Notice of Proposed Exemption, 36515-36519 [E9-17467]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 74, Number 140 (Thursday, July 23, 2009)]
[Notices]
[Pages 36515-36519]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-17467]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application No. and Proposed Exemption Involving: Bank of New York 
Mellon Corporation, D-11553]


Notice of Proposed Exemption

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of proposed exemption.

-----------------------------------------------------------------------

SUMMARY: This document contains a notice of pendency before the 
Department of Labor (the Department) of a proposed exemption from 
certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (ERISA or the Act) and/or the 
Internal Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests

    All interested persons are invited to submit written comments or 
requests for a hearing on the pending exemption, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice. Comments and 
requests for a hearing should state: (1) The name, address, and 
telephone number of the person making the comment or request, and (2) 
the nature of the person's interest in the exemption and the manner in 
which the person would be adversely affected by the exemption. A 
request for a hearing must also state the issues to be addressed and 
include a general description of the evidence to be presented at the 
hearing.

ADDRESSES: All written comments and requests for a hearing (at least 
three copies) should be sent to the Employee Benefits Security 
Administration (EBSA), Office of Exemption Determinations, Room N-5649, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. Attention: Application No. D-11553. Interested persons are also 
invited to submit comments and/or hearing requests to EBSA via e-mail 
or FAX. Any such comments or requests should be sent either by e-mail 
to: moffitt.betty@dol.gov, or by FAX to (202) 219-0204 by the end of 
the scheduled comment period. The application for exemption and the 
comments received will be available for public inspection in the Public 
Documents Room of the Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC 20210.

Notice to Interested Persons

    Notice of the proposed exemption will be provided to all interested 
persons in the manner agreed upon by the applicant and the Department 
within 15 days of the date of publication in the Federal Register. Such 
notice shall include a copy of the notice of proposed exemption as 
published in the Federal Register and shall inform interested persons 
of their right to comment and to request a hearing (where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemption was requested in an 
application filed pursuant to section 408(a) of the Act and/or section 
4975(c)(2) of the Code, and in accordance with procedures set forth in 
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 
of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the 
Secretary of the Treasury to issue exemptions of the type requested to 
the Secretary of Labor. Therefore, this notice of proposed exemption is 
issued solely by the Department.
    The application contains representations with regard to the 
proposed exemption which is summarized below. Interested persons are 
referred to the application on file with the Department for a complete 
statement of the facts and representations.

Bank of New York Mellon Corporation

    Located in Pittsburgh, PA

[Application No. D-11553]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, 32847, August 10, 1990).
    If the proposed exemption is granted, the restrictions of sections 
406(a)(1)(A) through (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)(A) through (E) of the Code,\1\\\ shall 
not apply, effective November 25, 2008, to the cash sale of certain 
securities (the Securities) issued by Lehman Brothers Holdings Inc. or 
its affiliates (Lehman) for an aggregate purchase price of 
approximately $5,512,395 by the EB SMAM Securities Lending Temporary 
Investment Fund (the Cash Collateral Fund) to the Bank of New York 
Mellon Corporation (BNYMC), a party in interest with respect to the 
employee benefit plans (the Plan(s)) invested, directly or indirectly, 
in the Cash Collateral Fund; provided that the following conditions are 
met:
---------------------------------------------------------------------------

    \1\ For purposes of this proposed exemption, references to 
specific provisions of Title I of the Act, unless otherwise 
specified, refer also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (a) The sale of the Securities was a one-time transaction for cash;
    (b) The Cash Collateral Fund received an amount for the sale of the 
Securities which was equal to the sum of:
    (1) the amortized cost of the Securities, and (2) the accrued but

[[Page 36516]]

unpaid interest on each of the Securities, determined as of the earlier 
of: (A) the date of the sale of the Securities, or (B) the maturity 
date of each of the Securities;
    (c) The amount received by the Cash Collateral Fund for the sale of 
the Securities was greater than the aggregate market value of the 
Securities at the time of the sale, as determined based on information 
regarding the then prevailing trading prices for the Securities 
obtained from two independent broker-dealers;
    (d) The Cash Collateral Fund did not bear any commissions, fees, 
transactions costs, or other expenses in connection with the sale of 
the Securities;
    (e) The Bank of New York Mellon (BNY Mellon), as trustee of the 
Cash Collateral Fund, determined that the sale of the Securities was 
appropriate for and in the best interest of the Cash Collateral Fund, 
and the Plans invested, directly or indirectly, in the Cash Collateral 
Fund, at the time of the transaction;
    (f) BNY Mellon took all appropriate actions necessary to safeguard 
the interests of the Cash Collateral Fund, and the Plans invested, 
directly or indirectly, in the Cash Collateral Fund, in connection with 
the transaction, given that Lehman had filed for bankruptcy and that 
the value of the Securities had declined substantially;
    (g) If the exercise of any of BNYMC's rights, claims, or causes of 
action in connection with its ownership of the Securities results in 
BNYMC recovering from Lehman, the issuer of the Securities, or from any 
third party, an aggregate amount that is more than the sum of:
    (1) The purchase price paid for such Securities by BNYMC; and
    (2) The interest due on the Securities from and after the date 
BNYMC purchased the Securities from the Cash Collateral Fund, 
determined at the last-published interest rate on the Securities 
preceding Lehman's bankruptcy filing, BNYMC will refund such excess 
amount promptly to the Cash Collateral Fund (after deducting all 
reasonable expenses incurred in connection with the recovery);
    (h) BNY Mellon and its affiliates, as applicable, maintain, or 
cause to be maintained, for a period of six (6) years from the date of 
the transaction such records as are necessary to enable the persons 
described, below, in paragraph (i)(1), to determine whether the 
conditions of this exemption have been met, except that--
    (1) No party in interest with respect to a Plan which engages in 
the transaction, other than BNY Mellon 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 (i)(1); and
    (2) A separate prohibited transaction shall not be considered to 
have occurred solely because, due to circumstances beyond the control 
of BNY Mellon and its affiliates, as applicable, such records are lost 
or destroyed prior to the end of the six-year period.
    (i)(1) Except as provided, below, in paragraph (i)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to, above, in paragraph (h) 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; or
    (B) Any fiduciary of a Plan that engages in the transaction, 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 
transaction, or any authorized employee or representative of these 
entities; or
    (D) Any participant or beneficiary of a Plan that engages in the 
transaction, or duly authorized employee or representative of such 
participant or beneficiary;
    (2) None of the persons described, above, in paragraph (i)(1)(B)-
(D) shall be authorized to examine trade secrets of BNY Mellon and its 
affiliates, as applicable, or commercial or financial information which 
is privileged or confidential; and
    (3) Should BNY Mellon and its affiliates, as applicable, refuse to 
disclose information on the basis that such information is exempt from 
disclosure, BNY Mellon and its affiliates, as applicable, shall, by the 
close of the thirtieth (30th) day following the request, provide a 
written notice advising that person of the reasons for the refusal and 
that the Department may request such information.
    Effective Date: This proposed exemption, if granted will be 
effective, as of November 25, 2008.

Summary of Facts and Representations

    1. BNY Mellon is a state bank subject to regulation by the state of 
New York. As of December 31, 2008, BNY Mellon managed assets in excess 
of $210 billion, a substantial portion of which consisted of assets of 
plans subject to the Act. BNY Mellon is a subsidiary of BNYMC.
    2. BNYMC is the parent of BNY Mellon by reason of its 100 percent 
(100%) ownership of BNY Mellon. BNYMC has numerous other subsidiaries 
and affiliates. BNYMC is a Delaware financial services company that 
provides a wide range of banking and fiduciary services to a broad 
array of clients, including plans subject to the Act and plans subject 
to section 4975 of the Code.
    3. The Cash Collateral Fund is a collective investment fund managed 
by BNY Mellon. The Cash Collateral Fund is a group trust that is exempt 
from federal income tax, pursuant to Rev. Rul. 81-100. BNY Mellon 
serves as a discretionary trustee for the Cash Collateral Fund. As of 
November 25, 2008, the value of the portfolio of the Cash Collateral 
Fund was approximately $486,303,272.
    4. The Cash Collateral Fund was established to hold collateral 
received in connection with the securities lending activities of three 
collective investment funds: (a) The EB SMAM 1-3 Year Government Bond 
Index Fund, (b) the EB SMAM 3-10 Year Government Bond Index Fund, and 
(c) the EB SMAM Long Government Bond Index Fund (collectively, the 
Lending Funds and together with the Cash Collateral Fund (the Funds)). 
As of November 25, 2008, the effective date of this proposed exemption, 
the Lending Funds were the only investors in the Cash Collateral Fund.
    5. Each of the Lending Funds is a group trust that is exempt from 
federal income tax, pursuant to Rev. Rul. 81-100. BNY Mellon serves as 
a discretionary trustee for the Lending Funds. As of November 25, 2008, 
the value of the aggregate portfolios of the Lending Funds was 
approximately, $686,048,723.
    6. Because the requested exemption involves a transaction with a 
collective investment fund in which a large number of Plans have a 
direct or indirect interest, the applicant, BNYMC, has not specifically 
identified any of the Plans involved in the subject transaction. No 
plans maintained by BNYMC or any of its affiliates had an interest, 
directly or indirectly, in any of the Funds at the time of the 
transaction.
    7. BNY Mellon is a fiduciary, pursuant to section 3(14)(A) of the 
Act, as the discretionary trustee of the Funds in which the Plans 
invest. BNY Mellon is also a party in interest, pursuant to section 
3(14)(B) of the Act, as a services

[[Page 36517]]

provider with respect to the Plans invested, directly or indirectly, in 
the Funds. Pursuant to section 3(14)(H) of the Act, BNYMC is a party in 
interest with respect to the Plans invested, directly or indirectly, in 
the Funds, as the 100 percent (100%) owner of BNY Mellon, a service 
provider to the Funds.
    8. As of November 25, 2008, there were five direct investors in the 
Lending Funds, including: (a) Two other collective investment funds 
maintained by BNY Mellon (the BNY Mellon Funds), (b) one collective 
investment fund maintained by an entity unrelated to BNY Mellon, and 
(c) two Plans subject to the Act. In addition, thirty-eight (38) other 
Plans subject to the Act were indirect investors in the Lending Funds 
by reason of such Plans' interests, directly or indirectly, in the BNY 
Mellon Funds. It is represented that none of these Plans owns, directly 
or indirectly, greater than 20 percent (20%) of the interests in the 
Cash Collateral Fund.
    9. The Securities which are the subject of this proposed exemption 
are floating rate securities issued by Lehman. Three Securities were 
acquired and held by the Cash Collateral Fund, prior to November 25, 
2008. At the time the Securities were acquired, the Securities were 
rated ``A1'' by Moody's and ``A+'' by S&P rating agencies. These three 
Securities are identified as: (a) LEHMAN BROTHERS HLDG-LEH (purchased 
12/19/06; maturity date 12/23/08); (b) LEHMAN BROTHERS HLDG-LEH 
(purchased 3/21/07; maturity date 3/23/09); and (c) LEHMAN BROTHERS 
HLDG-LEH (purchased 3/22/07; maturity date 10/22/08).
    The Cash Collateral Fund purchased two of the Securities involved 
in the subject transaction from Lehman at par (i.e., $100) in 
connection with the initial issuance of such Securities by Lehman. As a 
result, there was no premium to amortize and no discount to accrete 
with respect to these two Securities. The third of the Securities 
involved in the subject transaction was purchased by the Cash 
Collateral Fund from Morgan Stanley at a slight premium to par 
($100.0528). The premium reflects the fact that this security was 
purchased on the secondary market after its initial issuance. In this 
regard, it is represented that the purchase occurred at a time when 
interest rates had fallen slightly subsequent to the most recent reset 
date, thereby causing the value of this security at the time of 
purchase to be slightly higher than its par value.
    10. The decision for the Cash Collateral Fund to invest in the 
Securities was made by BNY Mellon. Prior to the investment by the Cash 
Collateral Fund in the Securities, BNY Mellon conducted an 
investigation of the potential investment, examining and considering 
the economic and other terms of the Securities. BNY Mellon represents 
that the investment in the Securities was consistent with the 
applicable investment policies and objectives of the Cash Collateral 
Fund.\2\
---------------------------------------------------------------------------

    \2\ The Department is expressing no opinion in this proposed 
exemption regarding whether the acquisition and holding of the 
Securities by the Cash Collateral Fund violated any of the fiduciary 
responsibility provisions of Part 4 of Title I of the Act. In this 
regard, the Department notes that section 404(a) of the Act 
requires, among other things, that a fiduciary of a plan act 
prudently, solely in the interest of such plan's participants and 
beneficiaries, and for the exclusive purpose of providing benefits 
to participants and beneficiaries when making investment decisions 
on behalf of such plan. Section 404(a) of the Act also states that 
the fiduciary of a plan should diversify the investments of such 
plan so as to minimize the risk of large losses, unless under the 
circumstances it is clearly prudent not to do so.
     In this regard, the Department is not providing an opinion as 
to whether a particular category of investments or an investment 
strategy would be considered prudent or in the best interests of a 
plan as required by section 404 of the Act. The determination of the 
prudence of a particular investment or investment course of action 
must be made by a plan fiduciary after appropriate consideration of 
those facts and circumstances that given the scope of such 
fiduciary's investment duties, the fiduciary knows or should know 
are relevant to the particular investment or investment course of 
action involved, including a plan's potential exposure to losses and 
the role of the investment or investment course of action plays in 
that portion of the plan's portfolio with respect to which the 
fiduciary has investment duties (see 29 CFR 2550.404a-1). The 
Department also notes that in order to act prudently in making 
investment decisions, a plan fiduciary must consider, among other 
factors, the availability, risks and potential return of alternative 
investments for the plan. Thus, a particular investment by a plan, 
which is selected in preference to other alternative investments, 
would generally not be prudent if such investment involves a greater 
risk to the security of a plan's assets than other comparable 
investments offering a similar return or result.
---------------------------------------------------------------------------

    11. On September 15, 2008, Lehman filed for Chapter 11 bankruptcy 
protection. BNY Mellon represents that following the date of Lehman's 
bankruptcy filing, the market value of the Securities decreased 
substantially, the Securities became relatively illiquid, and the 
Securities traded, if at all, at prices substantially below amortized 
cost.
    12. It is represented that because the first two Securities were 
purchased in connection with the initial issuance of such Securities by 
Lehman there was no premium to amortize and no discount with respect to 
these two Securities, such that the amortized cost of these two 
Securities was at all times equal to their par value (i.e., $100). 
Accordingly, the amortized cost for each of these two Securities is 
represented as approximately $1,703,424, and $3,407,847, respectively.
    However, the premium (i.e., $.0528 per $100) on the third security, 
consistent with standard accounting and valuation practice, would have 
been amortized on a straight-line, daily basis from the date of 
purchase (3/22/07) of this security through its maturity date (10/28/
08). When Lehman filed for bankruptcy on September 15, 2008, the 
amortization was discontinued with the result that a tiny portion of 
the premium (approximately $12 on the aggregate holding) remained. As a 
result, the amortized cost of this security was slightly above par when 
it was purchased by BNYMC on November 25, 2008. Accordingly, the par 
value and the amortized cost for this security are represented as 
approximately $354,744 and $354,756, respectively.
    13. BNY Mellon further represents that on or about November 25, 
2008, it obtained information from two independent broker-dealers--UBS 
and Bank of America Securities--that the market for the Securities was 
in extreme distress, with prices for actual trades being substantially 
lower than the sum of the amortized cost for the Securities, plus 
accrued and unpaid interest thereon. In particular, BNYMC was informed 
by each of these broker-dealers that the prevailing prices for the 
Securities were in the range of $8.50 to $9.00 per $100 of par value 
(i.e., a discount of approximately 90 percent (90%)) from the price 
paid by BNYMC.
    14. In view of the substantial decrease in the value of the 
Securities, BNY Mellon has submitted an application for an individual 
exemption requesting relief from sections 406(a)(1)(A) through (D), for 
the cash sale of the Securities by the Cash Collateral Fund for a lump 
sum payment in the aggregate amount of approximately $5,512,395 by 
BNYMC, given that BNYMC is a party in interest by reason of its 100 
percent (100%) ownership of BNY Mellon, a service provider to each of 
the Plans invested, directly or indirectly, in the Cash Collateral 
Fund.
    In addition, BNY Mellon has requested relief from 406(b)(1) and 
406(b)(2) of the Act for the purchase by BNYMC of the Securities from 
the Cash Collateral fund, because BNYMC (an affiliate of BNY Mellon, 
the discretionary trustee) would be purchasing the Securities for its 
own account.
    15. On November 25, 2008, BNYMC purchased the Securities from the 
Cash Collateral Fund. In this regard, shortly before the consummation 
of the transaction, BNY Mellon sent a written notice to the designated 
representative

[[Page 36518]]

of each of the investors having a direct interest in the Lending Funds 
of BNY Mellon. The notice informed such investors of BNY Mellon's 
intent to cause the Cash Collateral Fund to sell the Securities to 
BNYMC. Accordingly, BNYMC, the applicant, has requested that the 
exemption provide retroactive relief, effective November 25, 2008.
    16. As of November 25, 2008, the effective date of this proposed 
exemption, the amortized cost for each of the Securities were 
represented as approximately $1,703,424, $3,407,847, and $354,756, 
respectively. The Securities had a total amortized cost of 
approximately $5,466,027. The accrued but unpaid interest for each of 
the Securities is represented as approximately $11,217, $32,568, and 
$2,583, respectively. The total accrued but unpaid interest on the 
Securities was approximately $46,368. BNYMC purchased the Securities 
from the Cash Collateral Fund for a lump sum payment of approximately 
$5,512,395, which sum represented the aggregate amortized cost of the 
Securities (i.e., $5,466,027), plus the aggregate accrued but unpaid 
interest on such Securities (i.e., $46,368) through the earlier of 
November 25, 2008, or the maturity date of the Securities. BNY Mellon 
notes that, in determining the amount of accrued interest subsequent to 
the date preceding Lehman's bankruptcy filing, the last published 
interest rate on the Securities prior to the bankruptcy filing was 
utilized. With regard to the three (3) Securities which are the subject 
of this exemption, the last published interest rates were, respectively 
2.52188 percent (2.52188%); and 3.66 percent (3.66%), and 2.88063 
percent (2.88063%).
    17. BNY Mellon represents that the requested exemption is 
administratively feasible, because the transaction was a one-time sale 
for cash. Further, the exemption involves an easily identifiable 
transaction which does not require on-going monitoring by the 
Department.
    18. BNY Mellon, as trustee of the Funds, believes that the sale of 
the Securities to BNYMC was in the best interest of the Funds, and the 
Plans invested, directly, or indirectly, in the Funds, at the time of 
the transaction. In this regard, the aggregate value of the assets of 
the Funds increased, as a result of the subject transaction, and each 
Plan's pro rata share, directly or indirectly, of such value increased 
as well.
    BNY Mellon states that any sale of the Securities on the open 
market would have produced significant losses for the Funds and for the 
investors, including the Plans, participating in the Funds, given 
Lehman's bankruptcy filing, the resulting distressed market for the 
Securities, and the general disruption in the debt markets. In this 
regard, BNY Mellon represents that the sale of the Securities by the 
Cash Collateral Fund to BNYMC benefited the investors in the Funds, 
because the purchase price paid by BNYMC for the Securities 
substantially exceeded the aggregate fair market value of the 
Securities, as determined based on information regarding the then 
prevailing trading prices for the Securities obtained from two (2) 
independent broker-dealers. It is represented that the purchase of the 
Securities by BNYMC placed the Cash Collateral Fund in substantially 
the same position, as would have been the case had Lehman, the issuer 
of the Securities, not become insolvent. Further, in connection with 
the proposed transaction, the Funds did not bear any brokerage 
commissions, fees, transactions costs, or other expenses.
    19. It is represented that BNY Mellon determined that the purchase 
price of approximately $5,512,395 paid by BNYMC to the Cash Collateral 
would be appropriate and in the best interest of the Funds, as such 
price would protect the Funds and the investors having an interest in 
the Funds, including the Plans, from investment losses with respect to 
the Securities. BNY Mellon also determined that the purchase price of 
the Securities paid by BNYMC would be permissible under applicable 
banking law.
    20. BNY Mellon represents that it took all appropriate actions 
necessary to safeguard the interests of the Funds and their 
participating investors in connection with the sale of the Securities, 
given that Lehman had filed for bankruptcy and that the value of the 
Securities had declined substantially. In this regard, it is 
represented that the exemption is protective of the rights of the 
participants and beneficiaries of the Plans, because the requested 
exemption contains safeguards that are similar to two (2) other 
exemptions previously granted by the Department and are equally 
protective as those other exemptions.\3\ In particular, the sale of the 
Securities by the Cash Collateral Fund to BNYMC resulted in an 
assignment of all of the Cash Collateral Fund's rights, claims, and 
causes of action against Lehman or any third party arising in 
connection with or out of the issuance of the Securities or the 
purchase of the Securities by the Cash Collateral Fund. Further, the 
exemption would require that if the exercise of any of the foregoing 
rights, claims, or causes of action results in BNYMC recovering from 
Lehman or from any third party an aggregate amount that is more than 
the sum of: (a) The purchase price paid for the Securities by BNYMC; 
and (b) the interest due on the Securities from and after the date 
BNYMC purchased the Securities from the Cash Collateral Fund, 
determined at the last published rate on the Securities preceding the 
Lehman's bankruptcy filings, then BNYMC will refund such excess amount 
promptly to the Cash Collateral Fund (after deducting all reasonable 
expenses incurred in connection with the recovery).
---------------------------------------------------------------------------

    \3\ \\Prohibited Transaction Exemption 2008-12, Mellon Bank N.A. 
(73 FR 55540, September 25, 2008) and Prohibited Transaction 
Exemption 95-98, Boston Safe Deposit and Trust Company (60 FR 53811, 
October 17, 1995).
---------------------------------------------------------------------------

    21. In summary, BNY Mellon, the applicant, represents that the 
proposed transaction satisfies the statutory criteria of section 408(a) 
of the Act and section 4975 of the Code because:
    (a) The sale of the Securities was a one-time transaction for cash;
    (b) The Cash Collateral Fund received an amount for the sale of the 
Securities which was equal to the sum of:
    (1) the amortized cost of the Securities, and
    (2) the accrued but unpaid interest on each of the Securities, 
determined as of the earlier of: (A) the date of the sale of the 
Securities, or (B) the maturity date of the each of the Securities;
    (c) The amount paid for the Securities was substantially greater 
than the aggregate market value of the Securities at the time of the 
sale, as determined based on information regarding the then prevailing 
trading prices for the Securities obtained from two (2) independent 
broker-dealers;
    (d) The Cash Collateral Fund did not bear any commissions, fees, 
transactions costs, or other expenses in connection with the sale of 
the Securities;
    (e) BNY Mellon, as trustee of the Cash Collateral Fund, determined 
that the sale of the Securities was appropriate for and in the best 
interest of the Cash Collateral Fund, and the Plans invested, directly 
or indirectly, in the Cash Collateral Fund, at the time of the 
transaction;
    (f) BNY Mellon took all appropriate actions necessary to safeguard 
the interests of the Cash Collateral Fund, and the Plans invested, 
directly or indirectly, in the Cash Collateral Fund, in connection with 
the transaction, given that Lehman had filed for bankruptcy and that 
the value of the Securities had declined substantially;
    (g) BNYMC will promptly refund to the Cash Collateral Fund any 
amount recovered from Lehman or any third party in connection with the 
exercise of

[[Page 36519]]

any rights, claims, or causes of action in connection as a result of 
BNYMC's ownership of the Securities, if such amounts are in excess of 
the sum of:
    (1) The purchase price paid for the Securities by BNYMC; and
    (2) The interest due on the Securities from and after the date 
BNYMC purchased the Securities from the Cash Collateral Fund, 
determined at the last-published interest rate on the Securities 
preceding Lehman's bankruptcy filing (after deducting all reasonable 
expenses incurred in connection with the recovery);
    (h) BNY Mellon and its affiliates, as applicable, will maintain, or 
cause to be maintained, for a period of six (6) years from the date of 
any of covered transaction such records as are necessary to determine 
whether the conditions of this exemption have been met.

Notice to Interested Persons

    The persons who may be interested in the publication in the Federal 
Register of the Notice of Proposed Exemption (the Notice) include each 
of the investors with a direct interest in the Cash Collateral Fund.
    It is represented that each of these interested persons will be 
notified of the publication of the Notice by personal or express 
delivery, within fifteen (15) calendar days of publication of the 
Notice in the Federal Register. Such mailing will contain a copy of the 
Notice, as it appears in the Federal Register on the date of 
publication, plus a copy of the Supplemental Statement, as required, 
pursuant to 29 CFR 2570.43(b)(2), which will advise all interested 
persons of their right to comment and to request a hearing.
    Any written comments and/or requests for a hearing must be received 
by the Department from interested persons within 45 days of the 
publication of this proposed exemption in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena C. Le Blanc of the 
Department, telephone (202) 693-8540. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
section 404 of the Act, which, among other things, require a fiduciary 
to discharge his duties respecting the plan solely in the interest of 
the participants and beneficiaries of the plan and in a prudent fashion 
in accordance with section 404(a)(1)(b) of the Act; nor does it affect 
the requirement of section 401(a) of the Code that the plan must 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemption, 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 exemption, 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 16th day of July 2009.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. E9-17467 Filed 7-22-09; 8:45 am]
BILLING CODE 4510-29-P