42830 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

1Section 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.

In the discussion of the exemption, references to

specific provisions of the Act should be read to

refer as well to the corresponding provisions of

section 4975 of the Code.

Secretary has made a preliminary

finding that the four Intertek Testing

Services NA, Inc. facilities for which

expansion of its recognition was

requested can meet the requirements as

prescribed in 29 CFR 1910.7.

All interested members of the public

are invited to supply detailed reasons

and evidence supporting or challenging

the sufficiency of the applicant’s having

met the requirements for expansion of

its recognition as a Nationally

Recognized Testing Laboratory, as

required by 29 CFR 1910.7 and

Appendix A to 29 CFR 1910.7.

Submission of pertinent written

documents and exhibits shall be made

no later than October 7, 1997, and must

be addressed to the NRTL Recognition

Program, Office of Variance

Determination, Room N3653,

Occupational Safety and Health

Administration, U.S. Department of

Labor, 200 Constitution Avenue, NW,

Washington, D.C. 20210. Copies of the

ITS applications, the laboratory survey

reports, the notification of change of

ownership and name, and all submitted

comments, as received (Docket No.

NRTL–1–89), are available for

inspection and duplication at the

Docket Office, Room N2634,

Occupational Safety and Health

Administration, U.S. Department of

Labor, at the above address.

The Assistant Secretary’s final

decision on whether the applicant

(Intertek Testing Services NA Inc.)

satisfies the requirements for expansion

of its recognition as an NRTL will be

made on the basis of the entire record

including the public submissions and

any further proceedings that the

Assistant Secretary may consider

appropriate in accordance with

Appendix A to Section 1910.7.

Signed at Washington, D.C. this 30th day

of July 1997.

Greg Watchman,

Acting Assistant Secretary.

[FR Doc. 97–21012 Filed 8–7–97; 8:45 am]

BILLING CODE 4510–26–P

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

[Prohibited Transaction Exemption 97–41;

Exemption Application No. D–09988]

Class Exemption for Collective

Investment Fund Conversion

Transactions

AGENCY: Pension Welfare Benefits

Administration, Department of Labor.

ACTION: Grant of class exemption.

SUMMARY: This document contains a

final exemption from certain prohibited

transaction restrictions of the Employee

Retirement Income Security Act of 1974

(the Act or ERISA) and from certain

taxes imposed by the Internal Revenue

Code of 1986 (the Code). The exemption

permits an employee benefit plan (the

Client Plan) to purchase shares of a

registered investment company (the

Fund), the investment adviser for which

is a bank (the Bank) or plan adviser (the

Plan Adviser) registered under the

Investment Advisers Act of 1940 (the

Advisers Act), that also serves as a

fiduciary of the Client Plan, in exchange

for plan assets transferred in-kind to the

Fund from a collective investment fund

(the CIF) maintained by the Bank or

Plan Adviser, in connection with a

complete withdrawal of a Client Plan’s

assets from the CIF. The exemption

affects participants and beneficiaries of

the Client Plans that are involved in

such transactions as well as the Bank or

Plan Adviser and the Fund.

EFFECTIVE DATE: Section I of this

exemption is effective for transactions

occurring from October 1, 1988 until

August 8, 1997. Section II of the

exemption is effective for transactions

occurring after August 8, 1997.

FOR FURTHER INFORMATION CONTACT:

Ms. Jan D. Broady or Mr. E.F. Williams,

Office of Exemption Determinations,

Pension and Welfare Benefits

Administration, U.S. Department of

Labor, Washington, DC 20210 at (202)

219–8881 or (202) 219–8194,

respectively, or Ms. Susan E. Rees, Plan

Benefits Security Division, Office of the

Solicitor, U.S. Department of Labor,

Washington, DC 20210 at (202) 219–

4600, ext. 105. (These are not toll-free

numbers.)

Paperwork Reduction Act Analysis

Pursuant to the Paperwork Reduction

Act of 1995 (PRA 95), Pub. L. 104–13,

44 U.S.C. Chapter 35 and 5 CFR Part

1320, the information collection request

(the ICR) in this class exemption was

published for public comment on

November 13, 1996 (61 FR 58224). No

comments were received from the

public regarding the ICR. However, as

discussed below, because the

Department of Labor (the Department)

has modified the class exemption in

response to suggestions by commenters,

the estimated information collection

burden has been adjusted (see

RESPONDENTS AND PROPOSED

FREQUENCY OF RESPONSE and

ESTIMATED ANNUAL BURDEN,

below). The Office of Management and

Budget (OMB) has approved this ICR

with the control number OMB 1210–

0104, which expires on July 31, 2000.

Persons are not required to respond to

this ICR unless it displays a currently

valid OMB control number.

Respondents and Proposed Frequency

of Response: Following the publication

on November 13, 1996 of the notice of

proposed exemption (61 FR 58224),

based upon one of the comments

received, the Department determined to

modify the final exemption to include

relief for certain non-Bank Plan

Advisers. Consequently, the Department

has recalculated estimates of the

information collection burden in the

final exemption. Based upon this

recalculation, the Department staff

estimates that approximately 75 parties

will seek to take advantage of the class

exemption in any given year. The

respondents will be banks, non-bank

advisers, and trust companies acting as

fiduciaries of plans investing in

collective investment funds maintained

by such entities.

Estimated Annual Burden: The

Department staff estimates the annual

burden for preparing the materials

required under the class exemption to

be 1767 hours. The total annual burden

cost (operating/maintenance) is

estimated to be $221,247.

SUPPLEMENTARY INFORMATION: On

November 13, 1996, the Department

published a notice in the Federal

Register (61 FR 58224) of the pendency

of a proposed class exemption from the

restrictions of sections 406(a) and 406

(b)(1) and (b)(2) of the Act and from the

taxes imposed by section 4975 (a) and

(b) of the Code by reason of section

4975(c)(1) (A) through (E) of the Code.

The Department proposed the class

exemption in response to an application

dated March 28, 1995 which was

submitted on behalf of Federated

Investors (Federated) pursuant to

section 408(a) of the Act and section

4975(c)(2) of the Code, and in

accordance with the procedures set

forth in 29 CFR Part 2570, Subpart B,

(55 FR 32836, August 10, 1990).1

The notice of pendency gave

interested persons an opportunity to

comment or request a public hearing on

the proposal. In this regard, the

Department received four comments,

one of which contained a request for a

public hearing. Upon consideration of

the record as a whole, the Department
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices 42831

2See, for example, PTE 94–82 involving Marshall

& Ilsley Trust Company (59 FR 62422, December 5,

1994); PTE 94–86 involving The Bank of California,

N.A. (59 FR 65403, December 19, 1994); PTE 95–

33 involving Bank South, N.A. (60 FR 20773, April

27, 1995); PTE 95–48 involving Mellon Bank, N.A.

(60 FR 32995, June 26, 1995); PTE 96–64 involving

Society National Bank (61 FR 44081, August 27,

1996); and PTE 96–74 involving Chicago Trust

Company (61 FR 51464, October 2, 1996).

3The commenter further represented that all

disclosures and the form of independent fiduciary

approval will be designed to meet the requirements

of PTE 77–4.

has determined to grant the proposed

class exemption, subject to certain

modifications suggested by the

commenters. These modifications and

the comments are discussed below.

I. Discussion of Comments

A commenter requested certain

specific modifications to the proposal in

the following areas:

1. Definition of the term ‘‘Fund.’’ The

commenter noted that, with respect to

the description of investment

companies covered under the proposal,

the term ‘‘Fund’’ at the beginning of

section I and section II, and the

definition of a ‘‘Fund’’ in section IV(e)

of the proposal, all define a ‘‘Fund’’ as

a diversified open-end management

investment company registered under

the Investment Company Act of 1940

(the 1940 Act). According to the

commenter, the 1940 Act does not by its

terms require that an investment

company subject to its provisions be

diversified. In addition, Prohibited

Transaction Exemption (PTE) 77–4 (42

FR 18732, April 8, 1977), to which the

subject class exemption relates, does not

require that an open-end investment

company be diversified. Therefore, for

consistency with PTE 77–4, the

commenter requests that the term

‘‘diversified’’ be deleted in the three

paragraphs where it appears in the

proposal. The Department concurs with

this comment and, accordingly, has

deleted references in the final

exemption to the ‘‘diversified’’ status of

the investment companies.

2. Fee Disclosure Conditions. Sections

I(e)(2) and II(e)(2) of the proposal

require that Banks disclose, among other

things, the fees to be charged to, or paid

by, the Client Plan and the Funds to the

Bank ‘‘* * * or any unrelated third

party,’’ including the nature and extent

of any differential between the rates of

the fees. The commenter stated that

such disclosure is required in addition

to the disclosure in the Fund prospectus

required by sections I(e)(1) and II(e)(1)

of the proposal. According to the

commenter, this language differs, in

part, from the wording of the parallel

condition in PTE 77–4 and in the

individual exemptions granted by the

Department.2 As a result, the

commenter urged the Department to

delete the requirement that the Bank

disclose fees charged to Client Plans by

unrelated third parties in the final

exemption. The commenter argued that:

(a) the prospectuses for the Funds will

disclose the identities of the third-party

service providers to the Funds and the

total level of fees paid to those

providers, which should be sufficient to

fully inform the Client Plan’s

Independent Fiduciary of the thirdparty fees paid by the Fund; and (b) the

Bank would have no reason to know

about the fees charged to the Client

Plans by third parties outside the Funds

or the arrangements under which such

fees are paid, and as such may not be

in a position to make such disclosures.

Furthermore, the Bank would have no

basis for disclosing the differential

between the rates of fees by a third

party, as required by this condition.

Thus, the commenter requested that the

Department clarify that the delivery of

the prospectuses will satisfy the fee

disclosure condition with regard to fees

charged by third parties to the Funds.

The Department concurs with the

commenter and has determined to

delete the phrase ‘‘* * * or any

unrelated third party’’ from sections

I(e)(2) and II(e)(2) of the exemption.

One commenter requested that the

exemptive relief contained in the

proposal be modified to include in-kind

transfers of plan assets to mutual funds

in exchange for shares of the funds

where an investment adviser registered

under the Advisers Act is an investment

manager or investment adviser to a

Client Plan and also an investment

adviser to the mutual fund. The

commenter represented that many

investment advisers may wish to

convert all or a portion of their directly

managed Client Plan portfolios (the

Portfolios) into mutual funds. Under the

modifications contemplated by the

commenter, the investment adviser

would have to comply with many of the

same terms and conditions contained in

the proposal, such as valuations of the

securities in accordance with SEC Rule

17a–7 (Rule 17a–7).3 However, the

conditions described in sections I(c) and

II(c) of the proposal which generally

require that the transferred assets

constitute a Client Plan’s pro rata

portion of the assets held in the CIF

would not be met under the

commenter’s suggested modification.

According to the commenter, the

proposed in-kind transfers to the mutual

funds would be made with plan assets

selected by the investment adviser and

pro rata allocations of such assets

would not be necessary. Lastly, the

commenter requested that the

Department hold a public hearing prior

to any decision by the Department to

issue the final exemption without

expanding the proposal as requested.

In this regard, the Department notes

that the proposal was developed in

response to the prohibited transaction

issues raised by transactions involving

the conversion of Bank collective

investment funds. The conditions

applicable to such CIF conversions have

been developed based on the exemption

application submitted by Federated on

March 28, 1995. Accordingly, the

Department does not believe that it has

sufficient information regarding other

types of in-kind transfers of plan assets

involving investment advisers to make

the findings necessary to grant

exemptive relief. Moreover, the

Department does not believe that a

sufficient showing has been made that

the conditions suggested by the

commenter would adequately protect

the interests of a plan’s participants and

beneficiaries involved in such

transactions.

However, the Department has decided

to modify the final exemption to include

relief for ‘‘Plan Advisers’’, provided that

all of the terms and conditions of the

final exemption are met. In this regard,

the Department has added section IV(m)

to the exemption to define Plan Adviser

to mean any investment adviser

registered under the Advisers Act of

1940, and any ‘‘affiliate’’ (as defined in

section IV(b)) of such Plan Adviser. The

Department also has modified the

definition of the term ‘‘collective

investment fund’’ under section IV(d) to

include a common or collective trust

fund or pooled investment fund

maintained by a Plan Adviser for the

collective investment of the assets

attributable to two or more plans

maintained by unrelated employers. The

Department has defined the term

‘‘unrelated employers’’ in section IV(o)

to mean persons which are not, directly

or indirectly, affiliates, as defined in

section IV(b)(1). Finally, references

throughout the proposal to a ‘‘Bank’’

have been modified under the final

exemption to also include references to

a ‘‘Plan Adviser.’’

With respect to the commenter’s

request for a public hearing on the

proposal, the Department believes that

the issues raised by the commenter

relating to investment advisers generally

appear to be outside the scope of the

proposed exemption. In this regard, the

Department notes that the proposed

exemption requested by Federated

related to the conversion of collective
42832 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

funds by Banks. The safeguards and

conditions developed under that

proposal were designed to address the

ERISA issues raised by those

transactions that were the subject of

exemptive relief. Accordingly, the

Department has determined that no

issues relating to the proposed

exemption were identified that would

require the convening of a hearing and

has determined not to hold a public

hearing. Of course, the Department

would be prepared to consider

individual exemptive relief upon proper

demonstration that the findings can be

made under section 408(a) of the Act.

Another commenter submitted a

comment in general support of the

exemption. However, the commenter

noted that sections I(g) and II(g) of the

proposal require that the Bank send

confirmations, by regular mail, to the

Independent Fiduciary of each Client

Plan that purchases shares in

connection with the in-kind transfer, no

later than 105 days after the completion

of each purchase. The commenter stated

that some Banks have indicated that it

is not uncommon to deliver such

confirmations by personal delivery,

rather than by mail. Therefore, the

commenter has requested that the

Department modify the final exemption

to permit distributions of the

confirmation statements by personal

delivery, as well as delivery by any

other means reasonably anticipated to

ensure receipt by the Client Plan’s

Independent Fiduciary (e.g., private

express courier or facsimile). Upon

consideration of this comment, the

Department has modified sections I(g)

and II(g) to permit a Bank or Plan

Adviser to deliver the information

required under these sections by either

regular mail or personal delivery. The

Department has also prospectively

modified section II(g) to permit the

delivery of such information by

facsimile or electronic mail. In this

regard, the Department has modified

section II(f) to require that the

Independent Fiduciary, in connection

with the dissemination of confirmation

statements by either facsimile or

electronic mail, specifically agree, at the

time of the approval of the in-kind

transfer, to the receipt of such

statements in that form. In addition, the

Department has defined the term

‘‘personal delivery’’ in section IV(p) to

mean the delivery of the information

described in sections I(g) and II(g) to an

individual or individuals designated by

the Client Plan to act on behalf of the

Independent Fiduciary.

A commenter noted that the proposal

does not include exemptive relief for

purchases of Fund shares by employee

benefit plans that are sponsored by the

Bank for its own employees. In this

regard, the commenter suggested that

issues related to providing such relief

should be considered by the Department

apart from the proposal in order not to

delay the publication of the final

exemption. The Department agrees with

the commenter and intends to

separately consider the issues arising in

connection with transactions involving

the purchase of Fund shares by plans

sponsored by a Bank, or for that matter

a Plan Adviser, for its own employees.

A commenter noted that the second

sentence of section II(c) of the proposal

contains a mistaken cross-reference to

section II(b). In this regard, section II(c)

of the proposal provided that the

transferred assets constitute the Client

Plan’s pro rata portion of such assets

that were held by the CIF immediately

prior to the transfer. The second

sentence in section II(c) contained an

exception to this general rule and

provided that the allocation of fixedincome securities held by a CIF on the

basis of each Client Plan’s pro rata share

of the aggregate value of such securities

will not fail to meet the requirements of

section II(b) if certain additional

requirements are met. The Department

concurs with the commenter and has

revised the cross-reference to section

II(b) in the second sentence of section

II(c) to refer back to the general rule

under that section.

The commenter also has requested a

clarification of the disclosure

requirements in section II(e) of the

proposal. Section II(e)(5) requires that

the Client Plan’s Independent Fiduciary

receive advance written notice

concerning the identity of securities that

will be valued in accordance with

Securities and Exchange Commission

(SEC) Rule 17a–7(b)(4) and allocated

pursuant to section II(c) of the proposal.

The commenter noted that section

II(e)(6) of the proposal also requires that

information be provided about the

identity of any fixed-income securities

allocated pursuant to section II(c). The

commenter believed that each of these

requirements is intended to require

disclosure of two different lists of

securities, i.e., (a) securities valued

based on dealer quotations or pricing

services, and (b) fixed-income securities

allocated between the CIF and the Fund

on the basis of each Client Plan’s pro

rata share of the aggregate value of such

securities. Nonetheless, the commenter

believed that the references in both

subsections to section II(c) may confuse

the intended scope of the second

requirement (as stated in section II(e)(6)

of the proposal) which could be

construed to cover all fixed-income

securities involved in the in-kind

transfer, even those not allocated on an

aggregate value basis. In response to the

comment, the Department has modified

section II(e)(6) in the final exemption to

require disclosure of any fixed-income

securities which are allocated on the

basis of each Client Plan’s pro rata share

of the aggregate value of such securities.

A commenter noted that section IV(a)

of the proposal defines the term ‘‘Bank’’

to include any affiliate thereof as

defined in section IV(b). However, the

commenter further noted that sections

IV(h) and IV(k) of the proposal also

contain references to the Bank or an

affiliate thereof. For purposes of clarity,

the commenter requested that references

in these sections to the term ‘‘affiliate’’

be deleted in order to avoid the

anomalous result of such references

being interpreted to include an affiliate

of an affiliate of a Bank. The Department

has adopted this suggestion and deleted

references to an ‘‘affiliate’’ of the Bank

in sections IV(h) and IV(k) of the final

exemption.

II. Description of the Exemption

The class exemption consists of four

sections. Section I provides conditional

exemptive relief for transactions

occurring from October 1, 1988 until the

date of the notice granting the final

exemption is published in the Federal

Register. Section II provides prospective

relief for transactions which must meet

certain additional conditions which are

described below. Section III provides

that a transaction that meets the

applicable conditions of the exemption

will be deemed a purchase by the Client

Plan of shares of an open-end

investment company registered under

the 1940 Act for purposes of PTE 77–4.

Accordingly, a Bank or Plan Adviser

that complies with the terms of this

exemption and with the terms of PTE

77–4 is able to receive investment

management and investment advisory

fees from the Fund and the Client Plan

with respect to the plan’s assets

invested in shares of the Fund to the

extent permitted under PTE 77–4.

Section III also provides that

compliance with the exemption will

constitute compliance with paragraphs

(a), (d) and (e) of section II of PTE 77–

4. Finally, Section IV contains

definitions for certain terms used in the

exemption.

Specifically, the class exemption set

forth in Section I provides retroactive

relief from the restrictions of sections

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

Act for the purchase of Fund shares by

an employee benefit plan, where a Bank

or Plan Adviser that serves as

investment adviser to the Fund is also
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices 42833

4See the list of exemptions cited in Footnote 2.

5The Department notes that the Bank or Plan

Adviser retains ongoing responsibilities under

ERISA’s general standards of fiduciary conduct

with respect to plans electing to remain as investors

in the CIF and with respect to other aspects of the

transfers. In this regard, the applicant represents

that all nontransferable assets of a CIF are

liquidated prior to an in-kind transfer with respect

to a partial or a complete termination of the CIF.

The applicant further notes that transferable assets

of a CIF may consist of securities or a combination

of cash and securities.

6The Department has clarified section II(e) to

indicate that a Client Plan should receive

disclosures which would allow it to compare the

rates of CIF–level fees to the rates of Fund-level fees

that are paid to the Bank or Plan Adviser.

a fiduciary with respect to the plan, in

exchange for plan assets transferred inkind to the Fund from a CIF maintained

by the Bank or Plan Adviser. The

exemption is generally similar to a

number of individual exemptions that

have been granted by the Department for

such transactions, but the operative

language of this exemption differs from

that of the individual exemptions in two

major respects.4 First, the operative

language has been revised to make it

more comprehensible to the user.

Second, the operative language

emphasizes that the class exemption

does not provide relief for any

prohibited transactions that may arise in

connection with terminating a CIF,

permitting certain plans to withdraw

from a CIF that is not terminating, or

liquidating or transferring any plan

assets held by the CIF. Thus, the class

exemption provides relief only for the

purchase of Fund shares by a Client

Plan in exchange for assets that are

transferred in-kind from a CIF. Although

the Department interprets the individual

exemptions as being similarly limited in

their scope, the language of the class

exemption is intended to clarify this

limitation.

The Department believes that the

scope of the class exemption is

consistent with the applicant’s request

for relief based on the applicant’s

mistaken reliance on PTE 77–4. In

addition, the Department notes that the

class exemption defines the term

‘‘Client Plan’’ in section IV so as to

exclude exemptive relief for purchases

of Fund shares by plans sponsored by

the Bank or a Plan Adviser for its own

employees.

The conditions applicable to the

retroactive exemption set forth in

Section I of the exemption are described

below.

Under section I(a) of the exemption,

no sales commissions or other fees are

paid by the Client Plan in connection

with the transaction.

Section I (b) and (c) of the exemption

requires that the transferred assets be

securities for which market quotations

are readily available (or cash) and

consist of the Client Plan’s pro rata

portion of all assets held by the CIF

immediately prior to the transfer.5

Under section I(d), the Client Plan must

have received shares of a Fund to which

the CIF assets have been transferred that

have a total net asset value that is equal

to the value of the Client Plan’s

transferred assets on the date of the

transfer. The value of any securities

transferred in-kind will be based on the

current market value of such assets, as

determined in a single valuation for

each asset, with all valuations

performed in the same manner at the

close of the same business day (defined

in section IV(n) to mean a banking day

as defined by federal or state banking

regulations), in accordance with Rule

17a–7 of the 1940 Act (using sources

independent of the Bank or Plan

Adviser) and the procedures established

by the Funds pursuant to Rule 17a–7 for

the valuation of such assets. The same

valuation must be used for each asset in

determining the amount transferred

from the CIF and the amount received

by the Fund.

Section I(e) provides that an

Independent Fiduciary must receive

advance written notice of the

transaction, as well as the following

written information concerning the

Funds: (a) A current prospectus for each

Fund in which a Client Plan is

considering investing; (b) full and

detailed written disclosure of the

investment advisory and other fees

charged to, or paid by, the Client Plan

(and by such Fund) to the Bank or Plan

Adviser, including the nature and extent

of any differential between the rates of

the fees; 6 (c) the reasons why the Bank

or Plan Adviser may consider an

exchange of the Client Plan’s CIF assets

for investments in the Fund to be

appropriate for the Client Plan; and (d)

a statement describing whether there are

any limitations applicable to the Bank

or Plan Adviser with respect to which

assets of the Client Plan may be invested

in the Fund, and, if so, the nature of

such limitations.

Moreover, under section I(f), the

Independent Fiduciary gives prior

approval in writing of each in-kind

transfer of the Client Plan’s CIF assets to

a Fund in exchange for shares of the

Fund, on the basis of the information

disclosed to the Independent Fiduciary.

In addition, section I(g) requires that the

Independent Fiduciary receive written

confirmation of the transaction no later

than 105 days after the transaction,

which may be sent by regular mail or

personal delivery. This written

confirmation must disclose the number

of CIF units held by the Client Plan

immediately before the transaction and

the number of Fund shares held by the

Client Plan immediately following the

transaction, the related per unit and per

share values, and the dollar amounts of

the CIF units and the Fund shares

involved in the transaction.

Section I(h) requires that, for each

Client Plan, the combined total of all

fees received by the Bank or Plan

Adviser for the provision of services to

the Client Plan, and in connection with

the provision of services to a Fund in

which a Client Plan invests, must not

exceed ‘‘reasonable compensation’’

within the meaning of section 408(b)(2)

of the Act. Finally, section I(i) provides

that all dealings between a Client Plan

and a Fund are on a basis no less

favorable to the Client Plan than such

dealings are with other shareholders of

the Fund.

On a prospective basis, Section II of

the exemption requires that the

transactions meet certain conditions in

addition to those described in Section I

of the exemption. These additional

conditions are described below.

Section II(c) provides an exception to

the general requirement that the assets

transferred in-kind to a Fund consist of

the Client Plan’s pro rata portion of

each of the transferred assets of the CIF.

This exception applies to certain

investments in fixed-income securities.

The fixed-income securities which are

allocated between the CIF and the Fund

must have the same coupon rates,

maturities and credit ratings at the time

of the transaction and cannot exceed

one (1) percent of the aggregate assets

held by the CIF as of each transfer. In

this regard, section IV(j) defines the

term ‘‘fixed-income security’’ as any

interest-bearing or discounted

government or corporate security with a

face amount of $1,000 or more that

obligates the issuer to pay the holder a

specified sum of money, usually at

specific intervals, and to repay the

principal amount of the loan at

maturity.

Section II(e) of the exemption requires

that the Independent Fiduciary receive

advance written notice of the in-kind

transfer and purchase of assets and full

written disclosure of information

concerning the Funds. Among the

information provided to the

Independent Fiduciary will include

documentation relating to the identity of

all securities that will be valued in

accordance with Rule 17a–7(b)(4) of the
42834 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

7Rule 17a–7(b)(4) describes the method for

determining the current market price of securities

that are not reported securities under Rule 11Aa3–

1 (17 CFR 240.11Aa3–1), are not traded principally

on an exchange and are not quoted in the NASDAQ

system. 17 CFR 270.17a–7(b)(4). Because the proper

valuation of such securities may require more

extensive inquiry than in the valuation of securities

described in Rule 17a–7 (b)(1)–(b)(3), the

Department believes that the Independent Fiduciary

should receive advance notice that the transfer will

entail such valuations.

8The Department is of the view that section II(c)

requires that a Bank or Plan Adviser disclose, in the

case of any fixed-income securities allocated on the

basis of aggregate value, the identity of all such

securities.

1940 Act 7 and allocated on the basis of

the Client Plan’s pro rata portion under

section II(c), and the identity of any

fixed-income securities that will be

allocated on the basis of each Client

Plan’s pro rata share of the aggregate

value of such securities pursuant to

section II(c).8

Under section II(f) of the exemption,

the Independent Fiduciary must give

the Bank or Plan Adviser prior written

approval of the in-kind transfer of the

Client Plan’s CIF assets to a Fund in

exchange for shares of the Fund.

Moreover, if the confirmation

statements described in section II(g) are

to be sent by facsimile or electronic

mail, section II(f) requires that the

Independent Fiduciary specifically

approve the delivery of the confirmation

statements in this manner.

Section II(g) has been revised to

specifically allow a Bank or Plan

Adviser to send information confirming

the in-kind transfer to the Independent

Fiduciary of a Client Plan, by regular

mail or personal delivery or, with the

prior written approval of the

Independent Fiduciary, by facsimile or

electronic mail. However, in addition to

the 105 day distribution period for

confirmation statements described in

sections I(g) and II(g)(2) of the

exemption, section II(g)(1) provides for

another written confirmation to the

Independent Fiduciary, not later than 30

days after the completion of the

transaction, for securities that were

valued in accordance with Rule 17a–

7(b)(4). The additional confirmation

must contain the following information:

(a) the identity of each such security; (b)

the current market price as of the date

of the transaction of each such security

involved in the transaction; and (c) the

identity of each pricing service or

market-maker consulted in determining

the value of such securities.

Further, section II(h) requires the

Bank or Plan Adviser to provide certain

ongoing disclosures to the Independent

Fiduciary of a Client Plan. Such written

disclosures must include: (a) a copy of

an updated prospectus for each Fund in

which such plan has invested, which is

to be provided at least on an annual

basis; and (b) upon the request of the

Independent Fiduciary, a report or

statement (which may take the form of

the most recent financial report, the

current Statement of Additional

Information, or some other written

statement) containing a description of

all fees paid by the Fund to the Bank or

Plan Adviser. The purpose of this

additional disclosure is to ensure that

the Independent Fiduciary will

continue to have the information

necessary to effectively monitor the

Fund investments made by the Client

Plan.

The Department wishes to note that

the requirement under sections I and II

of the exemption that all valuations of

all plan assets transferred from a CIF to

a Fund be determined in accordance

with Rule 17a–7 under the 1940 Act is

designed to provide flexibility for future

transactions. Thus, for example, if Rule

17a–7 is subsequently amended by the

SEC to accommodate new pricing

systems, Banks or Plan Advisers could

take advantage of the amended Rule

without having to request an

amendment to the class exemption.

However, the Department cautions that

the exemption would not be available

for transactions involving assets that are

not valued by reference to sources

independent of the Bank or Plan

Adviser.

Unlike the individual exemptions

cited above, this class exemption does

not grant relief for fees that the Bank or

Plan Adviser may receive from the Fund

as a result of the Client Plans’ purchase

of Fund shares. However, section III of

this exemption provides that a purchase

of Fund shares that complies with

sections I and II will be deemed a

purchase of shares of an open-end

investment company for purposes of

PTE 77–4, and in compliance with

paragraphs (a), (d) and (e) of section II

of that exemption. Compliance with all

of the conditions of PTE 77–4 would

permit the Bank or Plan Adviser to

receive investment advisory and similar

fees from the Fund with respect to

shares acquired by a Client Plan in

accordance with this class exemption.

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, that

a fiduciary discharge his duties with

respect to the plan solely in the interests

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) In accordance with section 408(a)

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

Code, and based upon the entire record,

the Department finds that the exemption

is administratively feasible, in the

interests of the plans and their

participants and beneficiaries, and

protective of the rights of participants

and beneficiaries of such plans;

(3) The exemption is applicable to a

transaction only if the conditions

specified in the class exemption are

met; and

(4) The exemption is supplemental to,

and not in derogation of, any other

provisions of the Code and the Act,

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.

Exemption

Accordingly, the following exemption

is granted 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, 32847,

August 10, 1990).

Section I. Retroactive Exemption for the

Purchase of Fund Shares With Assets

Transferred In-Kind From a CIF

For the period from October 1, 1988

to August 8, 1997, the restrictions of

sections 406(a) and 406 (b)(1) and (b)(2)

of the Act and the taxes imposed by

section 4975 of the Code, by reason of

section 4975(c)(1) (A) through (E), shall

not apply to the purchase by an

employee benefit plan (the Client Plan)

of shares of one or more open-end

management investment companies (the

Fund or Funds) registered under the

Investment Company Act of 1940, in

exchange for assets of the Client Plan

transferred in-kind to the Fund from a

collective investment fund (the CIF)

maintained by a bank (the Bank) or a

plan adviser (the Plan Adviser), where

the Bank or Plan Adviser is the
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices 42835

investment adviser to the Fund and also

a fiduciary of the Client Plan. The

transfer and purchase must be in

connection with a complete withdrawal

of the Client Plan’s assets from the CIF,

and the following conditions must be

met:

(a) No sales commissions or other fees

are paid by the Client Plan in

connection with the purchase of Fund

shares.

(b) All transferred assets are securities

for which market quotations are readily

available, or cash.

(c) The transferred assets constitute

the Client Plan’s pro rata portion of all

assets that were held by the CIF

immediately prior to the transfer.

(d) The Client Plan receives Fund

shares that have a total net asset value

equal to the value of the Client Plan’s

transferred assets on the date of the

transfer, as determined with respect to

securities, in a single valuation for each

asset, with all valuations performed in

the same manner, at the close of the

same business day, in accordance with

Securities and Exchange Commission

Rule 17a–7 (using sources independent

of the Bank or Plan Adviser and the

Fund) and the procedures established

by the Funds pursuant to Rule 17a–7.

(e) An independent fiduciary with

respect to the Client Plan (the

Independent Fiduciary) receives

advance written notice of an in-kind

transfer and purchase of assets and full

written disclosure of information

concerning the Fund which includes the

following:

(1) A current prospectus for each

Fund to which the CIF assets may be

transferred;

(2) A statement describing the fees to

be charged to, or paid by, a Client Plan

and the Funds to the Bank or Plan

Adviser, including the nature and extent

of any differential between the rates of

the fees;

(3) A statement of the reasons why the

Bank or Plan Adviser may consider the

transfer and purchase to be appropriate

for the Client Plan; and

(4) A statement of whether there are

any limitations on the Bank or Plan

Adviser with respect to which plan

assets may be invested in shares of the

Funds, and, if so, the nature of such

limitations.

(f) On the basis of the foregoing

information, the Independent Fiduciary

gives prior approval, in writing, for each

purchase of Fund shares in exchange for

the Client Plan’s assets transferred from

the CIF, consistent with the

responsibilities, obligations and duties

imposed on fiduciaries by Part 4 of Title

I of the Act.

(g) The Bank or Plan Adviser sends by

regular mail or personal delivery to the

Independent Fiduciary of each Client

Plan that purchases Fund shares in

connection with the in-kind transfer, no

later than 105 days after completion of

each purchase, a written confirmation of

the transaction containing—

(1) The number of CIF units held by

the Client Plan immediately before the

in-kind transfer, the related per unit

value and the total dollar amount of

such CIF units; and

(2) The number of shares in the Funds

that are held by the Client Plan

immediately following the purchase, the

related per share net asset value and the

total dollar amount of such shares.

(h) As to each Client Plan, the

combined total of all fees received by

the Bank or Plan Adviser for the

provision of services to the Client Plan,

and in connection with the provision of

services to a Fund in which a Client

Plan holds shares purchased in

connection with the in-kind transfer, is

not in excess of ‘‘reasonable

compensation’’ within the meaning of

section 408(b)(2) of the Act.

(i) All dealings in connection with the

in-kind transfer and purchase between

the Client Plan and a Fund are on a

basis no less favorable to the Client Plan

than dealings between the Fund and

other shareholders.

Section II. Prospective Exemption for

the Purchase of Fund Shares With

Assets Transferred In-Kind From a CIF

Effective after August 8, 1997, the

restrictions of sections 406(a) and 406

(b)(1) and (b)(2) of the Act and the taxes

imposed by section 4975 of the Code, by

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

(E) of the Code, shall not apply to the

purchase by an employee benefit plan

(the Client Plan) of shares of one or

more open-end management investment

companies (the Fund or Funds)

registered under the Investment

Company Act of 1940, in exchange for

assets of the Client Plan transferred inkind to the Fund from a collective

investment fund (the CIF) maintained

by a bank (the Bank) or a plan adviser

(the Plan Adviser), where the Bank or

Plan Adviser is the investment adviser

to the Fund and also a fiduciary of the

Client Plan. The transfer and purchase

must be in connection with a complete

withdrawal of the Client Plan’s assets

from the CIF, and the following

conditions must be met:

(a) No sales commissions or other fees

are paid by the Client Plan in

connection with the purchase of Fund

shares.

(b) All transferred assets are securities

for which market quotations are readily

available, or cash.

(c) The transferred assets constitute

the Client Plan’s pro rata portion of all

assets that were held by the CIF

immediately prior to the transfer.

Notwithstanding the foregoing, the

allocation of fixed-income securities

held by a CIF among Client Plans on the

basis of each Client Plan’s pro rata share

of the aggregate value of such securities

will not fail to meet the requirements of

this subsection if:

(1) The aggregate value of such

securities does not exceed one (1)

percent of the total value of the assets

held by the CIF immediately prior to the

transfer; and

(2) Such securities have the same

coupon rate and maturity, and at the

time of the transfer, the same credit

ratings from nationally recognized

statistical rating agencies.

(d) The Client Plan receives Fund

shares that have a total net asset value

equal to the value of the Client Plan’s

transferred assets on the date of the

transfer, as determined with respect to

securities, in a single valuation for each

asset, with all valuations performed in

the same manner, at the close of the

same business day, in accordance with

Securities and Exchange Commission

Rule 17a–7 (using sources independent

of the Bank or Plan Adviser and the

Fund) and the procedures established

by the Funds pursuant to Rule 17a–7.

(e) An independent fiduciary with

respect to the Client Plan (the

Independent Fiduciary) receives

advance written notice of the in-kind

transfer and purchase of assets and full

written disclosure of information

concerning the Funds which includes

the following:

(1) A current prospectus for each

Fund to which the CIF assets may be

transferred;

(2) A statement describing the fees to

be charged to, or paid by, a Client Plan

and the Funds to the Bank or Plan

Adviser, including the nature and extent

of any differential between the rates of

the fees paid by the Fund and the rates

of the fees paid by the Client Plan in

connection with the Client Plan’s

investment in the CIF;

(3) A statement of the reasons why the

Bank or Plan Adviser may consider the

transfer and purchase to be appropriate

for the Client Plan;

(4) A statement of whether there are

any limitations on the Bank or Plan

Adviser with respect to which plan

assets may be invested in shares of the

Funds, and, if so, the nature of such

limitations;
42836 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

(5) The identity of all securities that

will be valued in accordance with Rule

17a–7(b)(4) and allocated on the basis of

the Client Plan’s pro rata portion under

section II(c); and

(6) The identity of any fixed-income

securities that will be allocated on the

basis of each Client Plan’s pro rata share

of the aggregate value of such securities

pursuant to section II(c).

(f) On the basis of the foregoing

information, the Independent Fiduciary

gives prior approval, in writing, for each

purchase of Fund shares in exchange for

the Client Plan’s assets transferred from

the CIF, consistent with the

responsibilities, obligations and duties

imposed on fiduciaries by Part 4 of Title

I of the Act. In addition, the

Independent Fiduciary must give prior

approval, in writing, for the receipt of

confirmation statements described

below in paragraph (g)(1) and (g)(2) by

facsimile or electronic mail if the

Independent Fiduciary elects to receive

such statements in that form.

(g) The Bank or Plan Adviser sends by

regular mail or personal delivery or, if

applicable, by facsimile or electronic

mail to the Independent Fiduciary of

each Client Plan that purchases Fund

shares in connection with the in-kind

transfer, the following information:

(1) No later than 30 days after the

completion of the purchase, a written

confirmation which contains—

(i) The identity of each transferred

security that was valued for purposes of

the purchase of Fund shares in

accordance with Rule 17a–7(b)(4);

(ii) The current market price, as of the

date of the in-kind transfer, of each such

security involved in the purchase of

Fund shares; and

(iii) The identity of each pricing

service or market-maker consulted in

determining the current market price of

such securities.

(2) No later than 105 days after the

completion of each purchase, a written

confirmation which contains—

(i) The number of CIF units held by

the Client Plan immediately before the

in-kind transfer, the related per unit

value and the total dollar amount of

such CIF units; and

(ii) The number of shares in the Funds

that are held by the Client Plan

immediately following the purchase, the

related per share net asset value and the

total dollar amount of such shares.

(h) With respect to each of the Funds

in which the Client Plan continues to

hold shares acquired in connection with

the in-kind transfer, the Bank or Plan

Adviser provides the Independent

Fiduciary of the Client Plan with—

(1) A copy of an updated prospectus

of such Fund, at least annually; and

(2) Upon request of the Independent

Fiduciary, a report or statement (which

may take the form of the most recent

financial report, the current Statement

of Additional Information, or some

other written statement) containing a

description of all fees paid by the Fund

to the Bank or Plan Adviser.

(i) As to each Client Plan, the

combined total of all fees received by

the Bank or Plan Adviser for the

provision of services to the Client Plan,

and in connection with the provision of

services to a Fund in which a Client

Plan holds shares acquired in

connection with the in-kind transfer, is

not in excess of ‘‘reasonable

compensation’’ within the meaning of

section 408(b)(2) of the Act.

(j) All dealings in connection with the

in-kind transfer and purchase between

the Client Plan and a Fund are on a

basis no less favorable to the Client Plan

than dealings between the Fund and

other shareholders.

Section III. Availability of Prohibited

Transaction Exemption (PTE) 77–4

Any purchase of Fund shares that

complies with the conditions of either

Section I or Section II of this class

exemption shall be treated as a

‘‘purchase or sale’’ of shares of an openend investment company for purposes

of PTE 77–4 and shall be deemed to

have satisfied paragraphs (a), (d) and (e)

of section II of that exemption. 42 FR

18732 (April 8, 1977).

Section IV. Definitions

For purposes of this exemption:

(a) The term ‘‘Bank’’ means a bank or

trust company, and any affiliate thereof

[as defined below in paragraph (b)(1)],

which is supervised by a state or federal

agency.

(b) An ‘‘affiliate’’ of a person

includes—

(1) Any person directly or indirectly

through one or more intermediaries,

controlling, controlled by, or under

common control with the person.

(2) Any officer, director, employee or

relative of such person, or partner in

any such person; and

(3) Any corporation or partnership of

which such person is an officer,

director, partner or employee.

(c) The term ‘‘control’’ means the

power to exercise a controlling

influence over the management or

policies of a person other than an

individual.

(d) The term ‘‘collective investment

fund’’ or ‘‘CIF’’ means a common or

collective trust fund or pooled

investment fund maintained by a

‘‘Bank’’ as defined in paragraph (a) of

this Section IV or by a ‘‘Plan Adviser’’

as defined in paragraph (m) of this

Section IV for the collective investment

of the assets attributable to two or more

plans maintained by unrelated

employers.

(e) The term ‘‘Fund’’ or ‘‘Funds’’

means any open-end management

investment company or companies

registered under the 1940 Act for which

the Bank or Plan Adviser serves as an

investment adviser, and may also serve

as a custodian, shareholder servicing

agent, transfer agent or provide some

other secondary service (as defined

below in paragraph (i) of this section).

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

the amount calculated by dividing the

value of all securities, determined by a

method as set forth in a Fund’s

prospectus and Statement of Additional

Information, and other assets belonging

to each of the portfolios in such Fund,

less the liabilities chargeable to each

portfolio, by the number of outstanding

shares.

(g) 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, a sister, or a spouse of a brother

or a sister.

(h) The term ‘‘Independent Fiduciary’’

means a fiduciary of a Client Plan who

is independent of and unrelated to the

Bank or Plan Adviser. For purposes of

this exemption, the Independent

Fiduciary will not be deemed to be

independent of and unrelated to the

Bank or Plan Adviser if:

(1) Such fiduciary directly or

indirectly controls, is controlled by, or

is under common control with the Bank

or Plan Adviser;

(2) Such fiduciary, or any officer,

director, partner, employee, or relative

of such fiduciary, is an officer, director,

partner, employee of the Bank or Plan

Adviser (or is a relative of such

persons);

(3) Such fiduciary, directly or

indirectly receives any compensation or

other consideration for his or her own

personal account in connection with

any transaction described in this

exemption.

If an officer, director, partner,

employee of the Bank or Plan Adviser

(or relative of such persons), is a

director of such Independent Fiduciary,

and if he or she abstains from

participation in (i) the choice of the

Client Plan’s investment adviser, and

(ii) the approval of any purchase or sale

between the Client Plan and the Funds,

as well as any transaction described in

Sections I and II above, then paragraph

(h)(2) of this Section IV shall not apply.
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices 42837

(i) The term ‘‘secondary service’’

means a service provided by a Bank or

Plan Adviser to a Fund other than

investment management, investment

advisory or similar services.

(j) The term ‘‘fixed-income security’’

means any interest-bearing or

discounted government or corporate

security with a face amount of $1,000 or

more that obligates the issues to pay the

holder a specified sum of money, at

specific intervals, and to repay the

principal amount of the loan at

maturity.

(k) The term ‘‘Client Plan’’ means a

pension plan described in 29 CFR

2510.3–2, a welfare benefit plan

described in 29 CFR 2510.3–1, and a

plan described in section 4975(e)(1) of

the Code, but does not include an

employee benefit plan established or

maintained by the Bank or a Plan

Adviser for its own employees.

(l) The term ‘‘security’’ shall have the

same meaning as defined in section

2(36) of the 1940 Act, as amended, 15

U.S.C. 80a–2(36) (1996).

(m) The term ‘‘Plan Adviser’’ means

an investment adviser registered under

the Investment Advisers Act of 1940,

and any ‘‘affiliate’’ thereof [as defined

above in paragraph (b)(1)].

(n) The term ‘‘business day’’ means a

banking day as defined by federal or

state banking regulations.

(o) The term ‘‘unrelated employers’’

means persons which are not, directly

or indirectly, affiliates, as defined above

in paragraph (b)(1).

(p) The term ‘‘personal delivery’’

means delivery of the information

described in sections I(g) and II(g) above

to an individual or individuals

designated by the Client Plan to act on

behalf of the Independent Fiduciary.

Signed at Washington, D.C., this 1st day of

August, 1997.

Alan D. Lebowitz,

Deputy Assistant Secretary for Program

Operations, Pension and Welfare Benefits

Administration, Department of Labor.

[FR Doc. 97–21003 Filed 8–7–97; 8:45 am]

BILLING CODE 4510–29–M

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

[Application No. D–10439, et al.]

Proposed Exemptions; Alloy Die

Casting Co. Employees Profit Sharing

Plan and Trust (the Plan), et al.

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Notice of proposed exemptions.

SUMMARY: This document contains

notices of pendency before the

Department of Labor (the Department) of

proposed exemptions from certain of the

prohibited transaction restrictions of the

Employee Retirement Income Security

Act of 1974 (the Act) and/or the Internal

Revenue Code of 1986 (the Code).

Written Comments and Hearing

Requests

Unless otherwise stated in the Notice

of Proposed Exemption, all interested

persons are invited to submit written

comments, and with respect to

exemptions involving the fiduciary

prohibitions of section 406(b) of the Act,

requests for hearing within 45 days from

the date of publication of this Federal

Register Notice. Comments and requests

for a hearing should state: (1) the name,

address, and telephone number of the

person making the comment or request,

and (2) the nature of the person’s

interest in the exemption and the

manner in which the person would be

adversely affected by the exemption. A

request for a hearing must also state the

issues to be addressed and include a

general description of the evidence to be

presented at the hearing.

ADDRESSES: All written comments and

requests for a hearing (at least three

copies) should be sent to the Pension

and Welfare Benefits Administration,

Office of Exemption Determinations,

Room N–5649, U.S. Department of

Labor, 200 Constitution Avenue, N.W.,

Washington, D.C. 20210. Attention:

Application No. stated in each Notice of

Proposed Exemption. The applications

for exemption and the comments

received will be available for public

inspection in the Public Documents

Room of Pension and Welfare Benefits

Administration, U.S. Department of

Labor, Room N–5507, 200 Constitution

Avenue, N.W., Washington, D.C. 20210.

Notice to Interested Persons

Notice of the proposed exemptions

will be provided to all interested

persons in the manner agreed upon by

the applicant and the Department

within 15 days of the date of publication

in the Federal Register. Such notice

shall include a copy of the notice of

proposed exemption as published in the

Federal Register and shall inform

interested persons of their right to

comment and to request a hearing

(where appropriate).

SUPPLEMENTARY INFORMATION: The

proposed exemptions were requested in

applications filed pursuant to section

408(a) of the Act and/or section

4975(c)(2) of the Code, and in

accordance with procedures set forth in

29 CFR Part 2570, Subpart B (55 FR

32836, 32847, August 10, 1990).

Effective December 31, 1978, section

102 of Reorganization Plan No. 4 of

1978 (43 FR 47713, October 17, 1978)

transferred the authority of the Secretary

of the Treasury to issue exemptions of

the type requested to the Secretary of

Labor. Therefore, these notices of

proposed exemption are issued solely

by the Department.

The applications contain

representations with regard to the

proposed exemptions which are

summarized below. Interested persons

are referred to the applications on file

with the Department for a complete

statement of the facts and

representations.

Alloy Die Casting Co. Employees’ Profit

Sharing Plan and Trust (the Plan),

Located in Anaheim, California

[Application No. D–10439]

Proposed Exemption

The Department is considering

granting an exemption 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, 32847, August 10, 1990). If

the exemption is granted, the

restrictions of section 406(a), 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 to the proposed cash

sale by the Plan to the Alloy Die Casting

Co./W.E. Holmes, Inc. (Alloy), the Plan

sponsor and a party in interest with

respect to the Plan, of units (the Units)

in the Krupp Insured Plus-II Limited

Partnership (the Partnership), provided:

(a) the sale is a one-time transaction for

cash; (b) no commissions or other

expenses are paid by the Plan in

connection with the sale; (c) the Plan

will receive $1.15 above the highest bid

price for the Units at the most recent

sealed bid auction for the Units which

has occurred prior to the time of the

sale; and (d) Alloy will purchase the

Units from the Plan within 10 calendar

days following the granting of the

exemption proposed herein.

Summary of Facts and Representations

1. On June 23, 1997, the Department

proposed an exemption for the subject

transaction (62 FR 33924). However, the

exemption proposed therein provided

for a sales price for the Units of the

greater of: (1) $13.05 per Unit, or (2)

$1.15 above the highest bid price for the

Units at the most recent sealed bid

auction for the Units which has