Prohibited Transaction Exemptions 2008-13 Through 2008-14; Grant of Individual Exemptions Involving: Banc One Investment Advisors Corporation and J.P. Morgan Investment Management Inc. (JPMIM) and Their Affiliates (collectively JPMorgan), PTE 2008-13; and Fidelity Brokerage Services, D-11424, LLC (FBS), PTE 2008-14, 70378-70383 [E8-27615]
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Federal Register / Vol. 73, No. 225 / Thursday, November 20, 2008 / Notices
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 12th day of
November 2008.
Ivan Strasfeld,
Director of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. E8–27616 Filed 11–19–08; 8:45 am]
BILLING CODE 4510–29–P
Statutory Findings
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
Prohibited Transaction Exemptions
2008–13 Through 2008–14; Grant of
Individual Exemptions Involving: Banc
One Investment Advisors Corporation
and J.P. Morgan Investment
Management Inc. (JPMIM) and Their
Affiliates (collectively JPMorgan), PTE
2008–13; and Fidelity Brokerage
Services, D–11424, LLC (FBS), PTE
2008–14
Employee Benefits Security
Administration, Labor.
ACTION: Grant of individual exemptions.
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AGENCY:
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
VerDate Aug<31>2005
18:26 Nov 19, 2008
Security Act of 1974 (ERISA or the Act)
and/or the Internal Revenue Code of
1986 (the Code).
A notice was published in the Federal
Register of the pendency before the
Department of a proposal to grant such
exemption. The notice set forth a
summary of facts and representations
contained in the application for
exemption and referred interested
persons to the application for a
complete statement of the facts and
representations. The application has
been available for public inspection at
the Department in Washington, DC. The
notice also invited interested persons to
submit comments on the requested
exemption to the Department. In
addition the notice stated that any
interested person might submit a
written request that a public hearing be
held (where appropriate). The applicant
has represented that it has complied
with the requirements of the notification
to interested persons. No requests for a
hearing were received by the
Department. Public comments were
received by the Department as described
in the granted exemption.
The notice of proposed exemption
was issued and the exemption is being
granted solely by the Department
because, effective December 31, 1978,
section 102 of Reorganization Plan No.
4 of 1978, 5 U.S.C. App. 1 (1996),
transferred the authority of the Secretary
of the Treasury to issue exemptions of
the type proposed to the Secretary of
Labor.
Jkt 217001
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.
Banc One Investment Advisors
Corporation (BOIA) and J.P. Morgan
Investment Management Inc. (JPMIM)
and their Affiliates (collectively,
JPMorgan). Located in New York, New
York. [Prohibited Transaction
Exemption 2008–13; Application No. D–
11263]
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Exemption
Section I—Retroactive Exemption for
the Acquisition, Holding, and
Disposition of JPMorgan Chase & Co.
Stock
The restrictions of sections
406(a)(1)(D), 406(b)(1) and 406(b)(2) of
the Act, and the sanctions resulting
from the application of section 4975 of
the Code by reason of section
4975(c)(1)(D) and (E) of the Code, shall
not apply, as of January 14, 2004, until
November 20, 2008, to the acquisition,
holding, and disposition of the common
stock of JPMorgan Chase & Co. (the JPM
Stock) by Index and Model-Driven
Funds managed by JPMorgan, provided
that the following conditions and the
general conditions in Section III are
satisfied:
(a) The acquisition or disposition of
the JPM Stock is for the sole purpose of
maintaining strict quantitative
conformity with the relevant index
upon which the Index or Model-Driven
Fund is based.
(b) The acquisition or disposition of
the JPM Stock does not involve any
agreement, arrangement, or
understanding regarding the design or
operation of the Fund acquiring the JPM
Stock which is intended to benefit
JPMorgan or any party in which
JPMorgan may have an interest.
(c) All aggregate daily purchases of
JPM Stock by the Funds do not exceed,
on any particular day, the greater of:
(1) Fifteen (15) percent of the
aggregate average daily trading volume
for the JPM Stock occurring on the
applicable exchange and automated
trading system (as described in
paragraph (d) below) for the previous
five business days, or
(2) Fifteen (15) percent of the trading
volume for the JPM Stock occurring on
the applicable exchange and automated
trading system on the date of the
transaction, both as determined by the
best available information for the trades
occurring on that date or dates.
(d) All purchases and sales of JPM
Stock are either (i) Entered into on a
principal basis in a direct, arm’s length
transaction with a broker-dealer, in the
ordinary course of its business, where
such broker-dealer is independent of
JPMorgan and is either registered under
the Securities Exchange Act of 1934 (the
1934 Act), and thereby subject to
regulation by the Securities and
Exchange Commission (SEC), (ii)
effected on an automated trading system
(as defined in Section IV(i) below)
operated by a broker-dealer independent
of JPMorgan that is subject to regulation
by the SEC, or an automated trading
system operated by a recognized U.S.
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securities exchange (as defined in
Section IV(j) below), which, in either
case, provides a mechanism for
customer orders to be matched on an
anonymous basis without the
participation of a broker-dealer, or (iii)
effected on a recognized securities
exchange (as defined in Section IV(j)
below), so long as the broker is acting
on an agency basis.
(e) No transactions by a Fund involve
purchases from, or sales to, JPMorgan
(including officers, directors, or
employees thereof), or any party in
interest that is a fiduciary with
discretion to invest plan assets into the
Fund (unless the transaction by the
Fund with such party in interest would
otherwise be subject to an exemption);
however, this condition would not
apply to purchases or sales on an
exchange or through an automated
trading system (described in paragraph
(d) of this Section) on a blind basis
where the identity of the counterparty is
not known.
(f) No more than five (5) percent of the
total amount of JPM Stock that is issued
and outstanding at any time is held in
the aggregate by Index and ModelDriven Funds managed by JPMorgan.
(g) JPM Stock constitutes no more
than three (3) percent of any
independent third party index on which
the investments of an Index or ModelDriven Fund are based.
(h) A plan fiduciary which is
independent of JPMorgan authorizes the
investment of such plan’s assets in an
Index or Model-Driven Fund which
purchases and/or holds JPM Stock,
pursuant to the procedures described
herein.
(i) A fiduciary independent of
JPMorgan directs the voting of the JPM
Stock held by an Index or Model-Driven
Fund on any matter in which
shareholders of JPM Stock are required
or permitted to vote.
Section II—Prospective Exemption for
the Acquisition, Holding, and
Disposition of JPMorgan Chase & Co.
Stock
The restrictions of sections
406(a)(1)(D), 406(b)(1) and 406(b)(2) of
the Act, and the sanctions resulting
from the application of section 4975 of
the Code by reason of section
4975(c)(1)(D) and (E) of the Code, shall
not apply, as of November 20, 2008 to
the acquisition, holding, and disposition
of JPM Stock by Index and ModelDriven Funds managed by JPMorgan,
provided that the following conditions
and the general conditions in Section III
are satisfied:
(a) The acquisition or disposition of
JPM Stock is for the sole purpose of
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maintaining strict quantitative
conformity with the relevant index
upon which the Index or Model-Driven
Fund is based.
(b) The acquisition or disposition of
JPM Stock does not involve any
agreement, arrangement or
understanding regarding the design or
operation of the Fund acquiring the JPM
Stock which is intended to benefit
JPMorgan or any party in which
JPMorgan may have an interest.
(c) All purchases of JPM Stock
pursuant to a Buy-up (as defined in
Section IV(d)) occur in the following
manner:
(1) Purchases on a single trading day
are from, or through, only one broker or
dealer;
(2) Based on the best available
information, purchases are not the
opening transaction for the trading day;
(3) Purchases are not effected in the
last half hour before the scheduled close
of the trading day;
(4) Purchases are at a price that is not
higher than the lowest current
independent offer quotation,
determined on the basis of reasonable
inquiry from brokers that are not
affiliates of JPMorgan (as defined in
section IV(g));
(5) Aggregate daily purchases of JPM
Stock by the Funds do not exceed, on
any particular day, the greater of: (i)
Fifteen (15) percent of the aggregate
average daily trading volume for the
security occurring on the applicable
exchange and automated trading system
for the previous five business days, or
(ii) fifteen (15) percent of the trading
volume for the security occurring on the
applicable exchange and automated
trading system on the date of the
transaction, as determined by the best
available information for the trades
occurring on that date;
(6) All purchases and sales of JPM
Stock occur either (i) On a recognized
securities exchange (as defined in
Section IV(j) below), (ii) through an
automated trading system (as defined in
Section IV(i) below) operated by a
broker-dealer independent of JPMorgan
that is registered under the 1934 Act,
and thereby subject to regulation by the
SEC, which provides a mechanism for
customer orders to be matched on an
anonymous basis without the
participation of a broker-dealer, or (iii)
through an automated trading system (as
defined in Section IV(i) below) that is
operated by a recognized securities
exchange (as defined in Section IV(j)
below), pursuant to the applicable
securities laws, and provides a
mechanism for customer orders to be
matched on an anonymous basis
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70379
without the participation of a brokerdealer; and
(7) If the necessary number of shares
of JPM Stock cannot be acquired within
10 business days from the date of the
event that causes the particular Fund to
require JPM Stock, JPMorgan appoints a
fiduciary that is independent of
JPMorgan to design acquisition
procedures and monitor JPMorgan’s
compliance with such procedures, in
accordance with Representation 7 in the
Summary of Facts and Representations
in the Notice of Proposed Exemption
(the Notice).1
(d) For transactions subsequent to a
Buy-up, all aggregate daily purchases of
JPM Stock by the Funds do not exceed,
on any particular day, the greater of:
(1) Fifteen (15) percent of the
aggregate average daily trading volume
for the JPM Stock occurring on the
applicable exchange and automated
trading system for the previous five (5)
business days, or
(2) Fifteen (15) percent of the trading
volume for JPM Stock occurring on the
applicable exchange and automated
trading system on the date of the
transaction, as determined by the best
available information for the trades that
occurred on such date.
(e) All transactions in JPM Stock not
otherwise described in paragraph (c)
above are either: (i) Entered into on a
principal basis in a direct, arms-length
transaction with a broker-dealer, in the
ordinary course of its business, where
such broker-dealer is independent of
JPMorgan and is registered under the
1934 Act, and thereby subject to
regulation by the SEC, (ii) effected on an
automated trading system (as defined in
Section IV(i) below) operated by a
broker-dealer independent of JPMorgan
that is subject to regulation by the SEC,
or an automated trading system
operated by a recognized securities
exchange (as defined in Section IV(j)
below), which, in either case, provides
a mechanism for customer orders to be
matched on an anonymous basis
without the participation of a brokerdealer, or (iii) effected through a
recognized securities exchange (as
defined in Section IV(j) below), so long
as the broker is acting on an agency
basis.
(f) No transactions by a Fund involve
purchases from, or sales to, JPMorgan
(including officers, directors, or
employees thereof), or any party in
interest that is a fiduciary with
discretion to invest plan assets in the
Fund (unless the transaction by the
Fund with such party in interest would
otherwise be subject to an exemption);
1 See
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73 FR 39168, 39172 (July 8, 2008).
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however, this condition would not
apply to purchases or sales on an
exchange or through an automated
trading system (described in paragraphs
(c) and (e) of this Section) on a blind
basis where the identity of the
counterparty is not known.
(g) No more than five (5) percent of
the total amount of JPM Stock that is
issued and outstanding at any time is
held in the aggregate by Index and
Model-Driven Funds managed by
JPMorgan.
(h) JPM Stock constitutes no more
than five (5) percent of any independent
third party index on which the
investments of an Index or ModelDriven Fund are based.
(i) A plan fiduciary independent of
JPMorgan authorizes the investment of
such plan’s assets in an Index or ModelDriven Fund which purchases and/or
holds JPM Stock, pursuant to the
procedures described herein.
(j) A fiduciary independent of
JPMorgan directs the voting of the JPM
Stock held by an Index or Model-Driven
Fund on any matter in which
shareholders of JPM Stock are required
or permitted to vote.
Section III—General Conditions
(a) JPMorgan maintains or causes to
be maintained, for a period of six years
from the date of the transaction, the
records necessary to enable the persons
described in paragraph (b) of this
Section to determine whether the
conditions of this exemption have been
met, except that (1) a prohibited
transaction will not be considered to
have occurred if, solely due to
circumstances beyond the control of
JPMorgan, the records are lost or
destroyed prior to the end of the sixyear period, and (2) no party in interest
other than JPMorgan 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
(b) below.
(b)(1) Except as provided in paragraph
(b)(2) and notwithstanding any
provisions of section 504(a)(2) and (b) of
the Act, the records referred to in
paragraph (a) of this Section 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
Securities and Exchange Commission,
(B) Any fiduciary of a plan
participating in an Index or ModelDriven Fund who has authority to
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18:26 Nov 19, 2008
Jkt 217001
acquire or dispose of the interests of the
plan, or any duly authorized employee
or representative of such fiduciary,
(C) Any contributing employer to any
plan participating in an Index or ModelDriven Fund or any duly authorized
employee or representative of such
employer, and
(D) Any participant or beneficiary of
any plan participating in an Index or
Model-Driven Fund, or a representative
of such participant or beneficiary.
(2) None of the persons described in
subparagraphs (B) through (D) of this
paragraph (b) shall be authorized to
examine trade secrets of JPMorgan or
commercial or financial information
that is considered confidential.
Section IV—Definitions
(a) The term ‘‘Index Fund’’ means any
investment fund, account, or portfolio
sponsored, maintained, trusteed, or
managed by JPMorgan, in which one or
more investors invest, and—
(1) That is designed to track the rate
of return, risk profile, and other
characteristics of an independently
maintained securities Index, as
described in Section IV(c) below, by
either (i) replicating the same
combination of securities that comprise
such Index, or (ii) sampling the
securities that comprise such Index
based on objective criteria and data;
(2) For which JPMorgan does not use
its discretion, or data within its control,
to affect the identity or amount of
securities to be purchased or sold;
(3) That contains ‘‘plan assets’’ subject
to the Act; and,
(4) That involves no agreement,
arrangement, or understanding
regarding the design or operation of the
Fund which is intended to benefit
JPMorgan or any party in which
JPMorgan may have an interest.
(b) The term ‘‘Model-Driven Fund’’
means any investment fund, account, or
portfolio sponsored, maintained,
trusteed, or managed by JPMorgan, in
which one or more investors invest,
and—
(1) That is composed of securities, the
identity of which and the amount of
which are selected by a computer model
that is based on prescribed objective
criteria using independent third party
data, not within the control of
JPMorgan, to transform an
independently maintained Index, as
described in Section IV(c) below;
(2) That contains ‘‘plan assets’’ subject
to the Act; and
(3) That involves no agreement,
arrangement, or understanding
regarding the design or operation of the
Fund or the utilization of any specific
objective criteria that is intended to
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Fmt 4703
Sfmt 4703
benefit JPMorgan or any party in which
JPMorgan may have an interest.
(c) The term ‘‘Index’’ means a
securities index that represents the
investment performance of a specific
segment of the public market for equity
or debt securities in the United States
and/or foreign countries, but only if—
(1) The organization creating and
maintaining the index is—
(A) Engaged in the business of
providing financial information,
evaluation, advice or securities
brokerage services to institutional
clients,
(B) A publisher of financial news or
information, or
(C) A public stock exchange or
association of securities dealers; and,
(2) The index is created and
maintained by an organization
independent of JPMorgan; and,
(3) The index is a generally accepted
standardized index of securities that is
not specifically tailored for the use of
JPMorgan.
(d) The term ‘‘Buy-up’’ means an
initial acquisition of JPM Stock by an
Index or Model-Driven Fund which is
necessary to bring the Fund’s holdings
of such stock either to its capitalizationweighted or other specified composition
in the relevant index, as determined by
the independent organization
maintaining such index, or to its correct
weighting as determined by the model
which has been used to transform the
index.
(e) The term ‘‘JPMorgan’’ refers to
Bank One Investment Advisors
Corporation (BOIA) and J.P. Morgan
Investment Management Inc. (JPMIM),
and their respective Affiliates, as
defined in paragraph (f) below.
(f) The term ‘‘Affiliate’’ means, with
respect to BOIA or JPMIM, an entity
which, directly or indirectly, through
one or more intermediaries, is
controlling, controlled by, or under
common control with BOIA or JPMIM;
(g) An ‘‘affiliate’’ of a person includes:
(1) Any person, directly or indirectly,
through one or more intermediaries,
controlling, controlled by or under
common control with the person;
(2) Any officer, director, employee or
relative of such person, or partner of any
such person; and
(3) Any corporation or partnership of
which such person is an officer,
director, partner, or employee.
(h) The term ‘‘control’’ means the
power to exercise a controlling
influence over the management or
policies of a person other than an
individual.
(i) The term ‘‘automated trading
system’’ means an electronic trading
system that functions in a manner
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intended to simulate a securities
exchange by electronically matching
orders on an agency basis from multiple
buyers and sellers, such as an
‘‘alternative trading system’’ within the
meaning of the SEC’s Reg. ATS [17 CFR
242.300], as such definition may be
amended from time to time, or an
‘‘automated quotation system’’ as
described in Section 3(a)(51)(A)(ii) of
the 1934 Act [15 U.S.C.
78c(a)(51)(A)(ii)].
(j) The term ‘‘recognized securities
exchange’’ means a U.S. securities
exchange that is registered as a
‘‘national securities exchange’’ under
Section 6 of the 1934 Act (15 U.S.C.
78f), as such definition may be amended
from time to time, which performs with
respect to securities the functions
commonly performed by a stock
exchange within the meaning of
definitions under the applicable
securities laws (e.g., 17 CFR 240.3b–16).
(k) The term ‘‘Fund’’ means an Index
Fund (as described in Section IV(a)) or
a Model-Driven Fund (as described in
IV(b)).
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 July 8, 2008, at 73 FR
39168.
The Department received no written
comments with respect to the Notice.
The Department notes that the Notice
incorrectly stated that, as of December
31, 2005, JPMIM managed $1.19 trillion
in assets for defined benefit and defined
contribution plans, endowments and
foundations, and other institutional
clients, mutual funds, and high net
worth individuals. In fact, the
applicable date for that information was
December 31, 2007.
FOR FURTHER INFORMATION CONTACT: Ms.
Karen Lloyd of the Department,
telephone (202) 693–8554. (This is not
a toll-free number.)
Fidelity Brokerage Services, LLC
(FBS) and its affiliates (together with
FBS, Fidelity); Located Boston,
Massachusetts.
[Prohibited Transaction Exemption
No. 2008–14; Application No. D–11424]
Section I: Covered Transactions
Effective November 20, 2008, the
restrictions of sections 406(a)(1)(D) and
406(b) of ERISA, and the sanctions
resulting from the application of section
4975 of the Code, including the loss of
exemption of an individual retirement
account or annuity pursuant to section
408(e)(2)(A) of the Code, of a Coverdell
education savings account pursuant to
section 530(d) of the Code, of an Archer
medical savings account pursuant to
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18:26 Nov 19, 2008
Jkt 217001
section 220(e)(2) of the Code, or of a
health savings account pursuant to
section 223(e)(2) of the Code, by reason
of section 4975(c)(1)(D), (E), and (F) of
the Code, shall not apply to the receipt
of an Applicable Benefit by an
individual for whose benefit a Covered
Plan is established or maintained, or by
his or her Family Members, with respect
to a Tiered Product, pursuant to an
arrangement offered by Fidelity under
which the Account Value of the Covered
Plan is taken into account for purposes
of determining eligibility to receive such
Applicable Benefit, provided that each
condition of Section II of this exemption
is satisfied.
Section II: Conditions
(a) The Covered Plan whose Account
Value is taken into account for purposes
of determining eligibility to receive the
Applicable Benefit under the
arrangement is established and
maintained for the exclusive benefit of
the participant covered under the
Covered Plan, his or her spouse, or their
beneficiaries.
(b) The Applicable Benefit with
respect to the Tiered Product must be of
the type that Fidelity itself could offer
consistent with all applicable federal
and state banking laws and all
applicable federal and state laws
regulating broker-dealers.
(c) The Applicable Benefit with
respect to the Tiered Product must be
provided by Fidelity or its affiliate in
the ordinary course of its business as a
bank or broker-dealer to customers of
Fidelity who qualify for such
arrangement, but who do not maintain
Covered Plans with Fidelity or its
affiliate.
(d) For purposes of determining
eligibility to receive the Applicable
Benefit, the Account Value required by
Fidelity for the Covered Plan is as
favorable as any such requirement based
on the value of any type of account and
other financial relationships an
individual and his or her Family
Members have with Fidelity that is used
by Fidelity to determine eligibility to
receive the Applicable Benefit.
(e) The rate of interest paid with
respect to any assets of the Covered Plan
invested in a Tiered Interest Product is
reasonable.
(f) The combined total of all fees for
the provision of services to the Covered
Plan is not in excess of reasonable
compensation within the meaning of
section 4975(d)(2) of the Code and
section 408(b)(2) of ERISA.
(g) The investment performance of the
Covered Plan’s investment(s) is no less
favorable than the investment
performance of an identical
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70381
investment(s) that could have been
made at the same time by a customer of
Fidelity who is not eligible for (or who
does not receive) any Applicable
Benefit.
(h) The Applicable Benefits offered
with respect to any Tiered Product
under the arrangement to a Covered
Plan customer must be the same as is
offered by Fidelity with respect to such
Tiered Product to non-Covered Plan
customers of Fidelity having the same
aggregate Account Value.
(i) If the Covered Plan is established
at a broker-dealer or bank that is
unrelated to Fidelity, the assets of the
Covered Plan must be custodied with
Fidelity and at the time the Covered
Plan is established, disclosures must be
made to the owner of the Covered Plan
specifying that under the arrangement,
services are being provided by Fidelity
to the Covered Plan.
III. Definitions
(a) The term ‘‘Fidelity’’ means
Fidelity Brokerage Services LLC (FBS)
or any of its affiliates. An ‘‘affiliate’’ of
Fidelity Brokerage Services LLC
includes any person directly or
indirectly controlling, controlled by, or
under common control with FBS. The
term control means the power to
exercise a controlling influence over the
management or policies of a person
other than an individual.
(b) The term ‘‘Covered Plan’’ means a
plan sponsored by Fidelity or a plan
with respect to which Fidelity
maintains custody of its assets, and is an
Individual Retirement Plan or other
savings account described in section
III(c), or a Keogh Plan described in
section III(d).
(c) The term ‘‘Individual Retirement
Plan’’ means an individual retirement
account (‘‘IRA’’) described in Code
section 408(a), an individual retirement
annuity described in Code section
408(b), a Coverdell education savings
account described in section 530 of the
Code, an Archer MSA described in
section 220(d) of the Code, or a health
savings account described in section
223(d) of the Code. For purposes of this
exemption, the term Individual
Retirement Plan shall not include an
Individual Retirement Plan which is an
employee benefit plan covered by Title
I of ERISA, except for a Simplified
Employee Pension (SEP) described in
section 408(k) of the Code or a Simple
Retirement Account described in
section 408(p) of the Code which
provides participants with the
unrestricted authority to transfer their
balances to IRAs or Simple Retirement
Accounts sponsored by different
financial institutions.
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70382
Federal Register / Vol. 73, No. 225 / Thursday, November 20, 2008 / Notices
(d) The term ‘‘Keogh Plan’’ means a
pension, profit-sharing or stock bonus
plan qualified under Code section
401(a) and exempt from taxation under
Code section 501(a) under which some
or all of the participants are employees
described in section 401(c) of the Code.
For purposes of this exemption, the
term Keogh Plan shall not include a
Keogh Plan which is an employee
benefit plan covered by Title I of ERISA.
(e) The term ‘‘Account Value’’ means
the dollar value of investments in cash
or securities held in the account for
which market quotations are readily
available. For purposes of this
exemption, the term ‘‘cash’’ shall
include (without limitation) savings
accounts that are federally-insured and
deposits as that term is defined in
section 29 CFR 2550.408b–4(c)(3). The
term ‘‘Account Value’’ shall not include
investments in securities that are offered
by Fidelity exclusively to Covered
Plans.
(f) The term ‘‘Tiered Product’’ means
an arrangement that is a ‘‘Tiered Interest
Product’’ or a ‘‘Tiered Loan Product.’’
(g) The term ‘‘Tiered Interest Product’’
means a bank deposit, an arrangement
for payment of interest on free cash held
in a brokerage account, or any other
arrangement under which assets in an
individual’s account that is eligible for
the arrangement (including Covered
Plans) are invested, and with respect to
which interest is paid at a specified rate
based on the aggregate amount of the
accounts and other financial
relationships an individual and his or
her Family Member have with Fidelity
that are eligible to be taken into account
for purposes of the arrangement,
including the Account Value of the
Covered Plans.
(h) The term ‘‘Tiered Loan Product’’
means any arrangement for the
extension of credit to an individual,
with respect to which the interest and/
or Loan Expenses required to be paid
are reduced to a specified rate or an
amount based on the aggregate amount
of the accounts and other financial
relationships that an individual and his
or her Family Member have with
Fidelity that are eligible to be taken into
account for purposes of the
arrangement, including the Account
Value of the Covered Plans.
(i) The term ‘‘Loan Expenses’’ means
application fees, points, attorneys’’ fees,
appraisal fees, title insurance, and any
other fees or costs that an individual is
required to pay in connection with the
origination or maintenance of an
extension of credit pursuant to a Tiered
Loan Product.
(j) The term ‘‘Applicable Benefit’’
means: (i) In the case of a Tiered Interest
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18:26 Nov 19, 2008
Jkt 217001
Product, an increase in the interest paid
on an account established or maintained
by an individual or any of his or her
Family Members (including, in either
case, through a Covered Plan); and (ii)
in the case of a Tiered Loan Product, a
reduction in the interest and/or Loan
Expenses that an individual or any of
his or her Family Members is required
to pay.
(k) The term ‘‘Family Members’’
means beneficiaries of an individual for
whose benefit the Covered Plan is
established or maintained who would
be members of the family as that term
is defined in Code Section 4975(e)(6), or
a brother, a sister, or spouse of a brother
or sister.
DATES: Effective Date: This exemption is
effective November 20, 2008.
Written Comments
The proposed exemption gave
interested persons an opportunity to
comment and to request a hearing. In
this regard, all interested persons were
invited to submit written comments
and/or requests for a hearing on the
pending exemption on or before October
20, 2008. During the comment period,
the Department received one written
comment letter and no requests for a
public hearing. The comment was
submitted by the applicant, and a
discussion of the comment is provided
below.
Exemption Heading
The applicant requested the
Department change the heading of the
exemption to read ‘‘Fidelity Brokerage
Services LLC (FBS) and its affiliates
(together with FBS, Fidelity.) The
Department has made the requested
change.
Eligibility
In its application, Fidelity discussed
that an individual’s eligibility to receive
Tiered Products would be calculated
based on the aggregate amount of
accounts and other financial
relationships that the individual and his
or her Family Members have with
Fidelity. In this regard, Sections II(d),
III(g) and III(h) of the proposal relate to
eligibility requirements and definitions
of the products offered under Fidelity’s
program. Section II(d) of the proposal
states:
‘‘For purposes of determining eligibility to
receive the Applicable Benefit, the Account
Value required by Fidelity for the Covered
Plan is as favorable as any such requirement
based on the value of any type of account
used by Fidelity to determine eligibility to
receive the Applicable Benefit.’’
Section III(g) of the proposal states:
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Frm 00074
Fmt 4703
Sfmt 4703
‘‘The term ‘‘Tiered Interest Product’’ means
a bank deposit, an arrangement for payment
of interest on free cash held in a brokerage
account, or any other arrangement under
which assets in an individual’s account that
is eligible for the arrangement (including
Covered Plans) are invested, and with respect
to which interest is paid at a specified rate
based on the aggregate amount of the
accounts maintained with Fidelity by an
individual and by his or her Family Members
that are eligible to be taken into account for
purposes of the arrangement, including the
Account Value of the Covered Plans.’’
Lastly, Section III(h) of the proposal
states:
‘‘The term ‘‘Tiered Loan Product’’ means
any arrangement for the extension of credit
to an individual, with respect to which the
interest and/or Loan Expenses required to be
paid are reduced to a specified rate or
amount based on the aggregate amount of the
accounts and other financial relationships of
the individual (and his or her Family
Members) eligible to be taken into account
for purposes of the arrangement, including
the Account Value of the Covered Plans.’’
The applicant asks the Department to
insert the words ‘‘and other financial
relationships’’ in Section II(d) and
Section III(g). The Department has made
the requested change making all three
sections consistent.
General Clarification:
The Department makes the following
clarifications in response to the
applicant’s comments: (1) Fidelity has
approximately $1.7 trillion assets under
administration, and (2) the word ‘‘as’’
should be inserted immediately after the
word ‘‘favorable’’ in the fifth line of
subparagraph 10(d) of the Summary of
Facts and Representations of the notice
of proposed exemption.
For a complete statement of the facts
and representations supporting the
Department’s decision to grant this
exemption, refer to the notice of
proposed exemption that was published
in the Federal Register on September 3,
2008 at 73 FR 51521.
FOR FURTHER INFORMATION CONTACT:
Allison Padams-Lavigne, U.S.
Department of Labor, telephone (202)
693–8564. (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
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Federal Register / Vol. 73, No. 225 / Thursday, November 20, 2008 / Notices
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 12th day of
November 2008.
Ivan Strasfeld,
Director of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. E8–27615 Filed 11–19–08; 8:45 am]
BILLING CODE 4510–29–P
NATIONAL ARCHIVES AND RECORDS
ADMINISTRATION
Agency Information Collection
Activities: Submission for OMB
Review; Comment Request
National Archives and Records
Administration (NARA).
ACTION: Notice.
rwilkins on PROD1PC63 with NOTICES
AGENCY:
SUMMARY: NARA is giving public notice
that the agency has submitted to OMB
for approval the information collection
described in this notice. The public is
invited to comment on the proposed
information collection pursuant to the
Paperwork Reduction Act of 1995.
DATES: Written comments must be
submitted to OMB at the address below
on or before December 22, 2008 to be
assured of consideration.
ADDRESSES: Send comments to Mr.
Nicholas A. Fraser, Desk Officer for
NARA, Office of Management and
Budget, New Executive Office Building,
Washington, DC 20503; fax: 202–395–
5167; or electronically mailed to
Nicholas_A._Fraser@omb.eop.gov.
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18:26 Nov 19, 2008
Jkt 217001
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the proposed information
collection and supporting statement
should be directed to Tamee Fechhelm
at telephone number 301–837–1694 or
fax number 301–713–7409.
SUPPLEMENTARY INFORMATION: Pursuant
to the Paperwork Reduction Act of 1995
(Pub. L. 104–13), NARA invites the
general public and other Federal
agencies to comment on proposed
information collections. NARA
published a notice of proposed
collection for this information collection
on September 11, 2008 (73 FR 52890).
No comments were received. NARA has
submitted the described information
collection to OMB for approval.
In response to this notice, comments
and suggestions should address one or
more of the following points: (a)
Whether the proposed information
collection is necessary for the proper
performance of the functions of NARA;
(b) the accuracy of NARA’s estimate of
the burden of the proposed information
collection; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including the use of
information technology; and (e) whether
small businesses are affected by this
collection. In this notice, NARA is
soliciting comments concerning the
following information collection:
Title: Use of NARA Official Seals.
OMB number: 3095–0052.
Agency form number: N/A.
Type of review: Regular.
Affected public: Business or other forprofit, not-for-profit institutions, Federal
government.
Estimated number of respondents: 10.
Estimated time per response: 20
minutes.
Frequency of response: On occasion.
Estimated total annual burden hours:
3 hours.
Abstract: The authority for this
information collection is contained in
36 CFR 1200.8. NARA’s three official
seals are the National Archives and
Records Administration seal; the
National Archives seal; and the National
Archives Trust Fund Board seal. The
official seals are used to authenticate
various copies of official records in our
custody and for other official NARA
business. Occasionally, when criteria
are met, we will permit the public and
other Federal agencies to use our official
seals. A written request must be
submitted to use the official seals,
which we approve or deny using
specific criteria.
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Fmt 4703
Sfmt 4703
70383
Dated: November 14, 2008.
Martha Morphy,
Assistant Archivist for Information Services.
[FR Doc. E8–27684 Filed 11–19–08; 8:45 am]
BILLING CODE 7515–01–P
NATIONAL ARCHIVES AND RECORDS
ADMINISTRATION
Agency Information Collection
Activities: Proposed Collection;
Comment Request
National Archives and Records
Administration (NARA).
ACTION: Notice.
AGENCY:
SUMMARY: NARA is giving public notice
that the agency proposes to renew the
information collections described in this
notice, which are used in the National
Historical Publications and Records
Commission (NHPRC) grant program.
The public is invited to comment on the
proposed information collections
pursuant to the Paperwork Reduction
Act of 1995.
DATES: Written comments must be
received on or before January 20, 2009
to be assured of consideration.
ADDRESSES: Comments should be sent
to: Paperwork Reduction Act Comments
(NHP), Room 4400, National Archives
and Records Administration, 8601
Adelphi Rd, College Park, MD 20740–
6001; or faxed to 301–713–7409; or
electronically mailed to
tamee.fechhelm@nara.gov.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the proposed information
collections and supporting statements
should be directed to Tamee Fechhelm
at telephone number 301–837–1694, or
fax number 301–713–7409.
SUPPLEMENTARY INFORMATION: Pursuant
to the Paperwork Reduction Act of 1995
(Pub. L. 104–13), NARA invites the
general public and other Federal
agencies to comment on proposed
information collections. The comments
and suggestions should address one or
more of the following points: (a)
Whether the proposed information
collections are necessary for the proper
performance of the functions of NARA;
(b) the accuracy of NARA’s estimate of
the burden of the proposed information
collections; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including the use of
information technology; and (e) whether
small businesses are affected by this
collection. The comments that are
E:\FR\FM\20NON1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 225 (Thursday, November 20, 2008)]
[Notices]
[Pages 70378-70383]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-27615]
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employee Benefits Security Administration
Prohibited Transaction Exemptions 2008-13 Through 2008-14; Grant
of Individual Exemptions Involving: Banc One Investment Advisors
Corporation and J.P. Morgan Investment Management Inc. (JPMIM) and
Their Affiliates (collectively JPMorgan), PTE 2008-13; and Fidelity
Brokerage Services, D-11424, LLC (FBS), PTE 2008-14
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Grant of individual exemptions.
-----------------------------------------------------------------------
SUMMARY: This document contains exemptions issued by the Department of
Labor (the Department) from certain of the prohibited transaction
restrictions of the Employee Retirement Income Security Act of 1974
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code).
A notice was published in the Federal Register of the pendency
before the Department of a proposal to grant such exemption. The notice
set forth a summary of facts and representations contained in the
application for exemption and referred interested persons to the
application for a complete statement of the facts and representations.
The application has been available for public inspection at the
Department in Washington, DC. The notice also invited interested
persons to submit comments on the requested exemption to the
Department. In addition the notice stated that any interested person
might submit a written request that a public hearing be held (where
appropriate). The applicant has represented that it has complied with
the requirements of the notification to interested persons. No requests
for a hearing were received by the Department. Public comments were
received by the Department as described in the granted exemption.
The notice of proposed exemption was issued and the exemption is
being granted solely by the Department because, effective December 31,
1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1
(1996), transferred the authority of the Secretary of the Treasury to
issue exemptions of the type proposed to the Secretary of Labor.
Statutory Findings
In accordance with section 408(a) of the Act and/or section
4975(c)(2) of the Code and the procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon
the entire record, the Department makes the following findings:
(a) The exemption is administratively feasible;
(b) The exemption is in the interests of the plan and its
participants and beneficiaries; and
(c) The exemption is protective of the rights of the participants
and beneficiaries of the plan.
Banc One Investment Advisors Corporation (BOIA) and J.P. Morgan
Investment Management Inc. (JPMIM) and their Affiliates (collectively,
JPMorgan). Located in New York, New York. [Prohibited Transaction
Exemption 2008-13; Application No. D-11263]
Exemption
Section I--Retroactive Exemption for the Acquisition, Holding, and
Disposition of JPMorgan Chase & Co. Stock
The restrictions of sections 406(a)(1)(D), 406(b)(1) and 406(b)(2)
of the Act, and the sanctions resulting from the application of section
4975 of the Code by reason of section 4975(c)(1)(D) and (E) of the
Code, shall not apply, as of January 14, 2004, until November 20, 2008,
to the acquisition, holding, and disposition of the common stock of
JPMorgan Chase & Co. (the JPM Stock) by Index and Model-Driven Funds
managed by JPMorgan, provided that the following conditions and the
general conditions in Section III are satisfied:
(a) The acquisition or disposition of the JPM Stock is for the sole
purpose of maintaining strict quantitative conformity with the relevant
index upon which the Index or Model-Driven Fund is based.
(b) The acquisition or disposition of the JPM Stock does not
involve any agreement, arrangement, or understanding regarding the
design or operation of the Fund acquiring the JPM Stock which is
intended to benefit JPMorgan or any party in which JPMorgan may have an
interest.
(c) All aggregate daily purchases of JPM Stock by the Funds do not
exceed, on any particular day, the greater of:
(1) Fifteen (15) percent of the aggregate average daily trading
volume for the JPM Stock occurring on the applicable exchange and
automated trading system (as described in paragraph (d) below) for the
previous five business days, or
(2) Fifteen (15) percent of the trading volume for the JPM Stock
occurring on the applicable exchange and automated trading system on
the date of the transaction, both as determined by the best available
information for the trades occurring on that date or dates.
(d) All purchases and sales of JPM Stock are either (i) Entered
into on a principal basis in a direct, arm's length transaction with a
broker-dealer, in the ordinary course of its business, where such
broker-dealer is independent of JPMorgan and is either registered under
the Securities Exchange Act of 1934 (the 1934 Act), and thereby subject
to regulation by the Securities and Exchange Commission (SEC), (ii)
effected on an automated trading system (as defined in Section IV(i)
below) operated by a broker-dealer independent of JPMorgan that is
subject to regulation by the SEC, or an automated trading system
operated by a recognized U.S.
[[Page 70379]]
securities exchange (as defined in Section IV(j) below), which, in
either case, provides a mechanism for customer orders to be matched on
an anonymous basis without the participation of a broker-dealer, or
(iii) effected on a recognized securities exchange (as defined in
Section IV(j) below), so long as the broker is acting on an agency
basis.
(e) No transactions by a Fund involve purchases from, or sales to,
JPMorgan (including officers, directors, or employees thereof), or any
party in interest that is a fiduciary with discretion to invest plan
assets into the Fund (unless the transaction by the Fund with such
party in interest would otherwise be subject to an exemption); however,
this condition would not apply to purchases or sales on an exchange or
through an automated trading system (described in paragraph (d) of this
Section) on a blind basis where the identity of the counterparty is not
known.
(f) No more than five (5) percent of the total amount of JPM Stock
that is issued and outstanding at any time is held in the aggregate by
Index and Model-Driven Funds managed by JPMorgan.
(g) JPM Stock constitutes no more than three (3) percent of any
independent third party index on which the investments of an Index or
Model-Driven Fund are based.
(h) A plan fiduciary which is independent of JPMorgan authorizes
the investment of such plan's assets in an Index or Model-Driven Fund
which purchases and/or holds JPM Stock, pursuant to the procedures
described herein.
(i) A fiduciary independent of JPMorgan directs the voting of the
JPM Stock held by an Index or Model-Driven Fund on any matter in which
shareholders of JPM Stock are required or permitted to vote.
Section II--Prospective Exemption for the Acquisition, Holding, and
Disposition of JPMorgan Chase & Co. Stock
The restrictions of sections 406(a)(1)(D), 406(b)(1) and 406(b)(2)
of the Act, and the sanctions resulting from the application of section
4975 of the Code by reason of section 4975(c)(1)(D) and (E) of the
Code, shall not apply, as of November 20, 2008 to the acquisition,
holding, and disposition of JPM Stock by Index and Model-Driven Funds
managed by JPMorgan, provided that the following conditions and the
general conditions in Section III are satisfied:
(a) The acquisition or disposition of JPM Stock is for the sole
purpose of maintaining strict quantitative conformity with the relevant
index upon which the Index or Model-Driven Fund is based.
(b) The acquisition or disposition of JPM Stock does not involve
any agreement, arrangement or understanding regarding the design or
operation of the Fund acquiring the JPM Stock which is intended to
benefit JPMorgan or any party in which JPMorgan may have an interest.
(c) All purchases of JPM Stock pursuant to a Buy-up (as defined in
Section IV(d)) occur in the following manner:
(1) Purchases on a single trading day are from, or through, only
one broker or dealer;
(2) Based on the best available information, purchases are not the
opening transaction for the trading day;
(3) Purchases are not effected in the last half hour before the
scheduled close of the trading day;
(4) Purchases are at a price that is not higher than the lowest
current independent offer quotation, determined on the basis of
reasonable inquiry from brokers that are not affiliates of JPMorgan (as
defined in section IV(g));
(5) Aggregate daily purchases of JPM Stock by the Funds do not
exceed, on any particular day, the greater of: (i) Fifteen (15) percent
of the aggregate average daily trading volume for the security
occurring on the applicable exchange and automated trading system for
the previous five business days, or (ii) fifteen (15) percent of the
trading volume for the security occurring on the applicable exchange
and automated trading system on the date of the transaction, as
determined by the best available information for the trades occurring
on that date;
(6) All purchases and sales of JPM Stock occur either (i) On a
recognized securities exchange (as defined in Section IV(j) below),
(ii) through an automated trading system (as defined in Section IV(i)
below) operated by a broker-dealer independent of JPMorgan that is
registered under the 1934 Act, and thereby subject to regulation by the
SEC, which provides a mechanism for customer orders to be matched on an
anonymous basis without the participation of a broker-dealer, or (iii)
through an automated trading system (as defined in Section IV(i) below)
that is operated by a recognized securities exchange (as defined in
Section IV(j) below), pursuant to the applicable securities laws, and
provides a mechanism for customer orders to be matched on an anonymous
basis without the participation of a broker-dealer; and
(7) If the necessary number of shares of JPM Stock cannot be
acquired within 10 business days from the date of the event that causes
the particular Fund to require JPM Stock, JPMorgan appoints a fiduciary
that is independent of JPMorgan to design acquisition procedures and
monitor JPMorgan's compliance with such procedures, in accordance with
Representation 7 in the Summary of Facts and Representations in the
Notice of Proposed Exemption (the Notice).\1\
---------------------------------------------------------------------------
\1\ See 73 FR 39168, 39172 (July 8, 2008).
---------------------------------------------------------------------------
(d) For transactions subsequent to a Buy-up, all aggregate daily
purchases of JPM Stock by the Funds do not exceed, on any particular
day, the greater of:
(1) Fifteen (15) percent of the aggregate average daily trading
volume for the JPM Stock occurring on the applicable exchange and
automated trading system for the previous five (5) business days, or
(2) Fifteen (15) percent of the trading volume for JPM Stock
occurring on the applicable exchange and automated trading system on
the date of the transaction, as determined by the best available
information for the trades that occurred on such date.
(e) All transactions in JPM Stock not otherwise described in
paragraph (c) above are either: (i) Entered into on a principal basis
in a direct, arms-length transaction with a broker-dealer, in the
ordinary course of its business, where such broker-dealer is
independent of JPMorgan and is registered under the 1934 Act, and
thereby subject to regulation by the SEC, (ii) effected on an automated
trading system (as defined in Section IV(i) below) operated by a
broker-dealer independent of JPMorgan that is subject to regulation by
the SEC, or an automated trading system operated by a recognized
securities exchange (as defined in Section IV(j) below), which, in
either case, provides a mechanism for customer orders to be matched on
an anonymous basis without the participation of a broker-dealer, or
(iii) effected through a recognized securities exchange (as defined in
Section IV(j) below), so long as the broker is acting on an agency
basis.
(f) No transactions by a Fund involve purchases from, or sales to,
JPMorgan (including officers, directors, or employees thereof), or any
party in interest that is a fiduciary with discretion to invest plan
assets in the Fund (unless the transaction by the Fund with such party
in interest would otherwise be subject to an exemption);
[[Page 70380]]
however, this condition would not apply to purchases or sales on an
exchange or through an automated trading system (described in
paragraphs (c) and (e) of this Section) on a blind basis where the
identity of the counterparty is not known.
(g) No more than five (5) percent of the total amount of JPM Stock
that is issued and outstanding at any time is held in the aggregate by
Index and Model-Driven Funds managed by JPMorgan.
(h) JPM Stock constitutes no more than five (5) percent of any
independent third party index on which the investments of an Index or
Model-Driven Fund are based.
(i) A plan fiduciary independent of JPMorgan authorizes the
investment of such plan's assets in an Index or Model-Driven Fund which
purchases and/or holds JPM Stock, pursuant to the procedures described
herein.
(j) A fiduciary independent of JPMorgan directs the voting of the
JPM Stock held by an Index or Model-Driven Fund on any matter in which
shareholders of JPM Stock are required or permitted to vote.
Section III--General Conditions
(a) JPMorgan maintains or causes to be maintained, for a period of
six years from the date of the transaction, the records necessary to
enable the persons described in paragraph (b) of this Section to
determine whether the conditions of this exemption have been met,
except that (1) a prohibited transaction will not be considered to have
occurred if, solely due to circumstances beyond the control of
JPMorgan, the records are lost or destroyed prior to the end of the
six-year period, and (2) no party in interest other than JPMorgan 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 (b) below.
(b)(1) Except as provided in paragraph (b)(2) and notwithstanding
any provisions of section 504(a)(2) and (b) of the Act, the records
referred to in paragraph (a) of this Section 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 Securities and Exchange
Commission,
(B) Any fiduciary of a plan participating in an Index or Model-
Driven Fund who has authority to acquire or dispose of the interests of
the plan, or any duly authorized employee or representative of such
fiduciary,
(C) Any contributing employer to any plan participating in an Index
or Model-Driven Fund or any duly authorized employee or representative
of such employer, and
(D) Any participant or beneficiary of any plan participating in an
Index or Model-Driven Fund, or a representative of such participant or
beneficiary.
(2) None of the persons described in subparagraphs (B) through (D)
of this paragraph (b) shall be authorized to examine trade secrets of
JPMorgan or commercial or financial information that is considered
confidential.
Section IV--Definitions
(a) The term ``Index Fund'' means any investment fund, account, or
portfolio sponsored, maintained, trusteed, or managed by JPMorgan, in
which one or more investors invest, and--
(1) That is designed to track the rate of return, risk profile, and
other characteristics of an independently maintained securities Index,
as described in Section IV(c) below, by either (i) replicating the same
combination of securities that comprise such Index, or (ii) sampling
the securities that comprise such Index based on objective criteria and
data;
(2) For which JPMorgan does not use its discretion, or data within
its control, to affect the identity or amount of securities to be
purchased or sold;
(3) That contains ``plan assets'' subject to the Act; and,
(4) That involves no agreement, arrangement, or understanding
regarding the design or operation of the Fund which is intended to
benefit JPMorgan or any party in which JPMorgan may have an interest.
(b) The term ``Model-Driven Fund'' means any investment fund,
account, or portfolio sponsored, maintained, trusteed, or managed by
JPMorgan, in which one or more investors invest, and--
(1) That is composed of securities, the identity of which and the
amount of which are selected by a computer model that is based on
prescribed objective criteria using independent third party data, not
within the control of JPMorgan, to transform an independently
maintained Index, as described in Section IV(c) below;
(2) That contains ``plan assets'' subject to the Act; and
(3) That involves no agreement, arrangement, or understanding
regarding the design or operation of the Fund or the utilization of any
specific objective criteria that is intended to benefit JPMorgan or any
party in which JPMorgan may have an interest.
(c) The term ``Index'' means a securities index that represents the
investment performance of a specific segment of the public market for
equity or debt securities in the United States and/or foreign
countries, but only if--
(1) The organization creating and maintaining the index is--
(A) Engaged in the business of providing financial information,
evaluation, advice or securities brokerage services to institutional
clients,
(B) A publisher of financial news or information, or
(C) A public stock exchange or association of securities dealers;
and,
(2) The index is created and maintained by an organization
independent of JPMorgan; and,
(3) The index is a generally accepted standardized index of
securities that is not specifically tailored for the use of JPMorgan.
(d) The term ``Buy-up'' means an initial acquisition of JPM Stock
by an Index or Model-Driven Fund which is necessary to bring the Fund's
holdings of such stock either to its capitalization-weighted or other
specified composition in the relevant index, as determined by the
independent organization maintaining such index, or to its correct
weighting as determined by the model which has been used to transform
the index.
(e) The term ``JPMorgan'' refers to Bank One Investment Advisors
Corporation (BOIA) and J.P. Morgan Investment Management Inc. (JPMIM),
and their respective Affiliates, as defined in paragraph (f) below.
(f) The term ``Affiliate'' means, with respect to BOIA or JPMIM, an
entity which, directly or indirectly, through one or more
intermediaries, is controlling, controlled by, or under common control
with BOIA or JPMIM;
(g) An ``affiliate'' of a person includes:
(1) Any person, directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with
the person;
(2) Any officer, director, employee or relative of such person, or
partner of any such person; and
(3) Any corporation or partnership of which such person is an
officer, director, partner, or employee.
(h) The term ``control'' means the power to exercise a controlling
influence over the management or policies of a person other than an
individual.
(i) The term ``automated trading system'' means an electronic
trading system that functions in a manner
[[Page 70381]]
intended to simulate a securities exchange by electronically matching
orders on an agency basis from multiple buyers and sellers, such as an
``alternative trading system'' within the meaning of the SEC's Reg. ATS
[17 CFR 242.300], as such definition may be amended from time to time,
or an ``automated quotation system'' as described in Section
3(a)(51)(A)(ii) of the 1934 Act [15 U.S.C. 78c(a)(51)(A)(ii)].
(j) The term ``recognized securities exchange'' means a U.S.
securities exchange that is registered as a ``national securities
exchange'' under Section 6 of the 1934 Act (15 U.S.C. 78f), as such
definition may be amended from time to time, which performs with
respect to securities the functions commonly performed by a stock
exchange within the meaning of definitions under the applicable
securities laws (e.g., 17 CFR 240.3b-16).
(k) The term ``Fund'' means an Index Fund (as described in Section
IV(a)) or a Model-Driven Fund (as described in IV(b)).
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 July 8, 2008, at 73 FR 39168.
The Department received no written comments with respect to the
Notice. The Department notes that the Notice incorrectly stated that,
as of December 31, 2005, JPMIM managed $1.19 trillion in assets for
defined benefit and defined contribution plans, endowments and
foundations, and other institutional clients, mutual funds, and high
net worth individuals. In fact, the applicable date for that
information was December 31, 2007.
FOR FURTHER INFORMATION CONTACT: Ms. Karen Lloyd of the Department,
telephone (202) 693-8554. (This is not a toll-free number.)
Fidelity Brokerage Services, LLC (FBS) and its affiliates (together
with FBS, Fidelity); Located Boston, Massachusetts.
[Prohibited Transaction Exemption No. 2008-14; Application No. D-
11424]
Section I: Covered Transactions
Effective November 20, 2008, the restrictions of sections
406(a)(1)(D) and 406(b) of ERISA, and the sanctions resulting from the
application of section 4975 of the Code, including the loss of
exemption of an individual retirement account or annuity pursuant to
section 408(e)(2)(A) of the Code, of a Coverdell education savings
account pursuant to section 530(d) of the Code, of an Archer medical
savings account pursuant to section 220(e)(2) of the Code, or of a
health savings account pursuant to section 223(e)(2) of the Code, by
reason of section 4975(c)(1)(D), (E), and (F) of the Code, shall not
apply to the receipt of an Applicable Benefit by an individual for
whose benefit a Covered Plan is established or maintained, or by his or
her Family Members, with respect to a Tiered Product, pursuant to an
arrangement offered by Fidelity under which the Account Value of the
Covered Plan is taken into account for purposes of determining
eligibility to receive such Applicable Benefit, provided that each
condition of Section II of this exemption is satisfied.
Section II: Conditions
(a) The Covered Plan whose Account Value is taken into account for
purposes of determining eligibility to receive the Applicable Benefit
under the arrangement is established and maintained for the exclusive
benefit of the participant covered under the Covered Plan, his or her
spouse, or their beneficiaries.
(b) The Applicable Benefit with respect to the Tiered Product must
be of the type that Fidelity itself could offer consistent with all
applicable federal and state banking laws and all applicable federal
and state laws regulating broker-dealers.
(c) The Applicable Benefit with respect to the Tiered Product must
be provided by Fidelity or its affiliate in the ordinary course of its
business as a bank or broker-dealer to customers of Fidelity who
qualify for such arrangement, but who do not maintain Covered Plans
with Fidelity or its affiliate.
(d) For purposes of determining eligibility to receive the
Applicable Benefit, the Account Value required by Fidelity for the
Covered Plan is as favorable as any such requirement based on the value
of any type of account and other financial relationships an individual
and his or her Family Members have with Fidelity that is used by
Fidelity to determine eligibility to receive the Applicable Benefit.
(e) The rate of interest paid with respect to any assets of the
Covered Plan invested in a Tiered Interest Product is reasonable.
(f) The combined total of all fees for the provision of services to
the Covered Plan is not in excess of reasonable compensation within the
meaning of section 4975(d)(2) of the Code and section 408(b)(2) of
ERISA.
(g) The investment performance of the Covered Plan's investment(s)
is no less favorable than the investment performance of an identical
investment(s) that could have been made at the same time by a customer
of Fidelity who is not eligible for (or who does not receive) any
Applicable Benefit.
(h) The Applicable Benefits offered with respect to any Tiered
Product under the arrangement to a Covered Plan customer must be the
same as is offered by Fidelity with respect to such Tiered Product to
non-Covered Plan customers of Fidelity having the same aggregate
Account Value.
(i) If the Covered Plan is established at a broker-dealer or bank
that is unrelated to Fidelity, the assets of the Covered Plan must be
custodied with Fidelity and at the time the Covered Plan is
established, disclosures must be made to the owner of the Covered Plan
specifying that under the arrangement, services are being provided by
Fidelity to the Covered Plan.
III. Definitions
(a) The term ``Fidelity'' means Fidelity Brokerage Services LLC
(FBS) or any of its affiliates. An ``affiliate'' of Fidelity Brokerage
Services LLC includes any person directly or indirectly controlling,
controlled by, or under common control with FBS. The term control means
the power to exercise a controlling influence over the management or
policies of a person other than an individual.
(b) The term ``Covered Plan'' means a plan sponsored by Fidelity or
a plan with respect to which Fidelity maintains custody of its assets,
and is an Individual Retirement Plan or other savings account described
in section III(c), or a Keogh Plan described in section III(d).
(c) The term ``Individual Retirement Plan'' means an individual
retirement account (``IRA'') described in Code section 408(a), an
individual retirement annuity described in Code section 408(b), a
Coverdell education savings account described in section 530 of the
Code, an Archer MSA described in section 220(d) of the Code, or a
health savings account described in section 223(d) of the Code. For
purposes of this exemption, the term Individual Retirement Plan shall
not include an Individual Retirement Plan which is an employee benefit
plan covered by Title I of ERISA, except for a Simplified Employee
Pension (SEP) described in section 408(k) of the Code or a Simple
Retirement Account described in section 408(p) of the Code which
provides participants with the unrestricted authority to transfer their
balances to IRAs or Simple Retirement Accounts sponsored by different
financial institutions.
[[Page 70382]]
(d) The term ``Keogh Plan'' means a pension, profit-sharing or
stock bonus plan qualified under Code section 401(a) and exempt from
taxation under Code section 501(a) under which some or all of the
participants are employees described in section 401(c) of the Code. For
purposes of this exemption, the term Keogh Plan shall not include a
Keogh Plan which is an employee benefit plan covered by Title I of
ERISA.
(e) The term ``Account Value'' means the dollar value of
investments in cash or securities held in the account for which market
quotations are readily available. For purposes of this exemption, the
term ``cash'' shall include (without limitation) savings accounts that
are federally-insured and deposits as that term is defined in section
29 CFR 2550.408b-4(c)(3). The term ``Account Value'' shall not include
investments in securities that are offered by Fidelity exclusively to
Covered Plans.
(f) The term ``Tiered Product'' means an arrangement that is a
``Tiered Interest Product'' or a ``Tiered Loan Product.''
(g) The term ``Tiered Interest Product'' means a bank deposit, an
arrangement for payment of interest on free cash held in a brokerage
account, or any other arrangement under which assets in an individual's
account that is eligible for the arrangement (including Covered Plans)
are invested, and with respect to which interest is paid at a specified
rate based on the aggregate amount of the accounts and other financial
relationships an individual and his or her Family Member have with
Fidelity that are eligible to be taken into account for purposes of the
arrangement, including the Account Value of the Covered Plans.
(h) The term ``Tiered Loan Product'' means any arrangement for the
extension of credit to an individual, with respect to which the
interest and/or Loan Expenses required to be paid are reduced to a
specified rate or an amount based on the aggregate amount of the
accounts and other financial relationships that an individual and his
or her Family Member have with Fidelity that are eligible to be taken
into account for purposes of the arrangement, including the Account
Value of the Covered Plans.
(i) The term ``Loan Expenses'' means application fees, points,
attorneys'' fees, appraisal fees, title insurance, and any other fees
or costs that an individual is required to pay in connection with the
origination or maintenance of an extension of credit pursuant to a
Tiered Loan Product.
(j) The term ``Applicable Benefit'' means: (i) In the case of a
Tiered Interest Product, an increase in the interest paid on an account
established or maintained by an individual or any of his or her Family
Members (including, in either case, through a Covered Plan); and (ii)
in the case of a Tiered Loan Product, a reduction in the interest and/
or Loan Expenses that an individual or any of his or her Family Members
is required to pay.
(k) The term ``Family Members'' means beneficiaries of an
individual for whose benefit the Covered Plan is established or
maintained who would be members of the family as that term is defined
in Code Section 4975(e)(6), or a brother, a sister, or spouse of a
brother or sister.
DATES: Effective Date: This exemption is effective November 20, 2008.
Written Comments
The proposed exemption gave interested persons an opportunity to
comment and to request a hearing. In this regard, all interested
persons were invited to submit written comments and/or requests for a
hearing on the pending exemption on or before October 20, 2008. During
the comment period, the Department received one written comment letter
and no requests for a public hearing. The comment was submitted by the
applicant, and a discussion of the comment is provided below.
Exemption Heading
The applicant requested the Department change the heading of the
exemption to read ``Fidelity Brokerage Services LLC (FBS) and its
affiliates (together with FBS, Fidelity.) The Department has made the
requested change.
Eligibility
In its application, Fidelity discussed that an individual's
eligibility to receive Tiered Products would be calculated based on the
aggregate amount of accounts and other financial relationships that the
individual and his or her Family Members have with Fidelity. In this
regard, Sections II(d), III(g) and III(h) of the proposal relate to
eligibility requirements and definitions of the products offered under
Fidelity's program. Section II(d) of the proposal states:
``For purposes of determining eligibility to receive the
Applicable Benefit, the Account Value required by Fidelity for the
Covered Plan is as favorable as any such requirement based on the
value of any type of account used by Fidelity to determine
eligibility to receive the Applicable Benefit.''
Section III(g) of the proposal states:
``The term ``Tiered Interest Product'' means a bank deposit, an
arrangement for payment of interest on free cash held in a brokerage
account, or any other arrangement under which assets in an
individual's account that is eligible for the arrangement (including
Covered Plans) are invested, and with respect to which interest is
paid at a specified rate based on the aggregate amount of the
accounts maintained with Fidelity by an individual and by his or her
Family Members that are eligible to be taken into account for
purposes of the arrangement, including the Account Value of the
Covered Plans.''
Lastly, Section III(h) of the proposal states:
``The term ``Tiered Loan Product'' means any arrangement for the
extension of credit to an individual, with respect to which the
interest and/or Loan Expenses required to be paid are reduced to a
specified rate or amount based on the aggregate amount of the
accounts and other financial relationships of the individual (and
his or her Family Members) eligible to be taken into account for
purposes of the arrangement, including the Account Value of the
Covered Plans.''
The applicant asks the Department to insert the words ``and other
financial relationships'' in Section II(d) and Section III(g). The
Department has made the requested change making all three sections
consistent.
General Clarification:
The Department makes the following clarifications in response to
the applicant's comments: (1) Fidelity has approximately $1.7 trillion
assets under administration, and (2) the word ``as'' should be inserted
immediately after the word ``favorable'' in the fifth line of
subparagraph 10(d) of the Summary of Facts and Representations of the
notice of proposed exemption.
For a complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the notice of proposed exemption that was published in the Federal
Register on September 3, 2008 at 73 FR 51521.
FOR FURTHER INFORMATION CONTACT: Allison Padams-Lavigne, U.S.
Department of Labor, telephone (202) 693-8564. (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
[[Page 70383]]
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 12th day of November 2008.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. E8-27615 Filed 11-19-08; 8:45 am]
BILLING CODE 4510-29-P
