Proposed Extension of Information Collection Comment Request; Prohibited Transaction Class Exemption 2002-12, Cross-Trades of Securities by Index and Model-Driven Funds, 17985-17986 [E9-8904]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 74, Number 74 (Monday, April 20, 2009)]
[Notices]
[Pages 17985-17986]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-8904]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Proposed Extension of Information Collection Comment Request; 
Prohibited Transaction Class Exemption 2002-12, Cross-Trades of 
Securities by Index and Model-Driven Funds

AGENCY: Employee Benefits Security Administration, Department of Labor.

ACTION: Notice.

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SUMMARY: The Department of Labor, as part of its continuing effort to 
reduce paperwork and respondent burden, conducts a preclearance 
consultation program to provide the general public and Federal agencies 
with an opportunity to comment on proposed and continuing collections 
of information in accordance with the Paperwork Reduction Act of 1995 
(PRA 95). This program helps to ensure that respondents can provide the 
requested data in the desired format, that the reporting burden (time 
and financial resources) on the public is minimized, that the public 
can understand the Department's collection instruments, and that the 
Department can properly assess the impact of its information collection 
requirements on respondents. Currently, the Employee Benefits Security 
Administration (EBSA) is soliciting comments on a proposed extension of 
the information collection provisions of Prohibited Transaction Class 
Exemption 2002-12, Cross-Trades of Securities by Index and Model-Driven 
Funds. A copy of the information collection request (ICR) can be 
obtained by contacting the individual shown in the Addresses section of 
this notice.

DATES: Written comments must be submitted to the office shown in the 
Addresses section on or before June 19, 2009.

ADDRESSES: Direct all written comments to G. Christopher Cosby, Office 
of Policy and Research, Employee Benefits Security Administration, U.S. 
Department of Labor, 200 Constitution Avenue, NW., Room N-5718, 
Washington, DC 20210, (202) 693-8410, FAX (202) 219-4745 (These are not 
toll-free numbers.). Comments may also be submitted electronically to 
the following Internet e-mail address: ebsa.opr@dol.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    PTE 2002-12 exempts certain transactions that would be prohibited 
under the Employee Retirement Income Security Act of 1974 (the Act or 
ERISA) and the Federal Employees' Retirement System Act (FERSA), and 
provides relief from certain sanctions of the Internal Revenue Code of 
1986 (the Code). The exemption permits cross-trades of securities among 
Index and Model-Driven Funds (Funds) managed by managers (Managers), 
and among such Funds and certain large accounts (Large Accounts) that 
engage such Managers to carry out a specific portfolio restructuring 
program or to otherwise act as a ``trading adviser'' for such a 
program. By removing existing barriers to these types of transactions, 
the exemption increases the incidences of cross-trading, thereby 
lowering the transaction costs to plans in a number of ways from what 
they would be otherwise.
    In order for the Department to grant an exemption for a transaction 
or class of transactions that would otherwise be prohibited under 
ERISA, the statute requires the Department to make a finding that the 
exemption is administratively feasible, in the interest of the plan and 
its participants and beneficiaries, and protective of the rights of the 
participants and beneficiaries. To ensure that Managers have complied 
with the requirements of the exemption, the Department has included in 
the exemption certain recordkeeping and disclosure obligations that are 
designed to safeguard plan assets by periodically providing information 
to plan fiduciaries, who generally must be independent, about the 
cross-trading program. Initially, where plans are not invested in 
Funds, Managers must furnish information to plan fiduciaries about the 
cross-trading program, provide a statement that the Manager will have a 
potentially conflicting division of loyalties, and obtain written 
authorization from a plan fiduciary for a plan to participate in a 
cross-trading program. For plans that are currently invested in Funds, 
the Manager must provide annual notices to update the

[[Page 17986]]

plan fiduciary and provide the plan with an opportunity to withdraw 
from the program. For Large Accounts, prior to the cross-trade, the 
Manager must provide information about the cross-trading program and 
obtain written authorization from the fiduciary of a Large Account to 
engage in cross-trading in connection with a portfolio restructuring 
program. Following completion of the Large Account's restructuring, 
information must be provided by the Manager about all cross-trades 
executed in connection with a portfolio-restructuring program. Finally, 
the exemption requires that Managers maintain for a period of 6 years 
from the date of each cross-trade the records necessary to enable plan 
fiduciaries and certain other persons specified in the exemption (e.g., 
Department representatives or contributing employers), to determine 
whether the conditions of the exemption have been met.
    EBSA previously submitted the information collection provisions of 
PTE 2002-12 to the Office of Management and Budget (OMB) for review in 
connection with promulgation of the prohibited transaction exemption. 
OMB approved the information collection request (ICR) under OMB Control 
No. 1210-0115. The ICR approval is currently scheduled to expire on 
August 31, 2009.

II. Desired Focus of Comments

    The Department of Labor (Department) is particularly interested in 
comments that:
     Provide information related to the number of entities 
offering Index and Model-Driven Funds and their client plans, and the 
number of Large Accounts that may make use of the exemption;
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluate the accuracy of the Department's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submissions of responses.

III. Current Actions

    This notice requests comments on an extension of the information 
collections in PTE 2002-12. After considering comments received in 
response to this notice, the Department intends to submit the ICR to 
OMB for continuing approval. Extension of the information collection 
provision of the exemption is important because, without the 
disclosures and recordkeeping provided for in the exemption, 
participants' and beneficiaries' investments in a pension plan might 
not be adequately protected. In addition, Managers that cross trade 
securities among Funds or cross trade securities in connection with the 
restructuring of a portfolio of a Large Account would be subject to 
statutorily imposed sanctions under ERISA. Lastly, the exemption 
provides a benefit to plans and participants through savings that 
result from index/model cross-trading. No change to the existing ICR is 
being proposed or made at this time. A summary of the ICR and the 
current burden estimates follows:
    Agency: Employee Benefits Security Administration, Department of 
Labor.
    Title: Prohibited Transaction Class Exemption 2002-12, Cross-Trades 
of Securities by Index and Model-Driven Funds.
    Type of Review: Extension of a currently approved collection of 
information.
    OMB Number: 1210-0115.
    Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
    Respondents: 60.
    Responses: 960.
    Estimated Total Burden Hours: 855.
    Comments submitted in response to this notice will be summarized 
and/or included in the ICR submitted to OMB for approval; they will 
also become a matter of public record.

    Dated: April 13, 2009.
Joseph S. Piacentini,
Director, Office of Policy and Research, Employee Benefits Security 
Administration.
[FR Doc. E9-8904 Filed 4-17-09; 8:45 am]
BILLING CODE 4510-29-P