8992 Federal Register / Vol. 74, No. 38 / Friday, February 27, 2009 / Notices 

1For purposes of this exemption, references to 

section 406 of ERISA should be read to refer as well 

to the corresponding provisions of section 4975 of 

the Code. 

2This exemption does not address tax issues. The 

Department has been informed by the Internal 

Revenue Service and the Department of the 

Treasury that they are considering providing 

limited relief from the requirements of sections 

72(t)(4), 401(a)(9), and 4974 of the Code with 

respect to retirement plans that hold Auction Rate 

Securities. The Department has also been informed 

by the Internal Revenue Service that if Auction Rate 

http://www.regulations.gov under 

docket number OSHA–2008–0049. 

Darrin A. King, 

Departmental Clearance Officer. 

[FR Doc. E9–4234 Filed 2–26–09; 8:45 am] 

BILLING CODE 4510–26–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Prohibited Transaction Exemptions 

and Grant of Individual Exemptions 

Involving: D–11481, CitiGroup Inc. 

2009–06; D–11484, Robert W. Baird & 

Co. Incorporated, 2009–07; D–11490 

Raymond James & Associates, Inc., 

2009–08; and Northwestern Mutual 

Investment Services, LLC 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Grant of Individual Exemptions. 

SUMMARY: This document contains 

exemptions issued by the Department of 

Labor (the Department) from certain of 

the prohibited transaction restrictions of 

the Employee Retirement Income 

Security Act of 1974 (ERISA or the Act) 

and/or the Internal Revenue Code of 

1986 (the Code). 

FOR FURTHER INFORMATION CONTACT: 

Chris Motta of the Department, 

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

a toll-free number.) 

SUPPLEMENTARY INFORMATION: A notice 

was published in the Federal Register of 

the pendency before the Department of 

a proposal to grant such exemption. The 

notice set forth a summary of facts and 

representations contained in the 

application for exemption and referred 

interested persons to the application for 

a complete statement of the facts and 

representations. The application has 

been available for public inspection at 

the Department in Washington, DC. The 

notice also invited interested persons to 

submit comments on the requested 

exemption to the Department. In 

addition the notice stated that any 

interested person might submit a 

written request that a public hearing be 

held (where appropriate). The applicant 

has represented that it has complied 

with the requirements of the notification 

to interested persons. No requests for a 

hearing were received by the 

Department. Public comments were 

received by the Department as described 

in the granted exemption. 

The notice of proposed exemption 

was issued and the exemption is being 

granted solely by the Department 

because, effective December 31, 1978, 

section 102 of Reorganization Plan No. 

4 of 1978, 5 U.S.C. App. 1 (1996), 

transferred the authority of the Secretary 

of the Treasury to issue exemptions of 

the type proposed to the Secretary of 

Labor. 

Statutory Findings 

In accordance with section 408(a) of 

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

Code and the procedures set forth in 29 

CFR Part 2570, Subpart B (55 FR 32836, 

32847, August 10, 1990) and based upon 

the entire record, the Department makes 

the following findings: 

(a) The exemption is administratively 

feasible; 

(b) The exemption is in the interests 

of the plan and its participants and 

beneficiaries; and 

(c) The exemption is protective of the 

rights of the participants and 

beneficiaries of the plan. 

Citigroup, Inc., Located in New York, 

New York 

[Prohibited Transaction Exemption 2009–06; 

Exemption Application Number D–11481] 

Exemption 

Section I. Transactions Involving Plans 

Described in Both Title I and Title II of 

ERISA 

The restrictions of section 

406(a)(1)(A) through (D) and section 

406(b) of ERISA, and the taxes imposed 

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

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

Code, shall not apply, effective February 

1, 2008, to the following transactions, if 

the conditions set forth in section III 

have been met: 1

(a) The sale or exchange of an Auction 

Rate Security (as defined in section IV 

(b)) by a Plan (as defined in section 

IV(h)) to the Sponsor (as defined in 

section IV (g)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Plan in 

connection with the holding of an 

Auction Rate Security by the Plan, from: 

(1) Citigroup, Inc. or an affiliate 

(Citigroup); (2) an Introducing Broker 

(as defined in section IV (f)); or (3) a 

Clearing Broker (as defined in section IV 

(d)); where the loan is: (i) repaid in 

accordance with its terms; and (ii) 

guaranteed by the Plan Sponsor. 

II. Transactions Involving Plans 

Described in Title II of ERISA Only 

The sanctions resulting from the 

application of section 4975(a) and (b) of 

the Code, by reason of section 4975(c)(1) 

of the Code, shall not apply, effective 

February 1, 2008, to the following 

transactions, if the conditions set forth 

in section III have been met: 

(a) The sale or exchange of an Auction 

Rate Security by a Title II Only Plan (as 

defined in section IV(i)) to the 

Beneficial Owner (as defined in section 

IV(c)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Title II Only 

Plan in connection with the holding of 

an Auction Rate Security by the Title II 

Only Plan, from: (1) Citigroup; (2) an 

Introducing Broker; or (3) a Clearing 

Broker; where the loan is: (i) repaid in 

accordance with its terms and; (ii) 

guaranteed by the Beneficial Owner. 

III. Conditions 

(a) Citigroup acted as a broker or 

dealer, non-bank custodian, or fiduciary 

in connection with the acquisition or 

holding of the Auction Rate Security 

that is the subject of the transaction; 

(b) For transactions involving a Plan 

(including a Title II Only Plan) not 

sponsored by Citigroup for its own 

employees, the decision to enter into the 

transaction is made by a Plan fiduciary 

who is Independent (as defined in 

section IV(e)) of Citigroup. 

Notwithstanding the foregoing, an 

employee of Citigroup who is the 

Beneficial Owner of a Title II Only Plan 

may direct such Plan to engage in a 

transaction described in section II, if all 

of the other conditions of this section III 

have been met; 

(c) The last auction for the Auction 

Rate Security was unsuccessful; 

(d) The Plan does not waive any rights 

or claims in connection with the loan or 

sale as a condition of engaging in the 

above-described transaction; 

(e) The Plan does not pay any fees or 

commissions in connection with the 

transaction; 

(f) The transaction is not part of an 

arrangement, agreement or 

understanding designed to benefit a 

party in interest; 

(g) With respect to any sale described 

in section I (a) or section II(a): 

(1) The sale is for no consideration 

other than cash payment against prompt 

delivery of the Auction Rate Security; 

and 

(2) For purposes of the sale, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 2


rwilkins on PROD1PC63 with NOTICES2
Federal Register / Vol. 74, No. 38 / Friday, February 27, 2009 / Notices 8993 

Securities are purchased from a Plan in a 

transaction described in sections I and II at a price 

that exceeds the fair market value of those 

securities, then the excess value would be treated 

as a contribution for purposes of applying 

applicable contribution and deduction limits under 

sections 219, 404, 408, and 415 of the Code. 

3The Department notes that the Act’s general 

standards of fiduciary conduct also would apply to 

the transactions described herein. In this regard, 

section 404 requires, among other things, that a 

fiduciary discharge his duties respecting a plan 

solely in the interest of the plan’s participants and 

beneficiaries and in a prudent manner. 

Accordingly, a plan fiduciary must act prudently 

with respect to, among other things: (1) The 

decision to exchange an Auction Rate Security for 

a Delivered Security; and (2) the negotiation of the 

terms of such exchange (or a cash sale or loan 

described above), including the pricing of such 

securities. The Department further emphasizes that 

it expects plan fiduciaries, prior to entering into any 

of the transactions, to fully understand the risks 

associated with these types of transactions 

following disclosure by Citigroup of all relevant 

information. 

4For purposes of this exemption, references to 

section 406 of ERISA should be read to refer as well 

to the corresponding provisions of section 4975 of 

the Code. 

(h) With respect to an in-kind 

exchange described in section (I)(a) or 

section II(a), the exchange involves the 

transfer by a Plan of an Auction Rate 

Security in return for a Delivered 

Security, as such term is defined in 

section IV(j), where: 

(1) The exchange is unconditional; 

(2) For purposes of the exchange, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 

(3) The Delivered Security is valued at 

fair market value, as determined at the 

time of the in-kind exchange by a third 

party pricing service or other objective 

source; 

(4) The Delivered Security is 

appropriate for the Plan and a security 

that the Plan is otherwise permitted to 

hold under applicable law; 3 and 

(5) The total value of the Auction Rate 

Security (i.e., par plus any accrued but 

unpaid interest) is equal to the fair 

market value of the Delivered Security; 

(i) With respect to a loan described in 

section I(b) or II(b): 

(1) The loan is documented in a 

written agreement containing all of the 

material terms of the loan, including the 

consequences of default; 

(2) The Plan does not pay an interest 

rate that exceeds one of the following 

three rates as of the commencement of 

the loan: 

(A) The coupon rate for the Auction 

Rate Security; 

(B) The Federal Funds Rate; or 

(C) The Prime Rate; 

(3) The loan is unsecured; and 

(4) The amount of the loan is not more 

than the total par value of the Auction 

Rate Securities held by the Plan. 

IV. Definitions 

(a) The term ‘‘affiliate’’ means: any 

person directly or indirectly, through 

one or more intermediaries, controlling, 

controlled by, or under common control 

with such other person; 

(b) The term ‘‘Auction Rate Security’’ 

or ‘‘ARS’’ means a security: 

(1) That is either a debt instrument 

(generally with a long-term nominal 

maturity) or preferred stock; and 

(2) With an interest rate or dividend 

that is reset at specific intervals through 

a Dutch auction process; 

(c) The term ‘‘Beneficial Owner’’ 

means: the individual for whose benefit 

the Title II Only Plan is established and 

includes a relative or family trust with 

respect to such individual; 

(d) The term ‘‘Clearing Broker’’ 

means: a member of a securities 

exchange that acts as a liaison between 

an investor and a clearing corporation 

and that helps to ensure that a trade is 

settled appropriately, that the 

transaction is successfully completed 

and that is responsible for maintaining 

the paper work associated with the 

clearing and executing of a transaction; 

(e) The term ‘‘Independent’’ means a 

person who is: (1) not Citigroup or an 

affiliate; and (2) not a relative (as 

defined in ERISA section 3(15)) of the 

party engaging in the transaction; 

(f) The term ‘‘Introducing Broker’’ 

means: a registered broker that is able to 

perform all the functions of a broker 

except for the ability to accept money, 

securities, or property from a customer; 

(g) The term ‘‘Sponsor’’ means: a plan 

sponsor as described in section 3(16)(B) 

of the Act and any Affiliates; 

(h) The term ‘‘Plan’’ means: any plan 

described in section 3(3) of the Act and/ 

or section 4975(e)(1) of the Code; 

(i) The term ‘‘Title II Only Plan’’ 

means: any plan described in section 

4975(e)(1) of the Code which is not an 

employee benefit plan covered by Title 

I of ERISA; 

(j) The term ‘‘Delivered Security 

means a security that is: (1) Listed on a 

national securities exchange (excluding 

OTC Bulletin Board-eligible securities 

and Pink Sheets-quoted securities); or 

(2) a U.S. Treasury obligation; or (3) A 

fixed income security that has a rating 

at the time of the exchange that is in one 

of the two highest generic rating 

categories from an independent 

nationally recognized statistical rating 

organization (e.g., a highly rated 

municipal bond or a highly rated 

corporate bond); or (4) A certificate of 

deposit insured by the Federal Deposit 

Insurance Corporation. Notwithstanding 

the above, the term ‘‘Delivered 

Security’’ shall not include any Auction 

Rate Security, or any related Auction 

Rate Security, including derivatives or 

securities materially comprised of 

Auction Rate Securities or any illiquid 

securities. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption, refer to the Notice of 

Proposed Exemption published in the 

Federal Register on November 7, 2008 

at 73 FR 66260. 

FOR FURTHER INFORMATION CONTACT: 

Chris Motta of the Department, 

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

a toll-free number.) 

Robert W. Baird & Co. Incorporated, 

Located in Milwaukee, Wisconsin 

[Prohibited Transaction Exemption 2009–07; 

Exemption Application Number D–11484] 

Exemption 

Section I. Transactions Involving Plans 

Described In Both Title I and Title II of 

ERISA 

The restrictions of section 

406(a)(1)(A) through (D) and section 

406(b) of ERISA, and the taxes imposed 

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

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

Code, shall not apply, effective February 

1, 2008, to the following transactions, if 

the conditions set forth in section III 

have been met: 4

(a) The sale or exchange of an Auction 

Rate Security (as defined in section 

IV(b)) by a Plan (as defined in section 

IV(h)) to the Sponsor (as defined in 

section IV(g)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Plan in 

connection with the Plan’s holding of an 

Auction Rate Security, from: (1) Robert 

W. Baird & Co. Incorporated or any of 

its current or future affiliates or 

subsidiaries (Baird); (2) an Introducing 

Broker (as defined in section IV(f)); or 

(3) a Clearing Broker (as defined in 

section IV(d)); where the loan is: (i) 

repaid in accordance with its terms; and 

(ii) guaranteed by the Plan Sponsor. 

II. Transactions Involving Plans 

Described In Title II of ERISA Only 

The sanctions resulting from the 

application of section 4975(a) and (b) of 

the Code, by reason of section 4975(c)(1) 

of the Code, shall not apply, effective 

February 1, 2008, to the following 

transactions, if the conditions set forth 

in section III have been met: 

(a) The sale or exchange of an Auction 

Rate Security by a Title II Only Plan (as 

defined in section IV(i)) to the 

Beneficial Owner (as defined in section 

IV(c)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Title II Only 


rwilkins on PROD1PC63 with NOTICES2
8994 Federal Register / Vol. 74, No. 38 / Friday, February 27, 2009 / Notices 

5This exemption does not address tax issues. The 

Department has been informed by the Internal 

Revenue Service and the Department of the 

Treasury that they are considering providing 

limited relief from the requirements of sections 

72(t)(4), 401(a)(9), and 4974 of the Code with 

respect to retirement plans that hold Auction Rate 

Securities. The Department has also been informed 

by the Internal Revenue Service that if Auction Rate 

Securities are purchased from a Plan in a 

transaction described in sections I and II at a price 

that exceeds the fair market value of those 

securities, then the excess value would be treated 

as a contribution for purposes of applying 

applicable contribution and deduction limits under 

sections 219, 404, 408, and 415 of the Code. 

6The Department notes that the Act’s general 

standards of fiduciary conduct also would apply to 

the transactions described herein. In this regard, 

section 404 requires, among other things, that a 

fiduciary discharge his duties respecting a plan 

solely in the interest of the plan’s participants and 

beneficiaries and in a prudent manner. 

Accordingly, a plan fiduciary must act prudently 

with respect to, among other things: (1) The 

decision to exchange an Auction Rate Security for 

a Delivered Security; and (2) the negotiation of the 

terms of such exchange (or a cash sale or loan 

described above), including the pricing of such 

securities. The Department further emphasizes that 

it expects plan fiduciaries, prior to entering into any 

of the transactions, to fully understand the risks 

associated with these types of transactions 

following disclosure by Baird of all relevant 

information. 

Plan in connection with the Plan’s 

holding of an Auction Rate Security, 

from: (1) Baird; (2) an Introducing 

Broker; or (3) a Clearing Broker; where 

the loan is: (i) repaid in accordance with 

its terms and; (ii) guaranteed by the 

Beneficial Owner. 

III. Conditions 

(a) Baird acted as a broker or dealer, 

non-bank custodian, or fiduciary in 

connection with the acquisition or 

holding of the Auction Rate Security 

that is the subject of the transaction; 

(b) For transactions involving a Plan 

(including a Title II Only Plan) not 

sponsored by Baird for its own 

employees, the decision to enter into the 

transaction is made by a Plan fiduciary 

who is Independent (as defined in 

section IV (e)) of Baird. Notwithstanding 

the foregoing, an employee of Baird who 

is the Beneficial Owner of a Title II Only 

Plan may direct such Plan to engage in 

a transaction described in section II, if 

all of the other conditions of this section 

III have been met; 

(c) The last auction for the Auction 

Rate Security was unsuccessful; 

(d) The Plan does not waive any rights 

or claims in connection with the loan or 

sale as a condition of engaging in the 

transaction; 

(e) The Plan does not pay any fees or 

commissions in connection with the 

transaction; 

(f) The transaction is not part of an 

arrangement, agreement or 

understanding designed to benefit a 

party in interest; 

(g) With respect to any sale described 

in section I (a) or section II (a): 

(1) The sale is for no consideration 

other than cash payment against prompt 

delivery of the Auction Rate Security; 

and 

(2) For purposes of the sale, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 5

(h) With respect to an in-kind 

exchange described in section (I)(a) or 

section II(a), the exchange involves the 

transfer by a Plan of an Auction Rate 

Security in return for a Delivered 

Security, as such term is defined in 

section IV(j), where: 

(1) The exchange is unconditional; 

(2) For purposes of the exchange, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 

(3) The Delivered Security is valued at 

fair market value, as determined at the 

time of the in-kind exchange by a third 

party pricing service or other objective 

source; 

(4) The Delivered Security is 

appropriate for the Plan and a security 

that the Plan is otherwise permitted to 

hold under applicable law; 6 and 

(5) The total value of the Auction Rate 

Security (i.e., par plus any accrued but 

unpaid interest) is equal to the fair 

market value of the Delivered Security; 

(i) With respect to a loan described in 

section I(b) or II(b): 

(1) The loan is documented in a 

written agreement containing all of the 

material terms of the loan, including the 

consequences of default; 

(2) The Plan does not pay an interest 

rate that exceeds one of the following 

three rates as of the commencement of 

the loan: 

(A) The coupon rate for the Auction 

Rate Security; 

(B) The Federal Funds Rate; or 

(C) The Prime Rate; 

(3) The loan is unsecured; and 

(4) The amount of the loan is not more 

than the total par value of the Auction 

Rate Securities held by the Plan. 

IV. Definitions 

(a) The term ‘‘affiliate’’ means any 

person directly or indirectly, through 

one or more intermediaries, controlling, 

controlled by, or under common control 

with such other person; 

(b) The term ‘‘Auction Rate Security’’ 

or ‘‘ARS’’ means a security: 

(1) That is either a debt instrument 

(generally with a long-term nominal 

maturity) or preferred stock; and 

(2) With an interest rate or dividend 

that is reset at specific intervals through 

a Dutch auction process; 

(c) The term ‘‘Beneficial Owner’’ 

means: the individual for whose benefit 

the Title II Only Plan is established and 

includes a relative or family trust with 

respect to such individual; 

(d) The term ‘‘Clearing Broker’’ 

means: a member of a securities 

exchange that acts as a liaison between 

an investor and a clearing corporation 

and that helps to ensure that a trade is 

settled appropriately, that the 

transaction is successfully completed 

and that is responsible for maintaining 

the paperwork associated with the 

clearing and executing of a transaction; 

(e) The term ‘‘Independent’’ means a 

person who is: (1) not Baird or an 

affiliate; and (2) not a relative (as 

defined in ERISA section 3(15)) of the 

party engaging in the transaction; 

(f) The term ‘‘Introducing Broker’’ 

means: a registered broker that is able to 

perform all the functions of a broker 

except for the ability to accept money, 

securities, or property from a customer; 

(g) The term ‘‘Sponsor’’ means: a plan 

sponsor as described in section 3(16)(B) 

of the Act and any Affiliates; 

(h) The term ‘‘Plan’’ means: any plan 

described in section 3(3) of the Act and/ 

or section 4975(e)(1) of the Code; 

(i) The term ‘‘Title II Only Plan’’ 

means: any plan described in section 

4975(e)(1) of the Code which is not an 

employee benefit plan covered by Title 

I of ERISA; 

(j) The term ‘‘Delivered Security 

means a security that is: (1) Listed on a 

national securities exchange (excluding 

OTC Bulletin Board-eligible securities 

and Pink Sheets-quoted securities); or 

(2) a U.S. Treasury obligation; or (3) A 

fixed income security that has a rating 

at the time of the exchange that is in one 

of the two highest generic rating 

categories from an independent 

nationally recognized statistical rating 

organization (e.g., a highly rated 

municipal bond or a highly rated 

corporate bond); or (4) A certificate of 

deposit insured by the Federal Deposit 

Insurance Corporation. Notwithstanding 

the above, the term ‘‘Delivered 

Security’’ shall not include any Auction 

Rate Security, or any related Auction 

Rate Security, including derivatives or 

securities materially comprised of 

Auction Rate Securities or any illiquid 

securities. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption, refer to the Notice of 

Proposed Exemption published in the 

Federal Register on November 7, 2008 

at 73 FR 66263. 

FOR FURTHER INFORMATION CONTACT: 

Chris Motta of the Department, 

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

a toll-free number.) 


rwilkins on PROD1PC63 with NOTICES2
Federal Register / Vol. 74, No. 38 / Friday, February 27, 2009 / Notices 8995 

7For purposes of this exemption, references to 

section 406 of ERISA should be read to refer as well 

to the corresponding provisions of section 4975 of 

the Code. 

8This exemption does not address tax issues. The 

Department has been informed by the Internal 

Revenue Service and the Department of the 

Treasury that they are considering providing 

limited relief from the requirements of sections 

72(t)(4), 401(a)(9), and 4974 of the Code with 

respect to retirement plans that hold Auction Rate 

Securities. The Department has also been informed 

by the Internal Revenue Service that if Auction Rate 

Securities are purchased from a Plan in a 

transaction described in sections I and II at a price 

that exceeds the fair market value of those 

securities, then the excess value would be treated 

as a contribution for purposes of applying 

applicable contribution and deduction limits under 

sections 219, 404, 408, and 415 of the Code. 

9The Department notes that the Act’s general 

standards of fiduciary conduct apply to the 

transactions described herein. In this regard, section 

404 requires, among other things, that a fiduciary 

discharge his duties respecting a plan solely in the 

interest of the plan’s participants and beneficiaries 

and in a prudent manner. Accordingly, a plan 

fiduciary must act prudently with respect to, among 

other things: (1) The decision to exchange an 

Auction Rate Security for a Delivered Security; and 

(2) the negotiation of the terms of such exchange 

(or a cash sale or loan described above), including 

the pricing of such securities. The Department 

further emphasizes that it expects plan fiduciaries, 

prior to entering into any of the transactions, to 

fully understand the risks associated with these 

types of transactions following disclosure by 

Raymond James of all relevant information. 

Raymond James & Associates, Inc., 

Located in St. Petersburg, Florida. 

[Prohibited Transaction Exemption 2009–08; 

Exemption Application Number D–11490] 

Exemption 

Section I. Transactions Involving Plans 

Described In Both Title I and Title II of 

ERISA 

The restrictions of section 

406(a)(1)(A) through (D) and section 

406(b) of ERISA, and the sanctions 

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

the Code, by reason of section 4975(c)(1) 

of the Code, shall not apply, effective 

February 1, 2008, to the following 

transactions, if the conditions set forth 

in section III have been met: 7

(a) The sale or exchange of an Auction 

Rate Security (as defined in section IV 

(b)) by a Plan (as defined in section 

IV(h)) to the Sponsor (as defined in 

section IV (g)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Plan in 

connection with the Plan’s holding of an 

Auction Rate Security, from: (1) 

Raymond James & Associates, Inc. or 

any of its current or future affiliates or 

subsidiaries (Raymond James); (2) an 

Introducing Broker (as defined in 

section IV (f)); or (3) a Clearing Broker 

(as defined in section IV (d)); where the 

loan is: (i) repaid in accordance with its 

terms; and (ii) guaranteed by the Plan 

Sponsor. 

II. Transactions Involving Plans 

Described In Title II of ERISA Only 

The sanctions resulting from the 

application of section 4975(a) and (b) of 

the Code, by reason of section 4975(c)(1) 

of the Code, shall not apply, effective 

February 1, 2008, to the following 

transactions, if the conditions set forth 

in section III have been met: 

(a) The sale or exchange of an Auction 

Rate Security by a Title II Only Plan (as 

defined in section IV(i)) to the 

Beneficial Owner (as defined in section 

IV(c)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Title II Only 

Plan in connection with the Plan’s 

holding of an Auction Rate Security, 

from: (1) Raymond James; (2) an 

Introducing Broker; or (3) a Clearing 

Broker; where the loan is: (i) repaid in 

accordance with its terms and; (ii) 

guaranteed by the Beneficial Owner. 

III. Conditions 

(a) Raymond James acted as a broker 

or dealer, non-bank custodian, or 

fiduciary in connection with the 

acquisition or holding of the Auction 

Rate Security that is the subject of the 

transaction; 

(b) For transactions involving a Plan 

(including a Title II Only Plan) not 

sponsored by Raymond James for its 

own employees, the decision to enter 

into the transaction is made by a Plan 

fiduciary who is Independent (as 

defined in section IV(e)) of Raymond 

James. Notwithstanding the foregoing, 

an employee of Raymond James who is 

the Beneficial Owner of a Title II Only 

Plan may direct such Plan to engage in 

a transaction described in section II, if 

all of the other conditions of this section 

III have been met; 

(c) The last auction for the Auction 

Rate Security was unsuccessful; 

(d) The Plan does not waive any rights 

or claims in connection with the loan or 

sale as a condition of engaging in the 

transaction; 

(e) The Plan does not pay any fees or 

commissions in connection with the 

transaction; 

(f) The transaction is not part of an 

arrangement, agreement or 

understanding designed to benefit a 

party in interest; 

(g) With respect to any sale described 

in section I(a) or section II(a): 

(1) The Sale is for no consideration 

other than cash payment against prompt 

delivery of the Auction Rate Security; 

and 

(2) For purposes of the sale, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 8

(h) With respect to an in-kind 

exchange described in section (I)(a) or 

section II(a), the exchange involves the 

transfer by a Plan of an Auction Rate 

Security in return for a Delivered 

Security, as such term is defined in 

section IV(j), where: 

(1) The exchange is unconditional; 

(2) For purposes of the exchange, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 

(3) The Delivered Security is valued at 

fair market value, as determined at the 

time of the in-kind exchange by a third 

party pricing service or other objective 

source; 

(4) The Delivered Security is 

appropriate for the Plan and a security 

that the Plan is otherwise permitted to 

hold under applicable law; 9 and 

(5) The total value of the Auction Rate 

Security (i.e., par plus any accrued but 

unpaid interest) is equal to the fair 

market value of the Delivered Security; 

(i) With respect to a loan described in 

section I(b) or II(b): 

(1) The loan is documented in a 

written agreement containing all of the 

material terms of the loan, including the 

consequences of default; 

(2) The Plan does not pay an interest 

rate that exceeds one of the following 

three rates as of the commencement of 

the loan: 

(A) The coupon rate for the Auction 

Rate Security; 

(B) The Federal Funds Rate; or 

(C) The Prime Rate; 

(3) The loan is unsecured; and 

(4) The amount of the loan is not more 

than the total par value of the Auction 

Rate Securities held by the Plan. 

IV. Definitions 

(a) The term ‘‘affiliate’’ means any 

person directly or indirectly, through 

one or more intermediaries, controlling, 

controlled by, or under common control 

with such other person; 

(b) The term ‘‘Auction Rate Security’’ 

or ‘‘ARS’’ means a security: 

(1) That is either a debt instrument 

(generally with a long-term nominal 

maturity) or preferred stock; and 

(2) With an interest rate or dividend 

that is reset at specific intervals through 

a Dutch auction process; 

(c) The term ‘‘Beneficial Owner’’ 

means: the individual for whose benefit 

the Title II Only Plan is established and 

includes a relative or family trust with 

respect to such individual; 

(d) The term ‘‘Clearing Broker’’ 

means: a member of a securities 

exchange that acts as a liaison between 

an investor and a clearing corporation 

and that helps to ensure that a trade is 

settled appropriately, that the 

transaction is successfully completed 


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8996 Federal Register / Vol. 74, No. 38 / Friday, February 27, 2009 / Notices 

10For purposes of this exemption, references to 

section 406 of ERISA should be read to refer as well 

to the corresponding provisions of section 4975 of 

the Code. 

11 In the event that the fair market value of an 

ARS exceeds the sum of its par value plus any 

accrued, but unpaid, interest as of the date of the 

Sale, NMIS will credit the difference to the Plan, 

with interest equal to the Federal Funds rate plus 

125 basis points. 

12The Department notes that the Act’s general 

standards of fiduciary conduct apply to the 

transactions described herein. In this regard, section 

404 requires, among other things, that a fiduciary 

discharge his duties respecting a plan solely in the 

interest of the plan’s participants and beneficiaries 

and in a prudent manner. Accordingly, a plan 

fiduciary must act prudently with respect to, among 

other things, the decision to engage (or to not 

engage) in a Sale. The Department further 

emphasizes that it expects a plan fiduciary, prior to 

entering into a Sale (or, alternately, prior to 

deciding to retain an ARS), to fully understand the 

risks associated with such a decision, following 

disclosure by NMIS of all relevant information. 

and that is responsible for maintaining 

the paper work associated with the 

clearing and executing of a transaction; 

(e) The term ‘‘Independent’’ means a 

person who is: (1) Not Raymond James 

or an affiliate; and (2) not a relative (as 

defined in ERISA section 3(15)) of the 

party engaging in the transaction; 

(f) The term ‘‘Introducing Broker’’ 

means: a registered broker that is able to 

perform all the functions of a broker 

except for the ability to accept money, 

securities, or property from a customer; 

(g) The term ‘‘Sponsor’’ means: a plan 

sponsor as described in section 3(16)(B) 

of the Act and any Affiliates; 

(h) The term ‘‘Plan’’ means: any plan 

described in section 3(3) of the Act and/ 

or section 4975(e)(1) of the Code; 

(i) The term ‘‘Title II Only Plan’’ 

means: any plan described in section 

4975(e)(1) of the Code which is not an 

employee benefit plan covered by Title 

I of ERISA; 

(j) The term ‘‘Delivered Security’’ 

means a security that is: (1) Listed on a 

national securities exchange (excluding 

OTC Bulletin Board-eligible securities 

and Pink Sheets-quoted securities); or 

(2) a U.S. Treasury obligation; or (3) A 

fixed income security that has a rating 

at the time of the exchange that is in one 

of the two highest generic rating 

categories from an independent 

nationally recognized statistical rating 

organization (e.g., a highly rated 

municipal bond or a highly rated 

corporate bond); or (4) A certificate of 

deposit insured by the Federal Deposit 

Insurance Corporation. Notwithstanding 

the above, the term ‘‘Delivered 

Security’’ shall not include any Auction 

Rate Security, or any related Auction 

Rate Security, including derivatives or 

securities materially comprised of 

Auction Rate Securities or any illiquid 

securities. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption, refer to the Notice of 

Proposed Exemption published in the 

Federal Register on November 7, 2008 

at 73 FR 66266. 

FOR FURTHER INFORMATION CONTACT: 

Chris Motta of the Department, 

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

a toll-free number.) 

Northwestern Mutual Investment 

Services, LLC, Located in Milwaukee, 

Wisconsin. 

[Prohibited Transaction Exemption 2009–09; 

Exemption Application Number D–11505] 

Exemption 

Section I. Transactions 

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 September 30, 2008, to the sale 

(the Sale) by a Plan (as defined in 

section II(d)) of an Auction Rate 

Security (as defined in section II(b) to 

Northwestern Mutual Investment 

Services, LLC (NMIS), provided that the 

following conditions are met: 10

(a) The Plan acquired the Auction 

Rate Security (ARS) in connection with 

brokerage services provided by NMIS; 

(b) The last auction for the ARS was 

unsuccessful; 

(c) The Sale is made in connection 

with a written offer by NMIS (the Offer) 

containing all of the material terms of 

the Sale; 

(d) The Sale is for no consideration 

other than cash payment against prompt 

delivery of the ARS; 

(e) The amount of the Sale is equal to 

the greater of: 

(1) The fair market value of the ARS 

as of the date of the Sale, as determined 

by a qualified, independent appraiser; 

or 

(2) The sum of the price paid by the 

Plan for the ARS and any accrued but 

unpaid interest; 11

(f) The Plan does not waive any rights 

or claims in connection with the Sale; 

(g) The decision to accept the Offer or 

retain the ARS is made by a Plan 

fiduciary or Plan participant or IRA 

owner, who (in all cases) is Independent 

(as defined in section II (c)) of NMIS; 12

(h) Neither NMIS nor any affiliate 

exercises investment discretion or 

renders investment advice [within the 

meaning of 29 CFR 2510.3–21(c)] with 

respect to the decision to accept the 

Offer or retain the ARS; 

(i) The Plan does not pay any 

commissions or transaction costs with 

respect to the Sale; 

(j) The Sale is not part of an 

arrangement, agreement or 

understanding designed to benefit a 

party in interest to the Plan; 

(k) NMIS and its affiliates, as 

applicable, maintain, or cause to be 

maintained, for a period of six (6) years 

from the date of the Sale such records 

as are necessary to enable the persons 

described below in paragraph (l)(i), to 

determine whether the conditions of 

this exemption have been met, except 

that— 

(i) No party in interest with respect to 

a Plan which engages in a Sale, other 

than NMIS and its affiliates, as 

applicable, shall be subject to a civil 

penalty under section 502(i) of the Act 

or the taxes imposed by section 4975(a) 

and (b) of the Code, if such records are 

not maintained, or not available for 

examination, as required, below, by 

paragraph (l)(i); and 

(ii) A separate prohibited transaction 

shall not be considered to have occurred 

solely because, due to circumstances 

beyond the control of NMIS or its 

affiliates, as applicable, such records are 

lost or destroyed prior to the end of the 

six-year period; 

(l)(i) Except as provided below in 

paragraph (l)(ii), and notwithstanding 

any provisions of subsections (a)(2) an 

(b) of section 504 of the Act, the records 

referred to above in paragraph (k) 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 the U.S. 

Securities and Exchange Commission; 

or 

(B) Any fiduciary of any Plan that 

engages in a Sale, or any duly 

authorized employee or representative 

of such fiduciary; or 

(C) Any employer of participants and 

beneficiaries and any employee 

organization whose members are 

covered by a Plan that engages in the 

Sale, or any authorized employee or 

representative of these entities; or 

(D) Any IRA owner, participant or 

beneficiary of a Plan that engages in a 

Sale, or duly authorized employee or 

representative of such IRA owner, 

participant or beneficiary; 

(ii) None of the persons described 

above in paragraph (l)(i)(B)–(D) shall be 

authorized to examine trade secrets of 

NMIS, or commercial or financial 

information which is privileged or 

confidential; and 

(iii) Should NMIS refuse to disclose 

information on the basis that such 

information is exempt from disclosure, 

NMIS shall, by the close of the thirtieth 

(30th) day following the request, 


rwilkins on PROD1PC63 with NOTICES2
Federal Register / Vol. 74, No. 38 / Friday, February 27, 2009 / Notices 8997 

provide a written notice advising that 

person of the reasons for the refusal and 

that the Department may request such 

information. 

Section II. Definitions 

(a) The term ‘‘affiliate’’ means: any 

person directly or indirectly, through 

one or more intermediaries, controlling, 

controlled by, or under common control 

with such other person; 

(b) The term ‘‘Auction Rate Security’’ 

or ‘‘ARS’’ means a security: 

(1) That is either a debt instrument 

(generally with a long-term nominal 

maturity) or preferred stock; and 

(2) With an interest rate or dividend 

that is reset at specific intervals through 

a Dutch auction process; 

(c) The term ‘‘Independent’’ means a 

person who is: (1) not NMIS or an 

affiliate; and (2) not a relative (as 

defined in ERISA section 3(15)) of the 

party engaging in the transaction; and 

(d) The term ‘‘Plan’’ means: any plan 

described in section 3(3) of the Act and/ 

or section 4975(e)(1) of the Code. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption, refer to the Notice of 

Proposed Exemption published in the 

Federal Register on November 7, 2008 

at 73 FR 66268. 

FOR FURTHER INFORMATION CONTACT: 

Chris Motta 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 24th day of 

February 2009. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. E9–4235 Filed 2–26–09; 8:45 am] 

BILLING CODE 4510–29–P 

MILLENNIUM CHALLENGE 

CORPORATION 

[MCC 09–07] 

Notice of Quarterly Report (October 1, 

2008–December 31, 2008) 

AGENCY: Millennium Challenge 

Corporation. 

ACTION: Notice. 

SUMMARY: The Millennium Challenge 

Corporation (MCC) is reporting for the 

quarter October 1, 2008 through 

December 31, 2008 respect to both 

assistance provided under Section 605 

of the Millennium Challenge Act of 

2003 (Pub.L. 108–199, Division D (the 

Act)), and transfers or allocations of 

funds to other federal agencies pursuant 

to Section 619(b) of the Act. The 

following report shall be made available 

to the public by means of publication in 

the Federal Register and on the Internet 

Website of the MCC (http:// 

www.mcc.gov) in accordance with 

Section 612(b) of the Act. 

ASSISTANCE PROVIDED UNDER SECTION 605 

Projects Obligated Objectives Cumulative 

disbursements Measures 

Country: Madagascar Year: 2009 Quarter 1 Total Obligation: $109,773,000 

Entity to which the assistance is provided: MCA Madagascar Total Quarterly Disbursement: $6,222,776 

Land Tenure Project ......... $36,028,000 Increase Land Titling and 

Security.

$17,142,693 Legislative proposal reflecting the National Land 

Tenure Program submitted to Parliament and 

passed. 

Number of land disputes reported and resolved in 

the target zones and sites of implementation. 

Percentage of land documents inventoried, restored, 

and/or digitized. 

Average time and cost required to carry out property 

transactions. 

Percent of reported land conflicts resolved on titled 

land in zone 3, 4, 5 during the title regularization 

operations. 

Percentage of land in the zones that is demarcated 

and ready for titling. 

Finance Project ................. $32,445,000 Increase Competition in 

the Financial Sector.

$14,549,224 The number of savings accounts and outstanding 

value of accounts from primary banks. 

Maximum check clearing delay. 

Volume of funds in payment system and number of 

transactions. 

Increased public awareness of new financial instruments as measured by surveys within intervention 

zones and large towns. 


rwilkins on PROD1PC63 with NOTICES2