Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 33343 

reduction from the 6.7 million hours 

worked in the prior calendar year; and 

(b) that IFS has no independent source 

for this data. IFS represents that the 

‘‘worst case’’ scenario IFS developed was 

based on a decrease in hours from 6.7 

million in 2008 to 1.1 million in 2022, 

which is a reduction of 84 percent 

(84%). IFS considers the 1.1 million 

level to be a sufficiently ‘‘worst case’’ 

economic scenario for this test. IFS 

represents that this scenario anticipated 

a significant decrease in hours for the 

2009 period already, albeit somewhat 

less than the actual 1.9 million hours. A 

29 percent (29%) decline in any one 

year is within the range of possibility for 

the aggregate worst case result modeled 

by IFS. In the model, IFS developed, 

maintaining the overall 5.6 million hour 

reduction after substituting the actual 

reduction in calendar year 2009 merely 

requires that the average declining rate 

over the final ten (10) years to average 

14.5 percent (14.5%), rather than 16 

percent (16%). IFS concludes that a 29 

percent (29%) reduction in work hours 

in one year is within the reasonable 

limits of volatility for the overall 84 

percent (84%) decline that IFS modeled 

between 2008 and 2022. Accordingly, 

IFS considers the worst case scenario to 

remain valid. 

With regard to the feasibility of the 

subject transaction, the applicant points 

out that the structure of the exemption 

is more important than the actual 

number of carpenter work hours in any 

month. In this regard, the applicant 

states that IFS, acting as the 

independent fiduciary on behalf of the 

Fund, is responsible for reviewing the 

financing terms, the Fund’s cash flow, 

and the amount of projected employer 

contributions to the Fund. Further, the 

applicant states that IFS will determine 

whether the transaction is feasible, in 

the interest of, and protective of the 

participants. If the transaction does not 

satisfy those requirements, the applicant 

states that IFS will not approve the 

transaction. 

In conclusion, it is the applicant’s 

view that the Fund’s purchase of a new 

facility is in furtherance of its long-term 

commitment to its core mission of 

training apprentices and carpenters in 

the Boston area. The decision by the 

Trustees to purchase the Condo and the 

decision of how much to pay for the 

Condo are not based on the number of 

carpenter work hours in a peak period 

or during a recession, but on an analysis 

of the training needs of participants and 

the projected revenues and expenses of 

the Fund over the long term. 

Furthermore, the applicant points out 

that while the economic downturn has 

caused a decline in carpenter work 

hours and contributions to the Fund, it 

has also resulted in lower interest rate 

financing, and lower construction costs 

for the renovation of the Building. In 

addition, because of the decline in real 

estate value, the Fund is likely to 

experience a savings in the purchase 

price of the Condo, as the fair market 

value is expected to be less than the 

Fund’s pro rata share of the 

construction costs for the renovation of 

the Building. The applicant maintains 

that IFS will analyze all of these factors 

before making its final decision on 

whether to proceed with the subject 

transaction. 

13. The commentator states that the 

construction costs for the renovation of 

the Building were approximately $26 

million dollars but that the fair market 

of such Building will be approximately 

$11 million upon completion. 

In response, the applicant maintains 

that the comment concerning the 

decline in the value of the Building is 

erroneous and misleading. In this 

regard, it is represented that while the 

purchase price and construction costs of 

renovating the Building totaled over $26 

million, the pro-rata allocation of those 

costs to the Union’s condominium unit 

is in the $11 million range, so the Union 

did not suffer a $15 million loss, as 

implied by the commentator. 

After full consideration and review of 

the entire record, including the written 

comments filed by the applicant and by 

the commentator, the Department has 

determined to grant the exemption, as 

amended, corrected, and clarified above. 

Comments and responses submitted to 

the Department by the applicant and 

comments submitted by the 

commentator have been included as part 

of the public record of the exemption 

application. Copies of these comments 

and the responses thereto are posted on 

the Department’s Web site at http:// 

www.dol.gov/ebsa. The complete 

application file (L–11558), including all 

supplemental submissions received by 

the Department, is available for public 

inspection in the Public Documents 

Room of the Employee Benefits Security 

Administration, Room N–1513, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption refer to the Notice published 

on December 22, 2009, at 74 FR 68120. 

FOR FURTHER INFORMATION CONTACT: 

Angelena C. Le Blanc of the Department, 

telephone (202) 693–8540. (This is not 

a toll-free number.) 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

4975(c)(2) of the Code does not relieve 

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of the Act, which among other things 

require a fiduciary to discharge his 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

section 404(a)(1)(B) of the Act; nor does 

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) This exemption is supplemental to 

and not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transactional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction; and 

(3) The availability of this exemption 

is subject to the express condition that 

the material facts and representations 

contained in the application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC, this 7th day of 

June 2010. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2010–14022 Filed 6–10–10; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Application Nos. and Proposed 

Exemptions; D–11573, Citigroup 

Global Markets, Inc. and Its Affiliates 

(Together, CGMI or the Applicant); and 

L–11624, Boston Carpenters 

Apprenticeship and Training Fund (the 

Fund), et al. 

AGENCY: Employee Benefits Security 

Administration, Labor 

ACTION: Notice of proposed exemptions. 

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33344 Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 

1For the avoidance of doubt, unless the context 

suggests otherwise, the term ‘‘Portfolio’’ includes the 

Stable Value Investments Fund, a collective trust 

fund established and maintained by First State 

Trust Company, formerly a wholly-owned 

subsidiary of Citigroup. 

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 (ERISA or the Act) and/or 

the Internal Revenue Code of 1986 (the 

Code). 

Written Comments and Hearing 

Requests 

All interested persons are invited to 

submit written comments or requests for 

a hearing on the pending exemptions, 

unless otherwise stated in the Notice of 

Proposed Exemption, 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 Employee 

Benefits Security Administration 

(EBSA), Office of Exemption 

Determinations, Room N–5700, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

Attention: Application No. ll, stated 

in each Notice of Proposed Exemption. 

Interested persons are also invited to 

submit comments and/or hearing 

requests to EBSA via e-mail or FAX. 

Any such comments or requests should 

be sent either by e-mail to: 

moffitt.betty@dol.gov, or by FAX to 

(202) 219–0204 by the end of the 

scheduled comment period. The 

applications for exemption and the 

comments received will be available for 

public inspection in the Public 

Documents Room of the Employee 

Benefits Security Administration, U.S. 

Department of Labor, Room N–1513, 

200 Constitution Avenue, NW., 

Washington, DC 20210. 

Warning: If you submit written 

comments or hearing requests, do not 

include any personally-identifiable or 

confidential business information that 

you do not want to be publiclydisclosed. All comments and hearing 

requests are posted on the Internet 

exactly as they are received, and they 

can be retrieved by most Internet search 

engines. The Department will make no 

deletions, modifications or redactions to 

the comments or hearing requests 

received, as they are public records. 

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, 5 U.S.C. App. 1 (1996), 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. 

Citigroup Global Markets, Inc. and Its 

Affiliates (Together, CGMI or the 

Applicant) Located in New York, New 

York 

[Application No. D–11573] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the Act (or 

ERISA) 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). 

Section I. Covered Transactions 

A. If the exemption is granted, the 

restrictions of section 406(a) of the Act 

and the sanctions resulting from the 

application of section 4975 of the Code, 

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

through (D) of the Code, shall not apply, 

effective May 31, 2009, to the purchase 

or redemption of shares by an employee 

benefit plan, an individual retirement 

account (an IRA), a retirement plan for 

self-employed individuals (a Keogh 

Plan), or an individual account pension 

plan that is subject to the provisions of 

Title I of the Act and established under 

section 403(b) of the Code (the Section 

403(b) Plan) (collectively, the Plans) in 

the Trust for Consulting Group Capital 

Markets Funds (the Trust), sponsored by 

MSSB in connection with such Plans’ 

participation in the TRAK Personalized 

Investment Advisory Service (the TRAK 

Program). 

B. If the exemption is granted, the 

restrictions of section 406(b) of the Act 

and the sanctions resulting from the 

application of section 4975 of the Code, 

by reason of section 4975(c)(1)(E) and 

(F) of the Code, shall not apply, effective 

May 31, 2009, with respect to the 

provision of (i) investment advisory 

services by the Adviser or (ii) an 

automatic reallocation option as 

described below (the Automatic 

Reallocation Option) to an independent 

fiduciary of a participating Plan (the 

Independent Plan Fiduciary), which 

may result in such fiduciary’s selection 

of a portfolio (the Portfolio) 1 in the 

TRAK Program for the investment of 

Plan assets. 

This exemption is subject to the 

following conditions set forth below in 

Section II. 

Section II. General Conditions 

(a) The participation of Plans in the 

TRAK Program is 

(b) approved by an Independent Plan 

Fiduciary. For purposes of this 

requirement, an employee, officer or 

director of the Adviser and/or its 

affiliates covered by an IRA not subject 

to Title I of the Act will be considered 

an Independent Plan Fiduciary with 

respect to such IRA. 

(c) The total fees paid to the Adviser 

and its affiliates will constitute no more 

than reasonable compensation. 

(d) No Plan pays a fee or commission 

by reason of the acquisition or 

redemption of shares in the Trust. 

(e) The terms of each purchase or 

redemption of Trust shares remain at 

least as favorable to an investing Plan as 

those obtainable in an arm’s length 

transaction with an unrelated party. 

(f) The Adviser provides written 

documentation to an Independent Plan 

Fiduciary of its recommendations or 

evaluations based upon objective 

criteria. 

(g) Any recommendation or 

evaluation made by the Adviser to an 

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Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 33345 

2The fact that certain transactions and fee 

arrangements are the subject of an administrative 

exemption does not relieve the Independent Plan 

Fiduciary from the general fiduciary responsibility 

provisions of section 404 of the Act. In this regard, 

the Department expects the Independent Plan 

Fiduciary to consider carefully the totality of the 

fees and expenses to be paid by the Plan, including 

any fees paid directly to MSSB, CGMI or to other 

third parties. 

Independent Plan Fiduciary is 

implemented only at the express 

direction of such Independent Plan 

Fiduciary, provided, however, that— 

(1) If such Independent Plan 

Fiduciary elects in writing (the 

Election), on a form designated by the 

Adviser from time to time for such 

purpose, to participate in the Automatic 

Reallocation Option under the TRAK 

Program, the affected Plan or participant 

account is automatically reallocated 

whenever the Adviser modifies the 

particular asset allocation 

recommendation which the 

Independent Plan Fiduciary has chosen. 

Such Election continues in effect until 

revoked or terminated by the 

Independent Plan Fiduciary in writing. 

(2) Except as set forth below in 

paragraph II(f)(3), at the time of a change 

in the Adviser’s asset allocation 

recommendation, each account based 

upon the asset allocation model (the 

Allocation Model) affected by such 

change is adjusted on the business day 

of the release of the new Allocation 

Model by the Adviser, except to the 

extent that market conditions, and order 

purchase and redemption procedures, 

may delay such processing through a 

series of purchase and redemption 

transactions to shift assets among the 

affected Portfolios. 

(3) If the change in the Adviser’s asset 

allocation recommendation exceeds an 

increase or decrease of more than 10 

percent in the absolute percentage 

allocated to any one investment 

medium (e.g., a suggested increase in a 

15 percent allocation to greater than 25 

percent, or a decrease of such 15 percent 

allocation to less than 5 percent), the 

Adviser sends out a written notice (the 

Notice) to all Independent Plan 

Fiduciaries whose current investment 

allocation may be affected, describing 

the proposed reallocation and the date 

on which such allocation is to be 

instituted (the Effective Date). If the 

Independent Plan Fiduciary notifies the 

Adviser, in writing, at any time within 

the period of 30 calendar days prior to 

the proposed Effective Date that such 

fiduciary does not wish to follow such 

revised asset allocation 

recommendation, the Allocation Model 

remains at the current level, or at such 

other level as the Independent Plan 

Fiduciary then expressly designated, in 

writing. If the Independent Plan 

Fiduciary does not affirmatively ‘opt 

out’ of the new Adviser 

recommendation, in writing, prior to the 

proposed Effective Date, such new 

recommendation is automatically 

effected by a dollar-for-dollar 

liquidation and purchase of the required 

amounts in the respective account. 

(4) An Independent Plan Fiduciary 

will receive a trade confirmation of each 

reallocation transaction. In this regard, 

for all Plan investors other than Section 

404(c) Plan accounts (i.e., 401(k) Plan 

accounts), CGMI or MSSB, as 

applicable, mails trade confirmations on 

the next business day after the 

reallocation trades are executed. In the 

case of Section 404(c) Plan participants, 

notification depends upon the 

notification provisions agreed to by the 

Plan recordkeeper. 

(h) The Adviser generally gives 

investment advice in writing to an 

Independent Plan Fiduciary with 

respect to all available Portfolios. 

However, in the case of a Plan providing 

for participant-directed investments (the 

Section 404(c) Plan), the Adviser 

provides investment advice that is 

limited to the Portfolios made available 

under the Plan. 

(i) Any sub-adviser (the Sub-Adviser) 

that acts for the Trust to exercise 

investment discretion over a Portfolio is 

independent of Morgan Stanley, Inc. 

(Morgan Stanley), CGMI, MSSB and 

their respective affiliates (collectively, 

the Affiliated Entities). 

(j) Immediately following the 

acquisition by a Portfolio of any 

securities that are issued by any 

Affiliated Entity, such as Citigroup or 

Morgan Stanley common stock (the 

Adviser Common Stock), the percentage 

of that Portfolio’s net assets invested in 

such securities will not exceed one 

percent. However, this percentage 

limitation may be exceeded if— 

(1) The amount held by a Sub-Adviser 

in managing a Portfolio is held in order 

to replicate an established third-party 

index (the Index). 

(2) The Index represents the 

investment performance of a specific 

segment of the public market for equity 

securities in the United States and/or 

foreign countries. The organization 

creating the Index is: 

(i) Engaged in the business of 

providing financial information; 

(ii) A publisher of financial news 

information; or 

(iii) A public stock exchange or 

association of securities dealers. 

The Index is created and maintained 

by an organization independent of the 

Affiliated Entities and is a generallyaccepted standardized Index of 

securities which is not specifically 

tailored for use by the Affiliated 

Entities. 

(3) The acquisition or disposition of 

Adviser Common Stock does not 

include any agreement, arrangement or 

understanding regarding the design or 

operation of the Portfolio acquiring such 

Adviser Common Stock, which is 

intended to benefit the Affiliated 

Entities or any party in which any of the 

Affiliated Entities may have an interest. 

(4) The Independent Plan Fiduciary 

authorizes the investment of a Plan’s 

assets in an Index Fund which 

purchases and/or holds the Adviser 

Common Stock and the Sub-Adviser is 

responsible for voting any shares of 

Adviser Common Stock that are held by 

an Index Fund on any matter in which 

shareholders of Adviser Common Stock 

are required or permitted to vote. 

(k) The quarterly investment advisory 

fee that is paid by a Plan to the Adviser 

for investment advisory services 

rendered to such Plan is offset by any 

amount in excess of 20 basis points that 

MSSB retains from any Portfolio (with 

the exception of the Money Market 

Investments Portfolio and the Stable 

Value Investments Portfolio for which 

neither MSSB nor the Trust will retain 

any investment management fee) which 

contains investments attributable to the 

Plan investor. 

(l) With respect to its participation in 

the TRAK Program prior to purchasing 

Trust shares, 

(1) Each Plan receives the following 

written or oral disclosures from the 

Adviser: 

(A) A copy of the Prospectus for the 

Trust discussing the investment 

objectives of the Portfolios comprising 

the Trust, the policies employed to 

achieve these objectives, the corporate 

affiliation existing among the Adviser 

and its affiliates, and the compensation 

paid to such entities.2

(B) Upon written or oral request to the 

Adviser, a Statement of Additional 

Information supplementing the 

Prospectus which describes the types of 

securities and other instruments in 

which the Portfolios may invest, the 

investment policies and strategies that 

the Portfolios may utilize and certain 

risks attendant to those investments, 

policies and strategies. 

(C) A copy of the investment advisory 

agreement between the Adviser and 

such Plan which relates to participation 

in the TRAK Program and describes the 

Automatic Reallocation Option. 

(D) Upon written request of the 

Adviser, a copy of the respective 

investment advisory agreement between 

MSSB and the Sub-Advisers. 

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33346 Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 

(E) In the case of a Section 404(c) 

Plan, if required by the arrangement 

negotiated between the Adviser and the 

Plan, an explanation by an Adviser 

representative (the Financial Advisor) to 

eligible participants in such Plan, of the 

services offered under the TRAK 

Program and the operation and 

objectives of the Portfolios. 

(F) A copy of the proposed exemption 

and the final exemption pertaining to 

the exemptive relief described herein. 

(2) If accepted as an investor in the 

TRAK Program, an Independent Plan 

Fiduciary of an IRA or Keogh Plan is 

required to acknowledge, in writing, 

prior to purchasing Trust shares that 

such fiduciary has received copies of 

the documents described above in 

subparagraph (k)(1) of this section. 

(3) With respect to a Section 404(c) 

Plan, written acknowledgement of the 

receipt of such documents is provided 

by the Independent Plan Fiduciary (i.e., 

the Plan administrator, trustee or named 

fiduciary, as the recordholder of Trust 

shares). Such Independent Plan 

Fiduciary is required to represent in 

writing to the Adviser that such 

fiduciary is (a) independent of the 

Affiliated Entities and (b) 

knowledgeable with respect to the Plan 

in administrative matters and funding 

matters related thereto, and able to make 

an informed decision concerning 

participation in the TRAK Program. 

(4) With respect to a Plan that is 

covered under Title I of the Act, where 

investment decisions are made by a 

trustee, investment manager or a named 

fiduciary, such Independent Plan 

Fiduciary is required to acknowledge, in 

writing, receipt of such documents and 

represent to the Adviser that such 

fiduciary is (a) independent of the 

Affiliated Entities, (b) capable of making 

an independent decision regarding the 

investment of Plan assets and (c) 

knowledgeable with respect to the Plan 

in administrative matters and funding 

matters related thereto, and able to make 

an informed decision concerning 

participation in the TRAK Program. 

(m) Subsequent to its participation in 

the TRAK Program, each Plan receives 

the following written or oral disclosures 

with respect to its ongoing participation 

in the TRAK Program: 

(1) The Trust’s semi-annual and 

annual report including a financial 

statement for the Trust and investment 

management fees paid by each Portfolio. 

(2) A written quarterly monitoring 

statement containing an analysis and an 

evaluation of a Plan investor’s account 

to ascertain whether the Plan’s 

investment objectives have been met 

and recommending, if required, changes 

in Portfolio allocations. 

(3) If required by the arrangement 

negotiated between the Adviser and a 

Section 404(c) Plan, a quarterly, detailed 

investment performance monitoring 

report, in writing, provided to an 

Independent Plan Fiduciary of such 

Plan showing Plan level asset 

allocations, Plan cash flow analysis and 

annualized risk adjusted rates of return 

for Plan investments. In addition, if 

required by such arrangement, Financial 

Advisors meet periodically with 

Independent Plan Fiduciaries of Section 

404(c) Plans to discuss the report as 

well as with eligible participants to 

review their accounts’ performance. 

(4) If required by the arrangement 

negotiated between the Adviser and a 

Section 404(c) Plan, a quarterly 

participant performance monitoring 

report provided to a Plan participant 

which accompanies the participant’s 

benefit statement and describes the 

investment performance of the 

Portfolios, the investment performance 

of the participant’s individual 

investment in the TRAK Program, and 

gives market commentary and toll-free 

numbers that enable the participant to 

obtain more information about the 

TRAK Program or to amend his or her 

investment allocations. 

(5) On a quarterly and annual basis, 

written disclosures to all Plans of (a) the 

percentage of each Portfolio’s brokerage 

commissions that are paid to the 

Affiliated Entities and (b) the average 

brokerage commission per share paid by 

each Portfolio to the Affiliated Entities, 

as compared to the average brokerage 

commission per share paid by the Trust 

to brokers other than the Affiliated 

Entities, both expressed as cents per 

share. 

(n) The Adviser maintains or causes 

to be maintained, for a period of (6) six 

years, the records necessary to enable 

the persons described in paragraph 

(m)(1) of this section to determine 

whether the applicable conditions of 

this exemption have been met. Such 

records are readily available to assure 

accessibility by the persons identified in 

paragraph (1) of this section. 

(1) Notwithstanding any provisions of 

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

records referred to in the first paragraph 

of this section are unconditionally 

available at their customary location for 

examination during normal business 

hours by— 

(i) Any duly authorized employee or 

representative of the Department or the 

Internal Revenue Service; 

(ii) Any fiduciary of a participating 

Plan or any duly authorized 

representative of such fiduciary; 

(iii) Any contributing employer to any 

participating Plan or any duly 

authorized employee representative of 

such employer; and 

(iv) Any participant or beneficiary of 

any participating Plan, or any duly 

authorized representative of such 

participant or beneficiary. 

(2) A prohibited transaction is not 

deemed to have occurred if, due to 

circumstances beyond the control of the 

Adviser, the records are lost or 

destroyed prior to the end of the sixyear period, and no party in interest 

other than the Adviser is subject to the 

civil penalty that may be assessed under 

section 502(i) of the Act or to the taxes 

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

the Code if the records are not 

maintained or are not available for 

examination as required by paragraph 

(1) of this section. 

(3) None of the persons described in 

subparagraphs (ii)–(iv) of this section 

(m)(1) is authorized to examine the 

trade secrets of the Adviser or 

commercial or financial information 

which is privileged or confidential. 

(4) Should the Adviser refuse to 

disclose information on the basis that 

such information is exempt from 

disclosure, the Adviser shall, by the 

close of the thirtieth (30th) day 

following the request, provide written 

notice advising that person of the reason 

for the refusal and that the Department 

may request such information. 

Section III. Definitions 

For purposes of this proposed 

exemption: 

(a) The term ‘‘Adviser’’ means CGMI 

or MSSB as investment adviser to Plans. 

(b) The term ‘‘Affiliated Entities’’ 

means Morgan Stanley, CGMI, MSSB 

and their respective affiliates. 

(c) The term ‘‘CGMI’’ means Citigroup 

Global Markets Inc. and any affiliate of 

Citigroup Global Markets Inc. 

(d) An ‘‘affiliate’’ of any of the 

Affiliated Entities includes: 

(1) Any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the Affiliated 

Entity. (For purposes of this 

subparagraph, the term ‘‘control’’ means 

the power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual); 

(2) Any individual who is an officer 

(as defined in Section III(g) hereof), 

director or partner in the Affiliated 

Entity or a person described in 

subparagraph (d)(1); 

(3) Any corporation or partnership of 

which the Affiliated Entity, or an 

affiliate described in subparagraph 

(d)(1), is a 10 percent or more partner 

or owner; and 

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Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 33347 

3For the avoidance of doubt, unless the context 

suggests otherwise, the term ‘‘Portfolio’’ includes the 

Stable Value Investments Fund, a collective trust 

fund established and maintained by First State 

Trust Company (First State), formerly a whollyowned subsidiary of Citigroup. 

4 57 FR 45833 (October 5, 1992). 

5 59 FR 32024 (June 21, 1994). 

6 64 FR 1648 (April 5, 1999). 

7 65 FR 54315 (September 7, 2000). 

8 In PTE 2000–45, Section II(h) of the General 

Conditions provided that ‘‘Any sub-adviser (the 

Sub-Adviser) that acts for the Trust to exercise 

investment discretion over a Portfolio will be 

independent of Salomon Smith Barney and its 

affiliates.’’ 

(4) Any corporation or partnership of 

which any individual which is an 

officer or director of the Affiliated Entity 

is a 10 percent or more partner or 

owner. 

(e) An ‘‘Independent Plan Fiduciary’’ 

is a Plan fiduciary which is independent 

of the Affiliated Entities and is either: 

(1) A Plan administrator, sponsor, 

trustee or named fiduciary, as the 

recordholder of Trust shares under a 

Section 404(c) Plan; 

(2) A participant in a Keogh Plan; 

(3) An individual covered under (i) a 

self-directed IRA or (ii) a Section 403(b) 

Plan, which invests in Trust shares; 

(4) A trustee, investment manager or 

named fiduciary responsible for 

investment decisions in the case of a 

Title I Plan that does not permit 

individual direction as contemplated by 

Section 404(c) of the Act; or 

(5) A participant in a Plan, such as a 

Section 404(c) Plan, who is permitted 

under the terms of such Plan to direct, 

and who elects to direct, the investment 

of assets of his or her account in such 

Plan. 

(f) The term ‘‘MSSB’’ means Morgan 

Stanley Smith Barney Holdings LLC, 

together with its subsidiaries. 

(g) The term ‘‘officer’’ means a 

president, any vice president in charge 

of a principal business unit, division or 

function (such as sales, administration 

or finance), or any other officer who 

performs a policymaking function for 

the entity. 

Section IV. Effective Date 

If granted, this proposed exemption 

will be effective as of May 31, 2009 with 

respect to the Covered Transactions, the 

General Conditions and the Definitions 

that are described in Sections I, II and 

III. 

Summary of Facts and Representations 

1. If granted, the proposed individual 

exemption described herein would 

replace Prohibited Transaction 

Exemption (PTE) 2009–12 (74 FR 13231, 

March 26, 2009), an exemption 

previously granted to CGMI. PTE 2009– 

12 relates to the operation of the TRAK 

Personalized Investment Advisory 

Service (the TRAK Program) and the 

Trust for Consulting Group Capital 

Markets Funds (the Trust). 

PTE 2009–12 provides exemptive 

relief from section 406(a) of the Act and 

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

Code, for the purchase or redemption of 

shares by various types of Plans, such as 

ERISA Title I Plans, IRAs, Keogh Plans, 

and Section 403(b) Plans, whose assets 

are invested in the Trust that was 

previously established by Citigroup in 

connection with such Plans’ 

participation in the TRAK Program. 

PTE 2009–12 also provides exemptive 

relief from section 406(b) of the Act and 

section 4975(c)(1)(E) and (F) of the 

Code, with respect to the provision, by 

Citigroup’s Consulting Group, of (i) 

investment advisory services or (ii) an 

Automatic Reallocation Option to an 

independent fiduciary of a participating 

Plan (i.e., the Independent Plan 

Fiduciary), which may result in such 

fiduciary’s selection of a Portfolio 3 in 

the TRAK Program for the investment of 

Plan assets. 

2. The Department originally granted 

to Shearson Lehman Brothers, Inc. PTE 

92–77, which relates to a less evolved 

form of the TRAK Program.4 PTE 92–77 

was superseded by PTE 94–50, which 

allowed Smith, Barney Inc. (Smith 

Barney), the predecessor to Salomon 

Smith Barney Inc. (Salomon Smith 

Barney), to add a daily-traded collective 

investment fund (the GIC Fund) to the 

existing fund Portfolios, describe the 

various entities operating the GIC Fund, 

and replace references to Shearson 

Lehman with Smith Barney.5 PTE 99– 

15, which superseded PTE 94–50, 

allowed Salomon Smith Barney to 

create a broader distribution of TRAKrelated products, implement a recordkeeping reimbursement offset procedure 

under the TRAK Program, adopt the 

Automated Reallocation Option under 

the TRAK Program that would reduce 

the asset allocation fee paid to Salomon 

Smith Barney by a Plan investor, and 

expand the scope of the exemption to 

include Section 403(b) Plans.6

3. Thereafter, PTE 99–15 was replaced 

by PTE 2000–45, which primarily 

modified the definition of an ‘‘affiliate’’ 

of Salomon Smith Barney so that it only 

covered persons or entities that had a 

significant role in the decisions made 

by, or which were managed or 

influenced by, Salomon Smith Barney, 

or included any corporation or 

partnership of which Salomon Smith 

Barney or an affiliate was a 10 percent 

or more partner or owner.7

4. Finally, on March 26, 2009, the 

Department granted PTE 2009–12. As 

the result of a merger transaction (the 

Merger Transaction) between Citigroup 

and Legg Mason, Inc. (Legg Mason), on 

December 1, 2005, an affiliate of 

Citigroup acquired an approximately 

14% equity ownership interest in Legg 

Mason common and preferred stock. 

This meant that two investment adviser 

subsidiaries of Legg Mason (Brandywine 

Asset Management LLC and Western 

Asset Management Company), which 

were sub-advisers (the Sub-Advisers) to 

three Trust Portfolios under the TRAK 

Program, were no longer considered 

‘‘independent’’ of Citigroup and its 

affiliates in violation of Section II(h) of 

the General Conditions.8 Also, the SubAdvisers were considered ‘‘affiliates’’ of 

Citigroup under Section III(b)(3) of the 

General Definitions of PTE 2000–45 

inasmuch as Citigroup became a 10% or 

more indirect owner of each SubAdviser following the Merger 

Transaction. 

5. Although Citigroup reduced its 

ownership interest in Legg Mason to 

under the 10% ownership threshold on 

March 10, 2006, the Department 

decided that PTE 2000–45 was no 

longer effective for the transactions 

described therein, because Section II(h) 

of the General Conditions and Section 

III(b) of the Definitions were not met. 

Therefore, the Department granted PTE 

2009–12, a new exemption, which 

replaced PTE 2000–45. Unless 

otherwise noted, PTE 2009–12 

incorporates by reference the facts, 

representations, operative language and 

definitions of PTE 2000–45. In addition, 

PTE 2009–12 updates the operative 

language of PTE 2000–45. Further, PTE 

2009–12 provides a temporary and 

limited exception to the definition of 

the term ‘‘affiliate,’’ so that during the 

three month period of time within 

which Citigroup held a 10% or greater 

economic ownership interest in Legg 

Mason, the Sub-Advisers would 

continue to be considered 

‘‘independent’’ of CGMI and its affiliates 

for purposes of Section II(h) and not 

‘‘affiliated’’ with CGMI and its affiliates 

for purposes of Section III(b) of the 

exemption. Finally, PTE 2009–12 

provides exemptive relief for a new 

method to compute fee offsets that are 

required under the exemption to 

mitigate past anomalies. 

PTE 2009–12 is effective from 

December 1, 2005 until March 10, 2006, 

with respect to the limited exception. It 

is also effective as of December 1, 2005 

with respect to the transactions covered 

by the exemption, the General 

Conditions, and the Definitions. 

Further, PTE 2009–12 is effective as of 

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9The Applicants believe that Citgroup’s 

ownership interest in MSSB will reach a point 

where it will no longer have an interest in MSSB 

or the Trust that could affect its best judgment as 

a fiduciary. The Applicants explain that at such 

point in time, it will no longer be necessary for 

Citigroup to rely on this exemption for the TRAK 

Program. The Department expresses no opinion on 

when it will no longer be necessary for Citigroup 

to rely on this exemption, given that this will be 

a facts and circumstances determination. 

10Morgan Stanley continues to provide an array 

of services for these accounts which include 

clearing and settling securities transactions, 

providing trade confirmations and customer 

statements and performing certain cashiering 

functions, custody services and other related 

services. 

11CGMI clears and settles securities transactions, 

provides trade confirmations and customer 

statements and performs certain cashiering 

functions, custody services and other related 

services for these accounts. 

January 1, 2008, with respect to the new 

fee offset procedure. 

Replacement of PTE 2009–12 

6. CGMI and its predecessors and 

current and future affiliates and Morgan 

Stanley Smith Barney LLC and its 

current and future affiliates 

(collectively, the Applicants) have 

requested a new exemption that would 

replace PTE 2009–12 to reflect the terms 

of a joint venture transaction (the Joint 

Venture Transaction) between Citigroup 

and Morgan Stanley, Inc. (Morgan 

Stanley) that occurred on May 31, 2009. 

As a result of the Joint Venture 

Transaction, which is described in 

detail below, the Applicants state that 

the exemptive relief provided under 

PTE 2009–12 is no longer effective due 

to a change in the parties and the 

ownership structure of the TRAK 

Program. Therefore, the Applicants 

request a new exemption that would 

replace PTE 2009–12. If granted, the 

new exemption would be made 

retroactive to May 31, 2009 and it would 

provide the same relief with respect to 

the transactions covered under PTE 

2009–12. In addition, the General 

Conditions and Definitions of the new 

exemption would be similar to those as 

set forth in PTE 2009–12. 

The Joint Venture Transaction 

7. The Applicants represent that on 

January 13, 2009, Citigroup and Morgan 

Stanley entered into a ‘‘Joint Venture 

Contribution and Formation Agreement’’ 

(the Joint Venture Agreement), which 

established the terms of a new joint 

venture (the Joint Venture) between 

Citigroup and Morgan Stanley. 

Citigroup and Morgan Stanley are global 

financial services providers, each 

headquartered in New York, New York. 

As of the end of 2008, Citigroup 

reported total client assets under 

management as approximately $1.3 

trillion. Citigroup’s current employee 

workforce consists of approximately 

300,000 individuals in approximately 

16,000 offices in 140 countries around 

the world. As of the end of 2008, 

Morgan Stanley reported total client 

assets under management as 

approximately $546 billion. Its current 

employee workforce of approximately 

60,000 serves a diversified group of 

corporations, governments, financial 

institutions, and individuals, and 

operates from over 1,200 offices in over 

36 countries around the world. 

8. Under the Joint Venture Agreement, 

each of Citigroup and Morgan Stanley 

(including their respective subsidiaries) 

agreed to contribute specified 

businesses into the Joint Venture, 

together with all contracts, employees, 

property licenses and other assets (as 

well as liabilities) used primarily in the 

contributed businesses. Generally, in 

the case of Citigroup, the contributed 

businesses included Citigroup’s retail 

brokerage and futures business operated 

under the name ‘‘Smith Barney’’ in the 

United States and Australia and 

operated under the name ‘‘Quilter’’ in 

the United Kingdom, Ireland and 

Channel Islands. Certain investment 

advisory and other businesses of 

Citigroup were also contributed, 

including Citigroup’s Consulting Group 

and the sponsorship of the TRAK 

Program. In the case of Morgan Stanley, 

the contributed businesses consisted 

generally of Morgan Stanley’s global 

wealth management (retail brokerage) 

and private wealth management 

businesses. According to the 

Applicants, no valuations for the 

contributed businesses were agreed 

upon between the parties. It was agreed, 

however, that the value of the Smith 

Barney business plus $2.75 billion 

would equal an ownership percentage of 

49% of the Joint Venture entity, Morgan 

Stanley Smith Barney Holdings LLC 

(Holdings), a Delaware limited liability 

company (together with its subsidiaries, 

MSSB). The closing date of the Joint 

Venture Transaction occurred on May 

31, 2009 (the Closing). 

Prior to the Closing, Morgan Stanley 

had formed Holdings, the sole member 

of Morgan Stanley Smith Barney LLC, 

which conducts most of the Joint 

Venture’s domestic operations as a dualregistered broker-dealer and investment 

adviser. Holdings presently generates 

about $14 billion in net revenues. It has 

18,500 financial advisers, 1,000 

locations worldwide and services about 

6.8 million households. 

Immediately following the Closing, 

Morgan Stanley owned indirectly 

through subsidiaries 51% of Holdings, 

and Citigroup owned 49% of Holdings, 

through CGMI. Morgan Stanley has call 

rights to purchase from Citigroup (a) an 

additional 14% of Holdings after the 

third anniversary of Closing, (b) an 

additional 15% of Holdings after the 

fourth anniversary and (c) the balance of 

Citigroup’s interest in Holdings after the 

fifth anniversary.9

9. The Joint Venture Agreement was 

amended and restated on May 29, 2009 

(the Amended Contribution Agreement). 

Under the Amended Contribution 

Agreement, Citigroup transferred its 

managed futures business and its 

proprietary investments to MSSB on 

July 31, 2009, in exchange for a cash 

payment of $299.778 million paid by 

Morgan Stanley, and Morgan Stanley 

purchased additional interests in MSSB 

worth approximately $2.7 billion on 

August 1, 2009, in order to maintain its 

total percentage of ownership interests 

in MSSB at 51%. The Amended 

Contribution Agreement also provided 

for an ‘‘introducing broker’’ structure for 

a period of time after the Closing. Under 

the ‘‘introducing broker’’ structure, 

clients of Morgan Stanley’s legacy 

businesses continue to have their 

brokerage transactions cleared through, 

and their accounts custodied and 

carried by, Morgan Stanley.10 Similarly, 

customers of the Citigroup legacy 

businesses continue to have their 

brokerage transactions cleared through, 

and have their accounts custodied and 

carried by, CGMI.11 Over time, it is 

expected that the contributed businesses 

and operations of Morgan Stanley and 

Citigroup will be integrated into one 

operation and that ultimately, MSSB 

will become a fully self-clearing and 

self-custody service firm and will carry 

its own customer accounts. 

Current Status of Operations 

10. Since the Closing, MSSB’s 

advisory services are being provided 

through two distribution channels. One 

distribution channel generally sponsors 

the advisory programs, including the 

TRAK Program, previously sponsored 

by Smith Barney and/or CGMI (the SB 

Channel). Therefore, since the Closing, 

the TRAK Program has continued to be 

made available to customers of the SB 

Channel. The other distribution channel 

generally sponsors the advisory 

programs previously sponsored by 

Morgan Stanley’s Global Wealth 

Management Group (the MS Channel). 

As stated previously, the parties’ 

ultimate goal is for the businesses, 

operations and systems of the MS 

Channel and the SB Channel to be 

integrated. However, decisions as to 

which programs will be offered to 

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whom or which programs will survive 

over the long-term have not been made. 

11. Also, since the Closing, CGMI has 

continued to offer the TRAK Program to 

its retained clients. As of August 31, 

2009, the TRAK Program had assets in 

excess of $6.13 billion, over $3.74 

billion of which is held in Plan 

accounts. At present, the investments 

under the TRAK Program encompass 

the Trust, which consists of eleven 

Portfolios, as well as the Stable Value 

Investments Fund, a collective trust 

fund established and maintained by 

First State. The Trust and the Stable 

Value Investment Fund are advised by 

one or more unaffiliated Sub-Advisers 

selected by MSSB and First State, 

respectively. In addition to the TRAK 

Program, CGMI offers other investment 

advisory programs to its retained clients 

under an advisory services agreement 

between Citigroup and Holdings dated 

as of the Closing. Under the agreement, 

Holdings provides a wide range of 

investment advisory services to 

Citigroup advisory programs pursuant to 

a delegation by Citigroup to Holdings of 

certain of Citigroup’s obligations to 

provide such services. Citigroup 

retained clients were provided notice of 

this arrangement. 

Descriptions of Revisions to the 

Operative Language of PTE 2009–12 

12. The proposed exemption generally 

modifies the operative language of PTE 

2009–12 to take into account the new 

ownership structure of the TRAK 

Program formed as a result of the Joint 

Venture Transaction. Section I of PTE 

2009–12 has been modified to conform 

the effective date of the proposal with 

the closing of the Joint Venture 

Transaction, May 31, 2009. In addition, 

the operative language in Section I(A) 

and I(B) has been revised to provide 

that, as a result of the Joint Venture, 

MSSB rather than Citigroup is now the 

sponsor of the Trust in connection with 

Plans’ investment in the TRAK Program, 

and that investment advisory services 

may be provided by MSSB in addition 

to CGMI, respectively. 

13. Section II of PTE 2009–12, General 

Conditions, has been modified 

throughout by replacing the terms 

‘‘CGMI,’’ ‘‘Consulting Group,’’ or 

‘‘Citigroup,’’ with the term ‘‘Adviser,’’ 

which has been added as a new defined 

term in Section III to mean ‘‘CGMI or 

MSSB as investment adviser to Plans.’’ 

The changes were made to these terms 

in order to reflect the addition of MSSB 

as a sponsor of the TRAK Program 

resulting from the Joint Venture 

Transaction. In addition, in Section 

II(h), the term ‘‘Affiliated Entities,’’ 

which has been added as a new defined 

term in Section III to mean ‘‘Morgan 

Stanley, CGMI, MSSB, and their 

respective affiliates,’’ has been added to 

take into account the addition of MSSB 

as a sponsor of the TRAK Program. 

14. Section II(j) of PTE 2009–12 has 

been modified to reflect the fact that 

CGMI has been removed from the 

reallocation formula because it no 

longer manages and supervises the Trust 

and the Portfolios. Prior to the Closing, 

Citigroup Investment Advisory Services 

LLC (CIAS), an affiliate of CGMI, 

managed and supervised the Trust and 

Portfolios. In connection with the Joint 

Venture Transactions, CIAS was 

contributed to MSSB and as an affiliate 

of MSSB, it manages and supervises the 

Trust and the Portfolios. Thus, the 

modifications to the language in Section 

II(j) seek to clarify the parties to the 

covered transactions, but do not change 

the formula for the calculation of the 

quarterly investment advisory fee that is 

paid by the Plan to the Adviser. 

Furthermore, Section II(j) has been 

amended to correct the names of the 

Portfolios that are excluded from the 

calculation of the quarterly investment 

advisory fee, namely by substituting the 

term ‘‘Money Markets Investment 

Portfolio’’ for ‘‘Government Money 

Investments Portfolio,’’ and the term 

‘‘Stable Value Investments Portfolio’’ for 

‘‘GIC Fund.’’ 

15. Section III of PTE 2009–12, which 

sets forth the Definitions, has been 

modified by: (i) Adding Section III(a), 

Adviser, to mean ‘‘CGMI or MSSB as 

investment adviser to Plans’’ to reflect 

the new sponsorship of the TRAK 

Program by MSSB, in addition to the 

previous sponsorship by CGMI; (ii) 

adding Section III(b), Affiliated Entities, 

to mean ‘‘Morgan Stanley, CGMI, MSSB 

and their respective affiliates’’ to reflect 

the addition of MSSB as a sponsor of the 

TRAK Program resulting from the Joint 

Venture Transaction; (iii) substituting 

the term ‘‘Affiliated Entities’’ for ‘‘CGMI’’ 

throughout Section III(d) in order to 

broaden the scope of the term ‘‘affiliate’’ 

to capture the current affiliates of the 

Applicants; (iv) amending the sectional 

references in Sections III(d)(2) and (3) to 

conform to the corresponding 

modifications to Section III; (v) 

amending the definition of 

‘‘Independent Plan Fiduciary’’ in Section 

III(e) so that the Independent Plan 

Fiduciary is independent of MSSB in 

addition to CGMI and their respective 

affiliates, thereby preserving the 

purpose of the provisions in PTE 2009– 

12 that provide that only a party 

independent of the Applicants is 

exercising discretion with respect to, 

among other things, Plans’ decisions to 

invest in the TRAK Program; and (vi) 

adding a new definition of ‘‘MSSB’’ in 

Section III(f) to mean ‘‘Morgan Stanley 

Smith Barney Holdings LLC, together 

with its affiliates.’’ 

16. Section IV of PTE 2009–12, 

pertaining to exemptive relief for the 

temporary and limited exception to the 

definition of the term ‘‘affiliate,’’ has 

been stricken since it is no longer 

applicable. Previously, Section IV 

provided that, during the three month 

period of time within which Citigroup 

held a 10% or greater economic 

ownership interest in Legg Mason, the 

Sub-Advisers would continue to be 

considered ‘‘independent’’ of CGMI and 

its affiliates for purposes of Section II(h) 

and not ‘‘affiliated’’ with CGMI and its 

affiliates for purposes of Section III(b) of 

the exemption. Because the time period 

has expired, Section IV is no longer 

relevant to the exemption. 

Finally, the Effective Date in new 

Section IV is modified to provide that 

the exemption, if granted, will be 

effective as of May 31, 2009, which is 

the closing date of the Joint Venture 

Transaction. 

Summary 

17. In summary, the Applicant 

represents that the transactions 

described herein have satisfied or will 

satisfy the statutory criteria for an 

exemption set forth in section 408(a) of 

the Act because: 

(a) The participation of Plans in the 

TRAK Program has been approved or 

will be approved by an Independent 

Plan Fiduciary; 

(b) The total fees paid to the Adviser 

and its affiliates has constituted or will 

constitute no more than reasonable 

compensation; 

(c) No Plan has paid or will pay a fee 

or commission by reason of the 

acquisition or redemption of shares in 

the Trust; 

(d) The terms of each purchase or 

redemption of Trust shares have 

remained or will remain at least as 

favorable to an investing Plan as those 

obtainable in an arm’s length 

transaction with an unrelated party; 

(e) The Adviser has provided or will 

provide written documentation to an 

Independent Plan Fiduciary of its 

recommendations or evaluations based 

upon objective criteria, and such 

recommendation or evaluation has been 

implemented or will be implemented 

only at the express direction of such 

Independent Plan Fiduciary. 

(f) The Adviser has given or will give 

investment advice in writing to an 

Independent Plan Fiduciary with 

respect to all available Portfolios (with 

respect to participant directed plans, 

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33350 Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 

such advice is limited to the Portfolios 

made available under the Plan); 

(g) Any Sub-Adviser that acts for the 

Trust to exercise investment discretion 

over a Portfolio has been independent or 

will be independent of Morgan Stanley, 

CGMI, MSSB and their respective 

affiliates; 

(h) Immediately following the 

acquisition by a Portfolio of Adviser 

Common Stock, the percentage of that 

Portfolio’s net assets invested in such 

securities generally has not exceeded or 

will not exceed one percent; 

(i) The quarterly investment advisory 

fee that is paid by a Plan to the Adviser 

for investment advisory services 

rendered to such Plan has been offset or 

will be offset by any amount in excess 

of 20 basis points that MSSB retains 

from any Portfolio (with the exception 

of the Money Market Investments 

Portfolio and the Stable Value 

Investments Portfolio for which neither 

MSSB nor the Trust will retain any 

investment management fee) which 

contains investments attributable to the 

Plan investor; 

(j) With respect to its participation in 

the TRAK Program, prior to purchasing 

Trust shares, each Plan has received or 

will receive written or oral disclosures 

and offering materials from the Adviser 

which generally disclose all material 

facts concerning the purpose, structure, 

operation, and investment in the TRAK 

Program, and describe the Adviser’s 

recommendations or evaluations, 

including the reasons and objective 

criteria forming the basis for such 

recommendations or evaluations; 

(k) Subsequent to its participation in 

the TRAK Program, each Plan has 

received or will receive periodic written 

disclosures from the Adviser with 

respect to the financial condition of the 

TRAK Program, the total fees that it and 

its affiliates will receive from such Plans 

and the value of the Plan’s interest in 

the TRAK Program, and on a quarterly 

and annual basis, written disclosures to 

all Plans of (a) the percentage of each 

Portfolio’s brokerage commissions that 

are paid to the Affiliated Entities and (b) 

the average brokerage commission per 

share paid by each Portfolio to the 

Affiliated Entities, as compared to the 

average brokerage commission per share 

paid by the Trust to brokers other than 

the Affiliated Entities, both expressed as 

cents per share; and 

(l) The Adviser has complied with, 

and will continue to comply with, the 

recordkeeping requirements provided in 

Section II(m) of the proposed 

exemption, for so long as such records 

are required to be maintained. 

Notice to Interested Persons 

Notice of the proposed exemption 

will be mailed by first class mail to the 

Independent Plan Fiduciary of each 

Plan currently participating in the 

TRAK Program, or, in the case of a Plan 

covered by Section 404(c) of the Act, to 

the recordholder of the Trust shares. 

Such notice will be given within 45 

days of the publication of the notice of 

pendency in the Federal Register. The 

notice will contain a copy of the notice 

of proposed exemption, as published in 

the Federal Register, and a 

supplemental statement, as required 

pursuant to 29 CFR 2570.43(b)(2). The 

supplemental statement will inform 

interested persons of their right to 

comment on and/or to request a hearing 

with respect to the pending exemption. 

Written comments and hearing requests 

are due within 75 days of the 

publication of the proposed exemption 

in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Warren Blinder of the Department, 

telephone (202) 693–8553. (This is not 

a toll-free number.) 

Boston Carpenters Apprenticeship and 

Training Fund (the Fund) Located in 

Boston, Massachusetts 

[Exemption Application No: L–11624] 

Proposed Exemption 

The Department of Labor is 

considering granting an exemption 

under the authority of section 408(a) of 

the Act in accordance with procedures 

set forth in 29 CFR Part 2570, Subpart 

B (55 FR 32836, 32847, August 10, 

1990). If the proposed exemption is 

granted, the restrictions of 406(b)(1), 

and 406(b)(2) of the Act shall not apply 

effective for the period from January 29, 

2010, through June 30, 2010, to the lease 

(the Lease) by the Fund from the 

NERCC, LLC (the Building Corporation), 

a party in interest with respect to the 

Fund, of a condominium unit (the 

Condo) in a building (the Building) 

owned by the Building Corporation, 

where the New England Regional 

Council of Carpenters (the Union), also 

a party in interest with respect to the 

Fund, indirectly owns the only other 

condominium unit in the Building; 

provided that, at the time the 

transaction was entered into, the 

following conditions were satisfied: 

(a) The proposed exemption is 

conditioned upon satisfaction at all 

times of the terms and conditions of this 

exemption, and upon adherence to the 

material facts and representations, as 

described in this proposed exemption, 

and, as set forth in application D–11624, 

and in application D–11558, including 

those representations that are required 

by 29 CFR 2570.34 and 29 CFR 2570.35 

of the Department’s regulations; 

(b) prior to entering into the Lease, the 

Fund sought legal advice from Aaron D. 

Krakow, Esq. (Mr. Krakow), acting as 

legal counsel on behalf of the Fund, 

who advised the Fund that it was 

permissible for the Fund to enter into a 

short term lease with the Building 

Corporation, and the Board of Trustees 

of the Fund (the Board) relied on Mr. 

Krakow’s advice; 

(c) the Lease which is the subject of 

this exemption and any other leasing 

arrangement of the Condo between the 

Fund and the Building Corporation and/ 

or the Union, if not terminated sooner, 

shall terminate on the date that the 

Fund closes on the purchase of the 

Condo from the Building Corporation; 

and the Fund shall have no obligation 

to pay rent to the Union or to the 

Building Corporation after the date of 

such termination; 

(d) before the Fund entered into the 

Lease of the Condo, James F. Grosso, 

Esq. (Mr. Grosso), of O’Reilly, Grosso & 

Gross, PC, acting as attorney for the 

Fund, assisted in the negotiation of the 

terms of the Lease, reviewed and 

approved the terms of such Lease to 

ensure that such terms are at least as 

favorable to the Fund as an arm’s length 

transaction with an unrelated party, 

determined that such terms are fair and 

reasonable, and selected an 

independent, qualified appraiser to 

determine the fair market rental value of 

the Condo; 

(e) Mr. Grosso is responsible 

throughout the duration of the Lease for: 

(i) Monitoring the rent payments made 

by the Fund to ensure that such 

payments are consistent with the 

amount of rental specified under the 

terms of such Lease, (ii) monitoring the 

payments of the Fund’s share of the 

expenses for taxes, insurance, and 

operating expenses (including repairs) 

to ensure that such payments represent 

a fair apportionment of such expenses; 

and (iii) determining that the Fund has 

sufficient assets to pay the rental 

amount and its portion of taxes, 

insurance, and operating expenses 

(including repairs); 

(f) throughout the duration of the 

Lease, the terms of the Lease of the 

Condo between the Fund and the 

Building Corporation are at all times 

satisfied; 

(g) the rent paid by the Fund for the 

Condo under the terms of the Lease is 

at no time greater than the fair market 

rental value of the Condo, as determined 

by an independent, qualified appraiser 

selected by Mr. Grosso; 

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Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 33351 

(h) under the provisions of the Lease, 

the subject transaction is on terms and 

at all times remains on terms that are at 

least as favorable to the Fund as those 

that would have been negotiated under 

similar circumstances at arm’s length 

with an unrelated third party; 

(i) the transaction is appropriate and 

helpful in carrying out the purposes for 

which the Fund is established or 

maintained; 

(j) the Board maintains, or causes to 

be maintained within the United States 

for a period of six (6) years in a manner 

that is convenient and accessible for 

audit and examination, such records as 

are necessary to enable the persons 

described, below, in paragraph (k)(1) of 

this exemption to determine whether 

the conditions of this exemption have 

been met; except that— 

(1) if the records necessary to enable 

the persons described, below, in 

paragraph (k)(1) of this exemption to 

determine whether the conditions of 

this exemption have been met are lost 

or destroyed, due to circumstances 

beyond the control of the Board, then no 

prohibited transaction will be 

considered to have occurred solely on 

the basis of the unavailability of those 

records; and 

(2) No party in interest, other than the 

Board shall be subject to the civil 

penalty that may be assessed under 

section 502(i) of the Act, or to the taxes 

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

the Code, if the records are not 

maintained, or are not available for 

examination as required by paragraph (j) 

of this exemption; and 

(k)(1) Except as provided, below, in 

paragraph (k)(2) of this exemption and 

notwithstanding any provisions of 

sections (a)(2) and (b) of section 504 of 

the Act, the records referred to in 

paragraph (j) of this exemption are 

unconditionally available at their 

customary location for examination 

during normal business hours by: 

(A) Any duly authorized employee or 

representative of the Department, the 

Internal Revenue Service, or any other 

applicable federal or state regulatory 

agency; 

(B) Any fiduciary of the Fund, or any 

duly authorized representative of such 

fiduciary; 

(C) Any contributing employer to the 

Fund and any employee organization 

whose members are covered by the 

Fund, or any duly authorized employee 

or representative of these entities; or 

(D) Any participant or beneficiary of 

the Fund, or any duly authorized 

representative of such participant or 

beneficiary. 

(2) None of the persons described, 

above, in paragraph (k)(1)(B)–(D) of this 

exemption are authorized to examine 

trade secrets or commercial or financial 

information that is privileged or 

confidential. 

Summary of Facts and Representations 

1. The Union is a labor organization 

made up of thirty (30) local carpenter 

unions in six (6) New England states. 

The local unions that are affiliated with 

the Union include local union nos. 33, 

40, 67, 218, and 723 (the Locals). 

Members of the Union are covered by 

the Fund. The Union and the Locals are 

parties in interest with respect to the 

Fund, pursuant to section 3(14)(D) of 

the Act, as employee organizations any 

of whose members are covered by such 

Fund. 

2. The Fund is an employee welfare 

benefit plan, as that term is defined in 

the Act. Further, the Fund is a 

multiemployer apprenticeship and 

training fund. The Fund is a 

Massachusetts nonprofit organization, 

and is exempt from income taxes under 

the provisions of Section 501(c)(3) of the 

Internal Revenue Code. 

3. The Fund provides training and 

education to carpenter apprentices in 

the greater Boston area. The Fund also 

provides training and education to 

journeymen carpenters in the greater 

Boston area. 

4. The Fund is maintained under 

collective bargaining agreements 

negotiated between the Union of the 

United Brotherhood of Carpenters and 

Joiners of America (the UBCJA) and the 

following multiemployer bargaining 

organizations: (a) The Labor Relations 

Division of the Associated General 

Contractors of Massachusetts, Inc.; (b) 

The Building Trades Employers’ 

Association of Boston and Eastern 

Massachusetts, Inc.; and (c) The Labor 

Relations Division of the Construction 

Industry of Massachusetts (collectively, 

the Employer Associations). Employers 

any of whose employees are covered by 

the Fund, are parties in interest with 

respect to the Fund, pursuant to section 

3(14)(C) of the Act. The UBCJA is a 

party in interest with respect to the 

Fund, pursuant to section 3(14)(D) of 

the Act, as an employee organization 

any of whose members are covered by 

such Fund. 

5. The Board has the authority to 

invest the assets of the Fund. The Board 

and the members of the Board, as 

persons who have investment discretion 

over the assets of the Fund, are 

fiduciaries with respect to the Fund, 

pursuant to section 3(21)(A) of the Act. 

As a fiduciaries of the Fund, the Board 

and the members of the Board are also 

parties in interest with respect to such 

Fund, pursuant to section 3(14)(A) of 

the Act. 

The Board consists of six (6) labor 

representatives and six (6) management 

representatives. Among the labor 

representatives serving on the Board are 

Joseph Power (Mr. Power), Thomas 

Flynn, Steve Tewksbury, Charles 

MacFarlane, Richard Pedi (Mr. Pedi), 

and Richard Scaramozza. All of the 

labor representatives on the Board are 

Union employees and members of 

various locals affiliated with the Union. 

Mr. Power, one of the labor 

representatives on the Board, also serves 

on the Executive Board of the Union. 

The representatives of management 

serving on the Board are Donald 

MacKinnon (Mr. MacKinnon), Tom 

Gunning, III, George Allen (Mr. Allen), 

William Fitzgerald, Christopher Pennie, 

and Mark DeNapoli (Mr. DeNapoli). 

It is represented that the Board, and 

more specifically the Finance 

Committee of the Board, each meet 

monthly, and at those meetings review 

the Fund’s finances for the month, 

including the Fund’s payments to the 

Union for rent and for the Fund’s share 

of taxes, insurance, and operating 

expenses (including repairs) in 

connection with the Lease of the Condo 

to the Fund. 

6. In the fiscal year ending September 

30, 2008, the Fund received employer 

contributions of $2,584,069, based on 

approximately 6.7 million hours of 

work. In addition, the Fund received 

other income of approximately 

$189,000. As of September 30, 2008, the 

Fund had expenses of $2,254,078 and 

total assets of $5,910,043. Included in 

the Fund’s total assets is a parcel of 

improved real property (the Existing 

Facility) located at 385 Market Street in 

the Brighton section of Boston, 

Massachusetts. 

7. Until February 2010 when 

construction on the Condo was 

completed, the Fund provided all of its 

classes and training in the Existing 

Facility. Purchased in 1975, from an 

unrelated third party, the Fund owns 

the Existing Facility free and clear of 

any mortgages. In February of 2010, the 

Fund entered into a purchase and sale 

agreement for the Existing Facility with 

Eli Jammal of Brookline Development, 

an unrelated party, for $1.5 million. It 

is represented that the sales price of the 

Existing Facility is $210,000 more than 

the net book value of the Existing 

Facility carried on the 2008 audited 

financial statement of the Fund. 

8. On February 1, 2008, the Union 

purchased for cash in the amount of 

$5.8 million, a parcel of improved real 

property (the Original Property) from an 

unrelated third party. The Original 

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1274 FR 68120. 

Property is described as a 48,000 square 

foot two-story building on a 64,000 

square foot lot located at 750 Dorchester 

Avenue, in Boston, Massachusetts. 

When purchased, the Union planned to 

renovate and expand the Original 

Property. 

9. The Union established the Building 

Corporation as a limited liability 

company for the purpose of developing 

the Original Property. In this regard, the 

Union contributed the Original Property 

to the Building Corporation in exchange 

for sole interest in the Building 

Corporation. The Building Corporation 

is a party in interest with respect to the 

Fund, pursuant to section 3(14)(G) of 

the Act, as 50 percent (50%) or more of 

the interests in the Building Corporation 

are owned by the Union. 

10. Construction on the renovation 

and expansion of the Original Property 

began in January 2009. As of February 

2010, the Union had completed the 

renovation and expansion of the 

Original Property and had separated the 

Building into two (2) condominium 

units. The Union owns one of the 

condominium units through its 

ownership of the Building Corporation, 

and the Building Corporation intends to 

sell the other condominium unit to the 

Fund. 

On February 24, 2009, the Fund filed 

an application (L–11558) with the 

Department seeking an administrative 

exemption to permit the Fund to 

purchase the Condo. The Department 

published a Notice of Proposed 

Exemption (the Notice) in the Federal 

Register on December 22, 2009.12 In this 

regard, appearing elsewhere in this 

issue of the Federal Register, the 

Department is publishing a final 

exemption for the purchase of the 

Condo by the Fund. 

11. In order that the Fund could hold 

its spring 2010 classes in the Condo and 

in order to establish a closing date with 

the prospective purchaser of the 

Existing Facility, the Board decided to 

pursue the option of renting the Condo 

to the Fund for a short term until the 

Fund could obtain financing to close on 

the purchase of the Condo and could 

obtain a final exemption from the 

Department to permit the Fund to 

purchase the Condo from the Building 

Corporation. 

12. It is represented that the Board 

retained its management co-counsel, Mr. 

Grosso of O’Reilly, Grosso & Gross, PC 

to represent the Fund in the leasing 

transaction. It is represented that Mr. 

Grosso is independent in that he has 

never represented the Building 

Corporation and does not provide legal 

services to the Union. Mr. Grosso is 

qualified in that he is an attorney 

representing employers and 

management in labor relations matters, 

primarily in the construction industry. 

It is represented that the 

responsibilities of Mr. Grosso, acting as 

attorney on behalf of the Fund, included 

obtaining an appraisal of the fair market 

rental value of the Condo. 

13. On January 15, 2010, Mr. Grosso 

obtained an appraisal of the fair market 

rental value of the Condo from CBRE/CB 

Richard Ellis (CBRE). James T. Moore 

(Mr. Moore), Senior Vice President/ 

Partner of CBRE and Harris E. Collins 

(Mr. Collins), Senior Vice President/ 

Partner of CBRE prepared an appraisal 

of the fair market rental value of the 

Condo. 

Mr. Moore is qualified in that he is an 

Associate Member of the Appraisal 

Institute, a member of the Real Estate 

Finance Association, Greater Boston 

Real Estate Board, and is a 

Massachusetts Certified General 

Appraiser. Mr. Collins is qualified in 

that, among other qualifications, he is a 

member of the Appraisal Institute 

(MAI), a member of the Counselors of 

Real Estate (CRE), a member of the Real 

Estate Finance Association-Greater 

Boston Real Estate Board, and is a 

Massachusetts Certified General 

Appraiser. 

Both Mr. Moore and Mr. Collins are 

independent in that neither has a 

present or prospective interest in or bias 

with respect to the property that is the 

subject of the appraisal and neither have 

a business or personal interest in or bias 

with respect to the parties involved. It 

is further represented that the 

engagement of Mr. Moore and Mr. 

Collins and the compensation for 

completing the appraisal assignment 

was not contingent upon the 

development or reporting of 

predetermined results. 

With regard to the Fund’s proposed 

leasing, CBRE established the fair 

market rental value of 35,112 square feet 

of space in the Building at $30 per 

square foot, triple net, as of January 15, 

2010, based on market rent comparables 

and on the return of cost approach. 

14. On January 22, 2010, the Board 

appointed a subcommittee to act on 

behalf of the Fund for the purpose of 

negotiating the terms of the Lease. The 

Fund subcommittee consisted of two (2) 

members: (a) Mr. Pedi, a labor 

representative on the Board, an 

employee of the Union, and a member 

of Local 218; and (b) Mr. Allen, a 

management representative on the 

Board, and a principal of Archer 

Corporation, a contributing employer to 

the Fund and a subcontractor of a 

subcontractor on the renovation and 

expansion of the Building. It is 

represented that the Fund subcommittee 

did not have authority to enter into the 

Lease but only to negotiate terms which 

were to be brought back to the full 

Board for approval. 

The Union also appointed a 

subcommittee to negotiate the terms of 

the Lease. The Union subcommittee 

consisted of four (4) members: (a) Jack 

Donahue, a member of the Union 

Executive Board in central 

Massachusetts; (b) Dave Palmisciano, a 

member of the Union Executive Board 

from Rhode Island; (c) Beth Conway, the 

Union’s comptroller; and (d) Mark 

Erlich (Mr. Erlich), the Executive 

Secretary/Treasurer and chief executive 

officer of the Union. 

15. It is represented that the 

responsibilities of Mr. Grosso, acting as 

attorney on behalf of the Fund, also 

included assisting in the negotiations of 

the Lease in order to ensure that the 

terms of the Lease were at least as 

favorable to the Fund as terms 

negotiated at arm’s length. Accordingly, 

on January 29, 2010, the Union 

subcommittee, the Fund subcommittee, 

and Mr. Grosso met to negotiate the 

terms of the Lease. 

16. The terms of the Lease negotiated 

by the Union subcommittee, the Fund 

subcommittee, and Mr. Grosso provide 

for a month-to-month leasing by the 

Fund from the Building Corporation of 

35,112 rentable square feet of space in 

the Building at a monthly rental rate of 

$73,150 (based on an annual rental of 

$25 per rentable square foot) for total 

rent of $877,800 per annum. Under the 

terms of the Lease, the Fund is 

responsible for a pro rata share of taxes, 

insurance, and operating expenses 

(including repairs) incurred by the 

Building Corporation with respect to the 

Building. The Lease can be terminated 

by either party giving not less than 

thirty (30) days prior written notice. The 

Lease which is the subject of this 

exemption and any other leasing 

arrangement of the Condo between the 

Fund and the Building Corporation and/ 

or the Union, if not terminated sooner, 

shall terminate on the date that the 

Fund closes on the purchase of the 

Condo from the Building Corporation; 

and the Fund shall have no obligation 

to pay rent to the Union or to the 

Building Corporation after the date of 

such termination. Under the terms of 

the Lease, in the event that the Fund 

purchases the Condo, the lesser of (a) 

$52,668 or (b) the product of (ii) 12 

percent (12%), times (ii) the aggregate 

rental payments paid by the Fund 

though the purchase date will be 

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13PTE 78–6 provides relief from section 406(a) of 

the Act for the leasing of real property (other than 

office space within the contemplation of section 

408(b)(2) of the Act) by an apprenticeship plan from 

an employee organization any of whose members’ 

work results in contributions being made to such 

apprenticeship plan. The Department is offering no 

view, herein, as to whether the Lease between the 

Fund and the Building Corporation and/or the 

Union was exempt from section 406(a) of the Act 

under the provisions of the class exemption PTE 

78–6. Further, the Department, herein, is not 

providing relief for any leasing between the Fund 

and the Building Corporation or the Union beyond 

that which is proposed herein. 

14The conditions of PTE 78–6 require that the 

terms of a leasing arrangement by an apprenticeship 

plan from an employee organization any of whose 

members’ work results in contributions being made 

to such apprenticeship plan must be arm’s length, 

the transaction must be appropriate and helpful in 

carrying out the purposes of such apprenticeship 

plan, and certain records must be maintained for a 

period of six years from the termination of such 

leasing arrangement. The Department is not offering 

any opinion, herein, as to whether the applicant has 

satisfied the conditions of PTE 78–6 with regard to 

the Lease between the Fund and the Building 

Corporation and/or the Union. 

credited to the Fund toward the 

purchase price of the Condo. 

17. The Building Corporation and the 

Fund entered into the Lease dated 

January 29, 2010. The Lease was signed 

by Mr. Erlich, on behalf of the Union, 

and Mr. MacKinnon on behalf of the 

Fund. 

18. It is represented that on February 

26, 2010, the terms of the Lease were 

presented to the full Board, including 

Mr. Pedi and Mr. Allen, who were also 

members of the Fund subcommittee that 

negotiated the terms of the Lease. With 

two (2) abstentions, the Board voted 

unanimously to accept the terms of the 

Lease. The two (2) abstaining members 

of the Board were Mr. Power, a labor 

representative on the Board who is also 

a member of the Union Executive Board, 

and Mr. DeNapoli, a management 

representative on the Board who is also 

the Executive Vice President and 

General Manager of Suffolk 

Construction, the construction manager 

responsible for the renovation and 

expansion of the Building, that was 

retained by the Union. It is represented 

that Mr. Power and Mr. DeNapoli 

recused themselves from all votes and 

matters before the Board relating to the 

Lease by the Fund of the Condo from 

the Building Corporation. 

19. As Mr. Grosso’s responsibilities, 

on behalf of the Fund, also included 

reviewing and approving any written 

agreement that the Fund would sign 

with respect to the leasing arrangement, 

it is represented that the Fund not 

deliver the February 2010 rent until 

March 1, 2010, after Mr. Grosso had 

reviewed and approved the terms of the 

Lease. 

20. Mr. Grosso is also responsible 

throughout the duration of the Lease for: 

(a) Monitoring the rent payments made 

by the Fund to ensure that such 

payments are consistent with the 

amount of rental specified under the 

terms of such Lease, (b) monitoring the 

payments of the Fund’s share of the 

expenses for taxes, insurance, and 

operating expenses (including repairs) 

to ensure that such payments represent 

a fair apportionment of such expenses; 

and (c) determining that the Fund has 

sufficient assets to pay the rental 

amount and its portion of taxes, 

insurance, and operating expenses 

(including repairs). In this regard, it is 

represented that Mr. Grosso reviewed 

the rent invoices, check register, and 

balance sheet of the Fund. Mr. Grosso 

also reviewed the preparation of the 

invoices and the allocation of expenses 

at the Building Corporation office. Mr. 

Grosso states that the monthly rent 

invoiced by the Building Corporation 

and paid by the Fund for each month— 

February through May 2010—was 

$73,150, the same amount as set forth in 

the Lease. The expenses allocated and 

billed to the Fund for February, March, 

and April 2010, pursuant to the triple 

net provision of the Lease were figured 

each month based on the fact that the 

Condo represents a 58 percent (58%) 

interest in the Building. Mr. Grosso 

states that this percentage interest is the 

same as described in the Condominium 

Deed. In the opinion of Mr. Grosso, this 

percentage is fair and reasonable. It is 

represented that the balance sheet of the 

Fund shows cash in the amount of 

$4,245,412.39 which to Mr. Grosso 

appears more than adequate for the 

Fund to be able to afford the rent, taking 

into consideration the training expenses 

of the Fund. It is represented that Mr. 

Grosso will continue to review the rent 

payments made by the Fund until the 

Lease is terminated. 

21. The applicant represents that in 

entering into the Lease with the 

Building Corporation, the Fund relied 

on the relief from the prohibitions of 

section 406(a) of the Act which is 

provided by PTE 78–6.13 It is further 

represented that at the time the Building 

Corporation and the Fund entered into 

the Lease of the Condo, all of the 

conditions specified in PTCE 78–6 were 

satisfied.14

In this regard, Mr. Krakow, acting as 

legal counsel for the Board, advised the 

Board that it was permissible for the 

Fund to enter into a short term lease 

with the Union for the Condo; provided 

that: (a) The transaction was on terms at 

least as favorable to the fund as an arm’s 

length transaction with an unrelated 

party would be; (b) the transaction was 

appropriate and helpful in carrying out 

the purposes for which the Fund was 

established and maintained; and (c) the 

Fund maintained records of the 

transaction for six (6) years from the 

termination of the transaction. Mr. 

Krakow further represents that in 

entering into the Lease, the Board, 

acting in good faith, relied on Mr. 

Krakow’s advice. 

Although PTE 78–6 provides relief 

from section 406(a) of the Act for the 

leasing of real property (other than 

office space within the contemplation of 

section 408(b)(2) of the Act), it is the 

view of the Department that PTE 78–6 

does not provide relief for the leasing of 

office space by an apprenticeship plan 

from a contributing employer, a wholly 

owned subsidiary of such employer, or 

from an employee organization any of 

whose members’ work results in 

contributions being made to such 

apprenticeship plan. 

The statutory exemption, pursuant to 

section 408(b)(2) of the Act, does 

provide relief from section 406(a) of the 

Act for contracting or making reasonable 

arrangements with a party in interest for 

office space, or legal, accounting, or 

other services necessary for the 

establishment or operation of the plan, 

if no more than reasonable 

compensation is paid therefore. The 

Department is offering no view, herein, 

as to whether the leasing of office space 

between the Fund and the Building 

Corporation and/or the Union would be 

exempt from section 406(a) of the Act, 

pursuant to the statutory exemption. 

Neither the class exemption, PTE 78– 

6, nor the statutory exemption, as set 

forth in section 408(b)(2) of the Act, 

provide relief from the prohibitions of 

section 406(b) of the Act. Accordingly, 

the applicant has requested an 

administrative exemption from section 

406(b)(1) and (b)(2) of the Act. In 

addition, as a result of the Fund’s 

occupancy of the Condo for the period 

starting on January 29, 2010, and ending 

on June 30, 2010, the applicant has 

requested retroactive relief to 

encompass that period. 

22. It is represented that the 

transaction which is the subject of this 

proposed exemption is feasible in that 

the Fund will maintain records for 

review by the Department and others to 

insure that the conditions of the 

exemption are satisfied. Further, it is 

represented that all the terms of the 

proposed transaction are known and 

have been disclosed in the Lease. 

23. The proposed exemption contains 

conditions which are designed to ensure 

the presence of adequate safeguards to 

protect the interests of the Fund 

regarding the subject transaction. In this 

regard, the fair market rental value of 

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15The Department is offering no view, herein, as 

to whether PTE 78–6 covers the new leasing 

agreement between the Building Corporation and 

the Fund for training space. Further, the 

Department is not opining as to whether the 

conditions of PTE 78–6 in connection with such 

leasing of training space to the Fund by the 

Building Corporation have been and will be 

satisfied. 

In addition, the Department is offering no view, 

herein, as to whether the leasing agreement between 

the Building Corporation and the Fund for office 

space is covered by the statutory exemption 

provided in section 408(b)(2) of the Act and the 

Department’s regulations, pursuant to 29 CFR 

2550.408b–2. Further, the Department is not 

opining as to whether the conditions of 408(b)(2) in 

connection with such leasing of office space to the 

Fund by the Building Corporation have been and 

will be satisfied. 

the Condo was determined by an 

independent, qualified appraiser. 

Further, Mr. Grosso, acting as attorney, 

for the Fund, assisted in the negotiation 

of the terms of the Lease, reviewed and 

approved the terms of such Lease to 

ensure that such terms are at least as 

favorable to the Fund as an arm’s length 

transaction with an unrelated party, and 

determined that such terms are fair and 

reasonable. In addition, Mr. Grosso has 

determined that the rent paid by the 

Fund for the period between February 

and May 2010 was the amount specified 

under the Lease, that the expenses for 

taxes, insurance, and operating expense 

(including repairs) have been fairly 

apportioned to the Fund, and that the 

Fund has sufficient assets to pay such 

rent and expenses. It is represented that 

Mr. Grosso will continue to review the 

payments made by the Fund in 

connection with the Lease which is the 

subject of this proposed exemption, 

until such Lease is terminated. 

24. The applicant maintains that the 

proposed transaction is in the interest of 

the participants and beneficiaries of the 

Fund, because the rent under the terms 

of the Lease is below the fair market 

rental value, as determined by CBRE. 

Further, it is represented that the month 

to month term of the Lease is favorable 

to the Fund, and that such month to 

month term is not commonly found in 

commercial leases. The applicant also 

maintains that by leasing and moving 

into the Condo prior to purchasing the 

Condo, the Fund was able to market the 

existing training facility for sale. 

25. With respect to the June 30, 2010, 

ending date for the Lease, it is 

represented that the Fund will send the 

Building Corporation a notice of 

termination of the Lease, effective June 

30, 2010. In addition, the Fund will 

request that the Building Corporation 

renegotiate the terms and enter into a 

new leasing arrangement of the Condo, 

starting on July 1, 2010, and continuing, 

until the Fund closes on the purchase of 

the Condo from the Building 

Corporation. In entering into the new 

leasing arrangement, the Fund will rely 

on the relief provided by the class 

exemption, PTE 78–6, for the leasing of 

training space by a plan from a party in 

interest and will rely on the relief 

provided by the statutory exemption, 

pursuant to 408(b)(2) of the Act, for the 

leasing of office space by a plan from a 

party in interest.15 It is represented that 

all of the labor representatives on the 

Board will recuse themselves from the 

discussions, negotiations, and approval 

of the new leasing arrangement. Further, 

Mr. DeNapoli and Mr. Allen, both of 

whom are management representatives 

on the Board, because of their 

involvement in the renovation and 

expansion of the Building, will recuse 

themselves from the discussions, 

negotiations and approval of the new 

leasing arrangement. 

25. In summary, the applicant 

represents that the proposed transaction 

meets the statutory criteria for an 

exemption under section 408(a) of the 

Act because: 

(a) Prior to entering into the Lease, the 

Fund sought legal advice from Mr. 

Krakow, acting as legal counsel on 

behalf of the Fund, who advised the 

Fund that it was permissible for the 

Fund to enter into a short term lease 

with the Building Corporation, and the 

Board relied on Mr. Krakow’s advice; 

(b) The Lease which is the subject of 

this exemption and any other leasing 

arrangement of the Condo between the 

Fund and the Building Corporation, if 

not terminated sooner, shall terminate 

on the date that the Fund closes on the 

purchase of the Condo from the 

Building Corporation; and the Fund 

shall have no obligation to pay rent to 

the Union or to the Building 

Corporation after the date of such 

termination; 

(c) before the Fund entered into the 

Lease of the Condo, Mr. Grosso, acting 

as attorney for the Fund, assisted in the 

negotiation of the terms of the Lease, 

reviewed and approved the terms of 

such Lease to ensure that such terms are 

at least as favorable to the Fund as an 

arm’s length transaction with an 

unrelated party, determined that such 

terms are fair and reasonable, and 

selected an independent, qualified 

appraiser to determine the fair market 

rental value of the Condo; 

(d) Mr. Grosso is also responsible 

throughout the duration of the Lease for: 

(1) Monitoring the rent payments made 

by the Fund to ensure that such 

payments are consistent with the 

amount of rental specified under the 

terms of such Lease, (2) monitoring the 

payments of the Fund’s share of the 

expenses for taxes, insurance, and 

operating expenses (including repairs) 

to ensure that such payments represent 

a fair apportionment of such expenses; 

(3) determining that the Fund has 

sufficient assets to pay the rental 

amount and its portion of taxes, 

insurance, and operating expenses 

(including repairs); and (4) monitoring, 

throughout the duration of the Lease, 

the terms of the Lease of the Condo 

between the Fund and the Building 

Corporation to ensure that the terms of 

the Lease are at all times satisfied; 

(e) the rent paid by the Fund for the 

Condo under the terms of the Lease is 

at no time greater than the fair market 

rental value of the Condo, as determined 

by an independent, qualified appraiser 

selected by Mr. Grosso; 

(f) under the provisions of the Lease, 

the subject transaction is on terms and 

at all times remains on terms that are at 

least as favorable to the Fund as those 

that would have been negotiated under 

similar circumstances at arm’s length 

with an unrelated third party; 

(g) the transaction is appropriate and 

helpful in carrying out the purposes for 

which the Fund is established or 

maintained; and 

(h) the Board maintains, or causes to 

be maintained within the United States 

for a period of six (6) years in a manner 

that is convenient and accessible for 

audit and examination, such records as 

are necessary to determine whether the 

conditions of this exemption have been 

met. 

Notice to Interested Persons 

Those persons who may be interested 

in the publication in the Federal 

Register of the Notice include all 

members of the Locals in the Boston 

area and all of the Employer 

Associations. 

It is represented that notification will 

be provided to all such interested 

persons by first class mail within fifteen 

(15) calendar days of the date of 

publication of the Notice in the Federal 

Register. Such mailing will contain a 

copy of the Notice, as it appears in the 

Federal Register on the date of 

publication, plus a copy of the 

supplemental statement, as required, 

pursuant to 29 CFR 2570.43(b)(2) of the 

Department’s regulations, which will 

advise all interested persons of the right 

to comment and to request a hearing. 

The Department must receive all 

written comments and requests for a 

hearing no later than forty-five (45) days 

from the date of the publication of the 

Notice in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Angelena C. Le Blanc of the Department, 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES

Federal Register / Vol. 75, No. 112 / Friday, June 11, 2010 / Notices 33355 

telephone (202) 693–8551. (This is not 

a toll-free number.) 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

4975(c)(2) of the Code does not relieve 

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions of the Act and/or 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, among other things, 

require a fiduciary to discharge his 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

section 404(a)(1)(b) of the Act; nor does 

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) Before an exemption may be 

granted under section 408(a) of the Act 

and/or section 4975(c)(2) of the Code, 

the Department must find that the 

exemption is administratively feasible, 

in the interests of the plan and of its 

participants and beneficiaries, and 

protective of the rights of participants 

and beneficiaries of the plan; 

(3) The proposed exemptions, 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; and 

(4) The proposed exemptions, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in each 

application are true and complete, and 

that each application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC, this 7th day of 

June, 2010. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2010–14023 Filed 6–10–10; 8:45 am] 

BILLING CODE 4510–29–P 

LEGAL SERVICES CORPORATION 

Sunshine Act Meeting 

TIME AND DATE: The Board of Directors 

of the Legal Services Corporation will 

meet by telephone on June 15, 2010. 

The meeting will begin at 12 p.m., e.s.t., 

and continue until conclusion of the 

Board’s agenda. 

LOCATION: Legal Services Corporation, 

3333 K Street, NW., 3rd Floor 

Conference Center, Washington, DC, 

20007. 

PUBLIC OBSERVATION: For all meetings 

and portions thereof open to public 

observation, members of the public that 

wish to listen to the proceedings may do 

so by following the telephone call-in 

directions given below. You are asked to 

keep your telephone muted to eliminate 

background noises. From time to time 

the Chairman may solicit comments 

from the public. 

CALL-IN DIRECTIONS FOR OPEN SESSION(S): 

• Call toll-free number: 1- (866) 451– 

4981; 

• When prompted, enter the 

following numeric pass code: 

5907707348; 

• When connected to the call, please 

‘‘Mute’’ your telephone immediately. 

STATUS OF MEETING: Open. 

Matters To Be Considered 

Open Session 

1. Approval of agenda. 

2. Consider and act on revisions to the 

LSC Accounting Guide for LSC 

Recipients. 

3. Public comment. 

4. Consider and act on other business. 

5. Consider and act on adjournment of 

meeting. 

CONTACT PERSON FOR INFORMATION: 

Katherine Ward, Executive Assistant to 

the Vice President for Legal Affairs, at 

(202) 295–1500. Questions may be sent 

by electronic mail to 

FR_NOTICE_QUESTIONS@lsc.gov. 

SPECIAL NEEDS: Upon request, meeting 

notices will be made available in 

alternate formats to accommodate visual 

and hearing impairments. Individuals 

who have a disability and need an 

accommodation to attend the meeting 

may notify Katherine Ward at (202) 

295–1500 or 

FR_NOTICE_QUESTIONS@lsc.gov. 

Dated: June 8, 2010. 

Patricia D. Batie, 

Corporate Secretary. 

[FR Doc. 2010–14171 Filed 6–9–10; 4:15 pm] 

BILLING CODE 7050–01–P 

NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

Records Schedules; Availability and 

Request for Comments 

AGENCY: National Archives and Records 

Administration (NARA). 

ACTION: Notice of availability of 

proposed records schedules; request for 

comments. 

SUMMARY: The National Archives and 

Records Administration (NARA) 

publishes notice at least once monthly 

of certain Federal agency requests for 

records disposition authority (records 

schedules). Once approved by NARA, 

records schedules provide mandatory 

instructions on what happens to records 

when no longer needed for current 

Government business. They authorize 

the preservation of records of 

continuing value in the National 

Archives of the United States and the 

destruction, after a specified period, of 

records lacking administrative, legal, 

research, or other value. Notice is 

published for records schedules in 

which agencies propose to destroy 

records not previously authorized for 

disposal or reduce the retention period 

of records already authorized for 

disposal. NARA invites public 

comments on such records schedules, as 

required by 44 U.S.C. 3303a(a). 

DATES: Requests for copies must be 

received in writing on or before July 12, 

2010. Once the appraisal of the records 

is completed, NARA will send a copy of 

the schedule. NARA staff usually 

prepare appraisal memorandums that 

contain additional information 

concerning the records covered by a 

proposed schedule. These, too, may be 

requested and will be provided once the 

appraisal is completed. Requesters will 

be given 30 days to submit comments. 

ADDRESSES: You may request a copy of 

any records schedule identified in this 

notice by contacting the Life Cycle 

Management Division (NWML) using 

one of the following means: 

Mail: NARA (NWML), 8601 Adelphi 

Road, College Park, MD 20740–6001. 

E-mail: request.schedule@nara.gov. 

FAX: 301–837–3698. 

Requesters must cite the control 

number, which appears in parentheses 

after the name of the agency which 

submitted the schedule, and must 

provide a mailing address. Those who 

desire appraisal reports should so 

indicate in their request. 

FOR FURTHER INFORMATION CONTACT: 

Laurence Brewer, Director, Life Cycle 

Management Division (NWML), 

National Archives and Records 

Administration, 8601 Adelphi Road, 

WReier-Aviles on DSKGBLS3C1PROD with NOTICES