3152 Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 

1The term ‘‘Underwriter Exemptions’’ refers to 

the following PTEs: PTE 89–88, 54 FR 42582 

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

(October 17, 1989); PTE 89–90, 54 FR 42597 

(October 17, 1989); PTE 90–22, 55 FR 20542 (May 

17, 1990); PTE 90–23, 55 FR 20545 (May 17, 1990); 

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

28, 55 FR 21456 (May 24, 1990); PTE 90–29, 55 FR 

21459 (May 24, 1990); PTE 90–30, 55 FR 21461 

(May 24, 1990); PTE 90–31, 55 FR 23144 (June 6, 

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

90–33, 55 FR 23151 (June 6, 1990); PTE 90–36, 55 

FR 25903 (June 25, 1990); PTE 90–39, 55 FR 27713 

(July 5, 1990); PTE 90–59, 55 FR 36724 (September 

6, 1990); PTE 90–83, 55 FR 50250 (December 5, 

1990); PTE 90–84, 55 FR 50252 (December 5, 1990); 

PTE 90–88, 55 FR 52899 (December 24, 1990); PTE 

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

22, 56 FR 03277 (April 18, 1991); PTE 91–23, 56 

FR 15936 (April 18, 1991); PTE 91–30, 56 FR 22452 

(May 15, 1991); PTE 91–62, 56 FR 51406 (October 

11, 1991); PTE 93–31, 58 FR 28620 (May 5, 1993); 

PTE 93–32, 58 FR 28623 (May 14, 1993); PTE 94–

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

FR 42312 (August 17, 1994); PTE 94–70, 59 FR 

50014 (September 30, 1994); PTE 94–73, 59 FR 

51213 (October 7, 1994); PTE 94–84, 59 FR 65400 

(December 19, 1994); PTE 95–26, 60 FR 17586 

(April 6, 1995); PTE 95–59, 60 FR 35938 (July 12, 

1995); PTE 95–89, 60 FR 49011 (September 21, 

1995); PTE 96–22, 61 FR 14828 (April 3, 1996); PTE 

96–84, 61 FR 58234 (November 13, 1996); PTE 96–

92, 61 FR 66334 (December 17, 1996); PTE 96–94, 

61 FR 68787 (December 30, 1996); PTE 97–05, 62 

FR 1926 (January 14, 1997); PTE 97–28, 62 FR 

28515 (May 23, 1997); PTE 97–34, 62 FR 39021 

(July 21, 1997); PTE 98–08, 63 FR 8498 (February 

19, 1998); PTE 99–11, 64 FR 11046 (March 8, 1999); 

PTE 2000–19, 65 FR 25950 (May 4, 2000); PTE 

2000–33, 65 FR 37171 (June 13, 2000); PTE 2000–

41, 65 FR 51039 (August 22, 2000); PTE 2000–55, 

65 FR 37171 (November 13, 2000); PTE 2002–19, 67 

FR 14979 (March 28, 2002); PTE 2003–31, 68 FR 

59202 (October 14, 2003); and PTE 2006–07, 71 FR 

32134 (June 2, 2006), each as subsequently 

amended by PTE 97–34, 62 FR 39021 (July 21, 

1997) and PTE 2000–58, 65 FR 67765 (November 

13, 2000) and for certain of the exemptions, 

amended by PTE 2002–41, 67 FR 54487 (August 22, 

2002). 

In addition, the Department notes that it is also 

proposing individual amendments for: Deutsche 

Bank AG, New York Branch and Deutsche Morgan 

Grenfell/C.J. Lawrence Inc., Final Authorization 

Number (FAN) 97–03E (December 9, 1996); Credit 

Lyonnais Securities (USA) Inc., FAN 97–21E 

(September 10, 1997); ABN AMRO Inc., FAN 98–

08E (April 27, 1998); Ironwood Capital Partners 

Ltd., FAN 99–31E (December 20, 1999) (supersedes 

FAN 97–02E (November 25, 1996)); William J. 

Mayer Securities LLC, FAN 01–25E (October 15, 

2001); Raymond James & Associates Inc. & 

Raymond James Financial Inc., FAN 03–07E ( June 

14, 2003); WAMU Capital Corporation, FAN 03–14E 

(August 24, 2003); and Terwin Capital LLC, FAN 

04–16E (August 18, 2004); which received the 

approval of the Department to engage in 

transactions substantially similar to the transactions 

described in the Underwriter Exemptions pursuant 

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

2Section 102 of Reorganization Plan No. 4 of 

1978 (5 U.S.C. App. 1 [1996]) generally transferred 

the authority of the Secretary of the Treasury to 

issue exemptions under section 4975(c)(2) of the 

Code to the Secretary of Labor. 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Notice of a Proposed Amendment to 

Prohibited Transaction Exemption 

(PTE) 2000–58, 65 FR 67765 (November 

13, 2000) and PTE 2002–41, 67 FR 

54487 (August 22, 2002) Involving 

Bear, Stearns & Co. Inc., Prudential 

Securities Incorporated, et al. to Add 

Dominion Bond Rating Service Limited 

and Dominion Bond Rating Service, 

Inc. to the Definition of ‘‘Rating 

Agency’’ (D–11370) 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 

ACTION: Notice of a Proposed 

Amendment to the Underwriter 

Exemptions.1

SUMMARY: This document contains a 

notice of pendency before the 

Department of Labor (the Department) of 

a proposed amendment to the 

Underwriter Exemptions. The 

Underwriter Exemptions are individual 

exemptions that provide relief for the 

origination and operation of certain 

asset pool investment trusts and the 

acquisition, holding and disposition by 

employee benefit plans (Plans) of 

certain asset-backed pass-through 

certificates representing undivided 

interests in those investment trusts. The 

proposed amendment, if granted, would 

expand the definition of ‘‘Rating 

Agency’’ in section III. X of the 

Underwriter Exemptions to include 

Dominion Bond Rating Service Limited 

(DBRS Limited) and Dominion Bond 

Rating Service, Inc. (DBRS, Inc.). The 

proposed amendment, if granted, would 

affect the participants and beneficiaries 

of the Plans participating in such 

transactions and the fiduciaries with 

respect to such plans. 

DATE: Written comments and requests 

for a hearing should be received by the 

Department by February 23, 2007. 

ADDRESSES: All written comments and 

requests for a public hearing (preferably, 

three copies) should be sent to the 

Office of Exemption Determinations, 

Employee Benefits Security 

Administration, Room N–5700, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210, 

(Attention: Exemption Application 

Number D–11370 ). Interested persons 

are invited to submit comments and/or 

hearing requests to the Department by 

the end of the scheduled comment 

period either by facsimile to (202) 219–

0204 or by electronic mail to 

moffitt.betty@dol.gov. The application 

pertaining to the proposed amendment 

(Application) and the comments 

received will be available for public 

inspection in the Public Disclosure 

Room of the Employee Benefits Security 

Administration, U.S. Department of 

Labor, Room N–1513, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

FOR FURTHER INFORMATION CONTACT: 

Wendy M. McColough of the 

Department, telephone (202) 693–8540. 

(This is not a toll-free number.) 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given of the pendency before the 

Department of a proposed exemption to 

amend the Underwriter Exemptions. 

The Underwriter Exemptions are a 

group of individual exemptions that 

provide substantially identical relief for 

the operation of certain asset-backed or 

mortgage-backed investment pools and 

the acquisition and holding by Plans of 

certain securities representing interests 

in those investment pools. These 

exemptions provide relief from certain 

of the prohibited transaction restrictions 

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

the Employee Retirement Income 

Security Act of 1974, as amended 

(ERISA or the Act) and from the taxes 

imposed by section 4975(a) and (b) of 

the Internal Revenue Code of 1986, as 

amended (the Code), by reason of 

certain provisions of section 4975(c)(1) 

of the Code. All of the Underwriter 

Exemptions were amended by PTE 97–

34, 62 FR 39021 (July 21, 1997) and PTE 

2000–58, 65 FR 67765 (November 13, 

2000) and certain of the Underwriter 

Exemptions were amended by PTE 

2002–41, 67 FR 54487 (August 22, 

2002). 

The Department is proposing this 

amendment to the Underwriter 

Exemptions pursuant to section 408(a) 

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

Code, and in accordance with the 

procedures set forth in 29 CFR part 

2570, subpart B (55 FR 32836, 32847, 

August 10, 1990).2 In addition, the 

Department is proposing to provide the 

same individual exemptive relief to: 

Deutsche Bank AG, New York Branch 

and Deutsche Morgan Grenfell/C.J. 

Lawrence Inc., Final Authorization 

Number (FAN) 97–03E (December 9, 

1996); Credit Lyonnais Securities (USA) 

Inc., FAN 97–21E (September 10, 1997); 

ABN AMRO Inc., FAN 98–08E (April 

27, 1998); Ironwood Capital Partners 

Ltd., FAN 99–31E (December 20, 1999) 

(supersedes FAN 97–02E (November 25, 

1996)); William J. Mayer Securities LLC, 

FAN 01–25E (October 15, 2001); 

Raymond James & Associates Inc. & 

Raymond James Financial Inc., FAN 03–

07E ( June 14, 2003); WAMU Capital 

Corporation, FAN 03–14E (August 24, 

2003); and Terwin Capital LLC, FAN 

04–16E (August 18, 2004); which 

previously received the approval of the 

Department to engage in transactions 

substantially similar to the transactions 


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Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 3153 

3 ‘‘Designated Transaction’’ means a 

securitization transaction in which the assets of the 

Issuer (see below) consist of secured consumer 

receivables, secured credit instruments or secured 

obligations that bear interest or are purchased at a 

discount and are: (i) Motor vehicle, home equity 

and/or manufactured housing consumer 

receivables; and/or (ii) motor vehicle credit 

instruments in transactions by or between business 

entities; and/or (iii) single-family residential, multifamily residential, home equity, manufactured 

housing and/or commercial mortgage obligations 

that are secured by single-family residential, multifamily residential, commercial real property or 

leasehold interests therein. 

4 ‘‘Issuer’’ means an investment pool, the corpus 

or assets of which are held in trust (including a 

grantor or owner Trust) or whose assets are held by 

a partnership, special purpose corporation or 

limited liability company (which Issuer may be a 

Real Estate Mortgage Investment Conduit (REMIC) 

or a Financial Asset Securitization Investment Trust 

(FASIT) within the meaning of section 860D(a) or 

section 860L, respectively, of the Code. 

5Since the granting of these three exemptions on 

October 17, 1989, the Department had granted 

several other Underwriter Exemptions that included 

Fitch Inc. as an acceptable rating agency. 

6The final paragraph of section III.B of these 

exemptions was also amended to include Fitch Inc. 

as an acceptable rating agency. 

7On November 15, 2006, the Co-Applicants 

informed the Department that on October 31, 2006, 

The Bond Market Association and the Securities 

Industry Association merged into a new entity, 

SIFMA. SIFMA is a Delaware nonstock corporation 

that was incorporated in June 2006 for purposes of 

the merger. Its members are approximately 650 

securities firms, banks and asset managers. Its 

mission is to promote policies and practices that 

expand and perfect markets, foster the development 

of new products and services and create efficiencies 

for member firms, while preserving and enhancing 

the public’s trust and confidence in the markets and 

the industry. The Bond Market Association no 

longer exists, having merged into SIFMA. The ASF 

is now a forum of SIFMA, and it is still a joint 

applicant. 

8The term ‘‘party in interest’’ also includes, 

where applicable, a ‘‘disqualified person’’ within 

the meaning of section 4975(e)(2) of the Code. 

described in the Underwriter 

Exemptions pursuant to PTE 96–62, 61 

FR 39988 (July 31, 1996). 

1. The Underwriter Exemptions 

permit Plans to purchase certain 

securities representing interests in assetbacked or mortgage-backed investment 

pools. The securities generally take the 

form of certificates issued by a trust 

(Trust). The Underwriter Exemptions 

permit transactions involving a Trust 

(including the servicing, management 

and operation of the Trust) and 

certificates evidencing interests therein 

(including the sale, exchange or transfer 

of certificates in the initial issuance of 

the certificates or in the secondary 

market for such certificates). The 

securities acquired by a Plan have been 

rated in one of the three highest rating 

categories (or four in the case of 

Designated Transactions 3) by a rating 

agency as defined in the Underwriter 

Exemptions (Rating Agency). The Rating 

Agency, in assigning a rating to such 

securities, takes into account the fact 

that the Issuer 4 may hold interest rate 

swaps or yield supplement agreements 

with notional principal amounts or, in 

Designated Transactions, securities may 

be issued by an Issuer holding 

residential and home equity loans with 

LTV ratios in excess of 100%. Section 

III.X. of the Underwriter Exemptions 

defines ‘‘Rating Agency’’ as Standard & 

Poor’s Rating Services, a division of The 

McGraw-Hill Companies, Inc., Moody’s 

Investors Services, Inc., Fitch Inc., or 

any successors thereto. 

2. Section II of the original 

Underwriter Exemptions, PTE 89–88, 54 

FR 42582 (October 17, 1989); PTE 89–

89, 54 FR 42569 (October 17, 1989); and 

PTE 89–90, 54 FR 42597 (October 17, 

1989), sets forth the general conditions 

which must be met in order for an 

investing Plan to avail itself of the relief 

provided by one of the exemptions. 

Section II.A(3) requires that any 

certificate acquired by a plan in reliance 

on the exemption must have received a 

rating at the time of acquisition that is 

in one of the three highest categories 

from either Standard & Poor’s 

Corporation, Moody’s Investors 

Services, Inc. or Duff & Phelps. The 

Department proposed an amendment to 

this condition by notice at 55 FR 25914 

(June 25, 1990) in response to a request 

from the three individual exemption 

applicants that Fitch Investors Service, 

Inc. (Fitch Inc.) be added to the rating 

agencies described in section II.A.(3) of 

PTE 89–88, PTE 89–89, and PTE 89–90.5

To support this request, Fitch Inc. 

submitted letters to the Department 

which provided information on Fitch 

Inc’s rating programs in general and its 

experience in rating asset backed 

securities in particular. Based on the 

information provided by Fitch Inc., the 

requests submitted on behalf of the 

applicants and the Department’s 

previous consideration of Fitch Inc. in 

conjunction with several other 

Underwriter Exemptions, the 

Department amended PTE 89–88, PTE 

89–89, and PTE 89–90 by notice at 55 

FR 48939 (November 23, 1990) to 

include Fitch Inc. as an acceptable 

rating agency for the rating of 

certificates described in the 

exemptions.6

3. The proposed amendment was 

requested by Application, dated April 5, 

2006, on behalf of the Securities 

Industry and Financial Markets 

Association (SIFMA) 7, the American 

Securitization Forum (ASF), DBRS 

Limited and DBRS, Inc. (collectively, 

the Co-Applicants). The Co-Applicants 

request that the Department amend the 

Underwriter Exemptions to add DBRS 

Limited and DBRS, Inc. to the group of 

entities included in the definition of 

‘‘Rating Agency’’ in section III.X. of the 

Underwriter Exemptions. The CoApplicants provide that DBRS Limited 

was recognized as a nationally 

recognized statistical rating organization 

(NRSRO) for purposes of Rule 15c3–1 

under the Securities Exchange Act of 

1934 by virtue of receiving a ‘‘no 

action’’ letter from the Securities and 

Exchange Commission (SEC) on 

February 24, 2003. As the Co-Applicants 

explain below, the Co-Applicants 

believe that DBRS, Inc., its affiliate, is 

also considered to be covered under this 

no action letter. Accordingly, ‘‘DBRS’’

shall hereinafter refer both to DBRS 

Limited and DBRS, Inc., except where 

the context indicates otherwise. The CoApplicants state that SIFMA and ASF 

agreed to make this request on behalf of 

their member underwriters for the 

reasons outlined below and because The 

Bond Market Association (TBMA), now 

merged into SIFMA, was the original 

entity that requested the exemptive 

relief granted by the Department 

pursuant to PTE 97–34, 62 FR 39021 

(July 21, 1997), PTE 2000–58, 65 FR 

67765 (Nov.13, 2000) and PTE 2002–41, 

67 FR 54487 (August 22, 2002). ASF 

was formed in February 2002, as an 

adjunct forum for TBMA to more 

specifically represent the interests of 

underwriters and other organizations 

related to the securitization markets 

(although ASF is part of the same legal 

entity as TBMA). 

4. The Co-Applicants represent that, if 

the requested amendment is not 

granted, possible violations of the 

prohibited transaction provisions of 

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

ERISA (and the corresponding 

provisions of sections 4975(c)(1)(A) 

through (F) of the Code) resulting from: 

(a) The purchase and sale of securities 

by a Plan to which any of the other 

parties is a party in interest; 8 and (b) the 

servicing, management and operation of 

an issuer may occur if DBRS Limited or 

DBRS, Inc. ratings are used for such 

transactions. The Co-Applicants believe 

that, if the requested amendment is not 

granted, this would result in the loss of 

opportunities for an investing Plan to 

achieve a current market return through 

investment in securities that have 

received a rating from an NRSRO as 

high as or higher than that of 

comparable instruments in which the 

Plan is clearly permitted to invest. The 

Co-Applicants assert that it is in the 

interests of Plan participants and 

beneficiaries that a Plan has the 

opportunity to diversify its investment 

portfolio by purchasing securities rated 


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3154 Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 

9 53 FR 52851 at p. 52857, footnote 7 (December 

29, 1988). There are currently five entities which 

were recognized by the SEC through the no-action 

letter process as NRSROs: S&P, Moody’s, Fitch, 

DBRS and A.M. Best Company, Inc. 

10 DBRS also recently opened offices in London, 

Paris and Frankfurt through another affiliate, DBRS 

(Europe) Limited. 

by a wide variety of rating agencies 

subject to a significant amount of 

competition. 

5. The Co-Applicants believe that the 

proposed amendment would be 

administratively feasible because the 

proposed requirements generally mirror 

those deemed administratively feasible 

in the asset-backed and mortgagebacked securities (ABS and MBS, 

respectively) exemptions previously 

issued by the Department. The 

transactions may be audited easily by a 

Plan fiduciary and all the records 

necessary to review these transactions 

will be kept for six years. The CoApplicants state that no further action 

would be required by the Department. 

The Co-Applicants consider that the 

requested amendment would be in the 

interest of the Plans and its participants 

and beneficiaries because it increases 

the number of available investment 

options, enhances diversification and 

liquidity and promotes a greater ability 

to assess credit risk and the rating 

process. The Co-Applicants state that 

the amendment would be protective of 

the rights of the Plans since the sale of 

the securities will be conducted under 

all of the safeguards contained in the 

existing Underwriter Exemptions for the 

sale of asset and mortgage-backed passthrough securities. Additionally, the CoApplicants believe that expanding the 

number of rating agencies with 

experience in rating the type of 

obligations covered under the 

Underwriter Exemptions would 

significantly benefit the Plans. The 

number of NRSROs that had been 

included within the definition of Rating 

Agency under the Underwriter 

Exemptions as of 1990 has been reduced 

from four to three since Duff & Phelps 

Inc. (D & P) and Fitch Inc. merged in 

2000 and became FitchRatings, Inc. 

(Fitch). There may be additional 

mergers in the future. The CoApplicants believe that this could make 

the number of Rating Agencies available 

to rate Underwriter Exemption-eligible 

MBS and ABS even fewer; resulting in 

fewer and less liquid securities available 

for Plans to purchase. The CoApplicants further note that, when the 

Department considered First Boston 

Corporation’s original application for its 

Underwriter Exemption in the proposed 

exemption to PTE 89–90 at 53 FR 52851 

(December 29, 1988), First Boston 

requested that any certificate receiving a 

rating in the three highest rating 

categories from any NRSRO receive 

exemptive relief. According to the 

Applicants, while the Department 

recognized that rating agencies other 

than Standard & Poor’s Corporation 

(currently, Standard & Poor’s Rating 

Services, a division of The McGraw Hill 

Companies, Inc. (S & P)), Moody’s 

Investor Services, Inc. (Moody’s) and 

D&P qualified as NRSROs, it decided 

that only those three should qualify as 

Rating Agencies under the Underwriter 

Exemptions, based on their respective 

experience in rating certain types of 

MBS/ABS.9 Fitch Inc. was later 

specifically named as an additional 

Rating Agency for purposes of the 

Underwriter Exemptions beginning in 

1989. The Co-Applicants believe that if 

the Department were to add DBRS 

Limited and DBRS, Inc. to the group of 

Rating Agencies permitted to rate 

Underwriter Exemption-eligible 

securities, it would benefit Plan 

investors in several ways, including: (a) 

Investors would have access to 

additional information and additional 

opinions about the creditworthiness of 

issuers and securities; (b) competition 

among rating agencies would result in 

improved accuracy and timeliness of 

ratings, thereby allowing investors to 

assess risk with greater certainty; and (c) 

competition among rating agencies 

would encourage different methods of 

analyzing credit risk. 

6. The Co-Applicants assert that DBRS 

has extensive experience in rating every 

type of obligation that is eligible for 

exemptive relief under the Underwriter 

Exemptions and listed under the 

definition of an ‘‘Issuer’’ in section III.B 

of the Underwriter Exemptions; and, 

therefore, meets a major criterion for 

recognition as a Rating Agency for 

purposes of the Underwriter 

Exemptions. In reviewing the 

information submitted to the 

Department by S&P and Fitch Inc. at 

that time, the Department was given 

information regarding how these 

agencies rated securities and the 

credentials of the senior management of 

their securitization groups. In this 

regard, DBRS has reviewed the 

description of the rating process in both 

the D&P submission and the proposed 

exemption for PTE 2000–58 and feels 

that its rating process is comparable to 

these. The Co-Applicants submitted the 

biographies of senior management for 

the DBRS Limited and DBRS, Inc. 

Structured Finance Departments to the 

Department with their Application. 

7. In order for the SEC to recognize 

DBRS Limited as an NRSRO in 2003, 

DBRS Limited had to satisfy certain 

established criteria. The single most 

important criterion was that DBRS 

Limited be widely accepted in the U.S. 

as an issuer of credible and reliable 

ratings by the predominant users of 

securities ratings. In addition, the 

following aspects of DBRS Limited’s 

operational capability and reliability 

were reviewed: (i) Its organizational 

structure, (ii) its financial resources, to 

determine, among other things, whether 

it is able to operate independently of 

economic pressures or control from the 

companies its rates, (iii) the size and 

experience and training of its staff to 

determine if it is capable of thoroughly 

and competently evaluating an issuer’s 

credit, (iv) its independence from the 

entities it rates, (v) its rating procedures 

to determine whether it has systematic 

procedures designed to produce 

credible and accurate ratings and (vi) 

whether it has internal procedures to 

prevent the misuse of non-public 

information and whether those 

procedures are followed. On April 5, 

2006, the Co-Applicants provided the 

following update of the statistics set 

forth in the SEC’s no action letter dated 

February 24, 2003 regarding DBRS’s 

business. DBRS now has a total staff of 

175, 110 of which are analysts. Of those 

analysts, 51 rate securitization 

transactions. The Co-Applicants also 

provided biographical information 

about the senior management team for 

that latter group. As of the application 

date, the principal amount of assetbacked securities (ABS), residential 

mortgage-backed securities (RMBS) and 

commercial mortgage-backed securities 

(CMBS) transactions that DBRS has 

rated and that are currently outstanding 

are: Can. $128.3 billion of ABS for 

Canadian issuers (representing 158 

transactions); U.S. $192.1 billion of 

RMBS and ABS for U.S. issuers 

(representing 207 transactions); and U.S. 

$20.5 billion of CMBS for U.S. issuers 

(representing 14 transactions). DBRS’s 

Structured Finance Department has also 

written over 95 industry reports and 442 

rating reports. 

8. The Co-Applicants state that DBRS 

Limited is a Canadian rating agency that 

has been in existence for almost 30 

years, having been incorporated in 1976 

under the Ontario Business 

Corporations Act. DBRS Limited was 

originally founded and owned by Walter 

Schroeder, who remains its President. 

DBRS Limited operates primarily 

through its Toronto office and DBRS 

Limited’s U.S. affiliate, DBRS, Inc., 

which has offices in New York and 

Chicago.10 On February 24, 2003 when 

the SEC issued its no action letter 


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identifying DBRS Limited as an NRSRO, 

DBRS Limited conducted all of its credit 

rating activities from its Toronto Ontario 

headquarters and rated issuers and 

securities both in Canada and in the 

United States. Subsequently, DBRS 

Limited decided to establish a physical 

presence in the United States. The New 

York and Chicago offices were 

incorporated as DBRS, Inc. on August 

21, 2003. The U.S. operations were 

organized for tax reasons as a separate 

Delaware affiliate corporation instead of 

as a branch of the Canadian company. 

The Co-Applicants assert that, although 

technically it is principally DBRS, Inc. 

that rates U.S. issuers and securities and 

DBRS Limited that rates Canadian 

issuers and securities, the ratings 

activities of Dominion Bond Rating 

Service worldwide are conducted in a 

seamless fashion and both DBRS 

Limited and DBRS, Inc. are considered 

to be covered by the SEC’s NRSRO noaction letter. The Co-Applicants add 

that DBRS, Inc. employs the same rating 

process that DBRS Limited uses; its 

ratings are approved by the same rating 

committees that approve DBRS 

Limited’s ratings; its staff are subject to 

the same code of conduct that applies to 

DBRS Limited’s staff; all ratings are 

‘‘DBRS’’ ratings without attribution to 

one corporate entity or the other, DBRS 

Limited stands behind the ratings issued 

by DBRS, Inc. and the officers of DBRS 

Limited supervise the ratings process 

conducted by DBRS, Inc. In this regard, 

the Co-Applicants submitted a letter 

dated November 1, 2005 from MariAnne Pisarri, Esq. of Pickard and Djinis, 

LLP, counsel to DBRS Limited to Mr. 

Michael A. Macchiaroli, Associate 

Director, Division of Market Regulation 

at the SEC discussing the NRSRO status 

of the ratings activities of DBRS, Inc. 

9. On September 29, 2006, the 

President signed into law S. 3850, the 

Credit Rating Agency Reform Act of 

2006 (CRARA). CRARA was introduced 

as a bill to improve ratings quality for 

the protection of investors and in the 

public interest by fostering 

accountability, transparency, and 

competition in the credit rating agency 

industry. The law will restructure the 

existing regulation of credit rating 

agencies by the SEC. Under CRARA, a 

credit rating agency can obtain the 

NRSRO designation through an 

application process unless the SEC 

determines that the agency lacks 

adequate financial and managerial 

resources to consistently produce credit 

ratings with integrity and to comply 

with its stated methodologies and 

procedures (CRARA subsection 

4(a)(2)(C)). The Securities Exchange Act 

of 1934 is amended at section 3(a) and 

by the addition of new section 15E. 

Registration of Nationally Recognized 

Statistical Rating Organizations. Section 

3(a) is amended by adding certain new 

definitions relevant to this proposed 

amendment (CRARA section 3): 

(60) CREDIT RATING—The term ‘credit 

rating’ means an assessment of the 

creditworthiness of an obligor as an entity or 

with respect to specific securities or money 

market instruments. 

(61) CREDIT RATING AGENCY—The term 

‘credit rating agency’ means any person—

(A) Engaged in the business of issuing 

credit ratings on the Internet or through 

another readily accessible means, for free or 

for a reasonable fee, but does not include a 

commercial credit reporting company; 

(B) Employing either a quantitative or 

qualitative model, or both, to determine 

credit ratings; and 

(C) Receiving fees from either issuers, 

investors, or other market participants, or a 

combination thereof. 

(62) NATIONALLY RECOGNIZED 

STATISTICAL RATING ORGANIZATION—

The term ‘nationally recognized statistical 

rating organization’ means a credit rating 

agency that—

(A) Has been in business as a credit rating 

agency for at least the 3 consecutive years 

immediately preceding the date of its 

application for registration under section 

15E; 

(B) Issues credit ratings certified by 

qualified institutional buyers, in accordance 

with section 15E(a)(1)(B)(ix), with respect 

to—

(i) Financial institutions, brokers, or 

dealers; 

(ii) Insurance companies; 

(iii) Corporate issuers; 

(iv) Issuers of asset-backed securities (as 

that term is defined in section 1101(c) of part 

229 of title 17, Code of Federal Regulations, 

as in effect on the date of enactment of this 

paragraph); 

(v) Issuers of government securities, 

municipal securities, or securities issued by 

a foreign government; or 

(vi) A combination of one or more 

categories of obligors described in any of 

clauses (i) through (v); and 

(C) Is registered under section 15E. 

CRARA establishes a registration and 

oversight scheme for NRSROs under the 

Securities Exchange Act of 1934 

(Exchange Act). This regime replaces 

the SEC’s current no-action letter 

process for designating NRSROs and 

removes NRSROs from the jurisdiction 

of the Investment Advisers Act of 1940 

(Advisers Act). The new regulatory 

regime takes effect when the SEC 

promulgates the rules necessary to 

implement CRARA, or in 270 days after 

CRARA’s enactment date, whichever is 

sooner. Thus, the new registration 

requirements will apply by June 26, 

2007. However, because the SEC has 90 

days to consider an NRSRO application 

(or longer, if the applicant consents), the 

first NRSRO registration may not occur 

until the end of September 2007. 

Although the NRSRO no-action letters 

will be void after the effective date of 

the new law, the 5 existing NRSROs will 

be allowed to function as NRSROs while 

the SEC considers their applications. 

10. The Co-Applicants represent that 

DBRS Limited and DBRS, Inc. each: (a) 

Will qualify as a ‘‘Nationally 

Recognized Statistical Rating 

Organization’’ within the meaning of 

new section 3(a)(62) of the Exchange 

Act as amended by the legislation, as 

each will be in business for at least three 

years prior to its applying for 

registration under the new statutory 

procedures, (b) rate the specified types 

of securities listed under such section, 

and (c) intend to register at the first date 

DBRS is able to register under new 

section 15E of the legislation and the 

applicable regulations and procedures 

to be promulgated by the SEC. The CoApplicants state that DBRS Limited and 

DBRS, Inc. will each be able to supply 

the information and meet the implied 

substantive criteria set forth in the 

legislation in new section 15E(a)(1)(B) of 

the Exchange Act as demonstrated in 

the chart below, provided by the CoApplicants, that compares the 

requirements for NRSRO registration 

under the legislation to existing 

requirements and the Co-Applicants 

confirm that each rating agency would 

comply. The Co-Applicants assert that 

the criteria for registration under the 

new law are not substantively different 

from what DBRS and the other current 

NRSROs already comply with. DBRS 

has also adopted and adheres to the 

International Organization of Securities 

Commissions’ (IOSCO) Code of Conduct 

Fundamentals for Credit Rating 

Agencies issued in December 2004 

(IOSCO Code of Conduct). Additionally, 

the Co-Applicants have provided the 

Department with copies of the DBRS 

Code of Conduct, the Report of 

Compliance to the DBRS Code of 

Conduct and the DBRS Corporate 

Default Study 1977–2005, which are 

pertinent to this analysis. 

CRA Reform Act requirement Existing requirement DBRS complies? 

Under Exchange Act § 15E (a) (1)(B), NRSRO applications must include: 


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CRA Reform Act requirement Existing requirement DBRS complies? 

(i) Applicant’s credit rating performance measurement statistics.IOSCO Code §§ 1.2, 3.8 ................................................. Yes. Corporate Default 

Study shows performance 1977–2004. 

(ii) Procedures & methodologies Applicant uses in 

determining credit ratings.

Required as part of NRSRO no-action letter designation 

process; IOSCO Code, §§ 1.A, 3.2, 3.5, 3.10.

Yes. 

(iii) Policies and procedures to prevent the misuse 

of inside information.

Advisers Act, § 204A IOSCO Code, § 3.B ...................... Yes. 

(iv) The organizational structure of the Applicant ..... Required as part of NRSRO no-action letter designation 

process; information on organization required on 

Form ADV; IOSCO Code, §§ 2.5, 2.10, 2.11, 2.12.

Yes. 

(v) Whether or not Applicant has a code of ethics, 

and if not, why not.

Advisers Act Rule 204A–1 requires a Code of Ethics; 

IOSCO Code, §§ 1.C, 2, 4.1.

Yes. 

(vi) Any conflict of interest relating to the Applicant’s 

issuance of credit ratings; § 15E(h) also requires 

NRSROs to maintain written policies and procedures to address and manage any conflicts of interest.

Advisers Act Rule 204A–1 requires advisers’ codes of 

ethics to address conflicts; IOSCO Code, § 2.B.

Yes. 

(ix) Written certifications from Qualified Institutional 

Buyers (QIBs) who use Applicant’s ratings.

Does not apply to current NRSROs. However, DBRS 

already supplied this type of information to the SEC 

to prove its ‘‘national recognition’’ under the no-action 

letter designation process.

N/A. 

Exchange Act § 15E(j) requires NRSROs to designate 

an individual responsible for administering its compliance policies and procedures.

Advisers Act Rule 206(4)–7 requires the appointment of 

a Chief Compliance Officer; IOSCO Code § 1.15 requires that a person be specified as responsible for 

overseeing compliance with applicable laws and regulations.

Yes. 

Exchange Act § 15E(i) directs the SEC to adopt rules 

prohibiting unfair business practices by NRSROs.

Advisers Act Rule 204A–1; IOSCO Code §§ 1.C, 2.3, 

2.4, 2.5, 2.11, 2.12, 2.15.

Yes. 

11. The Co-Applicants assert that 

under the new legislation, there would 

be no period of time when DBRS would 

not maintain its status as an NRSRO. 

They note that under new section 

15E(l)(2)(A) of the Exchange Act, a 

rating agency is entitled to rely on its 

no-action letter from the SEC to be 

treated as an NRSRO and act as an 

NRSRO while the SEC is considering its 

registration application pursuant to the 

new procedures and thereafter on and 

after its application is approved. The 

no-action letters that the SEC has issued 

to date to the five rating agencies 

including DBRS will become void under 

section 15E(1)(2)(B) upon the earlier of 

(i) 270 days following the date of 

enactment of the legislation (September 

29, 2006) or (ii) the date the regulations 

are issued by the SEC in final form. This 

theoretically means that if the SEC fails 

to issue the regulations on a timely 

basis, all five rating agencies would lose 

their NRSRO status. However, if this 

were to occur, it would also affect 

Moody’s, Standard & Poor’s, Fitch and 

A.M. Best Company, Inc. in the same 

manner as DBRS, and this would have 

disastrous results in the capital markets. 

Presumably this issue would have to be 

addressed by an amendment to the 

legislation. 

12. The Co-Applicants request that 

the Department grant DBRS Rating 

Agency status under the Underwriter 

Exemptions at this time and that it not 

wait until the SEC issues a final rule. 

Waiting until the SEC issues a final rule 

could take a substantial period of time 

which can only be disadvantageous for 

Plan investors. The Co-Applicants 

represent that DBRS Limited and DBRS, 

Inc. are already fully recognized 

together as an NRSRO and also meet the 

new proposed requirements. 

Accordingly, the Co-Applicants believe 

that there is no reason to wait for the 

SEC to issue the regulations and 

procedures for registration under 

CRARA as it will not affect DBRS’s 

status. The Co-Applicants believe that 

although CRARA provides that any noaction letter previously granted by the 

SEC would be revoked, DBRS’s NRSRO 

status would be quickly reinstated as it 

would meet all of the qualifications 

under the new registration 

requirements. The Co-Applicants assert 

that DBRS also complies with the 

substantive standards that the 

Department has previously established 

under the Underwriter Exemptions. 

Second, CRARA also will affect S&P, 

Moody’s and Fitch, which have already 

been granted status as Rating Agencies 

under the Underwriter Exemptions, in 

exactly the same way as it would affect 

DBRS if the Department were to grant 

this application. All four rating agencies 

would have their NRSRO status revoked 

and replaced with a new form of 

NRSRO registration. Accordingly, the 

Department would still be required to 

make its own determinations as to 

whether it considers a rating agency 

eligible to be covered under a particular 

type of exemption. 

13. The Co-Applicants believe that the 

Department also intended to look to the 

SEC’s proposed definition of NRSROs as 

published in Part 240 of its General 

Rules and Regulations under the 

Exchange Act for guidance in 

determining who should qualify as a 

‘‘Rating Agency’’ for purposes of the 

broad exemptive relief that has been 

previously granted by the Department. 

Prior to the enactment of CRARA, the 

Department had indicated that it would 

consider DBRS’ status as a Rating 

Agency under the Underwriter 

Exemptions based on the criteria set 

forth in the SEC’s proposed rule 

regarding the definition of an NRSRO 

published in the Federal Register on 

April 25, 2005 (70 FR 21306). In 

proposing the new definition, the SEC 

indicated that it believes that the five 

rating agencies to which it has already 

issued NRSRO no-action letters, 

including DBRS, would meet the 

proposed definition. The Co-Applicants 

assert that DBRS would meet the 

proposed definition of an NRSRO as set 

forth in the SEC’s proposed rule that the 

entity: (a) Issues publicly available 

credit ratings that are current 

assessments of the credit worthiness of 

obligors with respect to specific 

securities or money market instruments; 

(b) is generally accepted in the financial 

markets as an issuer of credible and 

reliable ratings, including ratings for a 

particular industry or geographic 

segment by the predominant users of 

securities ratings; and (c) uses 


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11The Co-Applicants note that the term 

‘‘sponsor’’ is used in their Application in the same 

way as the term ‘‘sponsor’’ is defined in the 

Underwriter Exemptions under Section III.D. 

‘‘Sponsor’’ may also be deemed to refer to an 

originator of loans, if deemed necessary and/or 

appropriate by DBRS for its ratings analyses with 

respect to securities issued by a specific issuer. 

systematic procedures designed to 

ensure credible and reliable ratings, 

manage potential conflicts of interest 

and prevent the misuse of nonpublic 

information, and has sufficient financial 

resources to ensure compliance with 

those procedures. 

The Co-Applicants submitted the 

following review of the standards the 

SEC discussed in its proposal to 

demonstrate DBRS’ status as an NRSRO 

prior to CRARA. 

a. Publicly Available Credit Ratings: 

DBRS makes its credit ratings available 

on its Web site at http://www.dbrs.com. 

The basic rationale behind the ratings is 

also available to the public through 

press releases. Both types of information 

are available at no charge. 

b. Issue-Specific Credit Opinions: 

DBRS rates specific securities, as well as 

issuers. 

c. Current Credit Opinions: DBRS 

issues ratings that represent current 

assessments of the securities ratings, as 

it has procedures in place to have at 

least two analysts be familiar with, and 

responsible for, all current and recent 

events relating to an issuer after DBRS 

issues its initial rating of the securities. 

A rating is fully reviewed and a meeting 

arranged with each sponsor’s 11 senior 

management on at least an annual basis. 

Follow up meetings occur where there 

have been material changes to the 

sponsor associated with the issuer or 

amendments to the initial program 

parameters and/or the program 

structure. In addition, if events occur 

that materially affect the credit 

performance of the issuer, a rating will 

be changed on a more frequent basis. A 

rating may also be placed ‘‘Under 

Review’’ if a significant event which 

impacts credit quality occurs and DBRS 

is unable to provide an objective 

forward looking opinion. In order to 

maintain the currency and accuracy of 

structured debt ratings, DBRS has 

several surveillance departments 

located in offices both in the United 

States and Canada. The analysts 

working in these departments are 

responsible for the collection, entry, 

analysis, and reporting related to the 

monitoring of structured finance 

transactions. Analysts are expected to 

analyze the data being reported by 

issuers and sponsors, identify 

transactions that require remediation or 

additional follow-up, and work with 

other analysts to determine the most 

appropriate course of action. 

d. General Acceptance in the 

Financial Markets: DBRS credibility and 

reasonable reliance of the marketplace 

have already been established by the 

SEC’s grant of DBRS Limited’s February 

24, 2003 no-action letter, as this is the 

most important criterion cited by the 

SEC in such a grant. 

e. Limited Coverage NRSROs: DBRS 

Limited received a no-action letter with 

respect to its ability to rate all securities 

and issuers with no limitations. The CoApplicants believe this letter also 

applies to DBRS, Inc. as discussed 

above. 

f. Analyst Experience and Training: 

DBRS requires that its analysts have the 

requisite experience and training to rate 

issuers and securities competently. The 

SEC in previously making this 

determination for its no-action letter, 

mentioned that generally, all of DBRS’

analysts have degrees in business 

administration or accounting and many 

have professional designations such as 

MBAs, JDs and CFAs. 

g. Number of Ratings per Analyst: 

DBRS maintains reasonable workloads 

for its analysts so that their analytical 

abilities to rate securities remain high, 

while not overloading them so that their 

work suffers in quality. The statistics of 

the number of ABS/RMBS/CMBS 

transactions and the number of 

securitization analysts have been given 

herein. In general, DBRS analysts work 

within groups, with each group 

containing approximately two to six 

analysts who cover issuers from 

industries that are as related as possible. 

Each issuer is normally covered directly 

by two analysts, who work together on 

the rating, arrange for and attend 

meetings with the sponsor’s senior 

management, and make a 

recommendation with regard to the 

rating action for the entity. The 

‘‘primary analyst’’ is responsible for 

preparing and for conducting the 

interview with the sponsor’s 

management, for writing the initial draft 

rating report, and for making the 

presentation to the rating committee. 

The ‘‘secondary’’ or backup analyst is 

responsible for supporting the primary 

analyst with these duties. Other analysts 

from the group can be available to 

provide additional support prior to the 

rating committee recommendations. The 

group head will review the report prior 

to the rating committee. Thus, there are 

generally at least two analysts that are 

familiar with, and responsible for, all 

current and recent events for that issuer. 

Since each issuer and sponsor is under 

continuous surveillance, all ratings are 

current. 

h. Information Sources Used in the 

Ratings Process: DBRS has procedures 

in place to verify financial information 

it receives from any given sponsor with 

respect to itself and the issuer. In many 

cases, DBRS will also require third party 

reports on the sponsor and with respect 

to the issuer as well as comparisons that 

have been done for comparable sponsors 

and issuers. All opinions expressed at 

the sponsor’s senior management level 

during meetings are scrutinized to deal 

with any inherent biases that may have 

affected sponsor’s perceptions of their 

relative strengths and weaknesses in 

absolute terms or in comparison to their 

competition. For both initial ratings and 

subsequent maintenance of such ratings, 

DBRS obtains a wide variety of 

information from third party sources. 

Public documents include regulatory 

filings, newspaper subscriptions, 

electronic news from services such as 

Reuters and Bloomberg, equity research 

from investment banks, and a wide 

variety of industry, sponsor and issuer 

specific news from the internet. DBRS 

also subscribes to publications such as 

Forbes, the Wall Street Journal, the 

Financial Post, Value Line, Business 

Week and the Economist. Most groups 

at DBRS have additional subscriptions 

related to their own specific area of 

interest. The general market intelligence 

that each analyst gains from 

conferences, DBRS sponsored seminars 

and luncheons, industry contacts, other 

independent reading and speeches are 

additional sources of information that 

assist in DBRS’s analysis. 

i. Contacts: As discussed above, DBRS 

meets with senior management of the 

sponsors related to the issuers of 

securities it rates. 

j. Organizational Structure: DBRS 

Limited, DBRS, Inc. and DBRS (Europe) 

Limited are not affiliated with any other 

organizations or engaged in any other 

businesses that could create conflicts of 

interest or cause the misuse of 

nonpublic information. 

k. Conflicts of Interest: (i) Reliance on 

Issuer Fees—DBRS does not have any 

one sponsor accounting for a 

meaningful percentage of its overall 

revenues, so no one sponsor can exert 

untoward pressure on DBRS’s rating 

activities. (ii) Internal Policies—DBRS 

encourages analysts to strive for good 

long-term relationships with its sponsor 

clients, while at the same time being 

mindful of maintaining objectivity. For 

example, when dealing with sponsors, 

DBRS expects analysts to be familiar 

with the CFA Institute Standards of 

Practice Handbook (the Handbook), 

which sets forth rules of ethics and 

professional responsibility for certified 

financial analysts, and to comply with 


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12 ‘‘Grandfathered securities’’ are securities of 

companies that DBRS rates or benchmarks but that 

a staff member already owns at the time they 

become newly employed by DBRS and those 

securities that a staff member held prior to DBRS 

undertaking the company as a rated or 

benchmarked entity. Grandfathered securities must 

not be sold unless and until written permission is 

obtained from the Chief Compliance Officer. 

13Although not relevant to this application, some 

Plans subscribe to DBRS’s subscription service. 

its Code of Ethics, regardless of analysts’

CFA status. As mandated by the Code of 

Ethics, analysts are warned to always be 

conscious about accepting gifts from a 

sponsor that could be considered 

significant enough to impair objectivity. 

Analysts are also prohibited from 

soliciting money, gifts, cash or favors 

from anyone with whom DBRS does 

business. As stated above, DBRS has 

adopted and adheres to the IOSCO Code 

of Conduct and has published a DBRS 

Code of Conduct that summarizes how 

its extensive range of policies, 

procedures and internal controls meet 

the IOSCO Code of Conduct. (iii) 

Consulting or Advisory Fees from 

Issuers—DBRS does not engage in a 

separate consulting or advisory for fee 

services business. (iv) Preferential 

Access to Information—DBRS does not 

allow subscribers to be given access to 

potential DBRS rating actions before 

they become public or to any nonpublic 

information. (v) Proprietary 

Associations with Rated Issuers: DBRS 

does not allow any employee, analyst or 

consultant to invest in any company or 

subsidiary that DBRS rates or 

benchmarks except for ‘‘grandfathered 

securities.’’ 12 DBRS also requires 

employees, analysts and consultants to 

report their investment activities to the 

Compliance Department each calendar 

quarter (i) by completing a signed 

transaction report or forwarding copies 

of brokerage statements if they have 

‘‘reportable securities transactions;’’ (ii) 

by completing a signed statement 

indicating that they have reportable 

securities but did not engage in any 

‘‘reportable securities transactions;’’ (iii) 

by email if they hold only ‘‘excluded 

securities;’’ and (iv) by email if they 

hold no investments. Excluded 

securities are mutual funds, GIC’s, CD’s, 

etc.; reportable securities include all 

securities that are not specifically 

excluded. 

l. Misuse of Information: DBRS 

prohibits employees from discussing 

nonpublic information with anyone 

other than the sponsor being rated or 

other DBRS employees. In addition, 

DBRS staff and consultants must 

annually review and sign an ‘‘Annual 

Statement of Understanding’’

concerning DBRS’s Code of Ethics 

which among other areas contains 

sections on confidentiality and 

nonpublic information. 

m. Financial Resources: DBRS has 

sufficient financial resources to 

maintain appropriate staffing levels to 

continuously monitor the sponsors and 

the issuers whose securities it rates. As 

mentioned above, it believes that 

conflicts of interests with sponsors and 

subscribers are minimized as none alone 

provide a significant source of business 

for it. 

n. Standardized Rating Symbols: 

DBRS uses the same generic substantive 

rating categories as the other four 

existing NRSROs and the SEC is not 

proposing to change the ‘‘sub-symbols’’

(i.e., ‘‘plus’’ or ‘‘minus’’ versus ‘‘high’’

or ‘‘low’’). 

o. Statistical Models: Statistical 

models are only one of the methods 

used by DBRS to rate issuers or 

securities. 

14. The Plans affected by the 

requested amendment are those Plans 

that will participate in a trust 

established under a pooling and 

servicing agreement. One or more Plans 

may invest in the securities to be issued 

with respect to a given issuer. Every 

Plan which intends to invest in an 

issuer will be able to review the form of 

the pooling and servicing agreement 

prior to acquiring a security. Each Plan 

will be an ‘‘accredited investor’’ as 

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

D under the Securities Act of 1933, as 

amended. The proposed amendment 

involves a class of prospective 

transactions with Plans. In its capacity 

as a rating agency, DBRS has no Plan 

clients or potential Plan clients.13

Therefore, the Co-Applicants request 

that the publication of this proposed 

exemption in the Federal Register serve 

as the Notice to Interested Persons for 

purposes of this request. 

15. The Co-Applicants request that 

the relief, if granted, be made retroactive 

to the date that they originally filed 

their request on April 5, 2006. DBRS 

had originally been prepared to file its 

application prior to April 5th; however, 

the SEC issued its proposed rules 

defining an NRSRO and this caused a 

delay in filing the application. The 

application was further delayed by the 

submission of additional information in 

response to the enactment of CRARA on 

September 29, 2006. Retroactive relief is 

requested to cover those transactions 

that have occurred or will occur over 

the next few months where DBRS was 

or is the only rating agency that gave or 

will give an investment-grade rating to 

certificates. If the relief is granted 

retroactively, Plans would be able to 

purchase certificates in the secondary 

market relying upon the Underwriter 

Exemptions once exemptive relief is 

granted, even if the transactions 

originally closed or will close prior to 

the date the final exemption, if granted 

by the Department, is published in the 

Federal Register. 

General Information 

The attention of interested persons is 

directed to the following: 

1. The fact that a transaction is the 

subject of an exemption under section 

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

of the Code does not relieve a fiduciary 

or other party in interest or disqualified 

person from certain other provisions of 

the Act and the Code, including any 

prohibited transaction provisions to 

which the exemption does not apply 

and the general fiduciary responsibility 

provisions of section 404 of the Act, 

which require, among other things, a 

fiduciary to discharge his or her duties 

respecting the plan solely in the interest 

of the participants and beneficiaries of 

the plan and in a prudent fashion in 

accordance with section 404(a)(1)(B) of 

the Act; nor does it affect the 

requirements of section 401(a) of the 

Code that the plan operate for the 

exclusive benefit of the employees of 

the employer maintaining the plan and 

their beneficiaries; 

2. Before an exemption can be granted 

under section 408(a) of the Act and 

section 4975(c)(2) of the Code, the 

Department must find that the 

exemption is administratively feasible, 

in the interest of the plans and of their 

participants and beneficiaries and 

protective of the rights of participants 

and beneficiaries of the plans; and 

3. The proposed amendment, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction. 

Written Comments and Hearing 

Requests 

All interested persons are invited to 

submit written comments or requests for 

a hearing on the pending amendment to 

the address above, within the time 

frame set forth above, after the 

publication of this proposed 

amendment in the Federal Register. All 

comments will be made a part of the 

record. Comments received will be 

available for public inspection with the 


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Federal Register / Vol. 72, No. 15 / Wednesday, January 24, 2007 / Notices 3159 

Application at the address set forth 

above. 

Proposed Exemption 

Based on the facts and representations 

set forth in the application, under the 

authority of section 408(a) of the Act 

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

in accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (55 

FR 32836, August 10, 1990), the 

Department proposes to modify the 

following individual Prohibited 

Transaction Exemptions (PTEs), as set 

forth below: PTE 89–88, 54 FR 42582 

(October 17, 1989); PTE 89–89, 54 FR 

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

FR 42597 (October 17, 1989); PTE 90–

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

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

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

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

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

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

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

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

90–59, 55 FR 36724 (September 6, 

1990); PTE 90–83, 55 FR 50250 

(December 5, 1990); PTE 90–84, 55 FR 

50252 (December 5, 1990); PTE 90–88, 

55 FR 52899 (December 24, 1990); PTE 

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

PTE 91–22, 56 FR 03277 (April 18, 

1991); PTE 91–23, 56 FR 15936 (April 

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

15, 1991); PTE 91–62, 56 FR 51406 

(October 11, 1991); PTE 93–31, 58 FR 

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

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

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

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

59 FR 50014 (September 30, 1994); PTE 

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

PTE 94–84, 59 FR 65400 (December 19, 

1994); PTE 95–26, 60 FR 17586 (April 

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

12, 1995); PTE 95–89, 60 FR 49011 

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

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

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

61 FR 66334 (December 17, 1996); PTE 

96–94, 61 FR 68787 (December 30, 

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

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

23, 1997); PTE 98–08, 63 FR 8498 

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

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

FR 25950 (May 4, 2000); PTE 2000–33, 

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

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

2000–55, 65 FR 37171 (November 13, 

2000); PTE 2002–19, 67 FR 14979 

(March 28, 2002); PTE 2003–31, 68 FR 

59202 (October 14, 2003); and PTE 

2006–07, 71 FR 32134 (June 2, 2006), 

each as subsequently amended by PTE 

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

PTE 2000–58, 65 FR 67765 (November 

13, 2000) and for certain of the 

exemptions, amended by PTE 2002–41, 

67 FR 54487 (August 22, 2002). 

In addition, the Department notes that 

it is also proposing individual 

exemptive relief for: Deutsche Bank 

A.G., New York Branch and Deutsche 

Morgan Grenfell/C.J. Lawrence Inc., 

Final Authorization Number (FAN) 97–

03E (December 9, 1996); Credit 

Lyonnais Securities (USA) Inc., FAN 

97–21E (September 10, 1997); ABN 

AMRO Inc., FAN 98–08E (April 27, 

1998); Ironwood Capital Partners Ltd., 

FAN 99–31E (December 20, 1999) 

(supersedes FAN 97–02E (November 25, 

1996)); William J. Mayer Securities LLC, 

FAN 01–25E (October 15, 2001); 

Raymond James & Associates Inc. & 

Raymond James Financial Inc., FAN 03–

07E ( June 14, 2003); WAMU Capital 

Corporation, FAN 03–14E (August 24, 

2003); and Terwin Capital LLC, FAN 

04–16E (August 18, 2004); which 

received the approval of the Department 

to engage in transactions substantially 

similar to the transactions described in 

the Underwriter Exemptions pursuant to 

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

The definition of ‘‘Rating Agency’’

under section III.X. of the Underwriter 

Exemptions is amended to read: 

‘‘Rating Agency’’ means Standard & 

Poor’s Ratings Services, a division of 

The McGraw-Hill Companies, Inc.; 

Moody’s Investors Service, Inc.; 

FitchRatings, Inc.; Dominion Bond 

Rating Service Limited, or Dominion 

Bond Rating Service, Inc.; or any 

successors thereto. 

If granted, the amendment would be 

effective for transactions occurring on or 

after April 5, 2006. 

The availability of this amendment, if 

granted, is subject to the express 

condition that the material facts and 

representations contained in the 

Application are true and complete and 

accurately describe all material terms of 

the transactions. In the case of 

continuing transactions, if any of the 

material facts or representations 

described in the Application change, the 

amendment will cease to apply as of the 

date of such change. In the event of any 

such change, an application for a new 

amendment must be made to the 

Department. 

Signed at Washington, DC, this 17th day of 

January, 2007. 

Ivan L. Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. E7–969 Filed 1–23–07; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Exemption Application No. D–11183] 

Prohibited Transaction Exemption 

2007–01; Grant of Individual 

Exemptions Involving; The Plumbers 

and Pipefitters National Pension Fund 

(the Fund) 

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: 


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