13126 Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Notices 

Act on December 29, 2006 (71 FR 

78468). 

Patricia A. Brink, 

Deputy Director of Operations, Antitrust 

Division. 

[FR Doc. 07–1322 Filed 3–19–07; 8:45 am] 

BILLING CODE 4410–11–M 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Prohibited Transaction Exemption 2007–

04; Exemption Application Nos. D–11345, 

and D–11370] 

Grant of Individual Exemptions 

Involving; D–11342, Mellon Financial 

Corporation (Mellon); and D–11370, 

Amendment to Prohibited Exemption 

(PTE) 2000–58 and (PTE) 2002–41 

Involving Bear Stearns & Co. Inc., 

Prudential Securities Incorporated, et 

al. to add Dominion Bond Rating 

Service Limited and Dominion Bond 

Rating Service, Inc. 

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. 

Mellon Financial Corporation (Mellon), 

Located in Pittsburgh, PA 

[Prohibited Transaction Exemption 2007–04; 

Exemption Application No. D–11342] 

Exemption 

Section I—Exemption for In-Kind 

Redemption of Assets 

The restrictions in sections 

406(a)(1)(A) through (D) and 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)(A) through (E) of the Code, 

shall not apply, effective November 30, 

2005, to certain in-kind redemptions 

(the Redemption(s)) by the Mellon 

401(k) Retirement Savings Plan or by 

any other employee benefit plan 

sponsored by Mellon or an affiliate (the 

Plan(s)), of shares (the Shares) of certain 

proprietary mutual funds in which the 

Plans were invested as of November 30, 

2005 (the Funds), for which Mellon or 

an affiliate (collectively, referred to also 

as Mellon) provides investment 

advisory and other services, provided 

that the following conditions are 

satisfied: 

(A) The Plan pays no sales 

commissions, redemption fees, or other 

similar fees in connection with the 

Redemption—other than customary 

transfer charges paid to parties other 

than Mellon; 

(B) The assets transferred to the Plan 

pursuant to the Redemption consist 

entirely of cash and Transferable 

Securities, as such term is defined in 

Section II, below. Notwithstanding the 

foregoing, Transferable Securities that 

are odd lot securities, fractional shares, 

and accruals on such securities may be 

distributed in cash; 

(C) With certain exceptions described 

below, the Plan receives in any 

Redemption its pro rata portion of the 

securities of the Funds equal in value to 

that of the number of Shares redeemed, 

as determined in a single valuation 

(using sources independent of Mellon) 

performed in the same manner and as of 

the close of business on the same day, 

in accordance with the procedures 

established by the Fund pursuant to 

Rule 2a–4 under the Investment 

Company Act of 1940, as amended from 

time to time (the 1940 Act), and the 

then-existing procedures established by 

the board of the Funds that are in 

compliance with the rules administered 

by the Securities Exchange Commission 

(SEC); 

(D) Mellon does not receive any direct 

or indirect compensation or any fees, 

including any fees payable pursuant to 

Rule 12b–1 under the 1940 Act, in 

connection with any Redemption of the 

Shares; 

(E) Prior to a Redemption, Mellon 

provides in writing to an independent 

fiduciary (Independent Fiduciary, as 

such term is defined in Section II, 

below), a full and detailed written 

disclosure of information regarding the 

Redemption; 

(F) The Independent Fiduciary 

provides written authorization in 

advance of the Redemption to Mellon, 

such authorization being terminable at 

any time prior to the date of the 

Redemption without penalty to the 

Plan, provided that the termination is 

effectuated by the close of business 

following the date of receipt by Mellon 

of written or electronic notice regarding 

such termination (unless circumstances 

beyond the control of Mellon delay 

termination for no more than one 

additional business day); 

(G) Before approving a Redemption, 

based on the disclosures provided by 

the Funds to the Independent Fiduciary 

and discussions with appropriate 

operational personnel of the Plan, the 

Independent Fiduciary determines that 

the terms of the Redemption are fair to 

the Plan and comparable to, and no less 

favorable than, terms obtainable at arm’s 

length between unaffiliated parties, and 

that the Redemption is in the best 

interests of the Plan and its participants 

and beneficiaries; 

(H) Mellon makes a ‘‘make-whole 

payment’’ to ensure that the dollar value 

of the interests received by the Plan 

from the collective investment funds is 

not diminished by transaction costs nor 

by valuation differences as a result of 

the Redemption; 


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(I) No later than thirty (30) business 

days after the completion of a 

Redemption, Mellon or the relevant 

Funds provides to the Independent 

Fiduciary a written confirmation 

regarding such Redemption containing: 

(i) The number of Shares held by the 

Plan immediately before the 

Redemption and the related per Share 

net asset value and the total dollar value 

of the Shares held; 

(ii) The identity and related aggregate 

dollar value of each security provided to 

the Plan pursuant to the Redemption, 

including each security valued (using 

sources independent of Mellon) in 

accordance with Rule 2a–4 under the 

1940 Act and the then-existing 

procedures established by the board of 

the Fund for obtaining current prices 

from independent pricing services or 

market-makers; 

(iii) The current market price of each 

security received by the Plan pursuant 

to the Redemption; and 

(iv) The identity of each pricing 

service or market-maker consulted in 

determining the value of such securities; 

(J) The value of the securities and 

cash received by the Plan for each 

redeemed Share equals the net asset 

value of such Share at the time of the 

transaction, and such value equals the 

value that would have been received by 

any other investor for shares of the same 

class of the relevant Fund at that time; 

(K) Subsequent to a Redemption, the 

Independent Fiduciary performs a posttransaction review which will include, 

among other things, testing a sampling 

of material aspects of the Redemption 

deemed in its judgment to be 

representative, including pricing; 

(L) Each of the Plan’s dealings with 

the Funds, the principal underwriter for 

the Funds, or any affiliate thereof, or 

with Mellon, are on a basis no less 

favorable to the Plan than dealings 

between the Funds and other 

shareholders holding shares of the same 

class as the Shares; 

(M) Mellon maintains, or causes to be 

maintained, for a period of six years 

from the date of any covered 

transaction, such records as are 

necessary to enable the persons 

described in paragraph (N)(1)(i)–(v), 

below, to determine whether the 

conditions described in this Section I 

have been met, except that: 

(i) if the records necessary to enable 

the persons described in paragraph 

(N)(1)(i)–(v), below, to determine 

whether the conditions of this 

exemption have been met are lost, or 

destroyed, due to circumstances beyond 

the control of Mellon, then no 

prohibited transaction will be 

considered to have occurred, solely on 

the basis of the unavailability of those 

records; and 

(ii) no party in interest with respect to 

the Plan other than Mellon shall be 

subject to the civil penalty that may be 

assessed under section 502(i) of the Act, 

or to the taxes imposed by section 

4975(a) and (b) of the Code, if such 

records are not maintained or are not 

available for examination as required by 

paragraph (N) below. 

(N)(1) Except as provided in 

subparagraph (2) of this paragraph (N), 

and notwithstanding any provisions of 

section 504(a)(2) and (b) of the Act, the 

records referred to in paragraph (M), 

above, are unconditionally available at 

their customary locations for 

examination during normal business 

hours by: 

(i) any duly authorized employee or 

representative of the Department, the 

Internal Revenue Service, or the SEC, 

(ii) any fiduciary of the Plan or any 

duly authorized representative of such 

fiduciary, 

(iii) any participant or beneficiary of 

the Plan or duly authorized 

representative of such participant or 

beneficiary, 

(iv) any employer whose employees 

are covered by the Plan, and 

(v) any employee organization whose 

members are covered by such Plan; 

(2) None of the persons described in 

paragraphs (N)(1)(ii) through (v) shall be 

authorized to examine trade secrets of 

Mellon or the Funds, or commercial or 

financial information which is 

privileged or confidential; and 

(3) Should Mellon or the Funds refuse 

to disclose information on the basis that 

such information is exempt from 

disclosure pursuant to paragraph (N)(2) 

above, Mellon or the Funds shall, by the 

close of the 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 II—Definitions 

(A) The term ‘‘affiliate’’ means: 

(1) Any person (including a 

corporation or partnership) directly or 

indirectly through one or more 

intermediaries, controlling, controlled 

by, or under common control with the 

person; 

(2) Any officer, director, employee, 

relative, or partner in any such person; 

and 

(3) Any corporation or partnership of 

which such person is an officer, 

director, partner, or employee. 

(B) The term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual. 

(C) The term ‘‘net asset value’’ means 

the amount for purposes of pricing all 

purchases and sales calculated by 

dividing the value of all securities, 

determined by a method as set forth in 

the Fund’s prospectus and statement of 

additional information, and other assets 

belonging to the Fund, less the 

liabilities charged to each such Fund, by 

the number of outstanding shares. 

(D) The term ‘‘Independent 

Fiduciary’’ means a fiduciary who is: 

(i) Independent of and unrelated to 

Mellon and its affiliates, and 

(ii) Appointed to act on behalf of the 

Plan with respect to the in-kind transfer 

of assets from one or more Funds to, or 

for the benefit of, the Plan. A fiduciary 

will not be independent of, and 

unrelated to, Mellon if: 

(i) Such fiduciary directly or 

indirectly controls, is controlled by or is 

under common control with, Mellon; 

(ii) Such fiduciary, directly or 

indirectly, receives any compensation or 

other consideration in connection with 

any transaction described herein (except 

that an Independent Fiduciary may 

receive compensation from Mellon in 

connection with the transactions 

contemplated herein, if the amount or 

payment of such compensation is not 

contingent upon, or in any way affected 

by any decision made by the 

Independent Fiduciary); or 

(iii) More than 1 percent (1%) of such 

fiduciary’s gross income, for federal 

income tax purposes, in its prior tax 

year, will be paid by Mellon in the 

fiduciary’s current tax year. 

(E) The term ‘‘Transferable Securities’’

means securities—

(1) for which market quotations are 

readily available, as determined 

pursuant to procedures established by 

the Funds under Rule 2a–4 of the 1940 

Act; and 

(2) that are not: 

(i) Securities that, if publicly offered 

or sold, would require registration 

under the Securities Act of 1933; 

(ii) Securities issued by entities in 

countries that (a) restrict or prohibit the 

holding of securities by non-nationals 

other than through qualified investment 

vehicles, such as the Funds, or (b) 

permit transfers of ownership of 

securities to be effected only by 

transactions conducted on a local stock 

exchange; 

(iii) Certain portfolio positions (such 

as forward foreign currency contracts, 

futures and options contracts, swap 

transactions, certificates of deposit and 

repurchase agreements) that, although 

liquid and marketable, involve the 

assumption of contractual obligations, 


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require special trading facilities, or can 

be traded only with the counter-party to 

the transaction to effect a change in 

beneficial ownership; 

(iv) Cash equivalents (such as 

certificates of deposit, commercial 

paper, and repurchase agreements); 

(v) Other assets that are not readily 

distributable (including receivables and 

prepaid expenses), net of all liabilities 

(including accounts payable); and 

(vi) Securities subject to ‘‘stop 

transfer’’ instructions or similar 

contractual restrictions on transfer. 

(F) The term ‘‘relative’’ means a 

‘‘relative’’ as that term is defined in 

section 3(15) of the Act (or a ‘‘member 

of the family,’’ as that term is defined in 

section 4975(e)(6) of the Code), or a 

brother, sister, or a spouse of a brother 

or a sister. 

Effective Date: This exemption is 

effective as of November 30, 2005. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption, refer to the notice of 

proposed exemption published on 

August 21, 2006 at 71 FR 48781. 

Written Comments 

The Department received three 

written comments with respect to the 

notice of proposed exemption (the 

Proposal). The comments were 

submitted by the applicant and by two 

Plan participants. 

The comment by the applicant first 

raises an issue concerning the scope of 

exemptive relief provided in the 

Proposal from sections 406(a)(1)(A) 

through (D) and 406(b)(2) of the Act. 

The applicant had originally requested 

relief from all of sections 406(a) and 

406(b), consistent with prior exemptions 

for similar in-kind redemption 

transactions. The Department informed 

the applicant that the current policy is 

to provide relief as narrow as possible 

and requested an explanation of the 

need for the requested relief; the 

applicant responded with a letter dated 

July 14, 2006 focusing on a potential 

violation of section 406(b)(2). The 

applicant notes, however, that the 

Department included language in the 

Summary of Facts and Representations 

(the Summary), at Item 4 (71 FR 48784, 

column 3), describing the in-kind 

redemptions ‘‘as raising the possibility 

of self-dealing,’’ implying a need for 

relief from section 406(b)(1), as well. 

The applicant requests, therefore, that 

the Department either expand this 

exemption to include relief from section 

406(b)(1) or clarify that the transactions 

do not raise the possibility of selfdealing. To resolve this issue, the 

Department has revised the exemption 

to provide relief from section 406(b)(1) 

of the Act. 

The applicant further notes that the 

Department has defined ‘‘Mellon’’ in 

Section I of the Proposal to include 

Mellon affiliates. However, there are 

two places requiring revision to avoid 

reaching affiliates of Mellon affiliates. 

To resolve this issue, the Department 

has revised Section I(L) (71 FR 48782, 

column 1) and the definition of 

‘‘Independent Fiduciary’’ at Section 

II(D) (71 FR 48782, column 2) of the 

exemption as follows (with underlining 

indicating new language and italics for 

deleted language). 

‘‘(L) Each of the Plan’s dealings with the 

Funds, Mellon, the principal underwriter for 

the Funds, or any affiliate thereof, or with 

Mellon, are on a basis no less favorable to the 

Plan than dealings between the Funds and 

other shareholders holding shares of the 

same class as the Shares;’’ and 

‘‘(D)(iii) More than 1 percent (1%) of such 

fiduciary’s gross income, for federal income 

tax purposes, in its prior tax year, will be 

paid by Mellon and its affiliates in the 

fiduciary’s current tax year.’’

The applicant also notes certain 

formatting problems with the two charts 

in the Summary as printed in the 

Federal Register, such that it is unclear 

how the information in the first column 

of the chart related to the information in 

the second column. To resolve this 

issue, the Department notes the 

applicant’s corrections as follows. In the 

first chart (71 FR 48783), under the title 

‘‘Actively Managed Funds,’’ ‘‘Dreyfus 

LifeTime Portfolios’’ appears on the 

same line as ‘‘Mellon Stable Value,’’

making it appear as if the two are a 

single Fund holding $92.6 million in 

assets. The $92.6 million should be 

attributed solely to the Mellon Stable 

Value Fund. ‘‘Dreyfus LifeTime 

Portfolios’’ is the name of a subgroup of 

Dreyfus Funds that consists of the 

following three Funds on the list—

Income Portfolio, Growth and Income 

Portfolio and Growth Portfolio. The 

second chart (71 FR 48784) fails to make 

clear which Actively Managed Funds 

are mapped into which recipient basic 

funds. The following chart shows the 

mapping: 

FUND TRANSFER OR ‘‘MAPPING’’ CHART

Actively managed fund fl Recipient basic fund 

Dreyfus LifeTime Portfolios, Inc. 

Income Portfolio ....................................................................................................... fl Daily Liquidity Asset Allocation Fund. 

Growth and Income Portfolio 

Growth Portfolio 

Dreyfus Appreciation 

Dreyfus Premier Core Value 

Dreyfus Disciplined Stock ............................................................................................... fl Daily Liquidity Stock Index. 

Dreyfus Premier Third Century Fund, Inc. 

Dreyfus Premier Technology Growth 

Dreyfus Founders Growth 

Dreyfus Premier New Leaders 

Dreyfus Founders Discovery fl Daily Liquidity Small Cap Stock Index. 

Dreyfus Founders Worldwide Growth 

Dreyfus Premier International Value ............................................................................... fl Daily Liquidity International Stock Index. 

The Boston Company International Small Cap 

Finally, the applicant notes that, as 

printed in the Federal Register, footnote 

21 erroneously references footnotes 3 

and 4, due to the inadvertent failure to 

adjust the cross-references to reflect the 

continuation of footnote numbers from 

other proposed exemption notices in the 

same package. To resolve this issue, the 

Department revises the cross-references 

in footnote 21 so that the original 

footnote 3 is now footnote 19 and the 

original footnote 4 is now footnote 20. 

In the second comment, a Plan 

participant notes his displeasure about 

the change in investment options 

offered under the Mellon Plan: (a) The 

literature describing the change in funds 

was confusing so that the participant 


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did not understand the need to take 

immediate action in order to be able to 

fully utilize the self-directed brokerage 

account feature; (b) Following the 

transfer, the self-directed brokerage 

account would be permanently 

unavailable for amounts greater than 

50% of his account. Those assets can 

only be reallocated within the ‘‘core’’

Basic Funds, limiting the potential for 

investment gains; (c) Public information 

regarding the Basic Funds is limited—

they do not appear in daily/weekly 

newspapers; (d) The effect of the 

changes was self-serving, done in the 

interests of Mellon, because it has 

required 50% of the Plan’s assets to be 

tied up in Mellon collective funds, 

increasing Mellon’s assets under 

management. The participant requested 

a hearing and hoped that Mellon would 

be forced to rescind the entire transfer 

of assets to the Basic Funds and to make 

up any losses to participants. 

In the third comment, another Plan 

participant expressed the following 

concerns: (a) The Plan trustees should 

not have engaged in a non-permitted 

transaction without first obtaining an 

exemption, as they should have known 

of the need for an exemption several 

months in advance; (b) He questioned 

the need to adhere to an ‘‘arbitrary’’ date 

that exposed the Plan to potential risk 

should the exemption not be granted. 

He questioned whether the rush to 

complete the transaction was done to 

benefit outside parties, or perhaps 

Mellon Plan committee members that 

served on the boards of other companies 

with a financial interest in the 

transactions; (c) He requested that a 

penalty be imposed that would send a 

message to the financial/legal 

community that no financial institution 

is above the law. 

The applicant responds that both 

commenters misunderstood the nature 

of the transfers and the reasons 

underlying the transfers, as well as the 

nature of the exemption process. As 

described in the Summary, there were 

two reasons for the changes in Plan 

investment options that were made at 

the end of 2005: (a) To simplify the 

investment offerings by eliminating the 

‘‘Actively Managed Funds’’ category, 

which overlapped in several respects 

with the ‘‘Basic Funds’’ category—the 

third category, a self-directed brokerage 

window, was not affected; (b) to reduce 

investment management expenses borne 

by participants, as Mellon absorbs all 

the costs for the Basic Funds (as they are 

Mellon collective investment funds) but 

did not absorb the internal costs of the 

Actively Managed Funds. 

The applicant also asserts that no 

financial interest of Mellon, any related 

company, or any Plan committee 

member was served through these 

changes. To the contrary, the changes 

were undertaken with the goal of better 

serving the interests of the Plan 

participants and beneficiaries, in 

accordance with the fiduciary 

responsibilities of the Plan committee, 

by simplifying investments and 

reducing costs in the manner described 

above. In fact, as several of the Actively 

Managed Funds that were eliminated 

are advised by Mellon affiliates, those 

affiliates will receive reduced Planrelated income (to the extent that 

participants chose to continue to invest 

in those Funds in the self-directed 

brokerage account). Furthermore, as the 

Plan committee members do not serve 

on the boards of other financial services 

companies, one commenter’s concern 

that committee members were enriched 

by the change in fund line-up through 

their outside board affiliations has no 

basis in fact. 

The applicant adds that information 

about the Basic Funds is not available 

in public newspapers because they are 

collective funds, available only to 

institutional investors. However, the 

information is readily available to Plan 

participants and beneficiaries on 

Mellon’s 401(k) Plan website, the 

address for which is included in 

participant statements and other 

mailings. The website includes fund 

closing prices for the prior business day 

and performance information for each 

fund for the preceding quarter, year-todate, and for the prior one-year, threeyear and five-year periods. 

As represented in the Summary, Plan 

participants were notified of the 

changes in investment offerings by an 

announcement (Exhibit E to the 

application) distributed on or about 

October 6, 2005. The new fund line-up 

was to be implemented December 1st, 

with the increased self-directed account 

limit available until December 30th. The 

Plan committee believes that the threepage announcement was clearly written 

and sufficiently explained that the 50% 

limitation on investment in the selfdirected brokerage window would be 

suspended only for a limited time 

period (see the bottom of page 2). Even 

so, to assure that its employees 

understood the changes, Mellon 

provided the same information in 

several additional ways prior to the 

December 30th deadline. A list of 

‘‘Frequently Asked Questions’’

regarding the changes was posted on the 

Mellon intranet site, accessible through 

an ‘‘In the Spotlight’’ section that 

contains information for employees, and 

the changes also were the subject of a 

three-page article in a December 

employee newsletter, ‘‘EC News.’’ In 

addition, Mellon Human Resources 

sponsored ‘‘in person’’ and web-based 

presentations on the changes, giving 

employees the opportunity to ask 

questions of a knowledgeable presenter. 

As a result, the Plan participants had 

notice in several formats of what was 

taking place and almost three months to 

preserve their investments in the 

Actively Managed Funds that were 

being removed as designated investment 

options. 

The applicant states that the fund 

change deadline of December 1st had 

already been communicated to the 

participants and beneficiaries when it 

became clear that exemptive relief 

would be necessary, as a result of the 

discovery by the Plan committee that 

two of the Fund transfers would have to 

be made in kind. It would have been 

detrimental to the interests of the 

participants and beneficiaries to have 

delayed the transfers at that point 

because they had already received the 

October notices and may have begun to 

make adjustments or taken (or not 

taken) other action in light of the 

upcoming changes. Therefore, the Plan 

committee decided to proceed and to 

request retroactive relief. The risks of 

the exemption’s not being granted were 

on Mellon and the Plan committee, as 

they, not the Plan, would be liable for 

any losses or prohibited transaction 

excise taxes in the event that the Fund 

transfers were prohibited without 

coverage under an exemption. 

Finally, the applicant explains that 

the 50% limitation on the investment of 

a participant’s account in the selfdirected brokerage window was 

imposed by the Plan committee when 

the brokerage window was first added to 

the Plan in 2001. The committee’s view 

was that the Funds available as 

designated investment options under 

the Plan offered a broad range of wellperforming and diverse investments and 

that participants should not be 

permitted to place more than half of 

their assets in potentially higher-risk 

investments. While the number of 

designated investment options has been 

reduced as a result of the 2005 changes, 

it is the committee’s view that the 

remaining Funds still provide a range of 

well-performing and diverse 

investments. Therefore, it has kept in 

place the 50% limitation, subject to the 

one-time, limited exception to permit 

participants to preserve their existing 

investments in the Funds being 

removed as Plan investment options. 

After a careful consideration of the 

entire record, including the written 

comments and the applicant’s responses 

thereto, the Department has determined 


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1Section 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 2510.3–21(c). 

2For purposes of this Underwriter Exemption, 

each plan participating in a commingled fund (such 

that a public hearing in this instance is 

unwarranted and that the proposed 

exemption should be granted as 

modified herein. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Karin Weng of the Department, 

telephone (202) 693–8557. (This is not 

a toll-free number.) 

Amendment to Prohibited Transaction 

Exemption (PTE) 2000–58, 65 FR 67765 

(November 13, 2000) and PTE 2002–41, 

67 FR 54487 (August 22, 2002) 

Involving Bear, Stearns & Co. Inc., 

Prudential Securities Incorporated, et 

al. to add Dominion Bond Rating 

Service Limited and Dominion Bond 

Rating Service, Inc. to the Definition of 

‘‘Rating Agency’’

[Prohibited Transaction Exemption 2007–05; 

Application Number D–11370] 

Exemption 

In accordance with section 408(a) of 

the Act and section 4975(c)(2) of the 

Code and the procedures set forth in 29 

CFR Part 2570, Subpart B (55 FR 32836, 

August 10, 1990) and based upon the 

entire record, the Department amends 

the following individual Prohibited 

Transaction Exemptions (PTEs), as set 

forth below: PTE 89–88, 54 FR 42582 

(October 17, 1989); PTE 89–89, 54 FR 

42569 (October 17, 1989); PTE 89–90, 54 

FR 42597 (October 17, 1989); PTE 90–

22, 55 FR 20542 (May 17, 1990); PTE 

90–24, 55 FR 20548 (May 17, 1990); PTE 

90–28, 55 FR 21456 (May 24, 1990); PTE 

90–29, 55 FR 21459 (May 24, 1990); PTE 

90–30, 55 FR 21461 (May 24, 1990); PTE 

90–32, 55 FR 23147 (June 6, 1990); PTE 

90–36, 55 FR 25903 (June 25, 1990); PTE 

90–39, 55 FR 27713 (July 5, 1990); PTE 

90–59, 55 FR 36724 (September 6, 

1990); PTE 90–83, 55 FR 50250 

(December 5, 1990); PTE 90–84, 55 FR 

50252 (December 5, 1990); PTE 90–88, 

55 FR 52899 (December 24, 1990); PTE 

91–14, 55 FR 48178 (February 22, 1991); 

PTE 91–22, 56 FR 03277 (April 18, 

1991); PTE 91–23, 56 FR 15936 (April 

18, 1991); PTE 91–30, 56 FR 22452 (May 

15, 1991); PTE 91–62, 56 FR 51406 

(October 11, 1991); PTE 93–31, 58 FR 

28620 (May 5, 1993); PTE 93–32, 58 FR 

28623 (May 14, 1993); PTE 94–29, 59 FR 

14675 (March 29, 1994); PTE 94–64, 59 

FR 42312 (August 17, 1994); PTE 94–70, 

59 FR 50014 (September 30, 1994); PTE 

94–73, 59 FR 51213 (October 7, 1994); 

PTE 94–84, 59 FR 65400 (December 19, 

1994); PTE 95–26, 60 FR 17586 (April 

6, 1995); PTE 95–59, 60 FR 35938 (July 

12, 1995); PTE 95–89, 60 FR 49011 

(September 21, 1995); PTE 96–22, 61 FR 

14828 (April 3, 1996); PTE 96–84, 61 FR 

58234 (November 13, 1996); PTE 96–92, 

61 FR 66334 (December 17, 1996); PTE 

96–94, 61 FR 68787 (December 30, 

1996); PTE 97–05, 62 FR 1926 (January 

14, 1997); PTE 97–28, 62 FR 28515 (May 

23, 1997); PTE 98–08, 63 FR 8498 

(February 19, 1998); PTE 99–11, 64 FR 

11046 (March 8, 1999); PTE 2000–19, 65 

FR 25950 (May 4, 2000); PTE 2000–33, 

65 FR 37171 (June 13, 2000); PTE 2000–

41, 65 FR 51039 (August 22, 2000); PTE 

2000–55, 65 FR 37171 (November 13, 

2000); PTE 2002–19, 67 FR 14979 

(March 28, 2002); PTE 2003–31, 68 FR 

59202 (October 14, 2003); and PTE 

2006–07, 71 FR 32134 (June 2, 2006), 

each as subsequently amended by PTE 

97–34, 62 FR 39021 (July 21, 1997) and 

PTE 2000–58, 65 FR 67765 (November 

13, 2000) and for certain of the 

exemptions, amended by PTE 2002–41, 

67 FR 54487 (August 22, 2002) 

(collectively, the Underwriter 

Exemptions). 

In addition, the Department notes that 

it is also granting individual exemptive 

relief for: Deutsche Bank A.G., New 

York Branch and Deutsche Morgan 

Grenfell/C.J. Lawrence Inc., Final 

Authorization Number (FAN) 97–03E 

(December 9, 1996); Credit Lyonnais 

Securities (USA) Inc., FAN 97–21E 

(September 10, 1997); ABN AMRO Inc., 

FAN 98–08E (April 27, 1998); Ironwood 

Capital Partners Ltd., FAN 99–31E 

(December 20, 1999) (supersedes FAN 

97–02E (November 25, 1996)); William 

J. Mayer Securities LLC, FAN 01–25E 

(October 15, 2001); Raymond James & 

Associates Inc. & Raymond James 

Financial Inc., FAN 03–07E (June 14, 

2003); WAMU Capital Corporation, FAN 

03–14E (August 24, 2003); and Terwin 

Capital LLC, FAN 04–16E (August 18, 

2004); which received the approval of 

the Department to engage in 

transactions substantially similar to the 

transactions described in the 

Underwriter Exemptions pursuant to 

PTE 96–62, 61 FR 39988 (July 31, 1996). 

I. Transactions 

A. Effective for transactions occurring 

on or after April 5, 2006, the restrictions 

of sections 406(a) and 407(a) of the Act, 

and the taxes imposed by sections 

4975(a) and (b) of the Code, by reason 

of section 4975(c)(1)(A) through (D) of 

the Code shall not apply to the 

following transactions involving Issuers 

and Securities evidencing interests 

therein: 

(1) The direct or indirect sale, 

exchange or transfer of Securities in the 

initial issuance of Securities between 

the Sponsor or Underwriter and an 

employee benefit plan when the 

Sponsor, Servicer, Trustee or Insurer of 

an Issuer, the Underwriter of the 

Securities representing an interest in the 

Issuer, or an Obligor is a party in 

interest with respect to such plan; 

(2) The direct or indirect acquisition 

or disposition of Securities by a plan in 

the secondary market for such 

Securities; and 

(3) The continued holding of 

Securities 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 Security 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.1

B. Effective for transactions occurring 

on or after April 5, 2006, the restrictions 

of sections 406(b)(1) and 406(b)(2) of the 

Act and the taxes imposed by sections 

4975(a) and (b) 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 Securities in the 

initial issuance of Securities between 

the Sponsor or 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 Securities is (a) an Obligor 

with respect to 5 percent or less of the 

fair market value of obligations or 

receivables contained in the Issuer, 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 Securities in connection with the 

initial issuance of the Securities, at least 

50 percent of each class of Securities 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 

Issuer is acquired by persons 

independent of the Restricted Group; 

(iii) A plan’s investment in each class 

of Securities does not exceed 25 percent 

of all of the Securities of that class 

outstanding at the time of the 

acquisition; and 

(iv) Immediately after the acquisition 

of the Securities, 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 

Securities representing an interest in an 

Issuer containing assets sold or serviced 

by the same entity.2 For purposes of this 


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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. 

3 In the case of a private placement memorandum, 

such memorandum must contain substantially the 

same information that would be disclosed in a 

prospectus if the offering of the securities were 

made in a registered public offering under the 

Securities Act of 1933. In the Department’s view, 

the private placement memorandum must contain 

sufficient information to permit plan fiduciaries to 

make informed investment decisions. For purposes 

of this exemption, references to ‘‘prospectus’’

include any related prospectus supplement thereto, 

pursuant to which Securities are offered to 

investors. 

paragraph (iv) only, an entity will not be 

considered to service assets contained 

in an Issuer if it is merely a Subservicer 

of that Issuer; 

(2) The direct or indirect acquisition 

or disposition of Securities by a plan in 

the secondary market for such 

Securities, provided that the conditions 

set forth in paragraphs (i), (iii) and (iv) 

of subsection I.B.(1) are met; and 

(3) The continued holding of 

Securities acquired by a plan pursuant 

to subsection I.B.(1) or (2). 

C. Effective for transactions occurring 

on or after April 5, 2006, the restrictions 

of sections 406(a), 406(b) and 407(a) of 

the Act, and the taxes imposed by 

section 4975(a) and (b) 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 an Issuer, 

including the use of any Eligible Swap 

transaction; or the defeasance of a 

mortgage obligation held as an asset of 

the Issuer through the substitution of a 

new mortgage obligation in a 

commercial mortgage-backed 

Designated Transaction, provided: 

(1) Such transactions are carried out 

in accordance with the terms of a 

binding Pooling and Servicing 

Agreement; 

(2) The Pooling and Servicing 

Agreement is provided to, or described 

in all material respects in the prospectus 

or private placement memorandum 

provided to, investing plans before they 

purchase Securities issued by the 

Issuer;3 and 

(3) The defeasance of a mortgage 

obligation and the substitution of a new 

mortgage obligation in a commercial 

mortgage-backed Designated 

Transaction meet the terms and 

conditions for such defeasance and 

substitution as are described in the 

prospectus or private placement 

memorandum for such Securities, 

which terms and conditions have been 

approved by a Rating Agency and does 

not result in the Securities receiving a 

lower credit rating from the Rating 

Agency than the current rating of the 

Securities. 

Notwithstanding the foregoing, 

section I.C. does not provide an 

exemption from the restrictions of 

section 406(b) of the Act or from the 

taxes imposed by reason of section 

4975(c) of the Code for the receipt of a 

fee by a Servicer of the Issuer from a 

person other than the Trustee or 

Sponsor, unless such fee constitutes a 

Qualified Administrative Fee. 

D. Effective for transactions occurring 

on or after April 5, 2006, the restrictions 

of sections 406(a) and 407(a) of the Act, 

and the taxes imposed by section 

4975(a) and (b) of the Code by reason of 

section 4975(c)(1)(A) through (D) of the 

Code, shall not apply to any 

transactions to which those restrictions 

or taxes 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) or (I) of the Code), solely 

because of the plan’s ownership of 

Securities. 

II. General Conditions 

A. The relief provided under section 

I. is available only if the following 

conditions are met: 

(1) The acquisition of Securities by a 

plan is on terms (including the Security 

price) that are at least as favorable to the 

plan as they would be in an arm’slength transaction with an unrelated 

party; 

(2) The rights and interests evidenced 

by the Securities are not subordinated to 

the rights and interests evidenced by 

other Securities of the same Issuer, 

unless the Securities are issued in a 

Designated Transaction; 

(3) The Securities acquired by the 

plan have received a rating from a 

Rating Agency at the time of such 

acquisition that is in one of the three (or 

in the case of Designated Transactions, 

four) highest generic rating categories; 

(4) The Trustee is not an Affiliate of 

any member of the Restricted Group, 

other than an Underwriter. For purposes 

of this requirement: 

(a) The Trustee shall not be 

considered to be an Affiliate of a 

Servicer solely because the Trustee has 

succeeded to the rights and 

responsibilities of the Servicer pursuant 

to the terms of a Pooling and Servicing 

Agreement providing for such 

succession upon the occurrence of one 

or more events of default by the 

Servicer; and 

(b) Subsection II.A.(4) will be deemed 

satisfied notwithstanding a Servicer 

becoming an Affiliate of the Trustee as 

the result of a merger or acquisition 

involving the Trustee, such Servicer 

and/or their Affiliates which occurs 

after the initial issuance of the 

Securities, provided that: 

(i) Such Servicer ceases to be an 

Affiliate of the Trustee no later than six 

months after the date such Servicer 

became an Affiliate of the Trustee; and 

(ii) Such Servicer did not breach any 

of its obligations under the Pooling and 

Servicing Agreement, unless such 

breach was immaterial and timely cured 

in accordance with the terms of such 

agreement, during the period from the 

closing date of such merger or 

acquisition transaction through the date 

the Servicer ceased to be an Affiliate of 

the Trustee; 

(5) The sum of all payments made to 

and retained by the Underwriters in 

connection with the distribution or 

placement of Securities represents not 

more than Reasonable Compensation for 

underwriting or placing the Securities; 

the sum of all payments made to and 

retained by the Sponsor pursuant to the 

assignment of obligations (or interests 

therein) to the Issuer represents not 

more than the fair market value of such 

obligations (or interests); and the sum of 

all payments made to and retained by 

the Servicer represents not more than 

Reasonable Compensation for the 

Servicer’s services under the Pooling 

and Servicing Agreement and 

reimbursement of the Servicer’s 

reasonable expenses in connection 

therewith; 

(6) The plan investing in such 

Securities is an ‘‘accredited investor’’ as 

defined in Rule 501(a)(1) of Regulation 

D of the Securities and Exchange 

Commission under the Securities Act of 

1933; and 

(7) In the event that the obligations 

used to fund an Issuer have not all been 

transferred to the Issuer on the Closing 

Date, additional obligations of the types 

specified in subsection III.B.(1) may be 

transferred to the Issuer during the PreFunding Period in exchange for 

amounts credited to the Pre-Funding 

Account, provided that: 

(a) The Pre-Funding Limit is not 

exceeded; 

(b) All such additional obligations 

meet the same terms and conditions for 

determining the eligibility of the 

original obligations used to create the 

Issuer (as described in the prospectus or 

private placement memorandum and/or 

Pooling and Servicing Agreement for 

such Securities), which terms and 


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conditions have been approved by a 

Rating Agency. 

Notwithstanding the foregoing, the 

terms and conditions for determining 

the eligibility of an obligation may be 

changed if such changes receive prior 

approval either by a majority vote of the 

outstanding securityholders or by a 

Rating Agency; 

(c) The transfer of such additional 

obligations to the Issuer during the PreFunding Period does not result in the 

Securities receiving a lower credit rating 

from a Rating Agency upon termination 

of the Pre-Funding Period than the 

rating that was obtained at the time of 

the initial issuance of the Securities by 

the Issuer; 

(d) The weighted average annual 

percentage interest rate (the average 

interest rate) for all of the obligations 

held by the Issuer at the end of the PreFunding Period will not be more than 

100 basis points lower than the average 

interest rate for the obligations which 

were transferred to the Issuer on the 

Closing Date; 

(e) In order to ensure that the 

characteristics of the receivables 

actually acquired during the PreFunding Period are substantially similar 

to those which were acquired as of the 

Closing Date, the characteristics of the 

additional obligations will either be 

monitored by a credit support provider 

or other insurance provider which is 

independent of the Sponsor or an 

independent accountant retained by the 

Sponsor will provide the Sponsor with 

a letter (with copies provided to the 

Rating Agency, the Underwriter and the 

Trustee) stating whether or not the 

characteristics of the additional 

obligations conform to the 

characteristics of such obligations 

described in the prospectus, private 

placement memorandum and/or Pooling 

and Servicing Agreement. In preparing 

such letter, the independent accountant 

will use the same type of procedures as 

were applicable to the obligations which 

were transferred as of the Closing Date; 

(f) The Pre-Funding Period shall be 

described in the prospectus or private 

placement memorandum provided to 

investing plans; and 

(g) The Trustee of the Trust (or any 

agent with which the Trustee contracts 

to provide Trust services) will be a 

substantial financial institution or trust 

company experienced in trust activities 

and familiar with its duties, 

responsibilities and liabilities as a 

fiduciary under the Act. The Trustee, as 

the legal owner of the obligations in the 

Trust or the holder of a security interest 

in the obligations held by the Issuer, 

will enforce all the rights created in 

favor of securityholders of the Issuer, 

including employee benefit plans 

subject to the Act; 

(8) In order to insure that the assets 

of the Issuer may not be reached by 

creditors of the Sponsor in the event of 

bankruptcy or other insolvency of the 

Sponsor: 

(a) The legal documents establishing 

the Issuer will contain: 

(i) Restrictions on the Issuer’s ability 

to borrow money or issue debt other 

than in connection with the 

securitization; 

(ii) Restrictions on the Issuer merging 

with another entity, reorganizing, 

liquidating or selling assets (other than 

in connection with the securitization); 

(iii) Restrictions limiting the 

authorized activities of the Issuer to 

activities relating to the securitization; 

(iv) If the Issuer is not a Trust, 

provisions for the election of at least one 

independent director/partner/member 

whose affirmative consent is required 

before a voluntary bankruptcy petition 

can be filed by the Issuer; and 

(v) If the Issuer is not a Trust, 

requirements that each independent 

director/partner/member must be an 

individual that does not have a 

significant interest in, or other 

relationships with, the Sponsor or any 

of its Affiliates; and 

(b) The Pooling and Servicing 

Agreement and/or other agreements 

establishing the contractual 

relationships between the parties to the 

securitization transaction will contain 

covenants prohibiting all parties thereto 

from filing an involuntary bankruptcy 

petition against the Issuer or initiating 

any other form of insolvency proceeding 

until after the Securities have been paid; 

and 

(c) Prior to the issuance by the Issuer 

of any Securities, a legal opinion is 

received which states that either: 

(i) A ‘‘true sale’’ of the assets being 

transferred to the Issuer by the Sponsor 

has occurred and that such transfer is 

not being made pursuant to a financing 

of the assets by the Sponsor; or 

(ii) In the event of insolvency or 

receivership of the Sponsor, the assets 

transferred to the Issuer will not be part 

of the estate of the Sponsor; 

(9) If a particular class of Securities 

held by any plan involves a Ratings 

Dependent or Non-Ratings Dependent 

Swap entered into by the Issuer, then 

each particular swap transaction 

relating to such Securities: 

(a) Shall be an Eligible Swap; 

(b) Shall be with an Eligible Swap 

Counterparty; 

(c) In the case of a Ratings Dependent 

Swap, shall provide that if the credit 

rating of the counterparty is withdrawn 

or reduced by any Rating Agency below 

a level specified by the Rating Agency, 

the Servicer (as agent for the Trustee) 

shall, within the period specified under 

the Pooling and Servicing Agreement: 

(i) Obtain a replacement swap 

agreement with an Eligible Swap 

Counterparty which is acceptable to the 

Rating Agency and the terms of which 

are substantially the same as the current 

swap agreement (at which time the 

earlier swap agreement shall terminate); 

or 

(ii) Cause the swap counterparty to 

establish any collateralization or other 

arrangement satisfactory to the Rating 

Agency such that the then current rating 

by the Rating Agency of the particular 

class of Securities will not be 

withdrawn or reduced. 

In the event that the Servicer fails to 

meet its obligations under this 

subsection II.A.(9)(c), plan 

securityholders will be notified in the 

immediately following Trustee’s 

periodic report which is provided to 

securityholders, and sixty days after the 

receipt of such report, the exemptive 

relief provided under section I.C. will 

prospectively cease to be applicable to 

any class of Securities held by a plan 

which involves such Ratings Dependent 

Swap; provided that in no event will 

such plan securityholders be notified 

any later than the end of the second 

month that begins after the date on 

which such failure occurs. 

(d) In the case of a Non-Ratings 

Dependent Swap, shall provide that, if 

the credit rating of the counterparty is 

withdrawn or reduced below the lowest 

level specified in section III.GG., the 

Servicer (as agent for the Trustee) shall 

within a specified period after such 

rating withdrawal or reduction: 

(i) Obtain a replacement swap 

agreement with an Eligible Swap 

Counterparty, the terms of which are 

substantially the same as the current 

swap agreement (at which time the 

earlier swap agreement shall terminate); 

or 

(ii) Cause the swap counterparty to 

post collateral with the Trustee in an 

amount equal to all payments owed by 

the counterparty if the swap transaction 

were terminated; or 

(iii) Terminate the swap agreement in 

accordance with its terms; and 

(e) Shall not require the Issuer to 

make any termination payments to the 

counterparty (other than a currently 

scheduled payment under the swap 

agreement) except from Excess Spread 

or other amounts that would otherwise 

be payable to the Servicer or the 

Sponsor; 

(10) Any class of Securities, to which 

one or more swap agreements entered 

into by the Issuer applies, may be 


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acquired or held in reliance upon this 

Underwriter Exemption only by 

Qualified Plan Investors; and 

(11) Prior to the issuance of any debt 

securities, a legal opinion is received 

which states that the debt holders have 

a perfected security interest in the 

Issuer’s assets. 

B. Neither any Underwriter, Sponsor, 

Trustee, Servicer, Insurer or any 

Obligor, unless it or any of its Affiliates 

has discretionary authority or renders 

investment advice with respect to the 

plan assets used by a plan to acquire 

Securities, shall be denied the relief 

provided under section I., if the 

provision of subsection II.A.(6) is not 

satisfied with respect to acquisition or 

holding by a plan of such Securities, 

provided that (1) such condition is 

disclosed in the prospectus or private 

placement memorandum; and (2) in the 

case of a private placement of 

Securities, the Trustee obtains a 

representation from each initial 

purchaser which is a plan that it is in 

compliance with such condition, and 

obtains a covenant from each initial 

purchaser to the effect that, so long as 

such initial purchaser (or any transferee 

of such initial purchaser’s Securities) is 

required to obtain from its transferee a 

representation regarding compliance 

with the Securities Act of 1933, any 

such transferees will be required to 

make a written representation regarding 

compliance with the condition set forth 

in subsection II.A.(6). 

III. Definitions 

For purposes of this exemption: 

A. ‘‘Security’’ means: 

(1) A pass-through certificate or trust 

certificate that represents a beneficial 

ownership interest in the assets of an 

Issuer which is a Trust and which 

entitles the holder to payments of 

principal, interest and/or other 

payments made with respect to the 

assets of such Trust; or 

(2) A security which is denominated 

as a debt instrument that is issued by, 

and is an obligation of, an Issuer; with 

respect to which the Underwriter is 

either (i) the sole underwriter or the 

manager or co-manager of the 

underwriting syndicate, or (ii) a selling 

or placement agent. 

B. ‘‘Issuer’’ means an investment pool, 

the corpus or assets of which are held 

in trust (including a grantor or owner 

Trust) or whose assets are held by a 

partnership, special purpose 

corporation or limited liability company 

(which Issuer may be a Real Estate 

Mortgage Investment Conduit (REMIC) 

or a Financial Asset Securitization 

Investment Trust (FASIT) within the 

meaning of section 860D(a) or section 

860L, respectively, of the Code); and the 

corpus or assets of which consist solely 

of: 

(1)(a) Secured consumer receivables 

that bear interest or are purchased at a 

discount (including, but not limited to, 

home equity loans and obligations 

secured by shares issued by a 

cooperative housing association); and/or 

(b) Secured credit instruments that 

bear interest or are purchased at a 

discount in transactions by or between 

business entities (including, but not 

limited to, Qualified Equipment Notes 

Secured by Leases); and/or 

(c) Obligations that bear interest or are 

purchased at a discount and which are 

secured by single-family residential, 

multi-family residential and/or 

commercial real property (including 

obligations secured by leasehold 

interests on residential or commercial 

real property); and/or 

(d) Obligations that bear interest or 

are purchased at a discount and which 

are secured by motor vehicles or 

equipment, or Qualified Motor Vehicle 

Leases; and/or 

(e) Guaranteed governmental 

mortgage pool certificates, as defined in 

29 CFR 2510.3–101(i)(2) 4; and/or 

(f) Fractional undivided interests in 

any of the obligations described in 

clauses (a)–(e) of this subsection B.(1).5

(1) Notwithstanding the foregoing, 

residential and home equity loan 

receivables issued in Designated 

Transactions may be less than fully 

secured, provided that: (i) the rights and 

interests evidenced by the Securities 

issued in such Designated Transactions 

(as defined in section III.DD.) are not 

subordinated to the rights and interests 

evidenced by Securities of the same 

Issuer; (ii) such Securities acquired by 

the plan have received a rating from a 

Rating Agency at the time of such 

acquisition that is in one of the two 

highest generic rating categories; and 

(iii) any obligation included in the 

corpus or assets of the Issuer must be 

secured by collateral whose fair market 

value on the Closing Date of the 

Designated Transaction is at least equal 

to 80% of the sum of: (I) the outstanding 

principal balance due under the 

obligation which is held by the Issuer 

and (II) the outstanding principal 

balance(s) of any other obligation(s) of 

higher priority (whether or not held by 

the Issuer) which are secured by the 

same collateral. 

(2) Property which had secured any of 

the obligations described in subsection 

III.B.(1); 

(3)(a) Undistributed cash or temporary 

investments made therewith maturing 

no later than the next date on which 

distributions are made to 

securityholders; and/or 

(b) Cash or investments made 

therewith which are credited to an 

account to provide payments to 

securityholders pursuant to any Eligible 

Swap Agreement meeting the conditions 

of subsection II.A.(9) or pursuant to any 

Eligible Yield Supplement Agreement; 

and/or 

(c) Cash transferred to the Issuer on 

the Closing Date and permitted 

investments made therewith which: 

(i) Are credited to a Pre-Funding 

Account established to purchase 

additional obligations with respect to 

which the conditions set forth in 

paragraphs (a)–(g) of subsection II.A.(7) 

are met; and/or 

(ii) Are credited to a Capitalized 

Interest Account; and 

(iii) Are held by the Issuer for a period 

ending no later than the first 

distribution date to securityholders 

occurring after the end of the PreFunding Period. 

For purposes of this paragraph (c) of 

subsection III.B.(3), the term ‘‘permitted 

investments’’ means investments which: 

(i) are either: (x) direct obligations of, or 

obligations fully guaranteed as to timely 

payment of principal and interest by, 

the United States or any agency or 

instrumentality thereof, provided that 

such obligations are backed by the full 

faith and credit of the United States or 

(y) have been rated (or the Obligor has 

been rated) in one of the three highest 

generic rating categories by a Rating 

Agency; (ii) are described in the Pooling 

and Servicing Agreement; and (iii) are 

permitted by the Rating Agency. 

(4) Rights of the Trustee under the 

Pooling and Servicing Agreement, and 

rights under any insurance policies, 

third-party guarantees, contracts of 

suretyship, Eligible Yield Supplement 

Agreements, Eligible Swap Agreements 

meeting the conditions of subsection 

II.A.(9) or other credit support 

arrangements with respect to any 

obligations described in subsection 

III.B.(1). 

Notwithstanding the foregoing, the 

term ‘‘Issuer’’ does not include any 

investment pool unless: (i) the assets of 

the type described in paragraphs (a)–(f) 

of subsection III.B.(1) which are 

contained in the investment pool have 

been included in other investment 

pools, (ii) Securities evidencing 

interests in such other investment pools 

have been rated in one of the three (or 

in the case of Designated Transactions, 

four) highest generic rating categories by 

a Rating Agency for at least one year 

prior to the plan’s acquisition of 

Securities pursuant to this Underwriter 

Exemption, and (iii) Securities 


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evidencing interests in such other 

investment pools have been purchased 

by investors other than plans for at least 

one year prior to the plan’s acquisition 

of Securities pursuant to this 

Underwriter Exemption. 

C. ‘‘Underwriter’’ means: 

(1) An entity defined as an 

Underwriter in subsection III.C.(1) of 

each of the Underwriter Exemptions 

that are being amended by this 

exemption. In addition, the term 

Underwriter includes Deutsche Bank 

AG, New York Branch and Deutsche 

Morgan Grenfell/C.J. Lawrence Inc, 

Credit Lyonnais Securities (USA) Inc., 

ABN AMRO Inc., Ironwood Capital 

Partners Ltd., William J. Mayer 

Securities LLC, Raymond James & 

Associates Inc. & Raymond James 

Financial Inc., WAMU Capital 

Corporation, and Terwin Capital LLC 

(which received the approval of the 

Department to engage in transactions 

substantially similar to the transactions 

described in the Underwriter 

Exemptions pursuant to PTE 96–62); 

(2) Any person directly or indirectly, 

through one or more intermediaries, 

controlling, controlled by or under 

common control with such entity; or 

(3) Any member of an underwriting 

syndicate or selling group of which a 

person described in subsections III.C.(1) 

or (2) is a manager or co-manager with 

respect to the Securities. 

D. ‘‘Sponsor’’ means the entity that 

organizes an Issuer by depositing 

obligations therein in exchange for 

Securities. 

E. ‘‘Master Servicer’’ means the entity 

that is a party to the Pooling and 

Servicing Agreement relating to assets of 

the Issuer and is fully responsible for 

servicing, directly or through 

Subservicers, the assets of the Issuer. 

F. ‘‘Subservicer’’ means an entity 

which, under the supervision of and on 

behalf of the Master Servicer, services 

loans contained in the Issuer, but is not 

a party to the Pooling and Servicing 

Agreement. 

G. ‘‘Servicer’’ means any entity which 

services loans contained in the Issuer, 

including the Master Servicer and any 

Subservicer. 

H. ‘‘Trust’’ means an Issuer which is 

a trust (including an owner trust, 

grantor trust or a REMIC or FASIT 

which is organized as a Trust). 

I. ‘‘Trustee’’ means the Trustee of any 

Trust which issues Securities and also 

includes an Indenture Trustee. 

‘‘Indenture Trustee’’ means the Trustee 

appointed under the indenture pursuant 

to which the subject Securities are 

issued, the rights of holders of the 

Securities are set forth and a security 

interest in the Trust assets in favor of 

the holders of the Securities is created. 

The Trustee or the Indenture Trustee is 

also a party to or beneficiary of all the 

documents and instruments transferred 

to the Issuer, and as such, has both the 

authority to, and the responsibility for, 

enforcing all the rights created thereby 

in favor of holders of the Securities, 

including those rights arising in the 

event of default by the Servicer. 

J. ‘‘Insurer’’ means the insurer or 

guarantor of, or provider of other credit 

support for, an Issuer. Notwithstanding 

the foregoing, a person is not an insurer 

solely because it holds Securities 

representing an interest in an Issuer 

which are of a class subordinated to 

Securities representing an interest in the 

same Issuer. 

K. ‘‘Obligor’’ means any person, other 

than the Insurer, that is obligated to 

make payments with respect to any 

obligation or receivable included in the 

Issuer. Where an Issuer contains 

Qualified Motor Vehicle Leases or 

Qualified Equipment Notes Secured by 

Leases, ‘‘Obligor’’ shall also include any 

owner of property subject to any lease 

included in the Issuer, or subject to any 

lease securing an obligation included in 

the Issuer. 

L. ‘‘Excluded Plan’’ means any 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 Securities means: 

(1) Each Underwriter; 

(2) Each Insurer; 

(3) The Sponsor; 

(4) The Trustee; 

(5) Each Servicer; 

(6) Any Obligor with respect to 

obligations or receivables included in 

the Issuer constituting more than 5 

percent of the aggregate unamortized 

principal balance of the assets in the 

Issuer, determined on the date of the 

initial issuance of Securities by the 

Issuer; 

(7) Each counterparty in an Eligible 

Swap Agreement; or 

(8) Any Affiliate of a person described 

in subsections III.M.(1)–(7). 

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), a brother, a sister, or 

a 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 who has 

investment management authority or 

renders investment advice with respect 

to any 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 prospectus or private 

placement memorandum 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 Underwriter 

Exemption applicable to sales are met. 

R. ‘‘Forward Delivery Commitment’’

means a contract for the purchase or 

sale of one or more Securities to be 

delivered at an agreed future settlement 

date. The term includes both mandatory 

contracts (which contemplate obligatory 

delivery and acceptance of the 

Securities) and optional contracts 

(which give one party the right but not 

the obligation to deliver Securities to, or 

demand delivery of Securities from, the 

other party). 

S. ‘‘Reasonable Compensation’’ has 

the same meaning as that term is 

defined in 29 CFR 2550.408c–2. 

T. ‘‘Qualified Administrative Fee’’

means a fee which meets the following 

criteria: 

(1) The fee is triggered by an act or 

failure to act by the Obligor other than 

the normal timely payment of amounts 

owing in respect of the obligations; 

(2) The Servicer may not charge the 

fee absent the act or failure to act 

referred to in subsection III.T.(1); 

(3) The ability to charge the fee, the 

circumstances in which the fee may be 

charged, and an explanation of how the 

fee is calculated are set forth in the 

Pooling and Servicing Agreement; and 

(4) The amount paid to investors in 

the Issuer will not be reduced by the 

amount of any such fee waived by the 

Servicer. 

U. ‘‘Qualified Equipment Note 

Secured By A Lease’’ means an 

equipment note: 

(1) Which is secured by equipment 

which is leased; 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Notices 13135 

(2) Which is secured by the obligation 

of the lessee to pay rent under the 

equipment lease; and 

(3) With respect to which the Issuer’s 

security interest in the equipment is at 

least as protective of the rights of the 

Issuer as the Issuer would have if the 

equipment note were secured only by 

the equipment and not the lease. 

V. ‘‘Qualified Motor Vehicle Lease’’

means a lease of a motor vehicle where: 

(1) The Issuer owns or holds a 

security interest in the lease; 

(2) The Issuer owns or holds a 

security interest in the leased motor 

vehicle; and 

(3) The Issuer’s security interest in the 

leased motor vehicle is at least as 

protective of the Issuer’s rights as the 

Issuer would receive under a motor 

vehicle installment loan contract. 

W. ‘‘Pooling and Servicing 

Agreement’’ means the agreement or 

agreements among a Sponsor, a Servicer 

and the Trustee establishing a Trust. 

‘‘Pooling and Servicing Agreement’’ also 

includes the indenture entered into by 

the Issuer and the Indenture Trustee. 

X. ‘‘Rating Agency’’ means Standard & 

Poor’s Ratings Services, a division of 

The McGraw-Hill Companies, Inc.; 

Moody’s Investors Service, Inc.; 

FitchRatings, Inc.; Dominion Bond 

Rating Service Limited, or Dominion 

Bond Rating Service, Inc.; or any 

successors thereto. 

Y. ‘‘Capitalized Interest Account’’

means an Issuer account: (i) which is 

established to compensate 

securityholders for shortfalls, if any, 

between investment earnings on the PreFunding Account and the interest rate 

payable under the Securities; and (ii) 

which meets the requirements of 

paragraph (c) of subsection III.B.(3). 

Z. ‘‘Closing Date’’ means the date the 

Issuer is formed, the Securities are first 

issued and the Issuer’s assets (other than 

those additional obligations which are 

to be funded from the Pre-Funding 

Account pursuant to subsection II.A.(7)) 

are transferred to the Issuer. 

AA. ‘‘Pre-Funding Account’’ means 

an Issuer account: (i) Which is 

established to purchase additional 

obligations, which obligations meet the 

conditions set forth in paragraph (a)–(g) 

of subsection II.A.(7); and (ii) which 

meets the requirements of paragraph (c) 

of subsection III.B.(3). 

BB. ‘‘Pre-Funding Limit’’ means a 

percentage or ratio of the amount 

allocated to the Pre-Funding Account, 

as compared to the total principal 

amount of the Securities being offered, 

which is less than or equal to 25 

percent. 

CC. ‘‘Pre-Funding Period’’ means the 

period commencing on the Closing Date 

and ending no later than the earliest to 

occur of: (i) The date the amount on 

deposit in the Pre-Funding Account is 

less than the minimum dollar amount 

specified in the Pooling and Servicing 

Agreement; (ii) the date on which an 

event of default occurs under the 

Pooling and Servicing Agreement; or 

(iii) the date which is the later of three 

months or ninety days after the Closing 

Date. 

DD. ‘‘Designated Transaction’’ means 

a securitization transaction in which the 

assets of the Issuer consist of secured 

consumer receivables, secured credit 

instruments or secured obligations that 

bear interest or are purchased at a 

discount and are: (i) Motor vehicle, 

home equity and/or manufactured 

housing consumer receivables; and/or 

(ii) motor vehicle credit instruments in 

transactions by or between business 

entities; and/or (iii) single-family 

residential, multi-family residential, 

home equity, manufactured housing 

and/or commercial mortgage obligations 

that are secured by single-family 

residential, multi-family residential, 

commercial real property or leasehold 

interests therein. For purposes of this 

section III.DD., the collateral securing 

motor vehicle consumer receivables or 

motor vehicle credit instruments may 

include motor vehicles and/or Qualified 

Motor Vehicle Leases. 

EE. ‘‘Ratings Dependent Swap’’ means 

an interest rate swap, or (if purchased 

by or on behalf of the Issuer) an interest 

rate cap contract, that is part of the 

structure of a class of Securities where 

the rating assigned by the Rating Agency 

to any class of Securities held by any 

plan is dependent on the terms and 

conditions of the swap and the rating of 

the counterparty, and if such Security 

rating is not dependent on the existence 

of the swap and rating of the 

counterparty, such swap or cap shall be 

referred to as a ‘‘Non-Ratings Dependent 

Swap’’. With respect to a Non-Ratings 

Dependent Swap, each Rating Agency 

rating the Securities must confirm, as of 

the date of issuance of the Securities by 

the Issuer, that entering into an Eligible 

Swap with such counterparty will not 

affect the rating of the Securities. 

FF. ‘‘Eligible Swap’’ means a Ratings 

Dependent or Non-Ratings Dependent 

Swap: 

(1) Which is denominated in U.S. 

dollars; 

(2) Pursuant to which the Issuer pays 

or receives, on or immediately prior to 

the respective payment or distribution 

date for the class of Securities to which 

the swap relates, a fixed rate of interest, 

or a floating rate of interest based on a 

publicly available index (e.g., LIBOR or 

the U.S. Federal Reserve’s Cost of Funds 

Index (COFI)), with the Issuer receiving 

such payments on at least a quarterly 

basis and obligated to make separate 

payments no more frequently than the 

counterparty, with all simultaneous 

payments being netted; 

(3) Which has a notional amount that 

does not exceed either: (i) the principal 

balance of the class of Securities to 

which the swap relates, or (ii) the 

portion of the principal balance of such 

class represented solely by those types 

of corpus or assets of the Issuer referred 

to in subsections III.B.(1), (2) and (3); 

(4) Which is not leveraged (i.e., 

payments are based on the applicable 

notional amount, the day count 

fractions, the fixed or floating rates 

designated in subsection III.FF.(2), and 

the difference between the products 

thereof, calculated on a one to one ratio 

and not on a multiplier of such 

difference); 

(5) Which has a final termination date 

that is either the earlier of the date on 

which the Issuer terminates or the 

related class of securities is fully repaid; 

and 

(6) Which does not incorporate any 

provision which could cause a 

unilateral alteration in any provision 

described in subsections III.FF.(1) 

through (4) without the consent of the 

Trustee. 

GG. ‘‘Eligible Swap Counterparty’’

means a bank or other financial 

institution which has a rating, at the 

date of issuance of the Securities by the 

Issuer, which is in one of the three 

highest long-term credit rating 

categories, or one of the two highest 

short-term credit rating categories, 

utilized by at least one of the Rating 

Agencies rating the Securities; provided 

that, if a swap counterparty is relying on 

its short-term rating to establish 

eligibility under the Underwriter 

Exemption, such swap counterparty 

must either have a long-term rating in 

one of the three highest long-term rating 

categories or not have a long-term rating 

from the applicable Rating Agency, and 

provided further that if the class of 

Securities with which the swap is 

associated has a final maturity date of 

more than one year from the date of 

issuance of the Securities, and such 

swap is a Ratings Dependent Swap, the 

swap counterparty is required by the 

terms of the swap agreement to establish 

any collateralization or other 

arrangement satisfactory to the Rating 

Agencies in the event of a ratings 

downgrade of the swap counterparty. 

HH. ‘‘Qualified Plan Investor’’ means 

a plan investor or group of plan 

investors on whose behalf the decision 

to purchase Securities is made by an 

appropriate independent fiduciary that 


pwalker on PROD1PC71 with NOTICES
13136 Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Notices 

6PTE 84–14 provides a class exemption for 

transactions between a party in interest with respect 

to an employee benefit plan and an investment fund 

(including either a single customer or pooled 

separate account) in which the plan has an interest, 

and which is managed by a QPAM, provided 

certain conditions are met. QPAMs (e.g., banks, 

insurance companies, registered investment 

advisers with total client assets under management 

in excess of $85 million) are considered to be 

experienced investment managers for plan investors 

that are aware of their fiduciary duties under 

ERISA. 

7PTE 96–23 permits various transactions 

involving employee benefit plans whose assets are 

managed by an INHAM, an entity which is 

generally a subsidiary of an employer sponsoring 

the plan which is a registered investment adviser 

with management and control of total assets 

attributable to plans maintained by the employer 

and its affiliates which are in excess of $50 million. 

is qualified to analyze and understand 

the terms and conditions of any swap 

transaction used by the Issuer and the 

effect such swap would have upon the 

credit ratings of the Securities. For 

purposes of the Underwriter Exemption, 

such a fiduciary is either: 

(1) A ‘‘qualified professional asset 

manager’’ (QPAM),6 as defined under 

Part V(a) of PTE 84–14, 49 FR 9494, 

9506 (March 13, 1984), as amended by 

70 FR 49305 (August 23, 2005); 

(2) An ‘‘in-house asset manager’’

(INHAM),7 as defined under Part IV(a) 

of PTE 96–23, 61 FR 15975, 15982 

(April 10, 1996); or 

(3) A plan fiduciary with total assets 

under management of at least $100 

million at the time of the acquisition of 

such Securities. 

II. ‘‘Excess Spread’’ means, as of any 

day funds are distributed from the 

Issuer, the amount by which the interest 

allocated to Securities exceeds the 

amount necessary to pay interest to 

securityholders, servicing fees and 

expenses. 

JJ. ‘‘Eligible Yield Supplement 

Agreement’’ means any yield 

supplement agreement, similar yield 

maintenance arrangement or, if 

purchased by or on behalf of the Issuer, 

an interest rate cap contract to 

supplement the interest rates otherwise 

payable on obligations described in 

subsection III.B.(1). Such an agreement 

or arrangement may involve a notional 

principal contract provided that: 

(1) It is denominated in U.S. dollars; 

(2) The Issuer receives on, or 

immediately prior to the respective 

payment date for the Securities covered 

by such agreement or arrangement, a 

fixed rate of interest or a floating rate of 

interest based on a publicly available 

index (e.g., LIBOR or COFI), with the 

Issuer receiving such payments on at 

least a quarterly basis; 

(3) It is not ‘‘leveraged’’ as described 

in subsection III.FF.(4); 

(4) It does not incorporate any 

provision which would cause a 

unilateral alteration in any provision 

described in subsections III.JJ.(1)–(3) 

without the consent of the Trustee; 

(5) It is entered into by the Issuer with 

an Eligible Swap Counterparty; and 

(6) It has a notional amount that does 

not exceed either: (i) the principal 

balance of the class of Securities to 

which such agreement or arrangement 

relates, or (ii) the portion of the 

principal balance of such class 

represented solely by those types of 

corpus or assets of the Issuer referred to 

in subsections III.B.(1), (2) and (3). 

IV. Modifications 

For the Underwriter Exemptions 

provided to Residential Funding 

Corporation, Residential Funding 

Mortgage Securities, Inc., et al. and GE 

Capital Mortgage Services, Inc. and 

GECC Capital Markets (the Applicants) 

(PTEs 94–29 and 94–73, respectively); 

A. Section III.A. of this exemption is 

modified to read as follows: 

A. ‘‘Security’’ means: 

(1) A pass-through certificate or trust 

certificate that represents a beneficial 

ownership interest in the assets of an 

Issuer which is a Trust and which 

entitles the holder to payments of 

principal, interest and/or other 

payments made with respect to the 

assets of such Trust; or 

(2) A security which is denominated 

as a debt instrument that is issued by, 

and is an obligation of, an Issuer; with 

respect to which (i) one of the 

Applicants or any of its Affiliates is the 

Sponsor, [and] an entity which has 

received from the Department an 

individual prohibited transaction 

exemption relating to Securities which 

is similar to this exemption, is the sole 

underwriter or the manager or comanager of the underwriting syndicate 

or a selling or placement agent or (ii) 

one of the Applicants or any of its 

Affiliates is the sole underwriter or the 

manager or co-manager of the 

underwriting syndicate, or a selling or 

placement agent. 

B. Section III.C. of this exemption is 

modified to read as follows: 

C. Underwriter means: 

(1) An entity defined as an 

Underwriter in subsection III.C.(1) of 

each of the Underwriter Exemptions 

that are being amended by this 

exemption. In addition, the term 

Underwriter includes Deutsche Bank 

AG, New York Branch and Deutsche 

Morgan Grenfell/C.J. Lawrence Inc., 

Credit Lyonnais Securities (USA) Inc., 

ABN AMRO Inc., Ironwood Capital 

Partners Ltd., William J. Mayer 

Securities LLC, Raymond James & 

Associates Inc. & Raymond James 

Financial Inc., WAMU Capital 

Corporation, and Terwin Capital LLC 

(which received the approval of the 

Department to engage in transactions 

substantially similar to the transactions 

described in the Underwriter 

Exemptions pursuant to PTE 96–62); 

(2) Any person directly or indirectly, 

through one or more intermediaries, 

controlling, controlled by or under 

common control with such entity; 

(3) Any member of an underwriting 

syndicate or selling group of which a 

person described in subsections III.C.(1) 

or (2) above is a manager or co-manager 

with respect to the Securities; or 

(4) Any entity which has received 

from the Department an individual 

prohibited transaction exemption 

relating to Securities which is similar to 

this exemption. 

Effective Date: This amendment is 

effective for transactions occurring on or 

after April 5, 2006. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to amend the 

Underwriter Exemptions, refer to the 

notice of proposed exemption that was 

published on January 24, 2007 in the 

Federal Register at 72 FR 3152. 

FOR FURTHER INFORMATION CONTACT: 

Wendy M. 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 


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Federal Register / Vol. 72, No. 53 / Tuesday, March 20, 2007 / Notices 13137 

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 14th day of 

March, 2007. 

Ivan Strasfeld 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

Department of Labor. 

[FR Doc. E7–4982 Filed 3–19–07; 8:45 am] 

BILLING CODE 4510–29–P 

NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

Advisory Committee on the Electronic 

Records Archives 

AGENCY: National Archives and Records 

Administration. 

ACTION: Notice of meeting. 

SUMMARY: In accordance with the 

Federal Advisory Committee Act, as 

amended (5 U.S.C. Appendix 2), the 

National Archives and Records 

Administration (NARA) announces a 

meeting of the Advisory Committee on 

the Electronic Records Archives 

(ACERA). The committee serves as a 

deliberative body to advise the Archivist 

of the United States on technical, 

mission, and service issues related to 

the Electronic Records Archives (ERA). 

This includes, but is not limited to, 

advising and making recommendations 

to the Archivist on issues related to the 

development, implementation, and use 

of the ERA system. 

Date of Meeting: April 4–5, 2007. 

Time of Meeting: 9 a.m.–4 p.m. 

Place of Meeting: 700 Pennsylvania 

Avenue, NW., Washington, DC 20408–

0001. 

This meeting will be open to the 

public. However, due to space 

limitations and access procedures, the 

name and telephone number of 

individuals planning to attend must be 

submitted to the Electronic Records 

Archives Program at 

era.program@nara.gov. 

SUPPLEMENTARY INFORMATION: 

Agenda 

• Opening Remarks 

• Approval of Minutes 

• Committee Updates 

• Activity Reports 

• Adjournment 

FOR FURTHER INFORMATION CONTACT: 

Lewis Bellardo, Deputy Archivist of the 

United States and Chief of Staff; (301) 

837–1600. 

Dated: March 15, 2007. 

Mary Ann Hadyka, 

Committee Management Officer. 

[FR Doc. E7–5068 Filed 3–19–07; 8:45 am] 

BILLING CODE 7515–01–P 

NATIONAL INSTITUTE FOR LITERACY 

National Institute for Literacy Advisory 

Board 

AGENCY: National Institute for Literacy. 

ACTION: Notice of open meeting with 

partially closed session (amended). 

SUMMARY: On March 8, 2007, the 

Secretary published in the Federal 

Register a notice of open meeting with 

a partially closed session for National 

Institute for Literacy. This notice 

amends the March 8, 2007, notice by 

changing the meeting to a one-day only 

meeting. This amended notice is 

appearing in the Federal Register less 

than 15 days before the meeting due to 

scheduling difficulties within the 

Agency. 

This notice sets forth the schedule 

and a summary of the agenda for an 

upcoming meeting of the National 

Institute for Literacy Advisory Board 

(Board). The notice also describes the 

functions of the Board. Notice of this 

meeting is required by section 10(a)(2) 

of the Federal Advisory Committee Act. 

This document is intended to notify the 

general public of their opportunity to 

attend the meeting. Individuals who 

will need accommodations for a 

disability in order to attend the meeting 

(e.g., interpreting services, assistive 

listening devices, or materials in 

alternative format) should notify Steve 

Langley at telephone number (202) 233–

2043. We will attempt to meet requests 

for accommodations after this date but 

cannot guarantee their availability. The 

meeting site is accessible to individuals 

with disabilities. 

DATE AND TIME: Open session—March 28, 

2007, from 8:30 a.m. to 5:30 p.m. Closed 

session—March 28, 2007, from 5:30 

p.m. to 6 p.m. 

ADDRESSES: The National Institute for 

Literacy, 1775 I Street, NW., Suite 730, 

Washington, DC 20006. 

FOR FURTHER INFORMATION CONTACT: 

Steve Langley, National Institute for 

Literacy, 1775 I Street, NW., Suite 730, 

Washington, DC 20006; telephone 

number: (202) 233–2043; e-mail: 

slangley@nifl.gov. 

SUPPLEMENTARY INFORMATION: The Board 

is established under section 242 of the 

Workforce Investment Act of 1998, 

Public Law 105–220 (20 U.S.C. 9252). 

The Board consists of ten individuals 

appointed by the President with the 

advice and consent of the Senate. The 

Board advises and makes 

recommendations to the Interagency 

Group that administers the Institute. 

The Interagency Group is composed of 

the Secretaries of Education, Labor, and 

Health and Human Services. The 

Interagency Group considers the Board’s 

recommendations in planning the goals 

of the Institute and in implementing any 

programs to achieve those goals. 

Specifically, the Board performs the 

following functions: (a) Makes 

recommendations concerning the 

appointment of the Director and the 

staff of the Institute; (b) provides 

independent advice on operation of the 

Institute; and (c) receives reports from 

the Interagency Group and the 

Institute’s Director. The National 

Institute for Literacy Advisory Board 

will meet March 28, 2007. On March 28, 

2007 from 8:30 a.m. to 5:30 p.m. the 

Board will meet in open session to 

discuss strategic planning and the 

dissemination plan for the National 

Early Literacy Panel Report. 

On March 28, 2007 from 5:30 p.m. to 

6 p.m., the Board will meet in closed 

session to discuss personnel issues. This 

discussion will relate to the Institute’s 

internal personnel practices, including 

consideration of the Director’s 

performance and salary. The discussion 

is likely to disclose information of 

personal nature where disclosure would 

constitute a clearly unwarranted 

invasion of personnel privacy. The 

discussion must therefore be held in 

closed session under exemptions 2 and 

6 of the Government in the Sunshine 

Act, 5 U.S.C. 552b(c)(2) and (6). A 

summary of the activities at the closed 

session and related matters that are 

informative to the public and consistent 

with the policy of 5 U.S.C. 552b will be 

available to the public within 14 days of 

the meeting. 

Records are kept of all Advisory 

Board proceedings and are available for 

public inspection at the National 

Institute for Literacy, 1775 I Street, NW., 

Suite 730, Washington, DC 20006, from 

8:30 a.m. to 5 p.m. 

Dated: March 15, 2007. 

Sandra L. Baxter, 

Director. 

[FR Doc. E7–5024 Filed 3–19–07; 8:45 am] 

BILLING CODE 6055–01–P 


pwalker on PROD1PC71 with NOTICES