Proposed Class Exemption for Principal Transactions

Forms and Documents

Document Name	Status
Principal Transactions Exemption Supporting Statementfinal.docx Supporting Statement A	2015-04-17

IC Document Collections

IC ID	Document Title	Status
213824	Conditions of Proposed Principal Transactions PTE	New

ICR Details

OMB Control No: 1210-0157	ICR Reference No: 201411-1210-005
Status: Historical Inactive	Previous ICR Reference No:
Agency/Subagency: DOL/EBSA	Agency Tracking No:
Title: Proposed Class Exemption for Principal Transactions
Type of Information Collection: New collection (Request for a new OMB Control Number)	Common Form ICR:  No
Type of Review Request: Regular
OIRA Conclusion Action: Comment filed on proposed rule	Conclusion Date: 07/24/2015
	Date Received in OIRA: 04/20/2015
Terms of Clearance: OMB files this comment in accordance with 5 CFR 1320.11( c ). This OMB action is not an approval to conduct or sponsor an information collection under the Paperwork Reduction Act of 1995. This action has no effect on any current approvals. If OMB has assigned this ICR a new OMB Control Number, the OMB Control Number will not appear in the active inventory. For future submissions of this information collection, reference the OMB Control Number provided. The agency will respond to comments received on the ICR in the final rule.

	Inventory as of this Action	Requested	Previously Approved
Expiration Date		36 Months From Approved
Responses	0	0	0
Time Burden (Hours)	0	0	0
Cost Burden (Dollars)	0	0	0

---

Abstract: The Department is proposing this prohibited transaction class exemption (PTE) in connection with its proposed regulation under ERISA section 3(21)(A)(ii) and Code section 4975(e)(3)(B) (Proposed Regulation). The Proposed Regulation would amend the definition of a "fiduciary" under ERISA and the Code to specify when a person is a fiduciary by reason of the provision of investment advice for a fee or other compensation regarding assets of a plan or IRA (i.e., an investment advice fiduciary). If adopted, the Proposed Regulation would replace an existing regulation dating to 1975, with the aim of more appropriately distinguishing between the sorts of advice relationships that should be treated as fiduciary in nature and those that should not. The proposed exemption would allow an individual investment advice fiduciary (an adviser) and the firm that employs or otherwise contracts with the adviser (a financial institution) to engage in principal transactions involving certain debt securities with plans and IRAs. The proposed exemption limits the type of debt securities that may be purchased or sold and contains conditions which the adviser and financial institution must satisfy in order to rely on the exemption. To safeguard the interests of plans and IRAs, the exemption would require the adviser and financial institution to contractually acknowledge fiduciary status and commit to adhere to certain impartial conduct standards when providing advice to the plan or IRA, including providing advice that is in the plan's or IRA's Best Interest. The financial institution would further be required to warrant that it has adopted policies and procedures designed to mitigate the impact of conflicts of interest and ensure that the individual advisers adhere to the impartial conduct standards. The plan or IRA would be required to consent to the principal transactions following disclosure of the conflicts of interest associated with such transactions. Additional disclosure of the mark-up or mark-down applied to the prevailing market price of the security would be required and financial institutions would be subject to recordkeeping requirements.

---

Authorizing Statute(s): US Code: 29 USC 1108 Name of Law: Employee Retirement Income Security Act
  

Citations for New Statutory Requirements: None

---

Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
1210-ZA25	Proposed rulemaking	80 FR 21989	04/20/2015

---

Federal Register Notices & Comments

Did the Agency receive public comments on this ICR? No

---

Number of Information Collection (IC) in this ICR: 1

IC Title	Form No.	Form Name
Conditions of Proposed Principal Transactions PTE

---

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Changing Regulations

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: The Department is proposing this prohibited transaction class exemption (PTE) in connection with its proposed regulation under ERISA section 3(21)(A)(ii) and Code section 4975(e)(3)(B) (Proposed Regulation). The Proposed Regulation would amend the definition of a "fiduciary" under ERISA and the Code to specify when a person is a fiduciary by reason of the provision of investment advice for a fee or other compensation regarding assets of a plan or IRA (i.e., an investment advice fiduciary). If adopted, the Proposed Regulation would replace an existing regulation dating to 1975, with the aim of more appropriately distinguishing between the sorts of advice relationships that should be treated as fiduciary in nature and those that should not. The proposed exemption would allow an individual investment advice fiduciary (an adviser) and the firm that employs or otherwise contracts with the adviser (a financial institution) to engage in principal transactions involving certain debt securities with plans and IRAs. The proposed exemption limits the type of debt securities that may be purchased or sold and contains conditions which the adviser and financial institution must satisfy in order to rely on the exemption. To safeguard the interests of plans and IRAs, the exemption would require the adviser and financial institution to contractually acknowledge fiduciary status and commit to adhere to certain impartial conduct standards when providing advice to the plan or IRA, including providing advice that is in the plan's or IRA's Best Interest. The financial institution would further be required to warrant that it has adopted policies and procedures designed to mitigate the impact of conflicts of interest and ensure that the individual advisers adhere to the impartial conduct standards. The plan or IRA would be required to consent to the principal transactions following disclosure of the conflicts of interest associated with such transactions. Additional disclosure of the mark-up or mark-down applied to the prevailing market price of the security would be required and financial institutions would be subject to recordkeeping requirements.

---

Annual Cost to Federal Government:

Does this IC contain surveys, censuses, or employ statistical methods? No

Is the Supporting Statement intended to be a Privacy Impact Assessment required by the E-Government Act of 2002? No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? Uncollected

---

Common Form ICR:  No

---

On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 04/20/2015

---