Application Nos. and Proposed Exemptions; D-11573, Citigroup Global Markets, Inc. and Its Affiliates (Together, CGMI or the Applicant); and L-11624, Boston Carpenters Apprenticeship and Training Fund (the Fund), et al., 33343-33355 [2010-14023]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 75, Number 112 (Friday, June 11, 2010)]
[Notices]
[Pages 33343-33355]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14023]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Application Nos. and Proposed Exemptions; D-11573, Citigroup 
Global Markets, Inc. and Its Affiliates (Together, CGMI or the 
Applicant); and L-11624, Boston Carpenters Apprenticeship and Training 
Fund (the Fund), et al.

AGENCY: Employee Benefits Security Administration, Labor

ACTION: Notice of proposed exemptions.

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[[Page 33344]]

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

Written Comments and Hearing Requests

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

ADDRESSES: All written comments and requests for a hearing (at least 
three copies) should be sent to the Employee Benefits Security 
Administration (EBSA), Office of Exemption Determinations, Room N-5700, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. Attention: Application No. ----, stated in each Notice of 
Proposed Exemption. Interested persons are also invited to submit 
comments and/or hearing requests to EBSA via e-mail or FAX. Any such 
comments or requests should be sent either by e-mail to: 
moffitt.betty@dol.gov, or by FAX to (202) 219-0204 by the end of the 
scheduled comment period. The applications for exemption and the 
comments received will be available for public inspection in the Public 
Documents Room of the Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC 20210.
    Warning: If you submit written comments or hearing requests, do not 
include any personally-identifiable or confidential business 
information that you do not want to be publicly-disclosed. All comments 
and hearing requests are posted on the Internet exactly as they are 
received, and they can be retrieved by most Internet search engines. 
The Department will make no deletions, modifications or redactions to 
the comments or hearing requests received, as they are public records.

Notice to Interested Persons

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

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

Citigroup Global Markets, Inc. and Its Affiliates (Together, CGMI or 
the Applicant) Located in New York, New York

[Application No. D-11573]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act (or ERISA) and section 
4975(c)(2) of the Code and in accordance with the procedures set forth 
in 29 CFR Part 2570, Subpart B (55 FR 32836, August 10, 1990).
Section I. Covered Transactions
    A. If the exemption is granted, the restrictions of section 406(a) 
of the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A) through (D) of the 
Code, shall not apply, effective May 31, 2009, to the purchase or 
redemption of shares by an employee benefit plan, an individual 
retirement account (an IRA), a retirement plan for self-employed 
individuals (a Keogh Plan), or an individual account pension plan that 
is subject to the provisions of Title I of the Act and established 
under section 403(b) of the Code (the Section 403(b) Plan) 
(collectively, the Plans) in the Trust for Consulting Group Capital 
Markets Funds (the Trust), sponsored by MSSB in connection with such 
Plans' participation in the TRAK Personalized Investment Advisory 
Service (the TRAK Program).
    B. If the exemption is granted, the restrictions of section 406(b) 
of the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(E) and (F) of the 
Code, shall not apply, effective May 31, 2009, with respect to the 
provision of (i) investment advisory services by the Adviser or (ii) an 
automatic reallocation option as described below (the Automatic 
Reallocation Option) to an independent fiduciary of a participating 
Plan (the Independent Plan Fiduciary), which may result in such 
fiduciary's selection of a portfolio (the Portfolio) \1\ in the TRAK 
Program for the investment of Plan assets.
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    \1\ For the avoidance of doubt, unless the context suggests 
otherwise, the term ``Portfolio'' includes the Stable Value 
Investments Fund, a collective trust fund established and maintained 
by First State Trust Company, formerly a wholly-owned subsidiary of 
Citigroup.
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    This exemption is subject to the following conditions set forth 
below in Section II.
Section II. General Conditions
    (a) The participation of Plans in the TRAK Program is
    (b) approved by an Independent Plan Fiduciary. For purposes of this 
requirement, an employee, officer or director of the Adviser and/or its 
affiliates covered by an IRA not subject to Title I of the Act will be 
considered an Independent Plan Fiduciary with respect to such IRA.
    (c) The total fees paid to the Adviser and its affiliates will 
constitute no more than reasonable compensation.
    (d) No Plan pays a fee or commission by reason of the acquisition 
or redemption of shares in the Trust.
    (e) The terms of each purchase or redemption of Trust shares remain 
at least as favorable to an investing Plan as those obtainable in an 
arm's length transaction with an unrelated party.
    (f) The Adviser provides written documentation to an Independent 
Plan Fiduciary of its recommendations or evaluations based upon 
objective criteria.
    (g) Any recommendation or evaluation made by the Adviser to an

[[Page 33345]]

Independent Plan Fiduciary is implemented only at the express direction 
of such Independent Plan Fiduciary, provided, however, that--
    (1) If such Independent Plan Fiduciary elects in writing (the 
Election), on a form designated by the Adviser from time to time for 
such purpose, to participate in the Automatic Reallocation Option under 
the TRAK Program, the affected Plan or participant account is 
automatically reallocated whenever the Adviser modifies the particular 
asset allocation recommendation which the Independent Plan Fiduciary 
has chosen. Such Election continues in effect until revoked or 
terminated by the Independent Plan Fiduciary in writing.
    (2) Except as set forth below in paragraph II(f)(3), at the time of 
a change in the Adviser's asset allocation recommendation, each account 
based upon the asset allocation model (the Allocation Model) affected 
by such change is adjusted on the business day of the release of the 
new Allocation Model by the Adviser, except to the extent that market 
conditions, and order purchase and redemption procedures, may delay 
such processing through a series of purchase and redemption 
transactions to shift assets among the affected Portfolios.
    (3) If the change in the Adviser's asset allocation recommendation 
exceeds an increase or decrease of more than 10 percent in the absolute 
percentage allocated to any one investment medium (e.g., a suggested 
increase in a 15 percent allocation to greater than 25 percent, or a 
decrease of such 15 percent allocation to less than 5 percent), the 
Adviser sends out a written notice (the Notice) to all Independent Plan 
Fiduciaries whose current investment allocation may be affected, 
describing the proposed reallocation and the date on which such 
allocation is to be instituted (the Effective Date). If the Independent 
Plan Fiduciary notifies the Adviser, in writing, at any time within the 
period of 30 calendar days prior to the proposed Effective Date that 
such fiduciary does not wish to follow such revised asset allocation 
recommendation, the Allocation Model remains at the current level, or 
at such other level as the Independent Plan Fiduciary then expressly 
designated, in writing. If the Independent Plan Fiduciary does not 
affirmatively `opt out' of the new Adviser recommendation, in writing, 
prior to the proposed Effective Date, such new recommendation is 
automatically effected by a dollar-for-dollar liquidation and purchase 
of the required amounts in the respective account.
    (4) An Independent Plan Fiduciary will receive a trade confirmation 
of each reallocation transaction. In this regard, for all Plan 
investors other than Section 404(c) Plan accounts (i.e., 401(k) Plan 
accounts), CGMI or MSSB, as applicable, mails trade confirmations on 
the next business day after the reallocation trades are executed. In 
the case of Section 404(c) Plan participants, notification depends upon 
the notification provisions agreed to by the Plan recordkeeper.
    (h) The Adviser generally gives investment advice in writing to an 
Independent Plan Fiduciary with respect to all available Portfolios. 
However, in the case of a Plan providing for participant-directed 
investments (the Section 404(c) Plan), the Adviser provides investment 
advice that is limited to the Portfolios made available under the Plan.
    (i) Any sub-adviser (the Sub-Adviser) that acts for the Trust to 
exercise investment discretion over a Portfolio is independent of 
Morgan Stanley, Inc. (Morgan Stanley), CGMI, MSSB and their respective 
affiliates (collectively, the Affiliated Entities).
    (j) Immediately following the acquisition by a Portfolio of any 
securities that are issued by any Affiliated Entity, such as Citigroup 
or Morgan Stanley common stock (the Adviser Common Stock), the 
percentage of that Portfolio's net assets invested in such securities 
will not exceed one percent. However, this percentage limitation may be 
exceeded if--
    (1) The amount held by a Sub-Adviser in managing a Portfolio is 
held in order to replicate an established third-party index (the 
Index).
    (2) The Index represents the investment performance of a specific 
segment of the public market for equity securities in the United States 
and/or foreign countries. The organization creating the Index is:
    (i) Engaged in the business of providing financial information;
    (ii) A publisher of financial news information; or
    (iii) A public stock exchange or association of securities dealers.
    The Index is created and maintained by an organization independent 
of the Affiliated Entities and is a generally-accepted standardized 
Index of securities which is not specifically tailored for use by the 
Affiliated Entities.
    (3) The acquisition or disposition of Adviser Common Stock does not 
include any agreement, arrangement or understanding regarding the 
design or operation of the Portfolio acquiring such Adviser Common 
Stock, which is intended to benefit the Affiliated Entities or any 
party in which any of the Affiliated Entities may have an interest.
    (4) The Independent Plan Fiduciary authorizes the investment of a 
Plan's assets in an Index Fund which purchases and/or holds the Adviser 
Common Stock and the Sub-Adviser is responsible for voting any shares 
of Adviser Common Stock that are held by an Index Fund on any matter in 
which shareholders of Adviser Common Stock are required or permitted to 
vote.
    (k) The quarterly investment advisory fee that is paid by a Plan to 
the Adviser for investment advisory services rendered to such Plan is 
offset by any amount in excess of 20 basis points that MSSB retains 
from any Portfolio (with the exception of the Money Market Investments 
Portfolio and the Stable Value Investments Portfolio for which neither 
MSSB nor the Trust will retain any investment management fee) which 
contains investments attributable to the Plan investor.
    (l) With respect to its participation in the TRAK Program prior to 
purchasing Trust shares,
    (1) Each Plan receives the following written or oral disclosures 
from the Adviser:
    (A) A copy of the Prospectus for the Trust discussing the 
investment objectives of the Portfolios comprising the Trust, the 
policies employed to achieve these objectives, the corporate 
affiliation existing among the Adviser and its affiliates, and the 
compensation paid to such entities.\2\
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    \2\ The fact that certain transactions and fee arrangements are 
the subject of an administrative exemption does not relieve the 
Independent Plan Fiduciary from the general fiduciary responsibility 
provisions of section 404 of the Act. In this regard, the Department 
expects the Independent Plan Fiduciary to consider carefully the 
totality of the fees and expenses to be paid by the Plan, including 
any fees paid directly to MSSB, CGMI or to other third parties.
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    (B) Upon written or oral request to the Adviser, a Statement of 
Additional Information supplementing the Prospectus which describes the 
types of securities and other instruments in which the Portfolios may 
invest, the investment policies and strategies that the Portfolios may 
utilize and certain risks attendant to those investments, policies and 
strategies.
    (C) A copy of the investment advisory agreement between the Adviser 
and such Plan which relates to participation in the TRAK Program and 
describes the Automatic Reallocation Option.
    (D) Upon written request of the Adviser, a copy of the respective 
investment advisory agreement between MSSB and the Sub-Advisers.

[[Page 33346]]

    (E) In the case of a Section 404(c) Plan, if required by the 
arrangement negotiated between the Adviser and the Plan, an explanation 
by an Adviser representative (the Financial Advisor) to eligible 
participants in such Plan, of the services offered under the TRAK 
Program and the operation and objectives of the Portfolios.
    (F) A copy of the proposed exemption and the final exemption 
pertaining to the exemptive relief described herein.
    (2) If accepted as an investor in the TRAK Program, an Independent 
Plan Fiduciary of an IRA or Keogh Plan is required to acknowledge, in 
writing, prior to purchasing Trust shares that such fiduciary has 
received copies of the documents described above in subparagraph (k)(1) 
of this section.
    (3) With respect to a Section 404(c) Plan, written acknowledgement 
of the receipt of such documents is provided by the Independent Plan 
Fiduciary (i.e., the Plan administrator, trustee or named fiduciary, as 
the recordholder of Trust shares). Such Independent Plan Fiduciary is 
required to represent in writing to the Adviser that such fiduciary is 
(a) independent of the Affiliated Entities and (b) knowledgeable with 
respect to the Plan in administrative matters and funding matters 
related thereto, and able to make an informed decision concerning 
participation in the TRAK Program.
    (4) With respect to a Plan that is covered under Title I of the 
Act, where investment decisions are made by a trustee, investment 
manager or a named fiduciary, such Independent Plan Fiduciary is 
required to acknowledge, in writing, receipt of such documents and 
represent to the Adviser that such fiduciary is (a) independent of the 
Affiliated Entities, (b) capable of making an independent decision 
regarding the investment of Plan assets and (c) knowledgeable with 
respect to the Plan in administrative matters and funding matters 
related thereto, and able to make an informed decision concerning 
participation in the TRAK Program.
    (m) Subsequent to its participation in the TRAK Program, each Plan 
receives the following written or oral disclosures with respect to its 
ongoing participation in the TRAK Program:
    (1) The Trust's semi-annual and annual report including a financial 
statement for the Trust and investment management fees paid by each 
Portfolio.
    (2) A written quarterly monitoring statement containing an analysis 
and an evaluation of a Plan investor's account to ascertain whether the 
Plan's investment objectives have been met and recommending, if 
required, changes in Portfolio allocations.
    (3) If required by the arrangement negotiated between the Adviser 
and a Section 404(c) Plan, a quarterly, detailed investment performance 
monitoring report, in writing, provided to an Independent Plan 
Fiduciary of such Plan showing Plan level asset allocations, Plan cash 
flow analysis and annualized risk adjusted rates of return for Plan 
investments. In addition, if required by such arrangement, Financial 
Advisors meet periodically with Independent Plan Fiduciaries of Section 
404(c) Plans to discuss the report as well as with eligible 
participants to review their accounts' performance.
    (4) If required by the arrangement negotiated between the Adviser 
and a Section 404(c) Plan, a quarterly participant performance 
monitoring report provided to a Plan participant which accompanies the 
participant's benefit statement and describes the investment 
performance of the Portfolios, the investment performance of the 
participant's individual investment in the TRAK Program, and gives 
market commentary and toll-free numbers that enable the participant to 
obtain more information about the TRAK Program or to amend his or her 
investment allocations.
    (5) On a quarterly and annual basis, written disclosures to all 
Plans of (a) the percentage of each Portfolio's brokerage commissions 
that are paid to the Affiliated Entities and (b) the average brokerage 
commission per share paid by each Portfolio to the Affiliated Entities, 
as compared to the average brokerage commission per share paid by the 
Trust to brokers other than the Affiliated Entities, both expressed as 
cents per share.
    (n) The Adviser maintains or causes to be maintained, for a period 
of (6) six years, the records necessary to enable the persons described 
in paragraph (m)(1) of this section to determine whether the applicable 
conditions of this exemption have been met. Such records are readily 
available to assure accessibility by the persons identified in 
paragraph (1) of this section.
    (1) Notwithstanding any provisions of section 504(a)(2) and (b) of 
the Act, the records referred to in the first paragraph of this section 
are unconditionally available at their customary location for 
examination during normal business hours by--
    (i) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service;
    (ii) Any fiduciary of a participating Plan or any duly authorized 
representative of such fiduciary;
    (iii) Any contributing employer to any participating Plan or any 
duly authorized employee representative of such employer; and
    (iv) Any participant or beneficiary of any participating Plan, or 
any duly authorized representative of such participant or beneficiary.
    (2) A prohibited transaction is not deemed to have occurred if, due 
to circumstances beyond the control of the Adviser, the records are 
lost or destroyed prior to the end of the six-year period, and no party 
in interest other than the Adviser is subject to the civil penalty that 
may be assessed under section 502(i) of the Act or to the taxes imposed 
by sections 4975(a) and (b) of the Code if the records are not 
maintained or are not available for examination as required by 
paragraph (1) of this section.
    (3) None of the persons described in subparagraphs (ii)-(iv) of 
this section (m)(1) is authorized to examine the trade secrets of the 
Adviser or commercial or financial information which is privileged or 
confidential.
    (4) Should the Adviser refuse to disclose information on the basis 
that such information is exempt from disclosure, the Adviser shall, by 
the close of the thirtieth (30th) day following the request, provide 
written notice advising that person of the reason for the refusal and 
that the Department may request such information.
Section III. Definitions
    For purposes of this proposed exemption:
    (a) The term ``Adviser'' means CGMI or MSSB as investment adviser 
to Plans.
    (b) The term ``Affiliated Entities'' means Morgan Stanley, CGMI, 
MSSB and their respective affiliates.
    (c) The term ``CGMI'' means Citigroup Global Markets Inc. and any 
affiliate of Citigroup Global Markets Inc.
    (d) An ``affiliate'' of any of the Affiliated Entities includes:
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with the Affiliated Entity. (For purposes of this subparagraph, the 
term ``control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual);
    (2) Any individual who is an officer (as defined in Section III(g) 
hereof), director or partner in the Affiliated Entity or a person 
described in subparagraph (d)(1);
    (3) Any corporation or partnership of which the Affiliated Entity, 
or an affiliate described in subparagraph (d)(1), is a 10 percent or 
more partner or owner; and

[[Page 33347]]

    (4) Any corporation or partnership of which any individual which is 
an officer or director of the Affiliated Entity is a 10 percent or more 
partner or owner.
    (e) An ``Independent Plan Fiduciary'' is a Plan fiduciary which is 
independent of the Affiliated Entities and is either:
    (1) A Plan administrator, sponsor, trustee or named fiduciary, as 
the recordholder of Trust shares under a Section 404(c) Plan;
    (2) A participant in a Keogh Plan;
    (3) An individual covered under (i) a self-directed IRA or (ii) a 
Section 403(b) Plan, which invests in Trust shares;
    (4) A trustee, investment manager or named fiduciary responsible 
for investment decisions in the case of a Title I Plan that does not 
permit individual direction as contemplated by Section 404(c) of the 
Act; or
    (5) A participant in a Plan, such as a Section 404(c) Plan, who is 
permitted under the terms of such Plan to direct, and who elects to 
direct, the investment of assets of his or her account in such Plan.
    (f) The term ``MSSB'' means Morgan Stanley Smith Barney Holdings 
LLC, together with its subsidiaries.
    (g) The term ``officer'' means a president, any vice president in 
charge of a principal business unit, division or function (such as 
sales, administration or finance), or any other officer who performs a 
policymaking function for the entity.
Section IV. Effective Date
    If granted, this proposed exemption will be effective as of May 31, 
2009 with respect to the Covered Transactions, the General Conditions 
and the Definitions that are described in Sections I, II and III.

Summary of Facts and Representations

    1. If granted, the proposed individual exemption described herein 
would replace Prohibited Transaction Exemption (PTE) 2009-12 (74 FR 
13231, March 26, 2009), an exemption previously granted to CGMI. PTE 
2009-12 relates to the operation of the TRAK Personalized Investment 
Advisory Service (the TRAK Program) and the Trust for Consulting Group 
Capital Markets Funds (the Trust).
    PTE 2009-12 provides exemptive relief from section 406(a) of the 
Act and section 4975(c)(1)(A) through (D) of the Code, for the purchase 
or redemption of shares by various types of Plans, such as ERISA Title 
I Plans, IRAs, Keogh Plans, and Section 403(b) Plans, whose assets are 
invested in the Trust that was previously established by Citigroup in 
connection with such Plans' participation in the TRAK Program.
    PTE 2009-12 also provides exemptive relief from section 406(b) of 
the Act and section 4975(c)(1)(E) and (F) of the Code, with respect to 
the provision, by Citigroup's Consulting Group, of (i) investment 
advisory services or (ii) an Automatic Reallocation Option to an 
independent fiduciary of a participating Plan (i.e., the Independent 
Plan Fiduciary), which may result in such fiduciary's selection of a 
Portfolio \3\ in the TRAK Program for the investment of Plan assets.
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    \3\ For the avoidance of doubt, unless the context suggests 
otherwise, the term ``Portfolio'' includes the Stable Value 
Investments Fund, a collective trust fund established and maintained 
by First State Trust Company (First State), formerly a wholly-owned 
subsidiary of Citigroup.
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    2. The Department originally granted to Shearson Lehman Brothers, 
Inc. PTE 92-77, which relates to a less evolved form of the TRAK 
Program.\4\ PTE 92-77 was superseded by PTE 94-50, which allowed Smith, 
Barney Inc. (Smith Barney), the predecessor to Salomon Smith Barney 
Inc. (Salomon Smith Barney), to add a daily-traded collective 
investment fund (the GIC Fund) to the existing fund Portfolios, 
describe the various entities operating the GIC Fund, and replace 
references to Shearson Lehman with Smith Barney.\5\ PTE 99-15, which 
superseded PTE 94-50, allowed Salomon Smith Barney to create a broader 
distribution of TRAK-related products, implement a record-keeping 
reimbursement offset procedure under the TRAK Program, adopt the 
Automated Reallocation Option under the TRAK Program that would reduce 
the asset allocation fee paid to Salomon Smith Barney by a Plan 
investor, and expand the scope of the exemption to include Section 
403(b) Plans.\6\
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    \4\ 57 FR 45833 (October 5, 1992).
    \5\ 59 FR 32024 (June 21, 1994).
    \6\ 64 FR 1648 (April 5, 1999).
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    3. Thereafter, PTE 99-15 was replaced by PTE 2000-45, which 
primarily modified the definition of an ``affiliate'' of Salomon Smith 
Barney so that it only covered persons or entities that had a 
significant role in the decisions made by, or which were managed or 
influenced by, Salomon Smith Barney, or included any corporation or 
partnership of which Salomon Smith Barney or an affiliate was a 10 
percent or more partner or owner.\7\
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    \7\ 65 FR 54315 (September 7, 2000).
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    4. Finally, on March 26, 2009, the Department granted PTE 2009-12. 
As the result of a merger transaction (the Merger Transaction) between 
Citigroup and Legg Mason, Inc. (Legg Mason), on December 1, 2005, an 
affiliate of Citigroup acquired an approximately 14% equity ownership 
interest in Legg Mason common and preferred stock. This meant that two 
investment adviser subsidiaries of Legg Mason (Brandywine Asset 
Management LLC and Western Asset Management Company), which were sub-
advisers (the Sub-Advisers) to three Trust Portfolios under the TRAK 
Program, were no longer considered ``independent'' of Citigroup and its 
affiliates in violation of Section II(h) of the General Conditions.\8\ 
Also, the Sub-Advisers were considered ``affiliates'' of Citigroup 
under Section III(b)(3) of the General Definitions of PTE 2000-45 
inasmuch as Citigroup became a 10% or more indirect owner of each Sub-
Adviser following the Merger Transaction.
---------------------------------------------------------------------------

    \8\ In PTE 2000-45, Section II(h) of the General Conditions 
provided that ``Any sub-adviser (the Sub-Adviser) that acts for the 
Trust to exercise investment discretion over a Portfolio will be 
independent of Salomon Smith Barney and its affiliates.''
---------------------------------------------------------------------------

    5. Although Citigroup reduced its ownership interest in Legg Mason 
to under the 10% ownership threshold on March 10, 2006, the Department 
decided that PTE 2000-45 was no longer effective for the transactions 
described therein, because Section II(h) of the General Conditions and 
Section III(b) of the Definitions were not met. Therefore, the 
Department granted PTE 2009-12, a new exemption, which replaced PTE 
2000-45. Unless otherwise noted, PTE 2009-12 incorporates by reference 
the facts, representations, operative language and definitions of PTE 
2000-45. In addition, PTE 2009-12 updates the operative language of PTE 
2000-45. Further, PTE 2009-12 provides a temporary and limited 
exception to the definition of the term ``affiliate,'' so that during 
the three month period of time within which Citigroup held a 10% or 
greater economic ownership interest in Legg Mason, the Sub-Advisers 
would continue to be considered ``independent'' of CGMI and its 
affiliates for purposes of Section II(h) and not ``affiliated'' with 
CGMI and its affiliates for purposes of Section III(b) of the 
exemption. Finally, PTE 2009-12 provides exemptive relief for a new 
method to compute fee offsets that are required under the exemption to 
mitigate past anomalies.
    PTE 2009-12 is effective from December 1, 2005 until March 10, 
2006, with respect to the limited exception. It is also effective as of 
December 1, 2005 with respect to the transactions covered by the 
exemption, the General Conditions, and the Definitions. Further, PTE 
2009-12 is effective as of

[[Page 33348]]

January 1, 2008, with respect to the new fee offset procedure.
Replacement of PTE 2009-12
    6. CGMI and its predecessors and current and future affiliates and 
Morgan Stanley Smith Barney LLC and its current and future affiliates 
(collectively, the Applicants) have requested a new exemption that 
would replace PTE 2009-12 to reflect the terms of a joint venture 
transaction (the Joint Venture Transaction) between Citigroup and 
Morgan Stanley, Inc. (Morgan Stanley) that occurred on May 31, 2009. As 
a result of the Joint Venture Transaction, which is described in detail 
below, the Applicants state that the exemptive relief provided under 
PTE 2009-12 is no longer effective due to a change in the parties and 
the ownership structure of the TRAK Program. Therefore, the Applicants 
request a new exemption that would replace PTE 2009-12. If granted, the 
new exemption would be made retroactive to May 31, 2009 and it would 
provide the same relief with respect to the transactions covered under 
PTE 2009-12. In addition, the General Conditions and Definitions of the 
new exemption would be similar to those as set forth in PTE 2009-12.
The Joint Venture Transaction
    7. The Applicants represent that on January 13, 2009, Citigroup and 
Morgan Stanley entered into a ``Joint Venture Contribution and 
Formation Agreement'' (the Joint Venture Agreement), which established 
the terms of a new joint venture (the Joint Venture) between Citigroup 
and Morgan Stanley. Citigroup and Morgan Stanley are global financial 
services providers, each headquartered in New York, New York. As of the 
end of 2008, Citigroup reported total client assets under management as 
approximately $1.3 trillion. Citigroup's current employee workforce 
consists of approximately 300,000 individuals in approximately 16,000 
offices in 140 countries around the world. As of the end of 2008, 
Morgan Stanley reported total client assets under management as 
approximately $546 billion. Its current employee workforce of 
approximately 60,000 serves a diversified group of corporations, 
governments, financial institutions, and individuals, and operates from 
over 1,200 offices in over 36 countries around the world.
    8. Under the Joint Venture Agreement, each of Citigroup and Morgan 
Stanley (including their respective subsidiaries) agreed to contribute 
specified businesses into the Joint Venture, together with all 
contracts, employees, property licenses and other assets (as well as 
liabilities) used primarily in the contributed businesses. Generally, 
in the case of Citigroup, the contributed businesses included 
Citigroup's retail brokerage and futures business operated under the 
name ``Smith Barney'' in the United States and Australia and operated 
under the name ``Quilter'' in the United Kingdom, Ireland and Channel 
Islands. Certain investment advisory and other businesses of Citigroup 
were also contributed, including Citigroup's Consulting Group and the 
sponsorship of the TRAK Program. In the case of Morgan Stanley, the 
contributed businesses consisted generally of Morgan Stanley's global 
wealth management (retail brokerage) and private wealth management 
businesses. According to the Applicants, no valuations for the 
contributed businesses were agreed upon between the parties. It was 
agreed, however, that the value of the Smith Barney business plus $2.75 
billion would equal an ownership percentage of 49% of the Joint Venture 
entity, Morgan Stanley Smith Barney Holdings LLC (Holdings), a Delaware 
limited liability company (together with its subsidiaries, MSSB). The 
closing date of the Joint Venture Transaction occurred on May 31, 2009 
(the Closing).
    Prior to the Closing, Morgan Stanley had formed Holdings, the sole 
member of Morgan Stanley Smith Barney LLC, which conducts most of the 
Joint Venture's domestic operations as a dual-registered broker-dealer 
and investment adviser. Holdings presently generates about $14 billion 
in net revenues. It has 18,500 financial advisers, 1,000 locations 
worldwide and services about 6.8 million households.
    Immediately following the Closing, Morgan Stanley owned indirectly 
through subsidiaries 51% of Holdings, and Citigroup owned 49% of 
Holdings, through CGMI. Morgan Stanley has call rights to purchase from 
Citigroup (a) an additional 14% of Holdings after the third anniversary 
of Closing, (b) an additional 15% of Holdings after the fourth 
anniversary and (c) the balance of Citigroup's interest in Holdings 
after the fifth anniversary.\9\
---------------------------------------------------------------------------

    \9\ The Applicants believe that Citgroup's ownership interest in 
MSSB will reach a point where it will no longer have an interest in 
MSSB or the Trust that could affect its best judgment as a 
fiduciary. The Applicants explain that at such point in time, it 
will no longer be necessary for Citigroup to rely on this exemption 
for the TRAK Program. The Department expresses no opinion on when it 
will no longer be necessary for Citigroup to rely on this exemption, 
given that this will be a facts and circumstances determination.
---------------------------------------------------------------------------

    9. The Joint Venture Agreement was amended and restated on May 29, 
2009 (the Amended Contribution Agreement). Under the Amended 
Contribution Agreement, Citigroup transferred its managed futures 
business and its proprietary investments to MSSB on July 31, 2009, in 
exchange for a cash payment of $299.778 million paid by Morgan Stanley, 
and Morgan Stanley purchased additional interests in MSSB worth 
approximately $2.7 billion on August 1, 2009, in order to maintain its 
total percentage of ownership interests in MSSB at 51%. The Amended 
Contribution Agreement also provided for an ``introducing broker'' 
structure for a period of time after the Closing. Under the 
``introducing broker'' structure, clients of Morgan Stanley's legacy 
businesses continue to have their brokerage transactions cleared 
through, and their accounts custodied and carried by, Morgan 
Stanley.\10\ Similarly, customers of the Citigroup legacy businesses 
continue to have their brokerage transactions cleared through, and have 
their accounts custodied and carried by, CGMI.\11\ Over time, it is 
expected that the contributed businesses and operations of Morgan 
Stanley and Citigroup will be integrated into one operation and that 
ultimately, MSSB will become a fully self-clearing and self-custody 
service firm and will carry its own customer accounts.
---------------------------------------------------------------------------

    \10\ Morgan Stanley continues to provide an array of services 
for these accounts which include clearing and settling securities 
transactions, providing trade confirmations and customer statements 
and performing certain cashiering functions, custody services and 
other related services.
    \11\ CGMI clears and settles securities transactions, provides 
trade confirmations and customer statements and performs certain 
cashiering functions, custody services and other related services 
for these accounts.
---------------------------------------------------------------------------

Current Status of Operations
    10. Since the Closing, MSSB's advisory services are being provided 
through two distribution channels. One distribution channel generally 
sponsors the advisory programs, including the TRAK Program, previously 
sponsored by Smith Barney and/or CGMI (the SB Channel). Therefore, 
since the Closing, the TRAK Program has continued to be made available 
to customers of the SB Channel. The other distribution channel 
generally sponsors the advisory programs previously sponsored by Morgan 
Stanley's Global Wealth Management Group (the MS Channel). As stated 
previously, the parties' ultimate goal is for the businesses, 
operations and systems of the MS Channel and the SB Channel to be 
integrated. However, decisions as to which programs will be offered to

[[Page 33349]]

whom or which programs will survive over the long-term have not been 
made.
    11. Also, since the Closing, CGMI has continued to offer the TRAK 
Program to its retained clients. As of August 31, 2009, the TRAK 
Program had assets in excess of $6.13 billion, over $3.74 billion of 
which is held in Plan accounts. At present, the investments under the 
TRAK Program encompass the Trust, which consists of eleven Portfolios, 
as well as the Stable Value Investments Fund, a collective trust fund 
established and maintained by First State. The Trust and the Stable 
Value Investment Fund are advised by one or more unaffiliated Sub-
Advisers selected by MSSB and First State, respectively. In addition to 
the TRAK Program, CGMI offers other investment advisory programs to its 
retained clients under an advisory services agreement between Citigroup 
and Holdings dated as of the Closing. Under the agreement, Holdings 
provides a wide range of investment advisory services to Citigroup 
advisory programs pursuant to a delegation by Citigroup to Holdings of 
certain of Citigroup's obligations to provide such services. Citigroup 
retained clients were provided notice of this arrangement.
Descriptions of Revisions to the Operative Language of PTE 2009-12
    12. The proposed exemption generally modifies the operative 
language of PTE 2009-12 to take into account the new ownership 
structure of the TRAK Program formed as a result of the Joint Venture 
Transaction. Section I of PTE 2009-12 has been modified to conform the 
effective date of the proposal with the closing of the Joint Venture 
Transaction, May 31, 2009. In addition, the operative language in 
Section I(A) and I(B) has been revised to provide that, as a result of 
the Joint Venture, MSSB rather than Citigroup is now the sponsor of the 
Trust in connection with Plans' investment in the TRAK Program, and 
that investment advisory services may be provided by MSSB in addition 
to CGMI, respectively.
    13. Section II of PTE 2009-12, General Conditions, has been 
modified throughout by replacing the terms ``CGMI,'' ``Consulting 
Group,'' or ``Citigroup,'' with the term ``Adviser,'' which has been 
added as a new defined term in Section III to mean ``CGMI or MSSB as 
investment adviser to Plans.'' The changes were made to these terms in 
order to reflect the addition of MSSB as a sponsor of the TRAK Program 
resulting from the Joint Venture Transaction. In addition, in Section 
II(h), the term ``Affiliated Entities,'' which has been added as a new 
defined term in Section III to mean ``Morgan Stanley, CGMI, MSSB, and 
their respective affiliates,'' has been added to take into account the 
addition of MSSB as a sponsor of the TRAK Program.
    14. Section II(j) of PTE 2009-12 has been modified to reflect the 
fact that CGMI has been removed from the reallocation formula because 
it no longer manages and supervises the Trust and the Portfolios. Prior 
to the Closing, Citigroup Investment Advisory Services LLC (CIAS), an 
affiliate of CGMI, managed and supervised the Trust and Portfolios. In 
connection with the Joint Venture Transactions, CIAS was contributed to 
MSSB and as an affiliate of MSSB, it manages and supervises the Trust 
and the Portfolios. Thus, the modifications to the language in Section 
II(j) seek to clarify the parties to the covered transactions, but do 
not change the formula for the calculation of the quarterly investment 
advisory fee that is paid by the Plan to the Adviser. Furthermore, 
Section II(j) has been amended to correct the names of the Portfolios 
that are excluded from the calculation of the quarterly investment 
advisory fee, namely by substituting the term ``Money Markets 
Investment Portfolio'' for ``Government Money Investments Portfolio,'' 
and the term ``Stable Value Investments Portfolio'' for ``GIC Fund.''
    15. Section III of PTE 2009-12, which sets forth the Definitions, 
has been modified by: (i) Adding Section III(a), Adviser, to mean 
``CGMI or MSSB as investment adviser to Plans'' to reflect the new 
sponsorship of the TRAK Program by MSSB, in addition to the previous 
sponsorship by CGMI; (ii) adding Section III(b), Affiliated Entities, 
to mean ``Morgan Stanley, CGMI, MSSB and their respective affiliates'' 
to reflect the addition of MSSB as a sponsor of the TRAK Program 
resulting from the Joint Venture Transaction; (iii) substituting the 
term ``Affiliated Entities'' for ``CGMI'' throughout Section III(d) in 
order to broaden the scope of the term ``affiliate'' to capture the 
current affiliates of the Applicants; (iv) amending the sectional 
references in Sections III(d)(2) and (3) to conform to the 
corresponding modifications to Section III; (v) amending the definition 
of ``Independent Plan Fiduciary'' in Section III(e) so that the 
Independent Plan Fiduciary is independent of MSSB in addition to CGMI 
and their respective affiliates, thereby preserving the purpose of the 
provisions in PTE 2009-12 that provide that only a party independent of 
the Applicants is exercising discretion with respect to, among other 
things, Plans' decisions to invest in the TRAK Program; and (vi) adding 
a new definition of ``MSSB'' in Section III(f) to mean ``Morgan Stanley 
Smith Barney Holdings LLC, together with its affiliates.''
    16. Section IV of PTE 2009-12, pertaining to exemptive relief for 
the temporary and limited exception to the definition of the term 
``affiliate,'' has been stricken since it is no longer applicable. 
Previously, Section IV provided that, during the three month period of 
time within which Citigroup held a 10% or greater economic ownership 
interest in Legg Mason, the Sub-Advisers would continue to be 
considered ``independent'' of CGMI and its affiliates for purposes of 
Section II(h) and not ``affiliated'' with CGMI and its affiliates for 
purposes of Section III(b) of the exemption. Because the time period 
has expired, Section IV is no longer relevant to the exemption.
    Finally, the Effective Date in new Section IV is modified to 
provide that the exemption, if granted, will be effective as of May 31, 
2009, which is the closing date of the Joint Venture Transaction.
Summary
    17. In summary, the Applicant represents that the transactions 
described herein have satisfied or will satisfy the statutory criteria 
for an exemption set forth in section 408(a) of the Act because:
    (a) The participation of Plans in the TRAK Program has been 
approved or will be approved by an Independent Plan Fiduciary;
    (b) The total fees paid to the Adviser and its affiliates has 
constituted or will constitute no more than reasonable compensation;
    (c) No Plan has paid or will pay a fee or commission by reason of 
the acquisition or redemption of shares in the Trust;
    (d) The terms of each purchase or redemption of Trust shares have 
remained or will remain at least as favorable to an investing Plan as 
those obtainable in an arm's length transaction with an unrelated 
party;
    (e) The Adviser has provided or will provide written documentation 
to an Independent Plan Fiduciary of its recommendations or evaluations 
based upon objective criteria, and such recommendation or evaluation 
has been implemented or will be implemented only at the express 
direction of such Independent Plan Fiduciary.
    (f) The Adviser has given or will give investment advice in writing 
to an Independent Plan Fiduciary with respect to all available 
Portfolios (with respect to participant directed plans,

[[Page 33350]]

such advice is limited to the Portfolios made available under the 
Plan);
    (g) Any Sub-Adviser that acts for the Trust to exercise investment 
discretion over a Portfolio has been independent or will be independent 
of Morgan Stanley, CGMI, MSSB and their respective affiliates;
    (h) Immediately following the acquisition by a Portfolio of Adviser 
Common Stock, the percentage of that Portfolio's net assets invested in 
such securities generally has not exceeded or will not exceed one 
percent;
    (i) The quarterly investment advisory fee that is paid by a Plan to 
the Adviser for investment advisory services rendered to such Plan has 
been offset or will be offset by any amount in excess of 20 basis 
points that MSSB retains from any Portfolio (with the exception of the 
Money Market Investments Portfolio and the Stable Value Investments 
Portfolio for which neither MSSB nor the Trust will retain any 
investment management fee) which contains investments attributable to 
the Plan investor;
    (j) With respect to its participation in the TRAK Program, prior to 
purchasing Trust shares, each Plan has received or will receive written 
or oral disclosures and offering materials from the Adviser which 
generally disclose all material facts concerning the purpose, 
structure, operation, and investment in the TRAK Program, and describe 
the Adviser's recommendations or evaluations, including the reasons and 
objective criteria forming the basis for such recommendations or 
evaluations;
    (k) Subsequent to its participation in the TRAK Program, each Plan 
has received or will receive periodic written disclosures from the 
Adviser with respect to the financial condition of the TRAK Program, 
the total fees that it and its affiliates will receive from such Plans 
and the value of the Plan's interest in the TRAK Program, and on a 
quarterly and annual basis, written disclosures to all Plans of (a) the 
percentage of each Portfolio's brokerage commissions that are paid to 
the Affiliated Entities and (b) the average brokerage commission per 
share paid by each Portfolio to the Affiliated Entities, as compared to 
the average brokerage commission per share paid by the Trust to brokers 
other than the Affiliated Entities, both expressed as cents per share; 
and
    (l) The Adviser has complied with, and will continue to comply 
with, the recordkeeping requirements provided in Section II(m) of the 
proposed exemption, for so long as such records are required to be 
maintained.

Notice to Interested Persons

    Notice of the proposed exemption will be mailed by first class mail 
to the Independent Plan Fiduciary of each Plan currently participating 
in the TRAK Program, or, in the case of a Plan covered by Section 
404(c) of the Act, to the recordholder of the Trust shares. Such notice 
will be given within 45 days of the publication of the notice of 
pendency in the Federal Register. The notice will contain a copy of the 
notice of proposed exemption, as published in the Federal Register, and 
a supplemental statement, as required pursuant to 29 CFR 2570.43(b)(2). 
The supplemental statement will inform interested persons of their 
right to comment on and/or to request a hearing with respect to the 
pending exemption. Written comments and hearing requests are due within 
75 days of the publication of the proposed exemption in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Warren Blinder of the Department, 
telephone (202) 693-8553. (This is not a toll-free number.)

Boston Carpenters Apprenticeship and Training Fund (the Fund) Located 
in Boston, Massachusetts

[Exemption Application No: L-11624]

Proposed Exemption

    The Department of Labor is considering granting an exemption under 
the authority of section 408(a) of the Act in accordance with 
procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 
32847, August 10, 1990). If the proposed exemption is granted, the 
restrictions of 406(b)(1), and 406(b)(2) of the Act shall not apply 
effective for the period from January 29, 2010, through June 30, 2010, 
to the lease (the Lease) by the Fund from the NERCC, LLC (the Building 
Corporation), a party in interest with respect to the Fund, of a 
condominium unit (the Condo) in a building (the Building) owned by the 
Building Corporation, where the New England Regional Council of 
Carpenters (the Union), also a party in interest with respect to the 
Fund, indirectly owns the only other condominium unit in the Building; 
provided that, at the time the transaction was entered into, the 
following conditions were satisfied:
    (a) The proposed exemption is conditioned upon satisfaction at all 
times of the terms and conditions of this exemption, and upon adherence 
to the material facts and representations, as described in this 
proposed exemption, and, as set forth in application D-11624, and in 
application D-11558, including those representations that are required 
by 29 CFR 2570.34 and 29 CFR 2570.35 of the Department's regulations;
    (b) prior to entering into the Lease, the Fund sought legal advice 
from Aaron D. Krakow, Esq. (Mr. Krakow), acting as legal counsel on 
behalf of the Fund, who advised the Fund that it was permissible for 
the Fund to enter into a short term lease with the Building 
Corporation, and the Board of Trustees of the Fund (the Board) relied 
on Mr. Krakow's advice;
    (c) the Lease which is the subject of this exemption and any other 
leasing arrangement of the Condo between the Fund and the Building 
Corporation and/or the Union, if not terminated sooner, shall terminate 
on the date that the Fund closes on the purchase of the Condo from the 
Building Corporation; and the Fund shall have no obligation to pay rent 
to the Union or to the Building Corporation after the date of such 
termination;
    (d) before the Fund entered into the Lease of the Condo, James F. 
Grosso, Esq. (Mr. Grosso), of O'Reilly, Grosso & Gross, PC, acting as 
attorney for the Fund, assisted in the negotiation of the terms of the 
Lease, reviewed and approved the terms of such Lease to ensure that 
such terms are at least as favorable to the Fund as an arm's length 
transaction with an unrelated party, determined that such terms are 
fair and reasonable, and selected an independent, qualified appraiser 
to determine the fair market rental value of the Condo;
    (e) Mr. Grosso is responsible throughout the duration of the Lease 
for: (i) Monitoring the rent payments made by the Fund to ensure that 
such payments are consistent with the amount of rental specified under 
the terms of such Lease, (ii) monitoring the payments of the Fund's 
share of the expenses for taxes, insurance, and operating expenses 
(including repairs) to ensure that such payments represent a fair 
apportionment of such expenses; and (iii) determining that the Fund has 
sufficient assets to pay the rental amount and its portion of taxes, 
insurance, and operating expenses (including repairs);
    (f) throughout the duration of the Lease, the terms of the Lease of 
the Condo between the Fund and the Building Corporation are at all 
times satisfied;
    (g) the rent paid by the Fund for the Condo under the terms of the 
Lease is at no time greater than the fair market rental value of the 
Condo, as determined by an independent, qualified appraiser selected by 
Mr. Grosso;

[[Page 33351]]

    (h) under the provisions of the Lease, the subject transaction is 
on terms and at all times remains on terms that are at least as 
favorable to the Fund as those that would have been negotiated under 
similar circumstances at arm's length with an unrelated third party;
    (i) the transaction is appropriate and helpful in carrying out the 
purposes for which the Fund is established or maintained;
    (j) the Board maintains, or causes to be maintained within the 
United States for a period of six (6) years in a manner that is 
convenient and accessible for audit and examination, such records as 
are necessary to enable the persons described, below, in paragraph 
(k)(1) of this exemption to determine whether the conditions of this 
exemption have been met; except that--
    (1) if the records necessary to enable the persons described, 
below, in paragraph (k)(1) of this exemption to determine whether the 
conditions of this exemption have been met are lost or destroyed, due 
to circumstances beyond the control of the Board, then no prohibited 
transaction will be considered to have occurred solely on the basis of 
the unavailability of those records; and
    (2) No party in interest, other than the Board shall be subject to 
the civil penalty that may be assessed under section 502(i) of the Act, 
or to the taxes imposed by section 4975(a) and (b) of the Code, if the 
records are not maintained, or are not available for examination as 
required by paragraph (j) of this exemption; and
    (k)(1) Except as provided, below, in paragraph (k)(2) of this 
exemption and notwithstanding any provisions of sections (a)(2) and (b) 
of section 504 of the Act, the records referred to in paragraph (j) of 
this exemption are unconditionally available at their customary 
location for examination during normal business hours by:
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or any other applicable 
federal or state regulatory agency;
    (B) Any fiduciary of the Fund, or any duly authorized 
representative of such fiduciary;
    (C) Any contributing employer to the Fund and any employee 
organization whose members are covered by the Fund, or any duly 
authorized employee or representative of these entities; or
    (D) Any participant or beneficiary of the Fund, or any duly 
authorized representative of such participant or beneficiary.
    (2) None of the persons described, above, in paragraph (k)(1)(B)-
(D) of this exemption are authorized to examine trade secrets or 
commercial or financial information that is privileged or confidential.

Summary of Facts and Representations

    1. The Union is a labor organization made up of thirty (30) local 
carpenter unions in six (6) New England states. The local unions that 
are affiliated with the Union include local union nos. 33, 40, 67, 218, 
and 723 (the Locals). Members of the Union are covered by the Fund. The 
Union and the Locals are parties in interest with respect to the Fund, 
pursuant to section 3(14)(D) of the Act, as employee organizations any 
of whose members are covered by such Fund.
    2. The Fund is an employee welfare benefit plan, as that term is 
defined in the Act. Further, the Fund is a multiemployer apprenticeship 
and training fund. The Fund is a Massachusetts nonprofit organization, 
and is exempt from income taxes under the provisions of Section 
501(c)(3) of the Internal Revenue Code.
    3. The Fund provides training and education to carpenter 
apprentices in the greater Boston area. The Fund also provides training 
and education to journeymen carpenters in the greater Boston area.
    4. The Fund is maintained under collective bargaining agreements 
negotiated between the Union of the United Brotherhood of Carpenters 
and Joiners of America (the UBCJA) and the following multiemployer 
bargaining organizations: (a) The Labor Relations Division of the 
Associated General Contractors of Massachusetts, Inc.; (b) The Building 
Trades Employers' Association of Boston and Eastern Massachusetts, 
Inc.; and (c) The Labor Relations Division of the Construction Industry 
of Massachusetts (collectively, the Employer Associations). Employers 
any of whose employees are covered by the Fund, are parties in interest 
with respect to the Fund, pursuant to section 3(14)(C) of the Act. The 
UBCJA is a party in interest with respect to the Fund, pursuant to 
section 3(14)(D) of the Act, as an employee organization any of whose 
members are covered by such Fund.
    5. The Board has the authority to invest the assets of the Fund. 
The Board and the members of the Board, as persons who have investment 
discretion over the assets of the Fund, are fiduciaries with respect to 
the Fund, pursuant to section 3(21)(A) of the Act. As a fiduciaries of 
the Fund, the Board and the members of the Board are also parties in 
interest with respect to such Fund, pursuant to section 3(14)(A) of the 
Act.
    The Board consists of six (6) labor representatives and six (6) 
management representatives. Among the labor representatives serving on 
the Board are Joseph Power (Mr. Power), Thomas Flynn, Steve Tewksbury, 
Charles MacFarlane, Richard Pedi (Mr. Pedi), and Richard Scaramozza. 
All of the labor representatives on the Board are Union employees and 
members of various locals affiliated with the Union. Mr. Power, one of 
the labor representatives on the Board, also serves on the Executive 
Board of the Union.
    The representatives of management serving on the Board are Donald 
MacKinnon (Mr. MacKinnon), Tom Gunning, III, George Allen (Mr. Allen), 
William Fitzgerald, Christopher Pennie, and Mark DeNapoli (Mr. 
DeNapoli).
    It is represented that the Board, and more specifically the Finance 
Committee of the Board, each meet monthly, and at those meetings review 
the Fund's finances for the month, including the Fund's payments to the 
Union for rent and for the Fund's share of taxes, insurance, and 
operating expenses (including repairs) in connection with the Lease of 
the Condo to the Fund.
    6. In the fiscal year ending September 30, 2008, the Fund received 
employer contributions of $2,584,069, based on approximately 6.7 
million hours of work. In addition, the Fund received other income of 
approximately $189,000. As of September 30, 2008, the Fund had expenses 
of $2,254,078 and total assets of $5,910,043. Included in the Fund's 
total assets is a parcel of improved real property (the Existing 
Facility) located at 385 Market Street in the Brighton section of 
Boston, Massachusetts.
    7. Until February 2010 when construction on the Condo was 
completed, the Fund provided all of its classes and training in the 
Existing Facility. Purchased in 1975, from an unrelated third party, 
the Fund owns the Existing Facility free and clear of any mortgages. In 
February of 2010, the Fund entered into a purchase and sale agreement 
for the Existing Facility with Eli Jammal of Brookline Development, an 
unrelated party, for $1.5 million. It is represented that the sales 
price of the Existing Facility is $210,000 more than the net book value 
of the Existing Facility carried on the 2008 audited financial 
statement of the Fund.
    8. On February 1, 2008, the Union purchased for cash in the amount 
of $5.8 million, a parcel of improved real property (the Original 
Property) from an unrelated third party. The Original

[[Page 33352]]

Property is described as a 48,000 square foot two-story building on a 
64,000 square foot lot located at 750 Dorchester Avenue, in Boston, 
Massachusetts. When purchased, the Union planned to renovate and expand 
the Original Property.
    9. The Union established the Building Corporation as a limited 
liability company for the purpose of developing the Original Property. 
In this regard, the Union contributed the Original Property to the 
Building Corporation in exchange for sole interest in the Building 
Corporation. The Building Corporation is a party in interest with 
respect to the Fund, pursuant to section 3(14)(G) of the Act, as 50 
percent (50%) or more of the interests in the Building Corporation are 
owned by the Union.
    10. Construction on the renovation and expansion of the Original 
Property began in January 2009. As of February 2010, the Union had 
completed the renovation and expansion of the Original Property and had 
separated the Building into two (2) condominium units. The Union owns 
one of the condominium units through its ownership of the Building 
Corporation, and the Building Corporation intends to sell the other 
condominium unit to the Fund.
    On February 24, 2009, the Fund filed an application (L-11558) with 
the Department seeking an administrative exemption to permit the Fund 
to purchase the Condo. The Department published a Notice of Proposed 
Exemption (the Notice) in the Federal Register on December 22, 
2009.\12\ In this regard, appearing elsewhere in this issue of the 
Federal Register, the Department is publishing a final exemption for 
the purchase of the Condo by the Fund.
---------------------------------------------------------------------------

    \12\74 FR 68120.
---------------------------------------------------------------------------

    11. In order that the Fund could hold its spring 2010 classes in 
the Condo and in order to establish a closing date with the prospective 
purchaser of the Existing Facility, the Board decided to pursue the 
option of renting the Condo to the Fund for a short term until the Fund 
could obtain financing to close on the purchase of the Condo and could 
obtain a final exemption from the Department to permit the Fund to 
purchase the Condo from the Building Corporation.
    12. It is represented that the Board retained its management co-
counsel, Mr. Grosso of O'Reilly, Grosso & Gross, PC to represent the 
Fund in the leasing transaction. It is represented that Mr. Grosso is 
independent in that he has never represented the Building Corporation 
and does not provide legal services to the Union. Mr. Grosso is 
qualified in that he is an attorney representing employers and 
management in labor relations matters, primarily in the construction 
industry.
    It is represented that the responsibilities of Mr. Grosso, acting 
as attorney on behalf of the Fund, included obtaining an appraisal of 
the fair market rental value of the Condo.
    13. On January 15, 2010, Mr. Grosso obtained an appraisal of the 
fair market rental value of the Condo from CBRE/CB Richard Ellis 
(CBRE). James T. Moore (Mr. Moore), Senior Vice President/Partner of 
CBRE and Harris E. Collins (Mr. Collins), Senior Vice President/P