other positions in the local area. In the request for reconsideration, the petitioner provided sufficient information confirming that the skills of the workers at the subject firm are not easily transferable in the local commuting area. Additional investigation has determined that the workers possess skills that are not easily transferable. A significant number or proportion of the worker group are age 50 years or over. Competitive conditions within the industry are adverse. Conclusion After careful review of the additional facts obtained on reconsideration, I conclude that the requirements of Section 246 of the Trade Act of 1974, as amended, have been met for workers at the subject firm. In accordance with the provisions of the Act, I make the following certification: All workers of Rexnord Industries, LLC, Industrial Chain and Conveyor Division, Milwaukee, Wisconsin, who became totally or partially separated from employment on or after July 20, 2005 through September 7, 2008, are eligible to apply for trade adjustment assistance under Section 223 of the Trade Act of 1974 and are also eligible to apply for alternative trade adjustment assistance under Section 246 of the Trade Act of 1974. Signed at Washington, DC, November 14, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-19795 Filed 11-22-06; 8:45 am] BILLING CODE 4510-30-P DEPARTMENT OF LABOR Employment and Training Administration Rodman Industries, Marinette, WI; Notice of Negative Determination Regarding Application for Reconsideration By application dated September 12, 2006 and by application dated September 18, a company official and United Steelworkers 12-14A, District 2, requested administrative reconsideration of the Department's negative determination regarding eligibility to apply for Trade Adjustment Assistance
(TAA)and Alternative Trade Adjustment Assistance (ATAA), applicable to workers and former workers of the subject firm. The denial notice was signed on August 16, 2006 and published in the **Federal Register** on September 6, 2006 (71 FR 52584). Pursuant to 29 CFR 90.18(c) reconsideration may be granted under the following circumstances:
(1)If it appears on the basis of facts not previously considered that the determination complained of was erroneous;
(2)if it appears that the determination complained of was based on a mistake in the determination of facts not previously considered; or
(3)if in the opinion of the Certifying Officer, a mis-interpretation of facts or of the law justified reconsideration of the decision. The petition for the workers of Rodman Industries, Marinette, Wisconsin was denied because criteria (a)(2)(A)(I.B) and (a)(2)(B)(II.B) were not met. The negative determination was based on the findings that sales and production of particle board by the subject firm increased from 2004 to 2005 and from January through June of 2006 when compared with the same period in 2005. The subject firm did not shift production to a foreign country during the relevant period. The petitioner provided additional information in the request for reconsideration. Review of the original investigation indicated that the subject facility ceased its production of particle board on August 14, 2006. Therefore, sales and production at the subject firm decreased absolutely during the relevant time period. The Department conducted a survey of the subject firm's major customers regarding their purchases of particle board and like or directly competitive products to particle board during the relevant time period. The survey revealed that none of respondents imported particle board and like or directly competitive products to particle board during the relevant time period. The investigation also revealed that the subject firm did not increase imports of particle board and there was no shift in production of particle board to a foreign country during the relevant time period. In order for the Department to issue a certification of eligibility to apply for ATAA, the worker group must be certified eligible to apply for TAA. Since the workers are denied eligibility to apply for TAA, the workers cannot be certified eligible for ATAA. Conclusion After reconsideration, I affirm the original notice of negative determination of eligibility to apply for worker adjustment assistance for workers and former workers of Rodman Industries, Marinette, Wisconsin. Signed at Washington, DC, November 15, 2006. Elliott S. Kushner, Certifying Officer, Division of Trade Adjustment Assistance. [FR Doc. E6-19793 Filed 11-22-06; 8:45 am] BILLING CODE 4510-30-P NATIONAL CAPITAL PLANNING COMMISSION No FEAR Act Notice AGENCY: National Capital Planning Commission. ACTION: Notice. SUMMARY: The National Capital Planning Commission is publishing this notice under the “Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002,” which is known as the No FEAR Act, to inform current employees, former employees, and applicants for NCPC employment of the rights and protections available to them under Federal antidiscrimination, whistleblower protection and retaliation laws. FOR FURTHER INFORMATION CONTACT: Lois Schiffer, General Counsel, National Capital Planning Commission, 401 9th Street, NW., North Lobby 5th Floor, Washington, DC 20004; telephone: 202-482-7200; Fax: 202-482-7272. The e-mail contact is: *Lois.Schiffer@ncpc.gov* (for e-mail messages, the subject line should include the reference “No FEAR Act Notice”). A copy of this No FEAR Act Notice will be posted on NCPC's Web site, *http://ww.ncpc.gov* on November 17, 2006. Persons who cannot access this No FEAR Act Notice through the Internet may request a paper or electronic copy by contacting Ms. Schiffer at the address, telephone numbers, e-mail address, or fax number listed above. SUPPLEMENTARY INFORMATION: On May 15, 2002, Congress enacted the “Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002,” which is now known as the No FEAR Act. One purpose of the Act is to “require that Federal agencies be accountable for violations of antidiscrimination and whistleblower protection laws.” Public Law 107-174, Summary. In support of this purpose, Congress found that “agencies cannot be run effectively if those agencies practice or tolerate discrimination.” Public Law 107-174, Title I, General Provisions, section 101(1). The Act also requires this agency to provide this notice to Federal employees, former Federal employees and applicants for Federal employment to inform you of the rights and protections available to you under Federal antidiscrimination and whistleblower protection laws. Antidiscrimination Laws A Federal agency cannot discriminate against an employee or applicant with respect to the terms, conditions or privileges of employment on the basis of race, color, religion, sex, national origin, age, disability, marital status or political affiliation. Discrimination on these bases is prohibited by one or more of the following statutes: 5 U.S.C. 2302(b)(1), 29 U.S.C. 206(d), 29 U.S.C. 631, 29 U.S.C. 633a, 29 U.S.C. 791 and 42 U.S.C. 2000e-16. If you believe that you have been the victim of unlawful discrimination on the basis of race, color, religion, sex, national origin or disability, you must contact an Equal Employment Opportunity
(EEO)counselor within 45 calendar days of the alleged discriminatory action, or, in the case of a personnel action, within 45 calendar days of the effective date of the action, before you can file a formal complaint of discrimination with your agency. See, *e.g.* , 29 CFR 1614. If you believe that you have been the victim of unlawful discrimination on the basis of age, you must either contact an EEO counselor as noted above or give notice of intent to sue to the Equal Employment Opportunity Commission
(EEOC)within 180 calendar days of the alleged discriminatory action. If you are alleging discrimination based on marital status or political affiliation, you may file a written complaint with the U.S. Office of Special Counsel
(OSC)at 1730 M Street, NW., Suite 218, Washington, DC 20036-4505 or online through the OSC Web site: *http://www.osc.gov.* In the alternative (or in some cases, in addition), you may pursue a discrimination complaint by filing a grievance through your agency's administrative or negotiated grievance procedures, if such procedures apply and are available. Whistleblower Protection Laws A Federal employee with authority to take, direct others to take, recommend or approve any personnel action must not use that authority to take or fail to take, or threaten to take or fail to take, a personnel action against an employee or applicant because of disclosure of information by that individual that is reasonably believed to evidence violations of law, rule or regulation; gross mismanagement; gross waste of funds; an abuse of authority; or a substantial and specific danger to public health or safety, unless disclosure of such information is specifically prohibited by law and such information is specifically required by Executive order to be kept secret in the interest of national defense or the conduct of foreign affairs. Retaliation against an employee or applicant for making a protected disclosure is prohibited by 5 U.S.C. 2302(b)(8). If you believe that you have been the victim of whistleblower retaliation, you may file a written complaint (Form OSC-11) with the U.S. Office of Special Counsel at 1730 M Street, NW., Suite 218, Washington, DC 20036-4505 or online through the OSC Web site: *http://www.osc.gov.* Retaliation for Engaging in Protected Activity A Federal agency cannot retaliate against an employee or applicant because that individual exercises his or her rights under any of the Federal antidiscrimination or whistleblower protection laws listed above. If you believe that you are the victim of retaliation for engaging in protected activity, you must follow, as appropriate, the procedures described in the Antidiscrimination Laws and Whistleblower Protection Laws sections or, if applicable, the administrative or negotiated grievance procedures in order to pursue any legal remedy. Disciplinary Actions Under the existing laws, each agency retains the right, where appropriate, to discipline a Federal employee for conduct that is inconsistent with Federal Antidiscrimination and Whistleblower Protection Laws up to and including removal. If OSC has initiated an investigation under 5 U.S.C. 1214, however, according to 5 U.S.C. 1214(f), agencies must seek approval from the Special Counsel to discipline employees for, among other activities, engaging in prohibited retaliation. Nothing in the No FEAR Act alters existing laws or permits an agency to take unfounded disciplinary action against a Federal employee or to violate the procedural rights of a Federal employee who has been accused of discrimination. Additional Information For further information regarding the No FEAR Act regulations, refer to 5 CFR part 724, as well as the appropriate offices and officers within the National Capital Planning Commission ( *e.g.* , EEO/civil rights officer, human resources office or General Counsel's office). Additional information regarding Federal antidiscrimination, whistleblower protection and retaliation laws can be found at the EEOC Web site: *http://www.eeoc.go* v and the OSC Web site: *http://www.osc.gov.* Existing Rights Unchanged Pursuant to section 205 of the No FEAR Act, neither the Act nor this notice creates, expands or reduces any rights otherwise available to any employee, former employee or applicant under the laws of the United States, including the provisions of law specified in 5 U.S.C. 2302(d). Approved: November 17, 2006. Patti Gallagher, Executive Director, National Capital Planning Commission. [FR Doc. E6-19823 Filed 11-22-06; 8:45 am] BILLING CODE 7520-01-P NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES National Endowment for the Arts; Proposed Collection; Comment Request ACTION: Correction. SUMMARY: This document corrects the date for comments regarding the National Endowment for the Arts
(NEA)proposed data collection for the national Survey of Public Participation in the Arts that was published in the **Federal Register** on November 6, 2006 (Vol. 71, No. 214, page 65007). The correct date for the submission of written comments to the office listed in the address section below is on or before January 7, 2007. ADDRESSES: Tom Bradshaw, National Endowment for the Arts, 1100 Pennsylvania Avenue, NW., Room 616, Washington, DC 20506-0001, telephone
(202)682-5527 (this is not a toll-free number), fax
(202)682-5677. Murray Welsh, Director, Administrative Services, National Endowment for the Arts. [FR Doc. E6-19872 Filed 11-22-06; 8:45 am] BILLING CODE 7537-01-P NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES National Endowment for the Arts; Proposed Collection; Comment Request ACTION: Notice. SUMMARY: The National Endowment for the Arts (NEA), as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C. 3506(c)(A)]. This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. Currently, the NEA is soliciting comments concerning the proposed information collection of: The Big Read Program Evaluation. A copy of the current information collection request can be obtained by contacting the office listed below in the address section of this notice. DATES: Written comments must be submitted to the office listed in the address section below on or before January 20, 2007. The NEA is particularly interested in comments which: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; • Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; • Enhance the quality, utility, and clarity of the information to be collected; and • Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, *e.g.* , permitting electronic submissions of responses. ADDRESSES: Sunil Iyengar, National Endowment for the Arts, 1100 Pennsylvania Avenue, NW., Room 616, Washington, DC 20506-0001, telephone
(202)682-5424 (this is not a toll-free number), fax
(202)682-5677. Murray Welsh, Director, Administrative Services, National Endowment for the Arts. [FR Doc. E6-19873 Filed 11-22-06; 8:45 am] BILLING CODE 7537-01-P NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES Meetings of Humanities Panel AGENCY: The National Endowment for the Humanities. ACTION: Notice of meetings. SUMMARY: Pursuant to the provisions of the Federal Advisory Committee Act (Pub. L. 92-463, as amended), notice is hereby given that the following meetings of Humanities Panels will be held at the Old Post Office, 1100 Pennsylvania Avenue, NW., Washington, DC 20506. FOR FURTHER INFORMATION CONTACT: Heather Gottry, Acting Advisory Committee Management Officer, National Endowment for the Humanities, Washington, DC 20506; telephone
(202)606-8322. Hearing-impaired individuals are advised that information on this matter may be obtained by contacting the Endowment's TDD terminal on
(202)606-8282. SUPPLEMENTARY INFORMATION: The proposed meetings are for the purpose of panel review, discussion, evaluation and recommendation on applications for financial assistance under the National Foundation on the Arts and the Humanities Act of 1965, as amended, including discussion of information given in confidence to the agency by the grant applicants. Because the proposed meetings will consider information that is likely to disclose trade secrets and commercial or financial information obtained from a person and privileged or confidential and/or information of a personal nature the disclosure of which would constitute a clearly unwarranted invasion of personal privacy, pursuant to authority granted me by the Chairman's Delegation of Authority to Close Advisory Committee meetings, dated July 19, 1993, I have determined that these meetings will be closed to the public pursuant to subsections (c)(4), and
(6)of section 552b of Title 5, United States Code. 1. *Date:* December 4, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Faculty Humanities Workshops, submitted to the Division of Education Programs at the September 15, 2006 deadline. 2. *Date:* December 5, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Grants for Teaching and Learning Resources and Curriculum Development, submitted to the Division of Education Programs at the October 2, 2006 deadline. 3. *Date:* December 5, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 415. *Program:* This meeting will review applications for U.S. History III, submitted to the Division of Preservation and Access at the July 25, 2006 deadline. 4. *Date:* December 6, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Grants for Teaching and Learning Resources and Curriculum Development, submitted to the Division of Education Programs at the October 2, 2006 deadline. 5. *Date:* December 7, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 415. *Program:* This meeting will review applications for U.S. History IV, submitted to the Division of Preservation and Access at the July 25, 2006 deadline. 6. Date: December 7, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Grants for Teaching and Learning Resources and Curriculum Development, submitted to the Division of Education Programs at the October 2, 2006 deadline. 7. *Date:* December 11, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Grants for Teaching and Learning Resources and Curriculum Development, submitted to the Division of Education Programs at the October 2, 2006 deadline. 8. *Date:* December 11, 2006. *Time:* 8:30 a.m. to 5:30 p.m. *Room:* 421. *Program:* This meeting will review applications for Humanities Projects in Media, submitted to the Division of Public Programs at the November 1, 2006 deadline. 9. *Date:* December 12, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Grants for Teaching and Learning Resources and Curriculum Development, submitted to the Division of Education Programs at the October 2, 2006 deadline. 10. *Date:* December 12, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 415. *Program:* This meeting will review applications for U.S. History V, submitted to the Division of Preservation and Access at the July 25, 2006 deadline. 11. *Date:* December 14, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Fellowship Programs at Independent Research Institutions, submitted to the Division of Research Programs at the September 1, 2006 deadline. 12. *Date:* December 18, 2006. *Time:* 8:30 a.m. to 5:30 p.m. *Room:* 415. *Program:* This meeting will review applications for Humanities Projects in Media, submitted to the Division of Public Programs at the November 1, 2006 deadline. 13. *Date:* December 18, 2006. *Time:* 9 a.m. to 5 p.m. *Room:* 315. *Program:* This meeting will review applications for Digital Humanities Start-Up Grants, submitted to the Miscellaneous Humanities Projects at the November 15, 2006 deadline. Heather Gottry, Acting Advisory Committee Management Officer. [FR Doc. E6-19820 Filed 11-22-06; 8:45 am] BILLING CODE 7536-01-P NATIONAL TRANSPORTATION SAFETY BOARD SES Performance Review Board AGENCY: National Transportation Safety Board. ACTION: Notice. SUMMARY: Notice is hereby given of the appointment of members of the National Transportation Safety Board Performance Review Board. FOR FURTHER INFORMATION CONTACT: Anh Bolles, Chief, Human Resources Division, Office of Administration, National Transportation Safety Board, 490 L'Enfant Plaza, SW., Washington, DC 20594-0001,
(202)314-6355. SUPPLEMENTARY INFORMATION: Section 4314 (c)(1) through
(5)of Title 5, United States code requires each agency to establish, in accordance with regulations prescribed by the Office of Personnel Management, one or more SES performance review boards. The board reviews and evaluates the initial appraisal of a senior executive's performance by the supervisor, and considers recommendations to the appointing authority regarding the performance of the senior executive. The following have been designated as members of the Performance Review Board of the National Transportation Safety Board: The Honorable Robert L. Sumwalt, Vice Chairman, National Transportation Safety Board; PRB Chair. The Honorable Deborah A.P. Hersman, Member, National Transportation Safety Board. Steven Goldberg, Chief Financial Officer, National Transportation Safety Board. Lowell Martin, Deputy Executive Director, Consumer Products Safety Commission. Richard Brechbiel, Chief Human Capital Officer, Small Business Administration. Joseph G. Osterman, Managing Director, National Transportation Safety Board. Dated: November 17, 2006. Vicky D'Onofrio, Federal Register Coordinator. [FR Doc. 06-9359 Filed 11-22-06; 8:45 am]
Connectionstraces to 15
10 references not yet in our index
  • 29 CFR 2570
  • 17 CFR 240.12
  • 17 CFR 240.10
  • 17 CFR 270.10
  • 29 CFR 2510.3-21(c)
  • 29 CFR 90.18(c)
  • Pub. L. 107-174
  • 29 CFR 1614
  • 5 CFR 724
  • Pub. L. 92-463
Citation graph
cites case law
Notices
Notice of proposed individual exemption
C.F.R.§ 230.415
U.S.C.§ 77a
U.S.C.§ 781
U.S.C.§ 78m
C.F.R.§ 230.144
U.S.C.§ 77d
U.S.C.§ 80a–2
U.S.C.§ 2302
U.S.C.§ 206
Cite29 CFR 2570
Cite17 CFR 240.12
Cite17 CFR 240.10
Cites 25 · showing 12Cited by 0 across 0 sources
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