15230 Federal Register / Vol. 67, No. 61 / Friday, March 29, 2002 / Notices

FL020045 (Mar. 01, 2002) CA020004 (Mar. 01, 2002) Signed at Washington, D.C. this 21st day of FL020096 (Mar. 01, 2002) CA020009 (Mar. 01, 2002) March 2002. FL020100 (Mar. 01, 2002) CA020019 (Mar. 01, 2002) Carl J. Poleskey, FL020103 (Mar. 01, 2002) CA020023 (Mar. 01, 2002) Chief, Branch of Construction Wage Kentucky CA020025 (Mar. 01, 2002) Determinations. KY020025 (Mar. 01, 2002) CA020028 (Mar. 01, 2002) [FR Doc. 02–7301 Filed 3–28–02; 8:45 am] VOLUME IV: CA020029 (Mar. 01, 2002) BILLING CODE 4510–27–M Wisconsin CA020030 (Mar. 01, 2002) WI020016 (Mar. 01, 2002) CA020031 (Mar. 01, 2002) DEPARTMENT OF LABOR WI020017 (Mar. 01, 2002) CA020032 (Mar. 01, 2002) WI020032 (Mar. 01, 2002) CA020033 (Mar. 01, 2002) Pension and Welfare Benefits WI020033 (Mar. 01, 2002) CA020035 (Mar. 01, 2002) Administration CA020036 (Mar. 01, 2002) VOLUME V: [Application No. D–11002, et al.] CA020037 (Mar. 01, 2002) Iowa Nevada Proposed Exemptions; Deutsche Bank IA020004 (Mar. 01, 2002) NV020004 (Mar. 01, 2002) AG Kansas NV020005 (Mar. 01, 2002) KS020002 (Mar. 01, 2002) AGENCY: Pension and Welfare Benefits KS020006 (Mar. 01, 2002) General Wage Determination Administration, Labor. KS020007 (Mar. 01, 2002) Publication ACTION: Notice of proposed exemptions. KS020012 (Mar. 01, 2002) General wage determinations issued SUMMARY: This document contains KS020013 (Mar. 01, 2002) under the Davis-Bacon and related Acts, KS020015 (Mar. 01, 2002) notices of pendency before the including those noted above, may be Department of Labor (the Department) of KS020016 (Mar. 01, 2002) found in the Government Printing Office KS020018 (Mar. 01, 2002) proposed exemptions from certain of the (GPO) document entitled ‘‘General Wage prohibited transaction restrictions of the KS020019 (Mar. 01, 2002) determinations Issued Under the Davis- KS020020 (Mar. 01, 2002) Employee Retirement Income Security Bacon And Related Acts’’. This KS020021 (Mar. 01, 2002) Act of 1974 (the Act) and/or the Internal publication is available at each of the 50 KS020023 (Mar. 01, 2002) Revenue Code of 1986 (the Code). Regional Government Depository KS020028 (Mar. 01, 2002) Libraries and many of the 1,400 Written Comments and Hearing KS020035 (Mar. 01, 2002) Government Depository Libraries across Requests Oklahoma the country. OK020013 (Mar. 01, 2002) All interested persons are invited to OK020014 (Mar. 01, 2002) General wage determinations issued submit written comments or requests for OK020016 (Mar. 01, 2002) under the Davis-Bacon and related Acts a hearing on the pending exemptions, OK020034 (Mar. 01, 2002) are available electronically at no cost on unless otherwise stated in the Notice of OK020036 (Mar. 01, 2002) the Government Printing Office site at Proposed Exemption, within 45 days OK020037 (Mar. 01, 2002) www.access.gpo.gov/davisbacon. They from the date of publication of this Texas are also available electronically by Federal Register Notice. Comments and TX020002 (Mar. 01, 2002) subscription to the Davis-Bacon Online requests for a hearing should state: (1) TX020003 (Mar. 01, 2002) Service (http:// The name, address, and telephone TX020007 (Mar. 01, 2002) davisbacon.fedworld.gov) of the number of the person making the TX020010 (Mar. 01, 2002) National Technical Information Service comment or request, and (2) the nature TX020051 (Mar. 01, 2002) (NTIS) of the U.S. Department of of the person’s interest in the exemption TX020054 (Mar. 01, 2002) Commerce at 1–800–363–2168. This and the manner in which the person TX020081 (Mar. 01, 2002) subscription offers value-added features would be adversely affected by the such as electronic delivery of modified exemption. A request for a hearing must VOLUME VI: wage decisions directly to the user’s also state the issues to be addressed and Alaska desktop, the ability to access prior wage include a general description of the AK020001 (Mar. 01, 2002) decisions issued during the year, evidence to be presented at the hearing. AK020002 (Mar. 02, 2002) extensive Help desk Support, etc. ADDRESSES: All written comments and AK020006 (Mar. 01, 2002) Hard-copy subscriptions may be requests for a hearing (at least three AK020008 (Mar. 02, 2002) purchased from: Superintendent of copies) should be sent to the Pension Colorado Documents, U.S. Government Printing and Welfare Benefits Administration CO020001 (Mar. 01, 2002) Office, Washington, DC 20402, (202) (PWBA), Office of Exemption CO020016 (Mar. 01, 2002) 512–1800. Determinations, Room N–5649, U.S. Oregon When ordering hard-copy Department of Labor, 200 Constitution OR020001 (Mar. 01, 2002) subscription(s), be sure to specify the Avenue, NW., Washington, DC 20210. OR020017 (Mar. 01, 2002) State(s) of interest, since subscriptions Attention: Application No. ___, stated in Washington may be ordered for any or all of the six each Notice of Proposed Exemption. WA020001 (Mar. 01, 2002) separate Volumes, arranged by State. Interested persons are also invited to WA020002 (Mar. 01, 2002) Subscriptions include an annual edition submit comments and/or hearing WA020005 (Mar. 01, 2002) (issued in January or February) which requests to PWBA via e-mail or FAX. includes all current general wage Any such comments or requests should VOLUME VII: determinations for the States covered by be sent either by e-mail to: California each volume. Throughout the remainder ‘‘[email protected]’’, or by FAX to CA020001 (Mar. 01, 2002) of the year, regular weekly updates will (202) 219–0204 by the end of the CA020002 (Mar. 01, 2002) be distributed to subscribers. scheduled comment period. The

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applications for exemption and the restrictions of section 406(a)(1)(A) Deutsche Bank, when combined with comments received will be available for through (D) of the Act and the taxes the assets of other plans established or public inspection in the Public imposed by section 4975(a) and (b) of maintained by the same employer (or Documents Room of the Pension and the Code by reason of section affiliate thereof described in section Welfare Benefits Administration, U.S. 4975(c)(1)(A) through (D) of the Code, V(c)(1) of this exemption) or by the Department of Labor, Room N–1513, shall not apply to a transaction between same employee organization, and 200 Constitution Avenue, NW., a party in interest with respect to an managed by Deutsche Bank, represent Washington, DC 20210. employee benefit plan and an more than 20 percent (20%) of the total Notice to Interested Persons investment fund (as defined in section client assets managed by Deutsche Bank V(b)), in which the plan has an interest, at the time of the transaction; Notice of the proposed exemptions and which is managed by Deutsche (f) At the time the transaction is will be provided to all interested Bank AG (Deutsche Bank or the entered into, and at the time of any persons in the manner agreed upon by Applicant)(as defined in section V(a)), if subsequent renewal or modification the applicant and the Department the following conditions are satisfied: thereof that requires the consent of within 15 days of the date of publication (a) At the time of the transaction (as Deutsche Bank, the terms of the in the Federal Register. Such notice defined in section V(i)), the party in transaction are at least as favorable to shall include a copy of the notice of interest, or its affiliate (as defined in the investment fund as the terms proposed exemption as published in the section V(c)), does not have, and during generally available in arm’s length Federal Register and shall inform the immediately preceding one (1) year transactions between unrelated parties; interested persons of their right to has not exercised, the authority to— (g)(1) Neither Deutsche Bank nor any comment and to request a hearing (1) Appoint or terminate Deutsche affiliate thereof (as defined in section (where appropriate). Bank as a manager of any of the plan’s V(d)), nor any owner, direct or rect, of SUPPLEMENTARY INFORMATION: The assets, or a 5 percent (5%) or more interest in proposed exemptions were requested in (2) Negotiate the terms of the Deutsche Bank is a person who, within applications filed pursuant to section management agreement with Deutsche the ten (10) years immediately 408(a) of the Act and/or section Bank (including renewals or preceding the transaction, has been 4975(c)(2) of the Code, and in modifications thereof) on behalf of such either convicted or released from accordance with procedures set forth in plan; imprisonment, whichever is later, as a 29 CFR Part 2570, Subpart B (55 FR (b) The transaction is not described result of any felony involving abuse or 32836, 32847, August 10, 1990). in— misuse of such person’s employee Effective December 31, 1978, section (1) Prohibited Transaction Class 2 benefit plan position or employment, or 102 of Reorganization Plan No. 4 of Exemption 81–6 (PTCE 81–6) (relating position or employment with a labor 1978, 5 U.S.C. App. 1 (1996), transferred to securities lending arrangements); organization; any felony arising out of the authority of the Secretary of the (2) Prohibited Transaction Class the conduct of the business of a broker, Treasury to issue exemptions of the type 3 Exemption 83–1 (PTCE 83–1) (relating dealer, investment adviser, bank, requested to the Secretary of Labor. to acquisitions by plans of interests in insurance company, or fiduciary; Therefore, these notices of proposed mortgage pools), or income tax evasion; any felony exemption are issued solely by the (3) Prohibited Transaction Class involving the larceny, theft, robbery, Department. Exemption 82–87 (PTCE 82–87) 4 extortion, forgery, counterfeiting, The applications contain (relating to certain mortgage financing fraudulent concealment, embezzlement, representations with regard to the arrangements); fraudulent conversion, or proposed exemptions which are (c) The terms of the transaction are misappropriation of funds or securities; summarized below. Interested persons negotiated on behalf of the investment conspiracy or attempt to commit any are referred to the applications on file fund by, or under the authority and such crimes or a crime in which any of with the Department for a complete general direction of Deutsche Bank, and the foregoing crimes is an element; or statement of the facts and either Deutsche Bank, or (so long as any other crime described in section 411 representations. Deutsche Bank retains full fiduciary of the Act. responsibility with respect to the Deutsche Bank AG, Located in (2) The relief provided by this Frankfurt/Main, Germany transaction) a property manager acting in accordance with written guidelines exemption is available to Deutsche Bank [Exemption Application No.: D–11002] established and administered by (as defined in section V(a)), notwithstanding the guilty plea on Proposed Exemption Deutsche Bank, makes the decision on behalf of the investment fund to enter March 11, 1999, of Deutsche Bank’s The Department of Labor is into the transaction, provided that the affiliate, Bankers Trust Company considering granting an exemption transaction is not part of an agreement, (Bankers Trust), to three counts of under the authority of section 408(a) of arrangement, or understanding designed violations of 18 U.S.C. § 1005, provided the Act and section 4975(c)(2) of the to benefit a party in interest; that neither Deutsche Bank nor any Code and in accordance with the (d) The party in interest dealing with affiliate, nor any owner, direct or procedures set forth in 29 CFR Part the investment fund is neither Deutsche indirect of a 5 percent (5%) or more 2570, Subpart B (55 FR 32836, 32847, interest in Deutsche Bank is convicted 1 Bank nor a person related to Deutsche August 10, 1990). Bank (within the meaning of section of any of the crimes (described in I. General Exemption V(h)); section I(g)(1)), and provided that (e) The transaction is not entered into Bankers Trust is not subsequently Effective for the period from June 12, convicted of any crimes (described in 2001, through July 27, 2009, the with a party in interest with respect to any plan whose assets managed by section I(g)(1)). (3) For purposes of this section I(g), a 1 For purposes of this proposed exemption, references to specific provisions of Title I of the 2 46 FR 7527, January 23, 1981. person shall be deemed to have been Act, unless otherwise specified, refer to the 3 48 FR 895, January 7, 1983. ‘‘convicted’’ from the date of the corresponding provisions of the Code. 4 47 FR 21331, May 18, 1982. judgment of the trial court, regardless of

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whether that judgment remains under customary location during normal derived from all sources for the prior appeal. business hours to: (i) Any duly taxable year of such party in interest, (h) Prior to entering into a transaction authorized employee or representative and covered by this exemption Deutsche of the Department, the Internal Revenue (5) The requirements of sections I(c) Bank must agree in writing with a plan: Service or the Securities and Exchange through (n) are satisfied with respect to (1) That the transaction is governed by Commission; (ii) any fiduciary of a plan the transaction; the laws of the United States and that affected by this exemption or any duly (b) The leasing of office or commercial Deutsche Bank is a fiduciary of the plan authorized representative of such space by an investment fund managed pursuant to the provisions of the Act; fiduciary; (iii) any contributing by Deutsche Bank to a party in interest (2) To submit to the jurisdiction of the employer to any plan affected by this with respect to a plan having an interest United States district courts; exemption or any duly authorized in the investment fund, if— (3) To appoint an agent for service of employee representative of such (1) The party in interest is an process in the United States, which may employer; and (iv) any participant or employer any of whose employees are be an affiliate (the Process Agent); and beneficiary of any plan affected by this covered by such plan or is a person who (4) To consent to service of process on exemption, or any duly authorized is a party in interest by virtue of a the Process Agent. representative of such participant or relationship to such an employer (i) Upon request, Deutsche Bank beneficiary; provides to each plan affected by this (2) None of the persons described described in section V(c), exemption copies of the Notice of above in section I(l)(1)(ii)–(iv) are (2) No commission or other fee is paid Proposed Exemption (the Notice) and authorized to examine the trade secrets by the investment fund to Deutsche the final exemption, if granted; of Deutsche Bank or commercial or Bank or to the employer, or to an (j) Deutsche Bank provides each plan financial information which is affiliate of Deutsche Bank or the affected by this exemption with a privileged or confidential; employer (as defined in section V(c)), in written consent to service of process in (m) Upon request, Deutsche Bank connection with the transaction, the United States and to the jurisdiction discloses to the plan sponsor and/or the (3) Any unit of space leased to the of the courts of the United States for any named fiduciary of each plan affected party in interest by the investment fund civil action or proceeding brought by this exemption information is suitable (or adaptable without against Deutsche Bank with respect to concerning the nature and extent of excessive cost) for use by different the subject transactions, which consent Deutsche Bank’s regulation by German tenants; provides that process may be served on governmental authorities. (4) The amount of space covered by Deutsche Bank through service on II. Specific Exemptions for Employers the lease does not exceed fifteen (15) Deutsche Bank’s New York branch (or percent of the rentable space of the any other branch or affiliate of Deutsche Effective for the period from June 12, office building, integrated office park, or Bank that is domiciled in the United 2001, through July 27, 2009, the of the commercial center (if the lease States); restrictions of sections 406(a), 406(b)(1) does not pertain to office space), (k) Deutsche Bank and/or its affiliates and 407(a) of the Act and the taxes (5) In the case of a plan that is not an (as defined in section V(c)(1)), maintains imposed by section 4975(a) and (b) of or causes to be maintained within the eligible individual account plan (as the Code, by reason of Code section defined in section 407(d)(3) of the Act), United States for a period of six (6) 4975(c)(1)(A) through (E), shall not years from the date of each transaction immediately after the transaction is apply to: entered into, the aggregate fair market covered by this exemption, in a manner (a) The sale, leasing, or servicing of value of employer real property and that is convenient and accessible for goods (as defined in section V(j)), or to employer securities held by investment audit and examination, such records as the furnishing of services, to an funds of Deutsche Bank in which such are necessary to enable persons (as investment fund managed by Deutsche plan has an interest does not exceed 10 described in section I(l)) to determine Bank, by a party in interest with respect percent (10%) of the fair market value whether the conditions of the to a plan having an interest in the of the assets of such plan held in those exemption have been met, except that— investment fund, ifl (1) A prohibited transaction will not (1) The party in interest is an investment funds. In determining the be considered to have occurred if, due employer any of whose employees are aggregate fair market value of employer to circumstances beyond the control of covered by the plan or is a person who real property and employer securities as Deutsche Bank and/or its affiliates (as is a party in interest by virtue of a described herein, a plan shall be defined in section V(c)(1)), records are relationship to such an employer considered to own the same lost or destroyed prior to the end of the described in section V(c), proportionate undivided interest in each six (6) year period; and (2) The transaction is necessary for asset of the investment fund or funds as (2) No party in interest other than the administration or management of its proportionate interest in the total Deutsche Bank and/or its affiliates shall the investment fund, assets of the investment fund(s). For be subject to the civil penalty that may (3) The transaction takes place in the purposes of this requirement, the term, be assessed under section 502(i) of the ordinary course of a business engaged in ‘‘employer real property,’’ means real Act, or to the taxes imposed by section by the party in interest with the general property leased to, and the term, 4975(a) and (b) of the Code, if the public, ‘‘employer securities,’’ means securities records are not maintained, or are not (4) Effective for taxable years of the issued by, an employer any of whose available for examination (as required party in interest furnishing goods and employees are covered by such plan or by section I(l)(1)); services after the date this exemption is a party in interest of the plan by reason (l)(1) Except as provided in section granted, the amount attributable in any of a relationship to the employer I(l)(2) and notwithstanding any taxable year of the party in interest to described in subparagraphs (E) or (G) of provisions of subsections (a)(2) and (b) transactions engaged in with an section 3(14) of the Act, and of section 504 of the Act, the records investment fund pursuant to section (6) The requirements of sections I(c) referred to, above, in section I(k) are II(a) of this exemption does not exceed through (n) are satisfied with respect to unconditionally available at their one percent (1%) of the gross receipts the transaction.

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III. Specific Lease Exemption for V. Definitions (2) Any director of, relative of, or Deutsche Bank For purposes of this exemption: partner in, any such person, Effective for the period from June 12, (a) The term, ‘‘Deutsche Bank’’ means (3) Any corporation, partnership, 2001, through July 27, 2009, the Deutsche Bank AG, provided that trust, or unincorporated enterprise of restrictions of sections 406(a)(1)(A) Deutsche Bank AG: (i) has the power to which such person is an officer, through (D) and 406(b)(1) and (2) of the manage, acquire or dispose of assets of director, or 5 percent (5%) or more Act and the taxes imposed by Code a plan affected by this exemption; (ii) partner, or owner, and (4) Any employee or officer of the section 4975(a) and (b), by reason of has, as of the last day of its most recent person who— Code section 4975(c)(1)(A) through (E), fiscal year, equity capital (as defined in (A) Is a highly compensated employee shall not apply to the leasing of office section V(k)) in excess of $10,000,000; (as described in section 4975(e)(2)(H) of or commercial space by an investment (iii) has acknowledged in a written the Code) or officer (earning 10 percent fund managed by Deutsche Bank to management agreement that it is a (10%) or more of the yearly wages of Deutsche Bank, a person who is a party fiduciary with respect to each plan that such person), or has retained Deutsche Bank AG to in interest of a plan by virtue of a (B) Has direct or indirect authority, manage the assets of the plan; and (iv) relationship to Deutsche Bank described responsibility, or control regarding the is subject to regulation by the German in subparagraphs (G), (H), or (I) of custody, management, or disposition of federal banking supervisory authority, section 3(14) of the Act, or a person not plan assets. eligible for the General Exemption of known as the Bundesaufsichtsamt fuer (e) The term, ‘‘control,’’ means the Part I of this exemption by reason of das Kreditwesen (the BAK). power to exercise a controlling section I(a), if— (b) An ‘‘investment fund’’ includes influence over the management or (a) The amount of space covered by individual trusts and common, policies of a person other than an the lease does not exceed the greater of collective or group trusts maintained by individual. 7500 square feet or one percent (1%) of a bank, and any other account or fund (f) The term, ‘‘party in interest,’’ the rentable space of the office building, to the extent that the disposition of its means a person described in section integrated office park or of the assets (whether or not in the custody of 3(14) of the Act and includes a commercial center in which the Deutsche Bank) is subject to the ‘‘disqualified person,’’ as defined in investment fund has the investment, discretionary authority of Deutsche section 4975(e)(2) of the Code. (b) The unit of space subject to the Bank. (g) The term, ‘‘relative,’’ means a lease is suitable (or adaptable without (c) For purposes of section I(a), relative as that term is defined in excessive cost) for use by different section I(k), and Part II, an ‘‘affiliate’’ of section 3(15) of the Act, or a brother, a tenants, a person means— sister, or a spouse of a brother or sister. (c) At the time the transaction is (1) Any person directly or indirectly, (h) Deutsche Bank is ‘‘related’’ to a entered into, and at the time of any through one or more intermediaries, party in interest for purposes of section subsequent renewal or modification controlling, controlled by, or under I(d) of this exemption, if the party in thereof that requires the consent of common control with the person, interest (or a person controlling, or Deutsche Bank, the terms of the (2) Any corporation, partnership, controlled by, the party in interest) transaction are not more favorable to the trust, or unincorporated enterprise of owns a 5 percent (5%) or more interest lessee than the terms generally available which such person is an officer, in Deutsche, Bank or if Deutsche Bank in arm’s length transactions between director, 5 percent (5%) or more partner, (or a person controlling, or controlled unrelated parties, and or employee (but only if the employer by, Deutsche Bank) owns a 5 percent (d) No commission or other fee is paid of such employee is the plan sponsor), (5%) or more interest in the party in by the investment fund to Deutsche and interest. For purposes of this definition: Bank, any person possessing the (3) Any director of the person or any (1) The term, ‘‘interest,’’ means with disqualifying powers described in employee of the person who is a highly respect to ownership of an entity— section I(a), or any affiliate of such compensated employee, as defined in (A) The combined voting power of all persons (as defined in section V(c)), in section 4975(e)(2)(H) of the Code, or classes of stock entitled to vote or the connection with the transaction. who has direct or indirect authority, total value of the shares of all classes of responsibility, or control regarding the stock of the entity if the entity is a IV. Transactions Involving Places of custody, management, or disposition of Public Accommodation corporation, plan assets. A named fiduciary (within (B) The capital interest or the profits Effective for the period from June 12, the meaning of section 402(a)(2) of the interest of the entity if the entity is a 2001, through July 27, 2009, the Act) of a plan, and an employer any of partnership; or restrictions of sections 406(a)(1)(A) whose employees are covered by such (C) The beneficial interest of the through (D) and 406(b)(1) and (b)(2) of plan will also be considered affiliates entity if the entity is a trust or the Act and the taxes imposed by with respect to each other for purposes unincorporated enterprise; and section 4975(a) and (b) of the Code, by of section I(a), if such employer or an (2) A person is considered to own an reason of section 4975(c)(1)(A) through affiliate of such employer has the interest held in any capacity if the (E) of the Code, shall not apply to the authority, alone or shared with others, person has or shares the authority— furnishing of services and facilities (and to appoint or terminate the named (A) To exercise any voting rights, or goods incidental thereto) by a place of fiduciary or otherwise negotiate the to direct some other person to exercise public accommodation owned by an terms of the named fiduciary’s the voting rights relating to such investment fund managed by Deutsche employment agreement. interest, or Bank to a party in interest with respect (d) For purposes of section I(g), an (B) To dispose or to direct the to a plan having an interest in the ‘‘affiliate’’ of a person means— disposition of such interest. investment fund, if the services and (1) Any person directly or indirectly, (i) The ‘‘time’’ as of which any facilities (and incidental goods) are through one or more intermediaries, transaction occurs is the date upon furnished on a comparable basis to the controlling, controlled by, or under which the transaction is entered into. In general public. common control with the person, addition, in the case of a transaction

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that is continuing, the transaction shall Prohibited Transaction Class Exemption a bank organized under the laws of the be deemed to occur until it is 84–14 (PTCE 84–14),6 solely because of Federal Republic of Germany. In this terminated. If any transaction is entered a failure to satisfy section I(g) of PTCE regard, Deutsche Bank provides a broad into on or after the effective date of this 84–14, as a result of a guilty plea filed variety of banking, fiduciary, record exemption, or a renewal that requires by an affiliate on March 11, 1999, to keeping, custodial, brokerage, and the consent of Deutsche Bank occurs on three counts of a felony. The relief investment services to corporations, or after such effective date, and the provided by PTE 99–29 was limited to institutions, governments, employee requirements of this exemption are a period of ten (10) years from July 27, benefit plans, governmental retirement satisfied at the time the transaction is 1999, the date of the publication of the plans, and private investors worldwide. entered into or renewed, respectively, final exemption for PTE 99–29 in the As of December 31, 2000, Deutsche the requirements will continue to be Federal Register. The Department in Bank held 697,306 million Euros in satisfied thereafter with respect to the proposing the subject exemption does assets and 19,807 million Euros in transaction. Notwithstanding the not intend that, if granted, the relief, as stockholder equity. Deutsche Bank foregoing, this exemption shall cease to described herein, be available beyond manages over $585 billion in assets apply to a transaction exempt by virtue the time remaining in the ten (10) year either through collective trusts, of Part I or Part II at such time as the period established by PTE 99–29. separately managed accounts, or mutual percentage requirement contained in Accordingly, the relief provided by this funds. It is represented that, as of the section I(e) is exceeded, unless no exemption, if granted, will be last day of its most recent fiscal year, portion of such excess results from an retroactive, effective as of June 12, 2001, Deutsche Bank has equity capital in increase in the assets transferred for the date when the application for excess of $10,000,000. discretionary management to Deutsche exemption was filed with the 2. It is anticipated that plans, Bank. For this purpose, assets Department, and will continue to be particularly large plans, with hundreds transferred do not include the available through July 27, 2009, the date or thousands of known and unknown reinvestment of earnings attributable to that is ten (10) years from the parties in interest may enter into the those plan assets already under the publication in the Federal Register of transactions described in this proposed discretionary management of Deutsche the final exemption for PTE 99–29. exemption. Deutsche Bank anticipates Bank. Nothing in this paragraph shall be In the case of a transaction that that such transactions would include construed as exempting a transaction continues beyond July 27, 2009, the derivatives, repurchase agreements with entered into by an investment fund transaction shall be deemed to occur foreign banks or broker dealers, foreign which becomes a transaction described until it is terminated. Although the exchange transactions, and other in section 406 of the Act or section 4975 relief provided by this exemption will transactions not exempted by other of the Code while the transaction is not be available after July 27, 2009, for individual or class exemptions.7 continuing, unless the conditions of this any new, or other transactions that 3. The exemption requested by exemption were met either at the time require the consent of Deutsche Bank, as Deutsche Bank would permit: (1) the transaction was entered into or at described herein, such relief will Transactions between parties in interest the time the transaction would have continue to apply beyond July 27, 2009, with respect to a plan and an become prohibited but for this for continuing transactions entered into investment fund in which such plan has exemption. prior to that date, provided such an interest, if the assets in such fund are (j) The term, ‘‘goods’’ includes all transactions satisfied the conditions of managed by Deutsche Bank; (2) the sale, things which are movable or which are this exemption. In this regard, see leasing, servicing of goods, or the fixtures used by an investment fund but section V(i) regarding continuing furnishing of services to an investment does not include securities, transactions. fund managed by Deutsche Bank by an commodities, commodities futures, Should the Applicant wish to extend, employer or an affiliate, and the leasing money, documents, instruments, beyond July 27, 2009, the relief of office or commercial space by such accounts, chattel paper, contract rights, provided by this exemption to new or investment fund to an employer or an and any other property, tangible or additional transactions, or should the affiliate where plans sponsored by such intangible, which, under the relevant Applicant wish for any reason to amend employer or an affiliate have an interest facts and circumstances, is held the conditions of this exemption, the in such fund; (3) the leasing of office or primarily for investment. Applicant may submit another commercial space by an investment (k) For purposes of section V(a) of this application for exemption. In this fund managed by Deutsche Bank to exemption, the term ‘‘equity capital’’ regard, the Department expects that Deutsche Bank or a person who is a means stock (common and preferred), prior to filing another exemption surplus, undivided profits, contingency 7 The Department notes that the general standards application seeking relief for new or of fiduciary conduct under the Act would apply to reserves and other capital reserves. additional transactions or to amend this the investment transactions permitted by this Temporary Nature of Exemption exemption, the Applicant should be proposed exemption, and that satisfaction of the prepared to demonstrate compliance conditions of this proposed exemption should not The Department has determined that with the conditions of this exemption. be viewed as an endorsement of any particular the relief provided by this exemption, if investment by the Department. Section 404 of the Summary of Facts and Representations Act requires, among other things, that a fiduciary granted, will be effective retroactively discharge his duties with respect to a plan solely but will be temporary in nature. In this 1. The request for relief from the in the interest of the plan’s participants and regard, Deutsche Bank, AG, among prohibited transaction provisions of the beneficiaries and in a prudent fashion. Accordingly, others, on July 27, 1999, obtained the manager or other plan fiduciary must act Act and Code was filed on behalf of prudently with respect to the decision to enter into Prohibited Transaction Exemption 99– Deutsche Bank and, if granted, will be an investment transaction, as well as to the 29 (PTE 99–29) 5 which provided that it applicable to Deutsche Bank, as that negotiation of the specific terms under which the would not be precluded from term is defined in Section V(a) of this plan will engage in such transaction. In addition, functioning as a ‘‘qualified professional the plan’s named fiduciary must act prudently and proposed exemption. Deutsche Bank is solely in the interest of the plan’s participants and asset manager’’ (a QPAM), pursuant to beneficiaries in selecting Deutsche Bank to manage 6 49 FR 9494 (March 13, 1984), as corrected, 50 plan assets and in periodically monitoring Deutsche 5 64 FR 40623, July 27, 1999 FR 41430 (October 10, 1985). Bank’s performance.

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party in interest of a plan by virtue of organized under the laws of the United branches through periodic consolidated a relationship to Deutsche Bank, as States, as defined in section 202(a)(1) of financial reports and through a described in 3(14)(G) (H), or (I) of the the Investment Advisers Act of 1940. As mandatory annual report prepared by Act, or a person not eligible for the Deutsche Bank is organized under the the auditor. general exemption of Part I of this laws of the Federal Republic of Additionally, the BAK in cooperation proposed exemption by reason of Germany, rather than the laws of the with the Deutsche Bundesbank section I(a); and (4) the furnishing of United States, Deutsche Bank does not (Bundesbank) supervises all branches of services and facilities (and goods qualify as a QPAM, and cannot rely on Deutsche Bank, wherever located. The incidental thereto) by a place of public the relief provided by PTCE 84–14. Bundesbank is the central bank of the accommodation owned by an Accordingly, Deutsche Bank has Federal Republic of Germany and is an investment fund which is managed by submitted an application for integral part of the European Central Deutsche Bank to a party in interest administrative exemption and requested Banks. For Deutsche Bank’s branches with respect to a plan having an interest the relief proposed herein. domiciled in European Economic Area in such fund; provided certain In the opinion of the Applicant, the (EEA) member states, the BAK is the condition are satisfied. The Applicant fact that Deutsche Bank is not a U.S.- lead supervisory authority pursuant to represents that these transactions have chartered bank carries little, if any the rule on the ‘‘European Passport,’’ not been consummated, nor will such significance in terms of the ability of and only some aspects are subject to transactions be consummated without Deutsche Bank to operate independently complementary supervision by an exemption. or to manage plan assets efficiently and supervisory authority of the host Relief is requested from the effectively. Given Deutsche Bank’s size, country. prohibitions of sections 406(a), global geographic distribution, financial It is represented that Deutsche Bank is 406(b)(1), 406(b)(2), and 407(a) of the strength, and experience managing subject to announced and unannounced Act and section 4975(c)(1)(A)-(E) of the assets, the Applicant maintains that on-site audits, and all other supervisory Code. According to the Applicant, the Deutsche Bank is better qualified than controls applicable to German Banks. transactions described in Parts I, II, III, many U.S. banks to act as an With respect to branches located in EEA and IV of this proposed exemption may independent asset manager. member states, such audits are carried violate section 406(a)(1)(A)–(D) of the 5. Deutsche Bank believes that its out consistent with applicable European Act, because a party in interest is operations are regulated as much as directives. With respect to branches involved or may be benefitted. Further, U.S.-chartered banks. In this regard, outside the EEA, such audits are carried in the opinion of the Applicant, the Deutsche Bank’s operations are out consistent with applicable transactions described in Parts II, III, regulated not only by the supervisory international agreements, memoranda of and IV of this proposed exemption authorities of various host countries, but understanding, or other arrangements would arguably violate 406(b)(1) of the by German authorities, as well. with the relevant foreign supervisory Act, because such transactions may Specifically, Deutsche Bank is subject authorities. benefit a sponsoring employer, globally to comprehensive supervision Deutsche Bank’s branches domiciled investment manager, or other plan and regulation on a consolidated basis outside the EEA are also subject to local fiduciaries. Further, the transactions by the German federal banking regulation and supervision by the described in section II(b) of the supervisory authority, referred to herein supervisory authority of the host proposed exemption may violate section as the BAK. The BAK is a federal country. In this regard, for example, 407(a) of the Act, because such institution with ultimate responsibility Deutsche Bank AG, New York Branch, transactions involve the leasing of fund to the German Ministry of Finance. The is regulated and supervised by the New real property to sponsoring employers. BAK supervises the operations of banks, York State Banking Department. Certain Finally, the transactions described in banking groups, financial holding activities of Deutsche Bank AG, New sections III and IV of this proposed groups and foreign bank branches in York Branch are also regulated and exemption could violate section Germany and has the authority to: (a) supervised by the Federal Reserve Bank 406(b)(2) of the Act and section Issue and withdraw banking licenses, of New York. 4975(c)(1)(E) of the Code to the extent (b) issue regulations on capital and There are two deposit insurance that Deutsche Bank, the employer, or liquidity requirements of banks, (c) programs that cover Deutsche Bank. The other fiduciary with authority or control request information and conduct first is a European Union required over plan assets is involved in the investigations, (d) intervene in cases of mandatory deposit insurance system transactions. inadequate capital or liquidity, established in 1998 that insures deposits 4. With regard to each of the endangered deposits, or bankruptcy by denominated in the currency of an EEA transactions described in paragraph 3 temporarily prohibiting certain banking member state up to the lesser of 90 above, Deutsche Bank has requested transactions. percent (90%) of the deposit amount or relief from the prohibited transaction The BAK ensures that Deutsche Bank 20,000 euros. This statutory deposit provisions of the Act and Code which has procedures for monitoring and protection scheme is maintained, as far is identical to the relief granted in PTCE controlling its worldwide activities as private commercial banks like 84–14. PTCE 84–14 provides through various statutory and regulatory Deutsche Bank are concerned, by a conditional relief for various parties in standards. Among these standards are separate institution and is subject to interest to engage in transactions requirements for adequate internal supervision by the BAK. In addition involving plan assets if, among other controls, oversight, administration, and since 1976, the Association of German conditions, such assets are managed by financial resources. The BAK reviews Banks has maintained a voluntary a QPAM, who is independent of such compliance with these operational and deposit protection program called the parties in interest. internal control standards through an Deposit Protection Fund that safeguards PTCE 84–14 does not permit a foreign annual audit performed by the year-end liabilities in excess of the thresholds bank to act as a QPAM. In this regard, auditor and through special audits guaranteed by the European Union section V(a)(1) of PTCE 84–14 requires ordered by the BAK. The supervisory program, up to a protection ceiling for that, in order to qualify as a QPAM, a authorities require information on the each creditor of 30 percent (30%) of the bank must be a banking institution condition of Deutsche Bank and its liable capital of the bank. The Deposit

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Protection Fund is funded by regular expertise or connections with a given country, Deutsche Bank has consented contributions paid by every German target market may result in inefficient to the appointment of an agent for bank which has elected to participate in execution, investment decisions based service of process in the United States; the Deposit Protection Fund. on imperfect information, or missed has consented to service of process on Participating banks may be required to investment opportunities. such agent; and to the jurisdiction of the make special contributions to the extent 9. In the absence of the proposed district courts of the United States for requested by the Deposit Protection exemption, the Applicant must any civil action or proceeding brought Fund to enable it to fulfill its purpose. undertake costly and time consuming against Deutsche Bank with respect to It is represented that Deutsche Bank has steps to examine each transaction to the subject transactions. Such consent elected to participate in the Deposit ensure that a given transaction on behalf provides that process may be served on Protection Fund. of a plan investor does not involve or Deutsche Bank through service on Upon request, Deutsche Bank will benefit the many parties in interest that Deutsche Bank’s New York branch (or disclose to the plan sponsor and/or the may exist with respect to such plan. other branch of Deutsche Bank that is named fiduciary of each plan affected These efforts encompass not only a domiciled in the United States). by this exemption information plan’s primary investments, but also 11. In summary, the Applicant concerning the nature and extent of collateral investments and investment- represents that the subject transactions Deutsche Bank’s regulation by German related transactions, including, e.g., will satisfy the statutory criteria of governmental authorities, as described sweep investments necessary for cash section 408(a) of the Act and section above and in the application for management, foreign exchange 4975(c)(2) of the Code because: exemption. In addition, Deutsche Bank transactions necessary for investments (a) Deutsche Bank has, as of the last will provide to each plan affected by denominated in foreign currencies, day of its most recent fiscal year, equity this exemption, if granted, copies of the securities lending, and the use of capital in excess of $10,000,000; proposed and the final exemption. brokers and agents to execute the 6. The Applicant maintains that the foregoing. In this regard, the Applicant (b) Except for the fact that Deutsche proposed exemption is administratively points out that the costs of these efforts Bank is not a U.S.-chartered bank, as feasible because, the requested are ultimately borne by the plan required by section V(a)(1) of PTCE 84– exemption would not impose any investors, as reflected in higher asset 14, the proposed exemption contains administrative burden on the management fees, higher transaction conditions substantially similar to those Department which is not already costs, and opportunity costs. which are set forth in PTCE 84–14; imposed by PTCE 84–14. In this regard, 10. The proposed exemption contains (c) The requested exemption will not no action would be necessary on the conditions which are designed to ensure impose any administrative burden on part of the Department to effect the the presence of adequate safeguards to the Department which is not already transactions other than by granting the protect the interests of the participants imposed by PTCE 84–14; exemption. As a condition of this and beneficiaries of plans regarding the (d) In addition to the requirements of exemption, Deutsche Bank or an affiliate subject transactions. Except for the fact the PTCE 84–14, Deutsche Bank has must maintain or cause to be that Deutsche Bank is not a U.S.- agreed to conditions, as set forth in maintained within the United States, for chartered bank, as required by section section I(h) through (m), which are a period of six (6) years from the date V(a)(1) of PTCE 84–14, the proposed designed to ensure that the affected of each transaction, the records exemption contains conditions plans are protected; necessary to enable the Department, the substantially similar to those which are (e) Deutsche Bank’s operations are IRS, and other persons to determine set forth in PTCE 84–14. subject to significant regulation, not whether the conditions of this In addition to the requirements of the only by the supervisory authorities of exemption have been met. PTCE 84–14, Deutsche Bank has agreed various host countries, but by German 7. The Applicant believes that the to additional conditions, as set forth in authorities, as well; proposed exemption is in the best section I(h) through (m), which are (f) Upon request, Deutsche Bank will interest of the participants and designed to ensure that the plans are disclose to the plan sponsor and/or the beneficiaries of the affected plans. In protected. In this regard, Deutsche Bank named fiduciary of each plan affected this regard, the Applicant maintains that will indemnify and hold harmless each by this exemption information the proposed transaction would broaden plan affected by this exemption against concerning the nature and extent of the choice of qualified independent any harm, damage, or injury (including Deutsche Bank’s regulation by German assets managers available to such plans, interest and attorney’s fees) arising from would increase transactional any fiduciary breach or other governmental authorities; efficiencies, and would afford greater wrongdoing of Deutsche Bank acting in (g) Upon request, Deutsche Bank will opportunities to such plans to diversify its capacity as asset manager for such provide to each plan affected by this through international investments. With plan. Further, Deutsche Bank has agreed exemption copies of the proposed and a physical presence in 27 different that enforcement by a Plan of the the final exemption, if granted; countries and with access to 90 markets indemnity provided by Deutsche Bank (h) The proposed exemption will worldwide, the Applicant maintains will occur in the United States district broaden the choice of qualified that Deutsche Bank can provide more courts. independent assets managers available informed and cost-efficient asset It is represented that there are to the affected plans, will increase management services for international adequate safeguards to minimize the transactional efficiencies, and will investments than most U.S. banks. risks associated with the Deutsche afford greater opportunities to such 8. Without the proposed exemption, Bank’s foreign nationality. Deutsche plans to diversify through international plans might lose opportunities to enter Bank will comply with the indicia of investments; and into beneficial financial transactions ownership of plan assets requirements (i) Without the proposed exemption, with parties in interest that would under section 404(b) of the Act and the plans might lose opportunities to enter enhance the return to such plans. In this regulations promulgated under 29 CFR into beneficial financial transactions regard, restricting plans to domestic 2550.404(b)–1. To ensure that a plan with parties in interest that would banks which may have little or no will not have to litigate in a foreign enhance the return to such plans.

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Notice to Interested Persons (2) Data derived from current and For purposes of subparagraph (f)(1), the Deutsche Bank will furnish a copy of historical data using statistical or requirement that the authorizing the Notice of Proposed Exemption (the computational techniques; and fiduciary be independent shall not (c) Each analytical tool sold/licensed Notice) along with the supplemental apply in the case of a plan of an Equity to the plan will be an objective statement (the Supplemental Owner (Equity Owner Plan); statistical or computational tool (B) May be terminated by the Statement), as described at 29 CFR designed to permit the evaluation of authorizing fiduciary, without penalty § 2570.43(b)(2), to the an independent securities lending activities. to the plan, within the lesser of: (i) The fiduciary for each plan to which time negotiated for such notice of Deutsche Bank currently provides Section II. Use of Platform by Owner termination by the plan and the Owner investment management services to Lending Agent/ Sale of EquiLend Lending Agent, or (ii) five business inform such persons of the pendency of Products to Plans Represented by Owner days. this proposed exemption. A copy of the Lending Agent Notwithstanding the foregoing, the Notice, as it appears in the Federal If the exemption is granted, the requirement for prior written Register, and a copy of the restrictions of sections 406(a) and 406(b) authorization will be deemed satisfied Supplemental Statement, will be of the Act, section 8477(c)(2) of FERSA, in the case of any plan for which the provided, by first class mailing, within and the sanctions resulting from the authorizing fiduciary has previously fifteen (15) days of the publication of application of section 4975(a) and (b) of provided written authorization to the the Notice in the Federal Register. the Code, by reason of section Owner Lending Agent pursuant to PTE Comments and requests for a hearing are 4975(c)(1)(A) through (F) of the Code, 82–63, unless such authorizing due from interested persons on or before shall not apply to: (1) The participation fiduciary objects to participation in the 45 days from the date of the publication in the Platform by an equity owner of Platform in writing to the Owner of the Notice in the Federal Register. EquiLend (an Equity Owner), in its Lending Agent within 30 days following FOR FURTHER INFORMATION CONTACT: Ms. capacity as a securities lending agent for disclosure of the information described Angelena C. Le Blanc of the Department, a plan (an Owner Lending Agent); and in paragraphs (e) and (g) of this section telephone (202) 693–8551 (this is not a (2) the sale or licensing of certain data to such authorizing fiduciary; and toll-free number). and/or analytical tools by EquiLend to (2) Except as otherwise provided in a plan for which an Equity Owner acts paragraph (i), each purchase or license EquiLend LLC (EquiLend), Located in of a securities lending-related product New York, New York as a securities lending agent, if the following conditions are met: from EquiLend on behalf of a plan by an [Exemption Application No.: D–11026] (a) In the case of participation in the Owner Lending Agent: (A) Is subject to the prior written Proposed Exemption Platform on behalf of a plan, to the extent applicable the procedures authorization of an authorizing The Department is considering regarding the securities lending fiduciary. For purposes of subparagraph granting an exemption under the activities conform to the provisions of (f)(2), the requirement for prior written authority of section 408(a) of the Act, Prohibited Transaction Class Exemption authorization shall not apply to any section 8477(c)(3) of the Federal (PTE) 81–6 (46 FR 7527 (Jan. 23, 1981)), purchase or licensing of an EquiLend Employees’ Retirement System Act of PTE 82–63 (46 FR 14804 (Apr. 6, 1982)), securities lending-related product by an 1986 (FERSA) and section 4975(c)(2) of and/or any applicable individual Equity Owner Plan if the fee or cost the Code and in accordance with the exemption; associated with such purchase or procedures set forth in 29 CFR Part (b) None of the fees imposed by licensing is not paid by the Equity 2570, Subpart B (55 FR 32836, 32847, EquiLend for securities lending Owner Plan; and August 10, 1990). transactions conducted through the use (B) May be terminated by the of the Platform at the direction of an authorizing fiduciary within (i) the time Section I. Sale of EquiLend Products to negotiated for such notice of Plans Owner Lending Agent will be charged to a plan; termination by the plan and the Owner If the exemption is granted, the (c) Each securities lender and Lending Agent or (ii) five business days, restrictions of section 406(a)(1)(A) and securities borrower participating in a whichever is lesser, in either case (D) of the Act and the sanctions securities lending transaction through without penalty to the plan, provided resulting from the application of section EquiLend will be notified by EquiLend that, such authorizing fiduciary shall be 4975(a) and (b) of the Code, by reason as to its responsibilities with respect to deemed to have given the necessary of section 4975(c)(1)(A) and (D) of the compliance, as applicable, with the Act, authorization in satisfaction of this Code, shall not apply to the sale or the Code, and FERSA; paragraph (f)(2) with respect to each licensing of certain data and/or (d) EquiLend will not act as a specific product purchased or licensed analytical tools to an employee benefit principal in any securities lending pursuant thereto unless such plan by EquiLend, a party in interest transaction involving plan assets; authorizing fiduciary objects to the with respect to such plan, if the (e) Each Owner Lending Agent will Owner Lending Agent within 15 days following conditions are met: provide prior written notice to its plan after the delivery of information (a) The terms of any such sale or clients of its intention to participate in regarding such specific product to the licensing are at least as favorable to the EquiLend; authorizing fiduciary in accordance plan as the terms generally available in (f) (1) Except as otherwise provided in with paragraph (g) of this exemption; an arm’s-length transaction involving an paragraph (i), the arrangement pursuant (g) The authorization described in unrelated party; to which the Owner Lending Agent paragraph (f) of this section shall not be (b) Any data sold/licensed to the plan utilizes the services of EquiLend on deemed to have been made unless the will be limited to: behalf of a plan for securities lending: Owner Lending Agent has furnished the (1) Current and historical data related (A) Is subject to the prior written authorizing fiduciary with any to transactions proposed or occurring on authorization of an independent reasonably available information that EquiLend’s electronic securities lending fiduciary (‘‘an authorizing fiduciary’’ as the Owner Lending Agent reasonably platform (the Platform) or, defined in paragraph (b) of section III). believes to be necessary for the

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authorizing fiduciary to determine or fund, without penalty to the plan, such aggregate loan balance is later whether such authorization should be within such time as may be necessary to determined to be less than $10 billion, made, and any other reasonably effect the withdrawal in an orderly no additional participation by an Equity available information regarding the manner that is equitable to all Owner Plan (other than through a matter that the authorizing fiduciary withdrawing plans and to the non- Commingled Investment Fund) shall may reasonably request. This includes, withdrawing plans. In the case of a plan occur until such time as the $10 billion but is not limited to: (1) A statement that elects to withdraw pursuant to the threshold amount is again met. that the Equity Owner, as securities foregoing, such withdrawal shall be lending agent, has a financial interest in effected prior to the implementation of, Section III. Definitions the successful operation of EquiLend, or material change in, the arrangement For purposes of this exemption: and (2) a statement, provided on an or purchase or license, but any existing (a) An ‘‘affiliate’’ of another person annual basis, that the authorizing arrangement need not be discontinued means: fiduciary may terminate the by reason of a plan electing to (1) Any person directly or indirectly, arrangement(s) described in (f) above at withdraw; and through one or more intermediaries, any time; (3) In the case of a plan whose assets controlling, controlled by, or under (h) Any purchase or licensing of data are proposed to be invested in the common control with such other and/or analytical tools with respect to pooled account or fund subsequent to person; securities lending activities by a plan the implementation of the arrangements (2) Any officer, director, partner, pursuant to this section complies with and which has not authorized the employee, relative (as defined in section the relevant conditions of section I and arrangements in the manner described 3(15) of the Act) of such other person; will be authorized in advance by an in paragraphs (i)(1) and (i)(2), the plan’s and authorizing fiduciary in accordance investment in the account or fund shall (3) Any corporation or partnership of with the applicable procedures of be authorized in the manner described which such other person is an officer, paragraphs (f), (g) and (i); in paragraph (f); director or partner. (i) (Special Rule for Commingled (j) The Equity Owner, together with For purposes of this paragraph, the Investment Funds) In the case of a its affiliates (as defined in paragraph (a) term ‘‘control’’ means the power to pooled separate account maintained by of section III), does not own at the time exercise a controlling influence over the an insurance company qualified to do of the execution of a securities lending management or policies of a person business in a state or a common or transaction on behalf of a plan by the other than an individual. collective trust fund maintained by a Equity Owner (i.e., in its capacity as (b) The term ‘‘authorizing fiduciary’’ bank or trust company supervised by a Owner Lending Agent) through state or federal agency (Commingled EquiLend or at the time of the purchase, means, with respect to an Owner Investment Fund), the requirements of or commencement of licensing, of data Lending Agent, a plan fiduciary who is paragraph (f) of this section shall not and/or analytical tools by the plan, more unrelated to, and independent of, such apply, provided that— than 20% of: Owner Lending Agent. In this regard, an (1) The information described in (1) If EquiLend is a corporation, authorizing fiduciary will not be paragraph (g) (including information including a limited liability company considered independent of an Owner with respect to any material change in taxable as a corporation, the combined Lending Agent if: the arrangement) of this section and a voting power of all classes of stock (1) Such fiduciary directly or description of the operation of the entitled to vote or the total value of indirectly controls, is controlled by, or Platform (including a description of the shares of all classes of stock of is under common control with the fee structure paid by securities lenders EquiLend, or Owner Lending Agent; or and borrowers), shall be furnished by (2) If EquiLend is a partnership, (2) Such fiduciary directly or the Owner Lending Agent to the including a limited liability company indirectly receives any compensation or authorizing fiduciary (described in taxable as a partnership, the capital other consideration from the Owner paragraph (b) of section III) with respect interest or the profits interest of Lending Agent or an affiliate for his or to each plan whose assets are invested EquiLend; her own personal account in connection in the account or fund, not less than 30 (k) Any information, authorization, or with any securities lending transaction days prior to implementation of any termination of authorization may be described herein. such arrangement or material changes provided by mail or electronically; and For purposes of section II, no Equity thereto, or, not less than 15 days prior (l) No Equity Owner Plan, as defined Owner or any affiliate may be an to the purchase or license of any in section III(e) below, will participate authorizing fiduciary. Notwithstanding specific securities lending-related in the Platform, other than through a the foregoing, the requirements for product, and, where requested, upon the Commingled Investment Fund in which consent by an authorizing fiduciary reasonable request of the authorizing the aggregate investment of all Equity with respect to participation in the fiduciary. For purposes of this Owner Plans at the time of the Platform, and the annual right of such subparagraph, the requirement that the transaction constitutes less than 20% of fiduciary to terminate such authorizing fiduciary be independent the total assets of such fund. participation, shall be deemed met to shall not apply in the case of an Equity Notwithstanding the foregoing, this the extent that the Owner Lending Owner Plan; prohibition shall not apply to the Agent’s proposed utilization of the (2) In the event any such authorizing participation by an Equity Owner Plan services of EquiLend on behalf of a plan fiduciary notifies the Owner Lending as of the date that the aggregate loan for securities lending has been approved Agent that it objects to participation in balance of all securities lending by an order of a United States district the Platform, or to the purchase or transactions entered into through court. license of any EquiLend securities EquiLend by all participants (c) The term ‘‘Owner Lending Agent’’ lending-related tool or product, the plan outstanding on such date (excluding means a fiduciary of a plan acting as on whose behalf the objection was transactions entered into on behalf of securities lending agent in connection tendered is given the opportunity to Equity Owner Plans) is equal to or with loans of plan assets that are terminate its investment in the account greater than $10 billion; provided that if securities.

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(d) The term ‘‘Equity Owner’’ means securities. The lending agent is typically 4. The applicant states that, in an entity that either directly or through responsible for, among other things, addition to compliance with the terms an affiliate owns an equity ownership identifying borrowers, negotiating loan of this proposed exemption, lenders and interest in EquiLend. transactions, maintaining the borrowers utilizing EquiLend services (e) The term ‘‘Equity Owner Plan’’ appropriate records, marking to market will remain responsible for compliance means an employee benefit plan, as all outstanding loans, ensuring the with other relevant laws and defined under section 3(3) of the Act, maintenance of collateral, and exemptions. In this regard, each which is established or maintained by monitoring the delivery and control of securities lending transaction involving an Equity Owner of EquiLend, as the collateral. the use of the Platform by an Equity defined in section III(d) above, as an The applicant represents that the Owner as Owner Lending Agent will employer of employees covered by such Platform will provide a tool for lending remain subject to all relevant provisions plan, or by its affiliate. agents to fulfil the above-mentioned of the Act, the Code, and FERSA, as (f) The terms ‘‘employee benefit plan’’ responsibilities. In this regard, the well as any applicable individual or and/or ‘‘plan’’ means: Platform will include: class exemption (including but not (1) An ‘‘employee benefit plan’’ (A) An interactive screen; limited to PTEs 81–6 and 82–63). In the within the meaning of section 3(3) of the (B) Screens for trade negotiations, event that a particular securities lending Act subject to Part 4 of Subtitle B of auctions, auto-borrowing, rate posting, transaction does not comply with any Title I of the Act, loan returns, recalls by lenders, and applicable law and/or exemption, the (2) A ‘‘plan’’ (within the meaning of inventory broadcasts (posting of relief contained in this exemption, if section 4975(e)(1) of the Code) subject to securities available for lending); granted, will no longer be available with section 4975 of the Code, or respect to such transaction. (3) The Federal Thrift Savings Fund. (C) Additional services such as the comparison of a transaction as reflected 5. The applicant anticipates that many Summary of Facts and Representations on lender and borrower books with the of the entities currently conducting securities lending and borrowing 1. EquiLend is a Delaware limited underlying contract and the identification of the differences between transactions, including banks, broker- liability company established on May dealers and investment managers, will 16, 2001. As of October 17, 2001, the lender and borrower records, including become members of EquiLend. The Equity Owners of EquiLend were as mark to market comparisons and fee applicant anticipates that an entity follows: Barclays California billing comparisons; participating in EquiLend and/or its Corporation; Bear Stearns Securities (D) The disclosure of the identity of counterparties to a transaction whereby Platform must, among other things: Corp.; JP Morgan Strategic Securities (A) Be qualified in its jurisdiction to members will have the ability to direct Lending Corp. (a wholly owned engage in securities lending transactions trades and control inventory broadcasts; subsidiary of The Chase Manhattan through EquiLend and be subject to an (E) The reflection of agreed Bank); LB I Group Inc. (a wholly owned appropriate level of regulatory subsidiary of Lehman Brothers Inc.); transaction terms on a shared electronic supervision (as determined by Merrill Lynch, Pierce, Fenner & Smith trade ticket in a form for automated EquiLend); Inc.; SSB Investments, Inc. (a wholly input to members’ systems; and (B) Execute a ‘‘User Agreement’’ owned subsidiary of State Street (F) The creation of securities lending which shall set forth the terms and Corporation); Strategic Investments I, indices to assist in the benchmarking of conditions for access to, and use of, Inc. (a wholly owned subsidiary of the performance of securities lending EquiLend’s platform and which shall Morgan Stanley Dean Witter & Co.); The agents. contain appropriate representations, Goldman Sachs Group, Inc.; Northern 3. The applicant states that, in warranties and indemnities from the Trust Corporation and UBS (USA) Inc., providing these services, EquiLend will participant, including those typically or affiliates of the foregoing entities. The not be a principal in any securities provided by users of electronic trading applicant represents that, as of October lending transaction and will not platforms; and 17, 2001, each Equity Owner owned 10 guarantee any transaction executed (C) Have the ability to pay all percent of EquiLend. through the Platform. In addition, the applicable EquiLend fees; 2. EquiLend intends to provide the applicant states that employee benefit (D) Have the ability to originate a Platform, a common electronic platform plans will not pay any fees to EquiLend certain number of loans per month for the negotiation of securities lending in connection with securities lending having a certain aggregate US dollar 8 and borrowing transactions. The transactions conducted through the use nominal value (which number and applicant represents that securities of the Platform. In this regard, the fees nominal value will be set prior to lending transactions involving the use charged by EquiLend will be paid by, EquiLend’s launch at levels designed to of the Platform will not change the and will be the same for, securities ensure that the applicant is a legitimate fundamental nature of how securities lending agents and securities borrowers. participant in the securities lending lending transactions are currently The fees charged by EquiLend are marketplace); and conducted. In this regard, the applicant expected to include an annual fee and (E) In order to remain a member in states that most securities owners use a a one-time initiation fee; both of which good standing, meet or exceed the levels custodian bank, asset manager, or non- will be structured on a tiered basis to described in (D) of this paragraph. The custodian lending agent to lend allow for the participation in EquiLend applicant notes that no Equity Owner by entities of varying sizes. Each level Plan will participate in the Platform 8 The proposed exemption does not provide relief of the annual fees will entitle the except to the extent that such Plan under Section I from section 406(a) of the Act with respect to the use of the Platform on behalf of a plan member to a certain number of participates in a commingled fund by a lending fiduciary which is not an Equity transactions and, thereafter, excess having less than 20% of its assets Owner. In this regard, based on the representations transactions will be subject to additional comprised of one or more Equity Owner made by the applicant, any relief from section charges. The applicant represents that, Plans. 406(a) that may be necessary in such a situation is provided by the statutory exemption for the although the Equity Owners will pay the 6. The applicant represents that an provision of services to a plan by a party in interest same annual fees as non-owners, no Equity Owner may be a party to contained in section 408(b)(2) of the Act. such owner will pay the initiation fee. transactions involving EquiLend sales

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and/or services. In this regard, each 7. In addition to providing the 9. In summary, the applicant Equity Owner may conduct securities Platform discussed above, EquiLend represents that the requirements of lending transactions on behalf of a plan, intends to sell and/or license data. In section 408(a) of ERISA will be met with in its capacity as an Owner Lending this regard, the applicant represents that respect to the sale or licensing of certain Agent, through EquiLend to the extent such data: (A) Will be historical in data and/or analytical tools to employee that such Equity Owner does not own nature and will relate to transactions benefit plans by EquiLend since: the more than 20% of EquiLend. The proposed or occurring on the system; or terms of any such sale or licensing will applicant represents that plans will not (B) will be derived from current and be at least as favorable to a plan as the incur any incremental cost as a result of historical data utilizing statistical or terms generally available in an arm’s- an Owner Lending Agent conducting computational techniques. EquiLend length transaction involving an such transactions through EquiLend. also intends to sell or license certain unrelated party; any data sold/licensed The applicant states that to the extent analytical tools. Such analytical tools, to a plan will be current and historical an Owner Lending Agent lends plan- the applicant states, will be objective data related to transactions proposed or owned securities through EquiLend, statistical or computational tools that occurring on the Platform; and any tool plan participants will be adequately will permit users to use data provided sold/licensed will be objective and protected. In this regard, the applicant to evaluate securities lending activities. designed to permit the evaluation of represents that prior to such an The applicant represents that securities lending transactions. arrangement, each Owner Lending EquiLend seeks to sell and/or license In addition, the applicant represents Agent will disclose to a plan’s such data and tools to various types of that the requirements of section 408(a) authorizing fiduciary (who is entities, including employee benefit of ERISA will be met with respect to: (1) independent of the Owner Lending plans. In this regard, the applicant states The participation in the Platform by an Agent and EquiLend) that such Owner that, if this proposed exemption is Equity Owner, in its capacity as an Lending Agent intends to participate in granted, to the extent EquiLend sells or Owner Lending Agent; and (2) the sale the Platform. In addition, each Owner licenses data and/or analytical tools to or licensing of certain data and/or Lending Agent will disclose all of the a plan with respect to which EquiLend analytical tools by EquiLend to a plan information that the Owner Lending is a party in interest, the terms of such for which an Equity Owner acts as a Agent believes is necessary for the sale or licensing will be at least as securities lending agent because, among authorizing fiduciary to determine favorable to such plan as the terms other things: whether the arrangement should be associated with an arm’s-length (A) In the case of participation in the approved.9 Thereafter, the applicant transaction involving unrelated parties. Platform on behalf of a plan, to the states, the plan’s authorizing fiduciary In addition, the applicant represents extent applicable the procedures must authorize the Owner Lending that if EquiLend sells or licenses a regarding the securities lending Agent’s use of the Platform to lend product to a plan with respect to which activities conform to the provisions of securities on behalf of such plan. This an Equity Owner acts as an Owner PTE 81–6, PTE 82–63, and/or any authorization may be terminated by the Lending Agent, such sale or licensing applicable individual exemption; authorizing fiduciary, the applicant will be authorized in advance by a (B) None of the fees imposed by states, without penalty to the plan, fiduciary who is independent of both EquiLend for securities lending within the lesser of: (i) The time EquiLend and the Owner Lending Agent transactions conducted through the use negotiated for such notice of of the Platform at the direction of an termination by the plan and the Owner upon such fiduciary’s receipt from the Owner Lending Agent will be charged to Lending Agent, or (ii) five business Owner Lending Agent of all of the days.10 information that the Owner Lending a plan; Agent believes is necessary for the (C) Each securities lender and 9 The Department notes that the Act’s general authorizing fiduciary to approve the securities borrower participating in a standards of fiduciary conduct also would apply to purchase or license. securities lending transaction through the proposed service and compensation 8. The applicant represents that the EquiLend will be notified by EquiLend arrangements. In this regard, section 404 requires, proposed exemption, if granted, will as to its responsibilities with respect to among other things, a fiduciary to discharge his duties respecting a plan solely in the interest of the benefit plans. In this regard, the compliance, as applicable, with the Act, plan’s participants and beneficiaries and in a applicant states that the use of the the Code, and FERSA; prudent manner. Accordingly, an independent plan Platform by lending fiduciaries will (D) Each Equity Owner will provide fiduciary must act prudently with respect to: (1) prior written notice to its plan clients of The decision to enter into an above-described enable plans to, among other things, arrangement; and (2) the negotiation of the terms of communicate with multiple borrowers, its intention to participate in EquiLend; such arrangement including any payment of devise and implement more efficient (E) With certain exceptions described compensation. The Department further emphasizes lending strategies, and monitor ongoing above, the arrangement pursuant to that it expects plan fiduciaries, prior to entering into any of the proposed service and compensation securities loan activities. In turn, which the Equity Owner utilizes the arrangements, to fully understand the extent of the affected plans may benefit from more services of EquiLend on behalf of a plan: services to be provided, the fee structure and the efficient pricing, reduced execution (1) Is subject to the prior written risks associated with these types of arrangements costs, streamlined front and back-office authorization of an authorizing following disclosure by the service provider of all relevant information. In addition, the Department activities, less failed trades and more fiduciary; notes that such plan fiduciaries are responsible for on-going information regarding lending (2) May be terminated by the periodically monitoring the services provided. activities. In addition, according to the authorizing fiduciary, without penalty 10 However, with respect to any plan for which applicant, if EquiLend sells or licenses to the plan, within the lesser of: (i) The the authorizing fiduciary has previously given time negotiated for such notice of written authorization to the Owner Lending Agent data related to securities lending pursuant to PTE 82–63, the applicant requests that activities and provides related analytical termination by the plan and the Equity such authorizing fiduciary be deemed to have given tools to plans, plans will have access to Owner, or (ii) five business days; the required authorization unless such authorizing information that will permit the (F) With certain exceptions described fiduciary objects in writing to participation in the Platform to the Owner Lending Agent within 30 enhanced evaluation of the performance above, each purchase or license of a days after disclosure of the information described of lending agents and the returns on securities lending-related product from above. lending portfolios. EquiLend is subject to the prior

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authorization of an authorizing respect to which Morgan Stanley Dean Borrowing Agreement) with the Plan fiduciary; Witter & Co. (Morgan Stanley) or any of fiduciary which is independent of the (G) The Equity Owner will furnish its affiliates is a party in interest, under Borrower and its affiliates. each authorizing fiduciary with any certain exclusive borrowing (d) The terms of each loan of reasonably available information which arrangements with: securities by the Plan to the Borrower the Equity Owner reasonably believes to (1) Morgan Stanley; are at least as favorable to such Plan as be necessary to determine whether such (2) Morgan Stanley & Co. Incorporated those of a comparable arm’s-length authorization should be made or (MS&Co); MS Securities Services Inc. transaction between unrelated parties, renewed; and (MSSSI); and any other affiliate of taking into account the exclusive (H) The Equity Owner, together with Morgan Stanley that, now or in the arrangement. its affiliates, does not own at the time future, is a U.S. registered broker-dealer (e) In exchange for granting the of the execution of a securities lending or a government securities broker or Borrower an exclusive right to borrow transaction on behalf of a plan by the dealer (collectively, the MS US Broker- certain securities, the Plan receives from Equity Owner through EquiLend or at Dealers); such Borrower either (i) a flat fee (which the time of the purchase, or (3) Morgan Stanley & Co. International may be equal to a percentage of the commencement of licensing, of data Limited (MSIL), which is subject to value of the total securities subject to and/or analytical tools by the plan, more regulation by the Financial Services the Borrowing Agreement from time to than 20% of EquiLend. Authority (FSA)in the United time), (ii) a periodic payment that is Notice to Interested Persons: The Kingdom; 12 equal to a percentage of the value of the applicant represents that the potentially (4) Morgan Stanley Japan Limited total balance of outstanding borrowed interested participants and beneficiaries (MSJL), which is subject to regulation by securities, or (iii) any combination of (i) cannot all be identified and therefore the Ministry of Finance, Financial and (ii) (collectively, the Exclusive Fee). the only practical means of notifying Services Agency, the Tokyo Stock If the Borrower pledges cash collateral, such participants and beneficiaries of Exchange, and the Osaka Stock all the earnings generated by such cash this proposed exemption is by the Exchange in Japan; and collateral shall be returned to such (5) Any broker-dealer that, now or in publication of this notice in the Federal Borrower; provided that such Borrower the future, is an affiliate of Morgan Register. Comments and requests for a may, but shall not be obligated to, agree Stanley which is subject to regulation by hearing must be received by the with the independent fiduciary of the the FSA in the United Kingdom or Department not later than 35 days from Plan that a percentage of the earnings on which is subject to regulation by the the date of publication of this notice of the collateral may be retained by such Ministry of Finance, the Financial proposed exemption in the Federal Plan, or the Plan may agree to pay the Services Agency, the Tokyo Stock Register. Borrower a rebate fee and retain the Exchange, and the Osaka Stock earnings on the collateral (the Shared FOR FURTHER INFORMATION CONTACT: Exchange in Japan; 13 and Earnings Compensation). If the Christopher Motta of the Department, (b) The receipt of compensation by Borrower pledges non-cash collateral, telephone (202) 693–8544. (This is not Morgan Stanley or any of its affiliates in all earnings on the non-cash collateral a toll-free number.) connection with securities lending shall be returned to such Borrower; transactions; provided that for the Morgan Stanley Dean Witter & Co., provided that the Borrower may, but transactions, set forth in section I(a) and Located in New York, New York shall not be obligated to, agree to pay (b), above, the conditions set forth in the Plan a lending fee (the Lending Fee, [Exemption Application No.: D–11048] section II, below, are satisfied. and together with the Shared Earnings Proposed Exemption Section II—Conditions Compensation, is referred to as the Transaction Lending Fee). The The Department of Labor is (a) For each Plan, neither the Transaction Lending Fee, if any, shall be considering granting an exemption Borrower nor any affiliate has or either in addition to the Exclusive Fee under the authority of section 408(a) of exercises discretionary authority or or an offset against the Exclusive Fee. the Act and section 4975(c)(2) of the control over such Plan’s investment in The Exclusive Fee and the Transaction Code and in accordance with the the securities available for loan, nor do Lending Fee may be determined in procedures as set forth in 29 CFR Part they render investment advice (within advance or pursuant to an objective 2570, Subpart B (55 FR 32836, 32847, the meaning of 29 CFR 2510.3–21(c)) formula and may be different for 11 August 10, 1990). with respect to those assets. different securities or different groups of (b) The party in interest dealing with securities subject to the Borrowing Section I—Transactions the Plan is a party in interest with Agreement. Any change in the Exclusive respect to such Plan (including a If the exemption is granted, the Fee or the Transaction Lending Fee that fiduciary) solely by reason of providing restrictions of section 406(a)(1)(A) the Borrower pays to the Plan with services to such Plan, or solely by through (D) of the Act and the sanctions respect to any securities loan requires reason of a relationship to a service resulting from the application of section the prior written consent of the provider described in section 3(14)(F), 4975 of the Code, by reason of section independent fiduciary of such Plan, 4975(c)(1)(A) through (D) of the Code, (G), (H), or (I) of the Act. except that consent is presumed where (c) The Borrower directly negotiates shall not apply, effective November 13, the Exclusive Fee or the Transaction an exclusive borrowing agreement (the 2001, to: Lending Fee changes pursuant to an (a) The lending of securities by an objective formula. Where the Exclusive 12 As of December 1, 2001, the FSA replaced the employee benefit plan, including a Fee or the Transaction Lending Fee commingled investment fund holding United Kingdom Securities and Futures Authority. 13 Each affiliated foreign broker-dealer is referred changes pursuant to an objective assets of such plan(the Plan(s)) with to herein, individually, as a Foreign Borrower or formula, the independent fiduciary of collectively, as Foreign Borrowers. The Foreign the Plan must be notified at least 24 11 For the purposes of this exemption, references Borrowers together with Morgan Stanley and the to specific provisions of Title I of the Act, unless MS US Broker-Dealers are referred to, herein, hours in advance of such change and otherwise specified, refer to the corresponding collectively as Borrowers or Applicants, and such independent Plan fiduciary must provisions of the Code. individually, as the Borrower. not object in writing to such change,

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prior to the effective time of such which provides custodial or trustee purchase price. If the collateral is change. services in respect of the securities insufficient to satisfy the Borrower’s (f) The Borrower may, but shall not be covered by the Borrowing Agreement for obligation to return the Plan’s securities, required to, agree to maintain a the Plan. The applicable Borrowing the Borrower will indemnify the Plan in minimum balance of borrowed Agreement shall give the Plan a the U.S. with respect to the difference securities subject to the Borrowing continuing security interest in, title to, between the replacement cost of Agreement. Such minimum balance or the rights of a secured creditor with securities and the market value of the may be a fixed U.S. dollar amount, a flat respect to the collateral and a lien on collateral on the date the loan is percentage or other percentage the collateral. declared in default, together with determined pursuant to an objective (i) Before entering into a Borrowing expenses incurred by the Plan plus formula. Agreement, the Borrower furnishes to applicable interest at a reasonable rate, (g) By the close of business on or the Plan the most recent publicly including reasonable attorneys’ fees before the day on which the loaned available audited and unaudited incurred by the Plan for legal action securities are delivered to the Borrower, statements of its financial condition, as arising out of default on the loans, or the Plan receives from such Borrower well as any publicly available failure by the Borrower to properly (by physical delivery, book entry in a information which it believes is indemnify the Plan. securities depository located in the necessary for the independent fiduciary (n) Except as otherwise provided United States, wire transfer, or similar to determine whether such Plan should herein, all procedures regarding the means) collateral consisting of U.S. enter into or renew the Borrowing securities lending activities, at a currency, securities issued or Agreement. minimum, conform to the applicable guaranteed by the U.S. Government or (j) The Borrowing Agreement contains provisions of PTE 81–6 (as amended or its agencies or instrumentalities, a representation by the Borrower that, as superseded), as well as to applicable irrevocable bank letters of credit issued of each time it borrows securities, there securities laws of the United States, the by a U.S. bank, other than the Borrower has been no material adverse change in United Kingdom and/or Japan, as or any affiliate thereof, or any its financial condition since the date of appropriate. combination thereof, or other collateral the most recently furnished statements (o) Only Plans with total assets having permitted under Prohibited Transaction of financial condition. an aggregate market value of at least $50 Exemption 81–6 (as amended or (k) The Plan receives the equivalent of million are permitted to lend securities superseded)(PTE 81–6).14 all distributions made during the loan to the Borrowers; provided, however, Such collateral will be deposited and period, including, but not limited to, that— maintained in an account which is cash dividends, interest payments, (1) In the case of two or more Plans separate from the Borrower’s accounts shares of stock as a result of stock splits, which are maintained by the same and will be maintained with an and rights to purchase additional employer, controlled group of institution other than the Borrower. For securities, that such Plan would have corporations or employee organization this purpose, the collateral may be held received (net of tax withholdings) 15 had (the Related Plans), whose assets are on behalf of the Plan by an affiliate of it remained the record owner of the commingled for investment purposes in the Borrower that is the trustee or securities. a single master trust or any other entity custodian of the Plan. (l) The Borrowing Agreement and/or the assets of which are ‘‘plan assets’’ (h) The market value (or in the case any securities loan outstanding may be under 29 CFR 2510.3–101 (the Plan of a letter of credit, the stated amount) terminated by either party at any time Asset Regulation), which entity is of the collateral initially equals at least without penalty (except for, if the Plan engaged in securities lending 102 percent (102%) of the market value has terminated its Borrowing arrangements with the Borrowers, the of the loaned securities on the close of Agreement, the return to the Borrower foregoing $50 million requirement shall business on the day preceding the day of a pro-rata portion of the Exclusive be deemed satisfied if such trust or of the loan and, if the market value of Fee paid by the Borrower to the Plan) other entity has aggregate assets which the collateral at any time falls below 100 whereupon the Borrower delivers are in excess of $50 million; provided percent (100%) (or such higher securities identical to the borrowed that if the fiduciary responsible for percentage as the Borrower and the securities (or the equivalent thereof in making the investment decision on independent fiduciary of the Plan may the event of reorganization, behalf of such master trust or other agree upon) of the market value of the recapitalization, or merger of the issuer entity is not the employer or an affiliate loaned securities, the Borrower delivers of the borrowed securities) to the Plan of the employer, such fiduciary has total additional collateral on the following within the lesser of five (5) business assets under its management and day to bring the level of the collateral days of written notice of termination or control, exclusive of the $50 million back to at least 102 percent (102%). The the customary settlement period for threshold amount attributable to plan level of the collateral is monitored daily such securities. investment in the commingled entity, by the Plan or its designee, which may (m) In the event that the Borrower which are in excess of $100 million. (2) In the case of two or more Plans be Morgan Stanley or any of its affiliates fails to return securities in accordance with the Borrowing Agreement, the Plan which are not maintained by the same 14 46 FR 7527, Jan. 23 1981, as amended at 52 FR will have the right under the Borrowing employer, controlled group of 18754, May 19, 1987). PTE 81–6 provides an Agreement to purchase securities corporations or employee organization exemption under certain conditions from section identical to the borrowed securities and (the Unrelated Plans), whose assets are 406(a)(1)(A) through (D) of the Act and the commingled for investment purposes in corresponding provisions of section 4975(c) of the apply the collateral to payment of the Code for the lending of securities that are assets of a group trust or any other form of entity an employee benefit plan to a U.S. broker-dealer 15 The Department notes the Applicants’ the assets of which are ‘‘plan assets’’ registered under the Securities Exchange Act of representation that dividends and other under the Plan Asset Regulation, which 1934 (the 1934 Act) (or exempted from registration distributions on foreign securities payable to a entity is engaged in securities lending under the 1934 Act as a dealer in exempt lending Plan are subject to foreign tax withholdings Government securities, as defined therein) or to a and that the Borrower will always put the Plan back arrangements with the Borrowers, the U.S. bank, that is a party in interest with respect in at least as good a position as it would have been foregoing $50 million requirement is to such plan. had it not loaned securities. satisfied if such trust or other entity has

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aggregate assets which are in excess of upon request of the Plan, the Borrower (2) No party in interest other than the $50 million (excluding the assets of any will provide the Plan with daily Borrower shall be subject to the civil Plan with respect to which the fiduciary confirmations of securities lending penalty that may be assessed under responsible for making the investment transactions. section 502(i) of the Act, or to the taxes decision on behalf of such group trust (r) In addition to the above imposed by section 4975(a) and (b) of or other entity or any member of the conditions, all loans involving Foreign the Code, if the records are not controlled group of corporations Borrowers must satisfy the following maintained, or are not available for including such fiduciary is the supplemental requirements: examination as required below by employer maintaining such Plan or an (1) Such Foreign Borrower is a paragraph (t)(1). employee organization whose members registered broker-dealer subject to (t)(1) Except as provided in are covered by such Plan). However, the regulation by the FSA in the United subparagraph (t)(2) of this paragraph fiduciary responsible for making the Kingdom or is subject to regulation in and notwithstanding any provisions of investment decision on behalf of such Japan by the Ministry of Finance, the subsections (a)(2) and (b) of section 504 group trust or other entity— Financial Services Agency, the Tokyo of the Act, the records referred to in (i) Has full investment responsibility Stock Exchange, and the Osaka Stock paragraph (s) are unconditionally with respect to plan assets invested Exchange; available at their customary location for therein; and (2) Such Foreign Borrower is in examination during normal business (ii) Has total assets under its compliance with all applicable hours by— management and control, exclusive of provisions of Rule 15a–6 (17 CFR (i) Any duly authorized employee or the $50 million threshold amount 240.15a–6) under the 1934 Act which representative of the Department, the attributable to plan investment in the provides foreign broker-dealers a Internal Revenue Service or the commingled entity, which are in excess limited exception from United States Securities and Exchange Commission of $100 million. (In addition, none of registration requirements; (SEC); the entities described above are formed (3) All collateral is maintained in (ii) Any fiduciary of a participating for the sole purpose of making loans of United States dollars or in U.S. dollar- Plan or any duly authorized securities.) denominated securities or letters of representative of such fiduciary; (p) Prior to any Plan’s approval of the credit or such other collateral as may be (iii) Any contributing employer to any lending of its securities to the permitted under PTE 81–6 (as amended participating Plan or any duly Borrowers, a copy of the notice of or superseded) from time to time; authorized employee representative of proposed exemption, and a copy of the (4) All collateral is held in the United such employer; and final exemption, if granted, is provided States and the situs of the Borrowing (iv) Any participant or beneficiary of to the Plan, and the Borrower informs Agreement is maintained in the United any participating Plan, or any duly the independent fiduciary that the States under an arrangement that authorized representative of such Borrower is not acting as a fiduciary of complies with the indicia of ownership participant or beneficiary. (2) None of the persons described the Plan in connection with its requirements under section 404(b) of the 16 above in subparagraphs (t)(1)(ii)– borrowing securities from the Plan. Act and the regulations promulgated (t)(1)(iv) are authorized to examine the (q) The independent fiduciary of the under 29 C.F.R. 2550.404(b)–1; and Plan receives monthly reports with trade secrets of Morgan Stanley or its (5) Prior to entering into a transaction respect to the securities lending affiliates or commercial or financial involving a Foreign Borrower, the transactions, including but not limited information which is privileged or Foreign Borrower must: to the information set forth in this confidential. (i) Agree to submit to the jurisdiction paragraph, so that an independent Plan of the United States; Section III—Definitions fiduciary may monitor such transactions (ii) Agree to appoint an agent for with the Borrowers. The monthly report (a) An ‘‘affiliate’’ of a person means: service of process in the United States, will list for a specified period all (i) Any person directly or indirectly, which may be an affiliate (the Process outstanding or closed securities lending through one or more intermediaries, Agent); transactions. The report will identify for controlling, controlled by, or under (iii) Consent to the service of process each open loan position, the securities common control with the person. (For on the Process Agent; and involved, the value of the security for purposes of this paragraph, the term (iv) Agree that enforcement by a Plan collateralization purposes, the current ‘‘control’’ means the power to exercise of the indemnity provided by the value of the collateral, the rebate or a controlling influence over the Foreign Borrower will occur in the premium (if applicable) at which the management or policies of a person United States courts. security is loaned, and the number of other than an individual); (s) The Borrower maintains, or causes days the security has been on loan. At (ii) Any officer, director, employee or to be maintained, within the United the request of the Plan, such a report relative (as defined in section 3(15) of States for a period of six (6) years from will be provided on a daily or weekly the Act) of any such other person or any the date of each transaction, in a manner basis, rather than a monthly basis. Also, partner in any such person; and that is convenient and accessible for (iii) Any corporation or partnership of audit and examination, such records as 16 The Department notes the Applicants’ which such person is an officer, director representation that, under the proposed exclusive are necessary to enable the persons or employee, or in which such person borrowing arrangements, neither the Borrower nor described in paragraph (t)(1) to is a partner. any of its affiliates will perform the essential determine whether the conditions of the (b) The terms, ‘‘Foreign Borrower’’ or functions of a securities lending agent, i.e., the exemption have been met, except that— Applicants will not be the fiduciary who negotiates ‘‘Foreign Borrowers,’’ includes MSIL the terms of the Borrowing Agreement on behalf of (1) A prohibited transaction will not and any broker-dealer that, now or in the Plan, the fiduciary who identifies the be considered to have occurred if, due the future, is an affiliate of Morgan appropriate borrowers of the securities or the to circumstances beyond the control of Stanley which is subject to regulation by fiduciary who decides to lend securities pursuant to an exclusive arrangement. However, the Morgan Stanley and/or its affiliates, the the FSA in the United Kingdom, and Applicants or their affiliates may monitor the level records are lost or destroyed prior to the MSJL, and any broker-dealer that, now of collateral and the value of the loaned securities. end of the six (6) year period; and or in the future, is an affiliate of Morgan

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Stanley which is subject to regulation by satisfy their own trading requirements 4. Japan has comprehensive financial the Ministry of Finance, Financial or to re-lend to other broker-dealers and resource and reporting/disclosure rules Services Agency, the Tokyo Stock entities which need a particular security concerning broker-dealers. Broker- Exchange, and the Osaka Stock for a certain period of time. The dealers are required to demonstrate their Exchange in Japan. Applicants represent that in the United capital adequacy. The reporting/ (c) The term, ‘‘Borrower,’’ includes States, as described in the Federal disclosure rules impose requirements on Morgan Stanley, MS&Co, MSSSI, the Reserve Board’s Regulation T, borrowed broker-dealers with respect to risk Foreign Borrowers, and any other securities are often used in short sales, management, internal controls, and affiliate of Morgan Stanley that, now or for non-purpose loans to exempted records relating to counter-parties. All in the future, is a U.S. registered broker- borrowers, or in the event of a failure to such records must be produced at the dealer or a government securities broker receive securities that a broker-dealer is request of the agency at any time. The or dealer. required to deliver. agencies’ registration requirements for Effective Date: This proposed The Applicants wish to enter into broker-dealers are enforced by fines and exemption, if granted, will be effective exclusive borrowing arrangements with penalties and thus constitute a as of November 11, 2001, the date the Plans for which Morgan Stanley or any comprehensive disciplinary system. application was received by the affiliate of Morgan Stanley may be an 5. The Applicants represent that in Department. investment manager for the assets of addition to the protections afforded by Summary of Facts and Representations such Plans that are unrelated to the the FSA, the Ministry of Finance, assets involved in the transaction. Financial Services Agency, the Tokyo 1. Morgan Stanley, a publicly traded Morgan Stanley or any of its affiliates Stock Exchange, or the Osaka Stock Delaware corporation and a registered may provide securities custodial Exchange, compliance by the investment adviser, is a full-line services, trustee services, clearing and/ Applicants with the requirements of investment services firm. As of or reporting functions in connection Rule 15a–6 of the 1934 Act (and the November 30, 2000, Morgan Stanley had with securities lending transactions, or amendments and interpretations approximately $426.8 billion in total other services to such Plans. thereof) will offer further protections to assets and $19.3 billion in stockholders’ 3. The Applicants represent that the Plans.17 Rule 15a–6 provides an equity. although MSIL or any other foreign exemption from U.S. registration Morgan Stanley has several affiliates broker-dealer of Morgan Stanley in the requirements for a foreign broker-dealer which are broker-dealers. MS&Co, a United Kingdom will not be registered that induces or attempts to induce the subsidiary of Morgan Stanley, is a with the SEC, their activities are purchase or sale of any security financial services firm which is a governed by the rules, regulations, and (including over-the-counter equity and member of the New York Stock membership requirements of the FSA. debt options) by a ‘‘U.S. institutional Exchange and other principal securities In this regard, the Applicants state that investor’’ or a ‘‘major U.S. institutional exchanges in the United States and is a these broker-dealers are subject to the investor,’’ provided that the foreign member of the National Association of FSA rules relating to, among other broker-dealer, among other things, Securities Dealers (NASD). MS&Co is things, minimum capitalization, enters into these transactions through a incorporated under the laws of the State reporting requirements, periodic U.S. registered broker-dealer of Delaware and is registered with and examinations, client money and safe intermediary. The term ‘‘U.S. regulated by the SEC as a U.S. broker- custody rules, and books and records institutional investor,’’ as defined in dealer under section 15 of the 1934 Act. requirements with respect to client Rule 15a–6(b)(7), includes an employee As of May 31, 2001, MS&Co had accounts. The Applicants represent that benefit plan within the meaning of the approximately $299 billion in assets. the rules and regulations set forth by the Act if: (a) The investment decision is MSSSI, a subsidiary of MS&Co, is a FSA and the SEC share a common made by a plan fiduciary, as defined in financial services company which is objective—the protection of the investor section 3(21) of the Act, which is either incorporated under the laws of the state by the regulation of the securities a bank, savings and loan association, of Delaware and is registered with and industry. The Applicants represent that insurance company, or registered regulated by the SEC as a broker-dealer the FSA rules require each firm which under the 1934 Act, as amended, and is employs registered representatives or 17 According to the Applicants, section 3(a)(4) of also a member of the NASD. As of registered traders to have positive the 1934 Act defines ‘‘broker,’’ to mean ‘‘any person November 20, 2000, MSSSI had tangible net worth and to be able to engaged in the business of effecting transactions in securities for the account of others, but it does not approximately $47 billion in assets. meet its obligations as they may fall include a bank.’’ Section 3(a)(5) of the 1934 Act The Foreign Borrowers and their due, and that the FSA rules set forth provides a similar exclusion for ‘‘banks’’ in the respective regulating entities, are as comprehensive financial resource and definition of the term, ‘‘dealer.’’ However, section follows: (a) MSIL, located in London reporting/disclosure rules regarding 3(a)(6) of the 1934 Act defines ‘‘bank’’ to mean a banking institution organized under the laws of the and subject to regulation by the FSA in capital adequacy. In addition, to United States or a State of the United States. the United Kingdom, and (b) MSJL, demonstrate capital adequacy, the Further, Rule 15a–6(b)(3) provides that the term, located in Tokyo, and subject to Applicants state that the FSA rules ‘‘foreign broker-dealer,’’ means ‘‘any non-U.S. regulation by the Ministry of Finance, impose reporting/disclosure resident person * * * whose securities activities, if conducted in the United States, would be described Financial Services Agency, the Tokyo requirements on broker-dealers with by the definition of ‘broker’ or ‘dealer’ in sections Stock Exchange, and the Osaka Stock respect to risk management, internal 3(a)(4) or 3(a)(5) of the [1934] Act.’’ Therefore, the Exchange in Japan. As of November 30, controls, and transaction reporting and test of whether an entity is a ‘‘foreign broker’’ or 2000, MSIL had approximately $194 record-keeping requirements. In this ‘‘dealer’’ is based on the nature of such foreign entity’s activities and, with certain exceptions, only million in assets. As of March 31, 2001, regard, required records must be banks that are regulated by either the United States MSJL Tokyo Branch had approximately produced at the request of the FSA at or a State of the United States are excluded from ¥5,560 billion in assets. any time. The Applicants further state the definition of the term, ‘‘broker’’ or ‘‘dealer.’’ 2. The Borrowers, acting as principal, that the rules and regulations of the FSA Thus, for purposes of this exemption request, the Applicants are willing to represent that they will actively engage in the borrowing and for broker-dealers are backed up by comply with the applicable provisions and relevant lending of securities. The Borrowers potential fines and penalties as well as SEC interpretations and amendments of Rule 15a– utilize borrowed securities either to a comprehensive disciplinary system. 6.

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investment advisor, or (b) the employee dealer, extend or arrange for the borrower a previously-agreed upon benefit plan has total assets in excess of extension of credit in connection with amount or a rebate fee and keep the $5 million, or (c) the employee benefit the transactions; earnings on the collateral. If the plan is a self-directed plan with (4) Maintain required books and borrower deposits government investment decisions made solely by records relating to the transactions, securities, the borrower is entitled to the persons that are ‘‘accredited investors,’’ including those required by Rules 17a– earnings on its deposited securities and as defined in Rule 501(a)(1) of 3 (Records to be Made by Certain may pay the lender a lending fee. If the Regulation D of the Securities Act of Exchange Members) and 17a–4 (Records borrower deposits irrevocable bank 1933, as amended. The term, ‘‘major to be Preserved by Certain Exchange letters of credit as collateral, the U.S. institutional investor,’’ is defined Members, Brokers and Dealers) of the borrower pays the lender a fee as as a person that is a U.S. institutional 1934 Act; compensation for the loan of its investor that has, or has under (5) Receive, deliver, and safeguard securities. These fees, referred to above, management, total assets in excess of funds and securities in connection with as the Transaction Lending Fee, may be $100 million or an investment adviser the transactions on behalf of the U.S. determined in advance or pursuant to registered under section 203 of the institutional investor or major U.S. an objective formula, and may be Investment Advisers Act of 1940 that institutional investor in compliance different for different securities or has total assets under management in with Rule 15c3–3 of the 1934 Act different groups of securities subject to excess of $100 million.18 The (Customer Protection—Reserves and the Borrowing Agreement. 20 Applicants represent that the Custody of Securities); and 7. The Borrowers request an intermediation of the U.S. registered (6) Participate in certain oral exemption for the lending of securities, broker-dealer imposes upon the foreign communications (e.g., telephone calls) under certain exclusive borrowing broker-dealer the requirement that the between the foreign associated person arrangements, by Plans with respect to securities transaction be effected in and the U.S. institutional investor (not which Morgan Stanley or any of its accordance with a number of U.S. the major U.S. institutional investor), affiliates is a party in interest (including securities laws and regulations and accompany the foreign associated a fiduciary) solely by reason of person on certain visits with both U.S. applicable to U.S. registered broker- providing services to such Plan, or institutional and major U.S. dealers. solely by reason of a relationship to a institutional investors. The Applicants The Applicants represent that under service provider described in section represent that, under certain Rule 15a–6, a foreign broker-dealer that 3(14)(F), (G), (H) or (I) of the Act. For circumstances, the foreign associated induces or attempts to induce the each Plan, neither the Borrowers nor person may have direct communications purchase or sale of any security by a any of its affiliates will have and contact with the U.S. Institutional U.S. institutional or major U.S. discretionary authority or control over Investor.21 (See April 9, 1997, No- institutional investor in accordance the Plan’s investment in the securities with Rule 15a–6 19 must, among other Action Letter.) 6. An institutional investor, such as a available for loan, nor will they render things: investment advice (within the meaning (a) Consent to service of process for pension fund, lends securities in its portfolio to a broker-dealer or bank in of 29 CFR 2510.3–21(c)) with respect to any civil action brought by, or those assets. The Applicants represent proceeding before, the SEC or any self- order to earn a fee while continuing to enjoy the benefits of owning the that because the Borrowers, by regulatory organization; exercising their contractual rights under (b) Provide the SEC with any securities (e.g., from the receipt of any the proposed exclusive borrowing information or documents within its interest, dividends, or other arrangements, will have discretion with possession, custody or control, any distributions due on those securities respect to whether there is a loan of testimony of any such foreign associated and from any appreciation in the value particular Plan securities to the persons, and any assistance in taking of the securities). The lender requires Borrowers, the lending of securities to the evidence of other persons, wherever that the securities loan be fully the Borrowers may be outside the scope located, that the SEC requests and that collateralized, and the collateral usually of relief provided by PTE 81–6.22 relates to the transactions effected is in the form of cash or high quality 8. For each Plan, the Borrowers will pursuant to the Rule; liquid securities, such as U.S. (c) Rely on the U.S. registered broker- Government or Federal Agency directly negotiate a Borrowing dealer through which the transactions obligations or irrevocable bank letters of Agreement with a Plan fiduciary which with the U.S. institutional and major credit. If the borrower deposits cash is independent of the Borrowers. Under U.S. institutional investors are effected collateral, the lender invests the the Borrowing Agreement, the to (among other things): collateral, and the borrowing agreement Borrowers will have exclusive access for (1) Effect the transactions, other than may provide that the lender pay the a specified period of time to borrow negotiating the terms; certain securities of the Plan pursuant to (2) Issue all required confirmations 20 Under certain circumstances described in the certain conditions. The form of the and statements; April 9, 1997, No-Action Letter (e.g., clearance and Borrowing Agreement to be used in (3) As between the foreign broker- settlement transactions), there may be direct foreign jurisdictions will reflect dealer and the U.S. registered broker- transfers of funds and securities between a Plan and appropriate local industry or market Morgan Stanley or between a Plan and the Foreign 23 Borrower. The Applicants note that in such standards. The Borrowing Agreement 18 Note that the categories of entities that qualify situations, the U.S. registered broker-dealer will not as ‘‘major U.S. institutional investors’’ has been be acting as principal with respect to any duties it 22 PTE 81–6 requires in part that neither the expanded by a Securities and Exchange is required to undertake pursuant to Rule 15a–6. borrower nor an affiliate of the borrower may have Commission No-action letter. See SEC No-Action 21 The term ‘‘foreign associated person’’ as discretionary authority or control over the Letter issued to Cleary, Gottlieb, Steen & Hamilton defined in Rule 15a–6(b)(2) means any natural investment of the plan assets involved in the on April 9, 1997, (April 9, 1997 No-Action Letter). person domiciled outside the United States who is transaction. 19 If it is determined that applicable regulation an associated person, as defined in section 3(a)(18) 23 For example, the form of the Borrowing under the 1934 Act does not require Morgan of the 1934 Act, of the foreign broker-dealer, and Agreement to be used in the United Kingdom Stanley or the Borrower to comply with Rule 15a– who participates in the solicitation of a U.S. differs from the standard U.S. Borrowing 6, both entities will nevertheless comply with institutional investor or a major U.S. institutional Agreement. Under the form Borrowing Agreement subparagraphs (a) and (b) of Representation 5. investor under Rule 15a–6(a)(3). Continued

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will specify all material terms of the securities, there may be different fees for Borrowing Agreement for the Plan, will agreement, including the basis for liquid securities than for illiquid monitor the level of the collateral daily compensation to the Plan under each securities. and, if the market value of the collateral category of securities available for loan. Any change in, or a change in the on the close of a business day falls The Borrowing Agreement will also method of determining, the Exclusive below 100 percent (or such higher contain a requirement that the Fee or the Transaction Lending Fee that percentage as the Borrower and the Borrowers pay all transfer fees and the Applicants pay to the Plan with independent fiduciary of the Plan may transfer taxes relating to the securities respect to any securities loan requires agree upon) of the market value of the loans. The terms of each loan of the prior written consent of the loaned securities at the close of business securities by a Plan to a Borrower will independent fiduciary of the Plan, on such day, the Borrower will deliver be at least as favorable to such Plan as except that consent is presumed where additional collateral by the close of those of a comparable arm’s-length the Exclusive Fee or the Transaction business on the following day to bring transaction between unrelated parties, Lending Fee changes pursuant to an the level of the collateral back to at least taking into account the exclusive objective formula. Where the Exclusive 102 percent. The applicable Borrowing arrangement. Fee or the Transaction Lending Fee Agreement will give the Plan a 9. The Borrowers may, but shall not changes pursuant to an objective continuing security interest in, title to, be required to, agree to maintain a formula, the independent fiduciary of or the rights of a secured creditor with minimum balance of borrowed the Plan must be notified at least 24 respect to the collateral and a lien on securities subject to the Borrowing hours in advance of such change and the collateral. Agreement. Such minimum balance such independent Plan fiduciary must If the Borrower pledges cash may be a fixed U.S. dollar amount, a flat not object in writing to such change, collateral, the Plan invests the collateral, percentage or other percentage prior to the effective time of such and all earnings on such cash collateral determined pursuant to an objective change. shall be returned to the Borrower; formula. The Plan is entitled to the equivalent provided that the Borrowing Agreement 10. In exchange for granting the of all distributions made to holders of may provide that the Plan receive Borrower the exclusive right to borrow the borrowed securities during the loan Shared Earnings Compensation, which, certain securities, the Plan receives an period, including, but not limited to, as discussed above, may be a percentage Exclusive Fee from the Borrower. If the cash dividends, interest payments, of the earnings on the collateral which Borrower deposits cash collateral, all shares of stock as a result of stock splits, may be retained by the Plan or the Plan the earnings generated by such cash and rights to purchase additional may agree to pay the Borrower a rebate collateral shall be returned to the securities that the Plan would have fee and retain the earnings on the Borrower; provided that the Borrower received (net of tax withholdings in the collateral. The terms of the rebate fee for may, but shall not be obligated to, agree case of foreign securities), had it each loan will be at least as favorable to with the independent fiduciary of the remained the record owner of the the Plan as those of comparable arm’s Plan to Shared Earnings Compensation. securities. length transactions between unrelated If the Borrower deposits non-cash 11. By the close of business on or parties taking into account the exclusive collateral, all earnings on the non-cash before the day on which the loaned arrangement, and will be based upon an collateral shall be returned to the securities are delivered to the Borrower, objective methodology which takes into Borrower; provided that the Borrower the Plan will receive from the Borrower account several factors, including may, but shall not be obligated to, agree (by physical delivery, book entry in a potential demand for the loaned to pay the Plan a Lending Fee. The securities depository located in the securities, the applicable benchmark Lending Fee, together with the Shared United States, wire transfer, or similar cost of fund indices (typically, the U.S. Earnings Compensation, is called the means) collateral consisting of U.S. Federal Funds rate established by the Transaction Lending Fee. currency, securities issued or U.S. Federal Reserve System (the The Transaction Lending Fee, if any, guaranteed by the U.S. Government or Federal Funds), the overnight REPO 24 may be in addition to the Exclusive Fee its agencies or instrumentalities, rate, or the like) and the anticipated or an offset against such Exclusive Fee. irrevocable bank letters of credit issued investment return on overnight The Exclusive Fee and the Transaction by U.S. banks, or other collateral investments permitted by the Lending Fee may be determined in permitted under PTE 81–6 (as amended independent fiduciary of the Plan. advance or pursuant to an objective or superseded). Such collateral will be If the Borrower pledges non-cash formula, and may be different for deposited and maintained in an account collateral, such as government securities different securities or different groups of on behalf of the Plan which is separate or irrevocable bank letters of credit, the securities subject to the Borrowing from the Borrower’s accounts and will Borrower shall be entitled to the Agreement. For example, in addition to be maintained with an institution other earnings on its non-cash collateral; the Borrower paying different fees for than the Borrower. For this purpose, the provided that the Borrower may, but different portfolios of securities (i.e., the collateral may be held on behalf of the shall not be obligated to, agree to pay fee for a domestic securities portfolio Plan by an affiliate of the Borrower that the Plan a Lending Fee. The Exclusive may be different than the fee for a is the trustee or custodian of the Plan. Fee and the Transaction Lending Fee The market value (or in the case of a foreign securities portfolio), the may be determined in advance or letter of credit, a stated amount) of the Borrower may also pay different fees for pursuant to an objective formula, and collateral on the close of business on the securities of issuers in different foreign day preceding the day of the loan will 24 An overnight REPO is an overnight repurchase countries (i.e., there may be a different be at least 102 percent of the market agreement that is an arrangement whereby fee for German securities than for value of the loaned securities. The Plan, securities dealers and banks finance their French securities). In addition, with inventories of Treasury bills, notes and bonds. The its independent fiduciary or its respect to, for example, the French dealer or bank sells securities to an investor with designee, which may be Morgan Stanley a temporary surplus of cash, agreeing to buy them or any of its affiliates which provides back the next day. Such transactions are settled in to be used in the United Kingdom, the Plan receives immediately available Federal Funds, usually at a title to (rather than a pledge of or a security interest custodial or trustee services in respect rate below the Federal Funds rate (the rate charged in) the collateral. of the securities covered by the by banks lending funds to each other).

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may be different for different securities Stanley or any of its affiliates has aggregate market value of at least $50 or different groups of securities subject negotiated to receive from any such Plan million are permitted to lend securities to the Borrowing Agreement. for standard custodial or other services to the Borrowers; provided, however, The Borrower will provide a monthly unrelated to the securities lending that— report to the independent fiduciary of activity. The arrangement for Morgan (a) In the case of the Related Plans, the Plan which includes the following Stanley or any of its affiliates to provide whose assets are commingled for information. The monthly report will such functions relative to securities investment purposes in a single master list for a specified period all outstanding loans to the Borrowers will be trust or any other entity the assets of or closed securities lending terminable by the Plan within five (5) which are ‘‘plan assets’’ under the Plan transactions. The report will identify for business days of the receipt of written Asset Regulation, which entity is each open loan position, the securities notice without penalty to the Plan, engaged in securities lending involved, the value of the security for except for the return to the Borrowers of arrangements with the Borrowers, the collateralization purposes, the current a pro-rata portion of the Exclusive Fee foregoing $50 million requirement shall value of the collateral, the rebate or paid by the Borrowers to the Plan, if the be deemed satisfied if such trust or premium (if applicable) at which the Plan has also terminated its exclusive other entity has aggregate assets which security is loaned, and the number of borrowing arrangement with the are in excess of $50 million; provided days the security has been on loan. At Borrowers. that if the fiduciary responsible for the request of the Plan, such a report 15. The Borrowing Agreement and/or making the investment decision on will be provided on a daily or weekly any securities loan outstanding may be behalf of such master trust or other basis, rather than a monthly basis. Also, terminated by either party at any time entity is not the employer or an affiliate upon request of the Plan, the Borrower without penalty. Upon termination of of the employer, such fiduciary has total will provide the Plan with daily any securities loan, the Borrower will assets under its management and confirmations of securities lending deliver securities identical to the control, exclusive of the $50 million transactions. borrowed securities (or the equivalent threshold amount attributable to plan 12. Before entering into a Borrowing thereof in the event of reorganization, investment in the commingled entity, Agreement, the Borrower will furnish to recapitalization, or merger of the issuer which are in excess of $100 million. the Plan the most recent publicly of the borrowed securities) to the Plan (b) In the case of the Unrelated Plans, available audited and unaudited within the lesser of five (5) business whose assets are commingled for statements of its financial condition, as days of written notice of termination or investment purposes in a group trust or well as any publicly available the customary settlement period for any other form of entity the assets of information which it believes is such securities. which are ‘‘plan assets’’ under the Plan necessary for the independent fiduciary 16. In the event that the Borrower fails Asset Regulation, which entity is to determine whether the Plan should to return securities in accordance with engaged in securities lending enter into or renew the Borrowing the Borrowing Agreement, the Plan will arrangements with the Borrowers, the Agreement. Further, the Borrowing have the right under the Borrowing foregoing $50 million requirement is Agreement will contain a representation Agreement to purchase securities satisfied if such trust or other entity has by the Borrower that as of each time it identical to the borrowed securities and aggregate assets which are in excess of borrows securities, there has been no apply the collateral to payment of the $50 million (excluding the assets of any material adverse change in its financial purchase price. If the collateral is Plan with respect to which the fiduciary condition since the date of the most insufficient to satisfy the Borrower’s responsible for making the investment recently furnished financial statements. obligation to return the Plan’s securities, decision on behalf of such group trust 13. Prior to any Plan’s approval of the the Borrower will indemnify the Plan in or other entity or any member of the lending of its securities to the the U.S. with respect to the difference controlled group of corporations Borrowers, a copy of the notice of between the replacement cost of including such fiduciary is the proposed exemption and a copy of the securities and the market value of the employer maintaining such Plan or an final exemption, if granted, will be collateral on the date the loan is employee organization whose members provided to the Plan, and the Borrower declared in default, together with are covered by such Plan). However, the will inform the independent fiduciary expenses incurred by the Plan plus fiduciary responsible for making the that the Borrower is not acting as a applicable interest at a reasonable rate, investment decision on behalf of such fiduciary of the Plan in connection with including reasonable attorneys’ fees group trust or other entity— its borrowing securities from the Plan. incurred by the Plan for legal action (i) Has full investment responsibility 14. With regard to those Plans for arising out of default on the loans or with respect to plan assets invested which Morgan Stanley or any of its failure by the Borrower to properly therein; and affiliates provides custodial, trustee, indemnify the Plan. (ii) Has total assets under its clearing and/or reporting functions 17. Except as provided herein, all the management and control, exclusive of relative to securities loans, Morgan procedures under the Borrowing the $50 million threshold amount Stanley and a Plan fiduciary Agreement will, at a minimum, conform attributable to plan investment in the independent of Morgan Stanley and its to the applicable provisions of PTE 81– commingled entity, which are in excess affiliates will agree in advance and in 6 (as amended or superseded), as well of $100 million. (In addition, none of writing to any fees that Morgan Stanley as to applicable securities laws of the the entities described above are formed or any of its affiliates is to receive for United States, the United Kingdom and/ for the sole purpose of making loans of such services. Such fees, if any, would or Japan, as appropriate. In addition, in securities.) be fixed fees (e.g., Morgan Stanley or order to ensure that the independent 18. It is represented that the lending any of its affiliates might negotiate to fiduciary representing a Plan has the of securities is an attractive investment receive a fixed percentage of the value experience, sophistication, and opportunity because it enables the of the assets with respect to which it resources necessary to adequately owner of the securities to earn performs these services or to receive a review the Borrowing Agreement and additional income from the securities stated dollar amount) and any such fee the fee arrangements thereunder, only while continuing to receive the would be in addition to any fee Morgan Plans with total assets having an dividends, interest payments, and other

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distributions made with respect to the determine whether the conditions of the (g) The Borrowing Agreement and/or loaned securities. The Applicants exemption have been met. any securities loan outstanding may be represent that the opportunity for the 21. The requested exemption is terminated by either party at any time Plans to enter into exclusive borrowing administratively feasible because the without penalty, except for the return to arrangements with the Borrowers under conditions to which the Applicants the Borrower of a pro-rata portion of the the flexible fee structures described have consented to be subject are Exclusive Fee paid by the Borrower to herein is in the interests of the Plans comparable to those described in PTE the Plan, and whereupon the Borrower because the Plans will then be able to 81–6. The proposed exemption requires will return any borrowed securities (or choose among an expanded number of the review and approval of the the equivalent thereof in the event of competing exclusive borrowers, as well borrowing arrangement by a fiduciary of reorganization, recapitalization, or as maximizing the volume of securities the Plan that is independent of Morgan merger of the issuer of the borrowed lent and the return on such securities. Stanley and its affiliates and does not securities) to the Plan within the lesser 19. The proposed transaction contain require any further action by the of five (5) business days of written safeguards sufficient to protect the Plans Department. notice of termination or the customary and the participants and beneficiaries of 22. In summary, the Applicants settlement period for such securities; such Plans. In this regard, in addition to represent that the described transactions (h) Neither the Borrower nor any of its the above conditions, all loans involving satisfy the statutory criteria of section affiliates will have discretionary Foreign Borrowers must satisfy the 408(a) of the Act because: authority or control over the Plan’s following supplemental requirements: (a) The Borrower will directly investment in the securities available for (i) Such Foreign Borrower is a negotiate a Borrowing Agreement with loan; registered broker-dealer subject to an independent fiduciary of each Plan; (i) The minimum Plan size requirement (as specified in section regulation by the FSA or the Ministry of (b) The Plans will be permitted to II(o)) will ensure that the Plans will Finance, Financial Services Agency, the lend to the Borrower, a major securities have the resources necessary to Tokyo Stock Exchange, or the Osaka borrower who will be added to an adequately review and negotiate all Stock Exchange; expanded list of competing exclusive aspects of the exclusive borrowing (ii) Such Foreign Borrower is in borrowers, enabling the Plans to earn arrangements; and compliance with all applicable additional income from the loaned (j) All the procedures will, at a provisions of Rule 15a–6 (17 CFR securities on a secured basis, while minimum, conform to the applicable 240.15a–6) under the 1934 Act which continuing to enjoy the benefits of provisions of PTE 81–6 (as amended or provides foreign broker-dealers a owning the securities; superseded), as well as applicable limited exception from United States (c) In exchange for granting the securities laws of the United States, the registration requirements; Borrower the exclusive right to borrow United Kingdom and/or Japan, as (iii) All collateral is maintained in certain securities, the Borrower will pay appropriate. United States dollars or in U.S. dollar- the Plan the Exclusive Fee, which as denominated securities or letters of discussed above may be either (i) a flat Notice to Interested Persons credit or such other collateral as may be fee (which may be a percentage of the Included among those persons who permitted under PTE 81–6 from time to value of the total securities subject to may be interested in the pendency of time; the Borrowing Agreement), (ii) a the proposed exemption are: (1) The (iv) All collateral is held in the United percentage of the total balance of independent fiduciaries of the Plans States and the situs of the Borrowing outstanding borrowed securities, or (iii) that the Applicants can identify as being Agreement is maintained in the United any combination of (i) and (ii); currently interested in lending States under an arrangement that (d) Any change in the Exclusive Fee securities to the Borrowers under complies with the indicia of ownership or Shared Earnings Compensation that circumstances described in the requirements under section 404(b) of the the Borrower pays to the Plan with proposed exemption; and (2) Plans Act and the regulations promulgated respect to any securities loan will which may be potentially interested in under 29 CFR 2550.404(b)–1; and require the prior written consent of the the proposed transactions but cannot be (v) Prior to entering into a transaction independent fiduciary, except that identified at the time the Notice is involving a Foreign Borrower, the consent will be presumed where the published in the Federal Register. Foreign Borrower must: Exclusive Fee or Shared Earnings These two classes of interested persons (1) Agree to submit to the jurisdiction Compensation changes pursuant to an will be notified as follows. of the United States; objective formula specified in the With respect to Plans that the (2) Agree to appoint a Process Agent Borrowing Agreement and the Applicants can identify as being for service of process in the United independent fiduciary is notified at currently interested in lending States, which may be an affiliate; least 24 hours in advance of such securities to the Borrowers, the (3) Consent to the service of process change and does not object in writing Applicants represent that they will on the Process Agent; and thereto, prior to the effective time of furnish a copy of the Notice of Proposed (4) Agree that enforcement by a Plan such change; Exemption (the Notice) along with the of the indemnity provided by the (e) The Borrower will provide supplemental statement, described at 29 Foreign Borrower will occur in the sufficient information concerning its CFR 2570.43(b)(2), to the independent United States courts. financial condition to a Plan before a fiduciary of such Plan either by hand 20. In addition to the protections cited Plan lends any securities to the delivery or first class mailing, within above, the Borrower will maintain, or Borrower; fifteen (15) days following the cause to be maintained, within the (f) The collateral posted with respect publication of the Notice in the Federal United States for a period of six years to each loan of securities to the Register. In addition, the Applicants from the date of a transaction, such Borrower initially will be at least 102 represent that they will provide the records as are necessary to enable the percent of the market value of the independent fiduciary of such Plans a Department and other persons (as loaned securities and will be monitored copy of the final exemption, if granted, specified herein in section II(t)(1)) to daily by the independent fiduciary; within fifteen (15) days following the

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publication of such final exemption in provisions of the Act and/or the Code, authority and need for program the Federal Register. including statutory or administrative evaluation, the nature and use of the With respect to the Plans which may exemptions and transitional rules. information to be collected, the be potentially interested in the proposed Furthermore, the fact that a transaction expected burden and cost to transactions but cannot be identified at is subject to an administrative or respondents and the Institute, and how the time the Notice is published in the statutory exemption is not dispositive of the evaluation results will be made Federal Register, the only practical whether the transaction is in fact a available. The ICRs also contain the means of notifying the fiduciaries of prohibited transaction; and specific questionnaires that will be used such Plans of the pendency of the (4) The proposed exemptions, if to collect the information for each Notice is by publication of the Notice in granted, will be subject to the express program area. Approval is being sought the Federal Register. condition that the material facts and for each ICR separately, and information The Applicants also represent that a representations contained in each collection will begin for each program copy of the Notice and a copy of the application are true and complete, and area once the respective ICR has been final exemption, if granted, will be that each application accurately approved by OMB. The Institute provided by hand delivery or first class describes all material terms of the published a Federal Register notice on mailing to the independent fiduciary of transaction which is the subject of the December 26, 2001, at 66 FR 66455, to a Plan prior to entering into any exemption. solicit public comments for a 60-day exclusive borrowing arrangement with Signed at Washington, DC, this 25th day of period. The Institute received three such Plan involving securities lending March, 2002. comments. The comments and the covered by this exemption. Ivan Strasfeld, Institute’s responses are included in the Written comments and/or requests for Director of Exemption Determinations, ICRs. The purpose of this notice is to a hearing on the proposed exemption Pension and Welfare Benefits Administration, allow an additional 30 days for public must be received by the Department on Department of Labor. comments regarding these ICRs. or before 45 days from the date [FR Doc. 02–7520 Filed 3–28–02; 8:45 am] DATES: Comments must be submitted on following publication of the Notice in or before April 29, 2002. the Federal Register. BILLING CODE 4510–29–P ADDRESSES: Direct comments to: Office FOR FURTHER INFORMATION CONTACT: of Information and Regulatory Affairs, Angelena C. Le Blanc of the Department, MORRIS K. UDALL SCHOLARSHIP Office of Management and Budget telephone (202) 693–8540. (This is not AND EXCELLENCE IN NATIONAL (OMB), Attention: Amy Farrell, Desk a toll-free number.) ENVIRONMENTAL POLICY Officer for The Morris K. Udall General Information FOUNDATION Scholarship and Excellence in National Environmental Policy Foundation, U.S. The attention of interested persons is The United States Institute for Institute for Environmental Conflict directed to the following: Environmental Conflict Resolution; (1) The fact that a transaction is the Resolution. Agency Information Collection _ _ subject of an exemption under section Amy L. [email protected]. Activities: Submission for OMB 408(a) of the Act and/or section FOR FURTHER INFORMATION CONTACT: Review; Comment Request; Program 4975(c)(2) of the Code does not relieve Technical details of the Institute’s Evaluation Instruments for Five of the a fiduciary or other party in interest or evolving program evaluation system are Institute’s Program Areas disqualified person from certain other contained in a December 2001 draft provisions of the Act and/or the Code, AGENCY: Morris K. Udall Scholarship report entitled Applying Program including any prohibited transaction and Excellence in National Evaluation Methods at the U.S. Institute provisions to which the exemption does Environmental Policy Foundation, U.S. for Environmental Conflict Resolution. not apply and the general fiduciary Institute for Environmental Conflict Paper copies of this report can be responsibility provisions of section 404 Resolution. obtained by contacting the Institute; an of the Act, which, among other things, ACTION: Notice. electronic copy can be downloaded require a fiduciary to discharge his from the Institute’s Web site: duties respecting the plan solely in the SUMMARY: In compliance with the www.ecr.gov/techdoc.htm. For further interest of the participants and Paperwork Reduction Act and information or a copy of the ICR, beneficiaries of the plan and in a supporting regulations, this document contact: Dale Keyes, Senior Program prudent fashion in accordance with announces that the U.S. Institute for Manager, U.S. Institute for section 404(a)(1)(b) of the Act; nor does Environmental Conflict Resolution (the Environmental Conflict Resolution, 110 it affect the requirement of section Institute), part of the Morris K. Udall South Church Avenue, Suite 3350, 401(a) of the Code that the plan must Foundation, has forwarded to the Office Tucson, Arizona 85701. Fax: 520–670– operate for the exclusive benefit of the of Management and Budget (OMB) the 5530. Phone: 520–670–5653. E-mail: employees of the employer maintaining following five Information Collection [email protected]. the plan and their beneficiaries; Requests (ICRs): (1) Program Evaluation SUPPLEMENTARY INFORMATION: (2) Before an exemption may be Instruments—Environmental Conflict granted under section 408(a) of the Act Resolution Services, (2) Program A. Title for the Collection of and/or section 4975(c)(2) of the Code, Evaluation Instruments—Conflict Information the Department must find that the Assessment Services, (3) Program Program Evaluation Instruments for exemption is administratively feasible, Evaluation Instruments—National Five of the U.S. Institute for in the interests of the plan and of its Roster of Environmental Dispute Environmental Conflict Resolution’s participants and beneficiaries, and Resolution and Consensus Building Program Areas protective of the rights of participants Professionals, (4) Program Evaluation and beneficiaries of the plan; Instruments—Environmental Conflict B. Potentially Affected Persons (3) The proposed exemptions, if Resolution Training, (5) Program You are potentially affected by this granted, will be supplemental to, and Evaluation Instruments—Meeting action if you are or could be a dispute not in derogation of, any other Facilitation. Each ICR describes the resolution professional (in particular, if

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