pte 97-41 Final FR

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Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

Secretary has made a preliminary
finding that the four Intertek Testing
Services NA, Inc. facilities for which
expansion of its recognition was
requested can meet the requirements as
prescribed in 29 CFR 1910.7.
All interested members of the public
are invited to supply detailed reasons
and evidence supporting or challenging
the sufficiency of the applicant’s having
met the requirements for expansion of
its recognition as a Nationally
Recognized Testing Laboratory, as
required by 29 CFR 1910.7 and
Appendix A to 29 CFR 1910.7.
Submission of pertinent written
documents and exhibits shall be made
no later than October 7, 1997, and must
be addressed to the NRTL Recognition
Program, Office of Variance
Determination, Room N3653,
Occupational Safety and Health
Administration, U.S. Department of
Labor, 200 Constitution Avenue, NW,
Washington, D.C. 20210. Copies of the
ITS applications, the laboratory survey
reports, the notification of change of
ownership and name, and all submitted
comments, as received (Docket No.
NRTL–1–89), are available for
inspection and duplication at the
Docket Office, Room N2634,
Occupational Safety and Health
Administration, U.S. Department of
Labor, at the above address.
The Assistant Secretary’s final
decision on whether the applicant
(Intertek Testing Services NA Inc.)
satisfies the requirements for expansion
of its recognition as an NRTL will be
made on the basis of the entire record
including the public submissions and
any further proceedings that the
Assistant Secretary may consider
appropriate in accordance with
Appendix A to Section 1910.7.

This document contains a
final exemption from certain prohibited
transaction restrictions of the Employee
Retirement Income Security Act of 1974
(the Act or ERISA) and from certain
taxes imposed by the Internal Revenue
Code of 1986 (the Code). The exemption
permits an employee benefit plan (the
Client Plan) to purchase shares of a
registered investment company (the
Fund), the investment adviser for which
is a bank (the Bank) or plan adviser (the
Plan Adviser) registered under the
Investment Advisers Act of 1940 (the
Advisers Act), that also serves as a
fiduciary of the Client Plan, in exchange
for plan assets transferred in-kind to the
Fund from a collective investment fund
(the CIF) maintained by the Bank or
Plan Adviser, in connection with a
complete withdrawal of a Client Plan’s
assets from the CIF. The exemption
affects participants and beneficiaries of
the Client Plans that are involved in
such transactions as well as the Bank or
Plan Adviser and the Fund.
EFFECTIVE DATE: Section I of this
exemption is effective for transactions
occurring from October 1, 1988 until
August 8, 1997. Section II of the
exemption is effective for transactions
occurring after August 8, 1997.
FOR FURTHER INFORMATION CONTACT:
Ms. Jan D. Broady or Mr. E.F. Williams,
Office of Exemption Determinations,
Pension and Welfare Benefits
Administration, U.S. Department of
Labor, Washington, DC 20210 at (202)
219–8881 or (202) 219–8194,
respectively, or Ms. Susan E. Rees, Plan
Benefits Security Division, Office of the
Solicitor, U.S. Department of Labor,
Washington, DC 20210 at (202) 219–
4600, ext. 105. (These are not toll-free
numbers.)

Signed at Washington, D.C. this 30th day
of July 1997.
Greg Watchman,
Acting Assistant Secretary.
[FR Doc. 97–21012 Filed 8–7–97; 8:45 am]

Paperwork Reduction Act Analysis

BILLING CODE 4510–26–P

DEPARTMENT OF LABOR
Pension and Welfare Benefits
Administration
[Prohibited Transaction Exemption 97–41;
Exemption Application No. D–09988]

Class Exemption for Collective
Investment Fund Conversion
Transactions
Pension Welfare Benefits
Administration, Department of Labor.
ACTION: Grant of class exemption.
AGENCY:

SUMMARY:

Pursuant to the Paperwork Reduction
Act of 1995 (PRA 95), Pub. L. 104–13,
44 U.S.C. Chapter 35 and 5 CFR Part
1320, the information collection request
(the ICR) in this class exemption was
published for public comment on
November 13, 1996 (61 FR 58224). No
comments were received from the
public regarding the ICR. However, as
discussed below, because the
Department of Labor (the Department)
has modified the class exemption in
response to suggestions by commenters,
the estimated information collection
burden has been adjusted (see
RESPONDENTS AND PROPOSED
FREQUENCY OF RESPONSE and
ESTIMATED ANNUAL BURDEN,
below). The Office of Management and
Budget (OMB) has approved this ICR
with the control number OMB 1210–

0104, which expires on July 31, 2000.
Persons are not required to respond to
this ICR unless it displays a currently
valid OMB control number.
Respondents and Proposed Frequency
of Response: Following the publication
on November 13, 1996 of the notice of
proposed exemption (61 FR 58224),
based upon one of the comments
received, the Department determined to
modify the final exemption to include
relief for certain non-Bank Plan
Advisers. Consequently, the Department
has recalculated estimates of the
information collection burden in the
final exemption. Based upon this
recalculation, the Department staff
estimates that approximately 75 parties
will seek to take advantage of the class
exemption in any given year. The
respondents will be banks, non-bank
advisers, and trust companies acting as
fiduciaries of plans investing in
collective investment funds maintained
by such entities.
Estimated Annual Burden: The
Department staff estimates the annual
burden for preparing the materials
required under the class exemption to
be 1767 hours. The total annual burden
cost (operating/maintenance) is
estimated to be $221,247.
SUPPLEMENTARY INFORMATION: On
November 13, 1996, the Department
published a notice in the Federal
Register (61 FR 58224) of the pendency
of a proposed class exemption from the
restrictions of sections 406(a) and 406
(b)(1) and (b)(2) of the Act and from the
taxes imposed by section 4975 (a) and
(b) of the Code by reason of section
4975(c)(1) (A) through (E) of the Code.
The Department proposed the class
exemption in response to an application
dated March 28, 1995 which was
submitted on behalf of Federated
Investors (Federated) pursuant to
section 408(a) of the Act and section
4975(c)(2) of the Code, and in
accordance with the procedures set
forth in 29 CFR Part 2570, Subpart B,
(55 FR 32836, August 10, 1990).1
The notice of pendency gave
interested persons an opportunity to
comment or request a public hearing on
the proposal. In this regard, the
Department received four comments,
one of which contained a request for a
public hearing. Upon consideration of
the record as a whole, the Department
1 Section 102 of Reorganization Plan No. 4 of
1978, 5 U.S.C. App. 1 (1996) generally transferred
the authority of the Secretary of the Treasury to
issue exemptions under section 4975(c)(2) of the
Code to the Secretary of Labor.
In the discussion of the exemption, references to
specific provisions of the Act should be read to
refer as well to the corresponding provisions of
section 4975 of the Code.

Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices
has determined to grant the proposed
class exemption, subject to certain
modifications suggested by the
commenters. These modifications and
the comments are discussed below.
I. Discussion of Comments
A commenter requested certain
specific modifications to the proposal in
the following areas:
1. Definition of the term ‘‘Fund.’’ The
commenter noted that, with respect to
the description of investment
companies covered under the proposal,
the term ‘‘Fund’’ at the beginning of
section I and section II, and the
definition of a ‘‘Fund’’ in section IV(e)
of the proposal, all define a ‘‘Fund’’ as
a diversified open-end management
investment company registered under
the Investment Company Act of 1940
(the 1940 Act). According to the
commenter, the 1940 Act does not by its
terms require that an investment
company subject to its provisions be
diversified. In addition, Prohibited
Transaction Exemption (PTE) 77–4 (42
FR 18732, April 8, 1977), to which the
subject class exemption relates, does not
require that an open-end investment
company be diversified. Therefore, for
consistency with PTE 77–4, the
commenter requests that the term
‘‘diversified’’ be deleted in the three
paragraphs where it appears in the
proposal. The Department concurs with
this comment and, accordingly, has
deleted references in the final
exemption to the ‘‘diversified’’ status of
the investment companies.
2. Fee Disclosure Conditions. Sections
I(e)(2) and II(e)(2) of the proposal
require that Banks disclose, among other
things, the fees to be charged to, or paid
by, the Client Plan and the Funds to the
Bank ‘‘* * * or any unrelated third
party,’’ including the nature and extent
of any differential between the rates of
the fees. The commenter stated that
such disclosure is required in addition
to the disclosure in the Fund prospectus
required by sections I(e)(1) and II(e)(1)
of the proposal. According to the
commenter, this language differs, in
part, from the wording of the parallel
condition in PTE 77–4 and in the
individual exemptions granted by the
Department.2 As a result, the
commenter urged the Department to
delete the requirement that the Bank
2 See, for example, PTE 94–82 involving Marshall
& Ilsley Trust Company (59 FR 62422, December 5,
1994); PTE 94–86 involving The Bank of California,
N.A. (59 FR 65403, December 19, 1994); PTE 95–
33 involving Bank South, N.A. (60 FR 20773, April
27, 1995); PTE 95–48 involving Mellon Bank, N.A.
(60 FR 32995, June 26, 1995); PTE 96–64 involving
Society National Bank (61 FR 44081, August 27,
1996); and PTE 96–74 involving Chicago Trust
Company (61 FR 51464, October 2, 1996).

disclose fees charged to Client Plans by
unrelated third parties in the final
exemption. The commenter argued that:
(a) the prospectuses for the Funds will
disclose the identities of the third-party
service providers to the Funds and the
total level of fees paid to those
providers, which should be sufficient to
fully inform the Client Plan’s
Independent Fiduciary of the thirdparty fees paid by the Fund; and (b) the
Bank would have no reason to know
about the fees charged to the Client
Plans by third parties outside the Funds
or the arrangements under which such
fees are paid, and as such may not be
in a position to make such disclosures.
Furthermore, the Bank would have no
basis for disclosing the differential
between the rates of fees by a third
party, as required by this condition.
Thus, the commenter requested that the
Department clarify that the delivery of
the prospectuses will satisfy the fee
disclosure condition with regard to fees
charged by third parties to the Funds.
The Department concurs with the
commenter and has determined to
delete the phrase ‘‘* * * or any
unrelated third party’’ from sections
I(e)(2) and II(e)(2) of the exemption.
One commenter requested that the
exemptive relief contained in the
proposal be modified to include in-kind
transfers of plan assets to mutual funds
in exchange for shares of the funds
where an investment adviser registered
under the Advisers Act is an investment
manager or investment adviser to a
Client Plan and also an investment
adviser to the mutual fund. The
commenter represented that many
investment advisers may wish to
convert all or a portion of their directly
managed Client Plan portfolios (the
Portfolios) into mutual funds. Under the
modifications contemplated by the
commenter, the investment adviser
would have to comply with many of the
same terms and conditions contained in
the proposal, such as valuations of the
securities in accordance with SEC Rule
17a–7 (Rule 17a–7).3 However, the
conditions described in sections I(c) and
II(c) of the proposal which generally
require that the transferred assets
constitute a Client Plan’s pro rata
portion of the assets held in the CIF
would not be met under the
commenter’s suggested modification.
According to the commenter, the
proposed in-kind transfers to the mutual
funds would be made with plan assets
selected by the investment adviser and
3 The commenter further represented that all
disclosures and the form of independent fiduciary
approval will be designed to meet the requirements
of PTE 77–4.

42831

pro rata allocations of such assets
would not be necessary. Lastly, the
commenter requested that the
Department hold a public hearing prior
to any decision by the Department to
issue the final exemption without
expanding the proposal as requested.
In this regard, the Department notes
that the proposal was developed in
response to the prohibited transaction
issues raised by transactions involving
the conversion of Bank collective
investment funds. The conditions
applicable to such CIF conversions have
been developed based on the exemption
application submitted by Federated on
March 28, 1995. Accordingly, the
Department does not believe that it has
sufficient information regarding other
types of in-kind transfers of plan assets
involving investment advisers to make
the findings necessary to grant
exemptive relief. Moreover, the
Department does not believe that a
sufficient showing has been made that
the conditions suggested by the
commenter would adequately protect
the interests of a plan’s participants and
beneficiaries involved in such
transactions.
However, the Department has decided
to modify the final exemption to include
relief for ‘‘Plan Advisers’’, provided that
all of the terms and conditions of the
final exemption are met. In this regard,
the Department has added section IV(m)
to the exemption to define Plan Adviser
to mean any investment adviser
registered under the Advisers Act of
1940, and any ‘‘affiliate’’ (as defined in
section IV(b)) of such Plan Adviser. The
Department also has modified the
definition of the term ‘‘collective
investment fund’’ under section IV(d) to
include a common or collective trust
fund or pooled investment fund
maintained by a Plan Adviser for the
collective investment of the assets
attributable to two or more plans
maintained by unrelated employers. The
Department has defined the term
‘‘unrelated employers’’ in section IV(o)
to mean persons which are not, directly
or indirectly, affiliates, as defined in
section IV(b)(1). Finally, references
throughout the proposal to a ‘‘Bank’’
have been modified under the final
exemption to also include references to
a ‘‘Plan Adviser.’’
With respect to the commenter’s
request for a public hearing on the
proposal, the Department believes that
the issues raised by the commenter
relating to investment advisers generally
appear to be outside the scope of the
proposed exemption. In this regard, the
Department notes that the proposed
exemption requested by Federated
related to the conversion of collective

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Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

funds by Banks. The safeguards and
conditions developed under that
proposal were designed to address the
ERISA issues raised by those
transactions that were the subject of
exemptive relief. Accordingly, the
Department has determined that no
issues relating to the proposed
exemption were identified that would
require the convening of a hearing and
has determined not to hold a public
hearing. Of course, the Department
would be prepared to consider
individual exemptive relief upon proper
demonstration that the findings can be
made under section 408(a) of the Act.
Another commenter submitted a
comment in general support of the
exemption. However, the commenter
noted that sections I(g) and II(g) of the
proposal require that the Bank send
confirmations, by regular mail, to the
Independent Fiduciary of each Client
Plan that purchases shares in
connection with the in-kind transfer, no
later than 105 days after the completion
of each purchase. The commenter stated
that some Banks have indicated that it
is not uncommon to deliver such
confirmations by personal delivery,
rather than by mail. Therefore, the
commenter has requested that the
Department modify the final exemption
to permit distributions of the
confirmation statements by personal
delivery, as well as delivery by any
other means reasonably anticipated to
ensure receipt by the Client Plan’s
Independent Fiduciary (e.g., private
express courier or facsimile). Upon
consideration of this comment, the
Department has modified sections I(g)
and II(g) to permit a Bank or Plan
Adviser to deliver the information
required under these sections by either
regular mail or personal delivery. The
Department has also prospectively
modified section II(g) to permit the
delivery of such information by
facsimile or electronic mail. In this
regard, the Department has modified
section II(f) to require that the
Independent Fiduciary, in connection
with the dissemination of confirmation
statements by either facsimile or
electronic mail, specifically agree, at the
time of the approval of the in-kind
transfer, to the receipt of such
statements in that form. In addition, the
Department has defined the term
‘‘personal delivery’’ in section IV(p) to
mean the delivery of the information
described in sections I(g) and II(g) to an
individual or individuals designated by
the Client Plan to act on behalf of the
Independent Fiduciary.
A commenter noted that the proposal
does not include exemptive relief for
purchases of Fund shares by employee

benefit plans that are sponsored by the
Bank for its own employees. In this
regard, the commenter suggested that
issues related to providing such relief
should be considered by the Department
apart from the proposal in order not to
delay the publication of the final
exemption. The Department agrees with
the commenter and intends to
separately consider the issues arising in
connection with transactions involving
the purchase of Fund shares by plans
sponsored by a Bank, or for that matter
a Plan Adviser, for its own employees.
A commenter noted that the second
sentence of section II(c) of the proposal
contains a mistaken cross-reference to
section II(b). In this regard, section II(c)
of the proposal provided that the
transferred assets constitute the Client
Plan’s pro rata portion of such assets
that were held by the CIF immediately
prior to the transfer. The second
sentence in section II(c) contained an
exception to this general rule and
provided that the allocation of fixedincome securities held by a CIF on the
basis of each Client Plan’s pro rata share
of the aggregate value of such securities
will not fail to meet the requirements of
section II(b) if certain additional
requirements are met. The Department
concurs with the commenter and has
revised the cross-reference to section
II(b) in the second sentence of section
II(c) to refer back to the general rule
under that section.
The commenter also has requested a
clarification of the disclosure
requirements in section II(e) of the
proposal. Section II(e)(5) requires that
the Client Plan’s Independent Fiduciary
receive advance written notice
concerning the identity of securities that
will be valued in accordance with
Securities and Exchange Commission
(SEC) Rule 17a–7(b)(4) and allocated
pursuant to section II(c) of the proposal.
The commenter noted that section
II(e)(6) of the proposal also requires that
information be provided about the
identity of any fixed-income securities
allocated pursuant to section II(c). The
commenter believed that each of these
requirements is intended to require
disclosure of two different lists of
securities, i.e., (a) securities valued
based on dealer quotations or pricing
services, and (b) fixed-income securities
allocated between the CIF and the Fund
on the basis of each Client Plan’s pro
rata share of the aggregate value of such
securities. Nonetheless, the commenter
believed that the references in both
subsections to section II(c) may confuse
the intended scope of the second
requirement (as stated in section II(e)(6)
of the proposal) which could be
construed to cover all fixed-income

securities involved in the in-kind
transfer, even those not allocated on an
aggregate value basis. In response to the
comment, the Department has modified
section II(e)(6) in the final exemption to
require disclosure of any fixed-income
securities which are allocated on the
basis of each Client Plan’s pro rata share
of the aggregate value of such securities.
A commenter noted that section IV(a)
of the proposal defines the term ‘‘Bank’’
to include any affiliate thereof as
defined in section IV(b). However, the
commenter further noted that sections
IV(h) and IV(k) of the proposal also
contain references to the Bank or an
affiliate thereof. For purposes of clarity,
the commenter requested that references
in these sections to the term ‘‘affiliate’’
be deleted in order to avoid the
anomalous result of such references
being interpreted to include an affiliate
of an affiliate of a Bank. The Department
has adopted this suggestion and deleted
references to an ‘‘affiliate’’ of the Bank
in sections IV(h) and IV(k) of the final
exemption.
II. Description of the Exemption
The class exemption consists of four
sections. Section I provides conditional
exemptive relief for transactions
occurring from October 1, 1988 until the
date of the notice granting the final
exemption is published in the Federal
Register. Section II provides prospective
relief for transactions which must meet
certain additional conditions which are
described below. Section III provides
that a transaction that meets the
applicable conditions of the exemption
will be deemed a purchase by the Client
Plan of shares of an open-end
investment company registered under
the 1940 Act for purposes of PTE 77–4.
Accordingly, a Bank or Plan Adviser
that complies with the terms of this
exemption and with the terms of PTE
77–4 is able to receive investment
management and investment advisory
fees from the Fund and the Client Plan
with respect to the plan’s assets
invested in shares of the Fund to the
extent permitted under PTE 77–4.
Section III also provides that
compliance with the exemption will
constitute compliance with paragraphs
(a), (d) and (e) of section II of PTE 77–
4. Finally, Section IV contains
definitions for certain terms used in the
exemption.
Specifically, the class exemption set
forth in Section I provides retroactive
relief from the restrictions of sections
406(a) and 406 (b)(1) and (b)(2) of the
Act for the purchase of Fund shares by
an employee benefit plan, where a Bank
or Plan Adviser that serves as
investment adviser to the Fund is also

Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices
a fiduciary with respect to the plan, in
exchange for plan assets transferred inkind to the Fund from a CIF maintained
by the Bank or Plan Adviser. The
exemption is generally similar to a
number of individual exemptions that
have been granted by the Department for
such transactions, but the operative
language of this exemption differs from
that of the individual exemptions in two
major respects.4 First, the operative
language has been revised to make it
more comprehensible to the user.
Second, the operative language
emphasizes that the class exemption
does not provide relief for any
prohibited transactions that may arise in
connection with terminating a CIF,
permitting certain plans to withdraw
from a CIF that is not terminating, or
liquidating or transferring any plan
assets held by the CIF. Thus, the class
exemption provides relief only for the
purchase of Fund shares by a Client
Plan in exchange for assets that are
transferred in-kind from a CIF. Although
the Department interprets the individual
exemptions as being similarly limited in
their scope, the language of the class
exemption is intended to clarify this
limitation.
The Department believes that the
scope of the class exemption is
consistent with the applicant’s request
for relief based on the applicant’s
mistaken reliance on PTE 77–4. In
addition, the Department notes that the
class exemption defines the term
‘‘Client Plan’’ in section IV so as to
exclude exemptive relief for purchases
of Fund shares by plans sponsored by
the Bank or a Plan Adviser for its own
employees.
The conditions applicable to the
retroactive exemption set forth in
Section I of the exemption are described
below.
Under section I(a) of the exemption,
no sales commissions or other fees are
paid by the Client Plan in connection
with the transaction.
Section I (b) and (c) of the exemption
requires that the transferred assets be
securities for which market quotations
are readily available (or cash) and
consist of the Client Plan’s pro rata
portion of all assets held by the CIF
immediately prior to the transfer.5
4 See

the list of exemptions cited in Footnote 2.
Department notes that the Bank or Plan
Adviser retains ongoing responsibilities under
ERISA’s general standards of fiduciary conduct
with respect to plans electing to remain as investors
in the CIF and with respect to other aspects of the
transfers. In this regard, the applicant represents
that all nontransferable assets of a CIF are
liquidated prior to an in-kind transfer with respect
to a partial or a complete termination of the CIF.
The applicant further notes that transferable assets
5 The

Under section I(d), the Client Plan must
have received shares of a Fund to which
the CIF assets have been transferred that
have a total net asset value that is equal
to the value of the Client Plan’s
transferred assets on the date of the
transfer. The value of any securities
transferred in-kind will be based on the
current market value of such assets, as
determined in a single valuation for
each asset, with all valuations
performed in the same manner at the
close of the same business day (defined
in section IV(n) to mean a banking day
as defined by federal or state banking
regulations), in accordance with Rule
17a–7 of the 1940 Act (using sources
independent of the Bank or Plan
Adviser) and the procedures established
by the Funds pursuant to Rule 17a–7 for
the valuation of such assets. The same
valuation must be used for each asset in
determining the amount transferred
from the CIF and the amount received
by the Fund.
Section I(e) provides that an
Independent Fiduciary must receive
advance written notice of the
transaction, as well as the following
written information concerning the
Funds: (a) A current prospectus for each
Fund in which a Client Plan is
considering investing; (b) full and
detailed written disclosure of the
investment advisory and other fees
charged to, or paid by, the Client Plan
(and by such Fund) to the Bank or Plan
Adviser, including the nature and extent
of any differential between the rates of
the fees; 6 (c) the reasons why the Bank
or Plan Adviser may consider an
exchange of the Client Plan’s CIF assets
for investments in the Fund to be
appropriate for the Client Plan; and (d)
a statement describing whether there are
any limitations applicable to the Bank
or Plan Adviser with respect to which
assets of the Client Plan may be invested
in the Fund, and, if so, the nature of
such limitations.
Moreover, under section I(f), the
Independent Fiduciary gives prior
approval in writing of each in-kind
transfer of the Client Plan’s CIF assets to
a Fund in exchange for shares of the
Fund, on the basis of the information
disclosed to the Independent Fiduciary.
In addition, section I(g) requires that the
Independent Fiduciary receive written
confirmation of the transaction no later
than 105 days after the transaction,
which may be sent by regular mail or
of a CIF may consist of securities or a combination
of cash and securities.
6 The Department has clarified section II(e) to
indicate that a Client Plan should receive
disclosures which would allow it to compare the
rates of CIF–level fees to the rates of Fund-level fees
that are paid to the Bank or Plan Adviser.

42833

personal delivery. This written
confirmation must disclose the number
of CIF units held by the Client Plan
immediately before the transaction and
the number of Fund shares held by the
Client Plan immediately following the
transaction, the related per unit and per
share values, and the dollar amounts of
the CIF units and the Fund shares
involved in the transaction.
Section I(h) requires that, for each
Client Plan, the combined total of all
fees received by the Bank or Plan
Adviser for the provision of services to
the Client Plan, and in connection with
the provision of services to a Fund in
which a Client Plan invests, must not
exceed ‘‘reasonable compensation’’
within the meaning of section 408(b)(2)
of the Act. Finally, section I(i) provides
that all dealings between a Client Plan
and a Fund are on a basis no less
favorable to the Client Plan than such
dealings are with other shareholders of
the Fund.
On a prospective basis, Section II of
the exemption requires that the
transactions meet certain conditions in
addition to those described in Section I
of the exemption. These additional
conditions are described below.
Section II(c) provides an exception to
the general requirement that the assets
transferred in-kind to a Fund consist of
the Client Plan’s pro rata portion of
each of the transferred assets of the CIF.
This exception applies to certain
investments in fixed-income securities.
The fixed-income securities which are
allocated between the CIF and the Fund
must have the same coupon rates,
maturities and credit ratings at the time
of the transaction and cannot exceed
one (1) percent of the aggregate assets
held by the CIF as of each transfer. In
this regard, section IV(j) defines the
term ‘‘fixed-income security’’ as any
interest-bearing or discounted
government or corporate security with a
face amount of $1,000 or more that
obligates the issuer to pay the holder a
specified sum of money, usually at
specific intervals, and to repay the
principal amount of the loan at
maturity.
Section II(e) of the exemption requires
that the Independent Fiduciary receive
advance written notice of the in-kind
transfer and purchase of assets and full
written disclosure of information
concerning the Funds. Among the
information provided to the
Independent Fiduciary will include
documentation relating to the identity of
all securities that will be valued in
accordance with Rule 17a–7(b)(4) of the

42834

Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

1940 Act 7 and allocated on the basis of
the Client Plan’s pro rata portion under
section II(c), and the identity of any
fixed-income securities that will be
allocated on the basis of each Client
Plan’s pro rata share of the aggregate
value of such securities pursuant to
section II(c).8
Under section II(f) of the exemption,
the Independent Fiduciary must give
the Bank or Plan Adviser prior written
approval of the in-kind transfer of the
Client Plan’s CIF assets to a Fund in
exchange for shares of the Fund.
Moreover, if the confirmation
statements described in section II(g) are
to be sent by facsimile or electronic
mail, section II(f) requires that the
Independent Fiduciary specifically
approve the delivery of the confirmation
statements in this manner.
Section II(g) has been revised to
specifically allow a Bank or Plan
Adviser to send information confirming
the in-kind transfer to the Independent
Fiduciary of a Client Plan, by regular
mail or personal delivery or, with the
prior written approval of the
Independent Fiduciary, by facsimile or
electronic mail. However, in addition to
the 105 day distribution period for
confirmation statements described in
sections I(g) and II(g)(2) of the
exemption, section II(g)(1) provides for
another written confirmation to the
Independent Fiduciary, not later than 30
days after the completion of the
transaction, for securities that were
valued in accordance with Rule 17a–
7(b)(4). The additional confirmation
must contain the following information:
(a) the identity of each such security; (b)
the current market price as of the date
of the transaction of each such security
involved in the transaction; and (c) the
identity of each pricing service or
market-maker consulted in determining
the value of such securities.
Further, section II(h) requires the
Bank or Plan Adviser to provide certain
ongoing disclosures to the Independent
Fiduciary of a Client Plan. Such written
disclosures must include: (a) a copy of
an updated prospectus for each Fund in
7 Rule 17a–7(b)(4) describes the method for
determining the current market price of securities
that are not reported securities under Rule 11Aa3–
1 (17 CFR 240.11Aa3–1), are not traded principally
on an exchange and are not quoted in the NASDAQ
system. 17 CFR 270.17a–7(b)(4). Because the proper
valuation of such securities may require more
extensive inquiry than in the valuation of securities
described in Rule 17a–7 (b)(1)–(b)(3), the
Department believes that the Independent Fiduciary
should receive advance notice that the transfer will
entail such valuations.
8 The Department is of the view that section II(c)
requires that a Bank or Plan Adviser disclose, in the
case of any fixed-income securities allocated on the
basis of aggregate value, the identity of all such
securities.

which such plan has invested, which is
to be provided at least on an annual
basis; and (b) upon the request of the
Independent Fiduciary, a report or
statement (which may take the form of
the most recent financial report, the
current Statement of Additional
Information, or some other written
statement) containing a description of
all fees paid by the Fund to the Bank or
Plan Adviser. The purpose of this
additional disclosure is to ensure that
the Independent Fiduciary will
continue to have the information
necessary to effectively monitor the
Fund investments made by the Client
Plan.
The Department wishes to note that
the requirement under sections I and II
of the exemption that all valuations of
all plan assets transferred from a CIF to
a Fund be determined in accordance
with Rule 17a–7 under the 1940 Act is
designed to provide flexibility for future
transactions. Thus, for example, if Rule
17a–7 is subsequently amended by the
SEC to accommodate new pricing
systems, Banks or Plan Advisers could
take advantage of the amended Rule
without having to request an
amendment to the class exemption.
However, the Department cautions that
the exemption would not be available
for transactions involving assets that are
not valued by reference to sources
independent of the Bank or Plan
Adviser.
Unlike the individual exemptions
cited above, this class exemption does
not grant relief for fees that the Bank or
Plan Adviser may receive from the Fund
as a result of the Client Plans’ purchase
of Fund shares. However, section III of
this exemption provides that a purchase
of Fund shares that complies with
sections I and II will be deemed a
purchase of shares of an open-end
investment company for purposes of
PTE 77–4, and in compliance with
paragraphs (a), (d) and (e) of section II
of that exemption. Compliance with all
of the conditions of PTE 77–4 would
permit the Bank or Plan Adviser to
receive investment advisory and similar
fees from the Fund with respect to
shares acquired by a Client Plan in
accordance with this class exemption.
General Information
The attention of interested persons is
directed to the following:
(1) The fact that a transaction is the
subject of an exemption under section
408(a) of the Act and section 4975(c)(2)
of the Code does not relieve a fiduciary
or other party in interest or disqualified
person from certain other provisions of
the Act and the Code, including any
prohibited transaction provisions to

which the exemption does not apply
and the general fiduciary responsibility
provisions of section 404 of the Act
which require, among other things, that
a fiduciary discharge his duties with
respect to the plan solely in the interests
of the participants and beneficiaries of
the plan and in a prudent fashion in
accordance with section 404(a)(1)(B) of
the Act; nor does it affect the
requirement of section 401(a) of the
Code that the plan must operate for the
exclusive benefit of the employees of
the employer maintaining the plan and
their beneficiaries;
(2) In accordance with section 408(a)
of the Act and section 4975(c)(2) of the
Code, and based upon the entire record,
the Department finds that the exemption
is administratively feasible, in the
interests of the plans and their
participants and beneficiaries, and
protective of the rights of participants
and beneficiaries of such plans;
(3) The exemption is applicable to a
transaction only if the conditions
specified in the class exemption are
met; and
(4) The exemption is supplemental to,
and not in derogation of, any other
provisions of the Code and the Act,
including statutory or administrative
exemptions and transitional rules.
Furthermore, the fact that a transaction
is subject to an administrative or
statutory exemption is not dispositive of
whether the transaction is in fact a
prohibited transaction.
Exemption
Accordingly, the following exemption
is granted under the authority of section
408(a) of the Act and section 4975(c)(2)
of the Code, and in accordance with the
procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, 32847,
August 10, 1990).
Section I. Retroactive Exemption for the
Purchase of Fund Shares With Assets
Transferred In-Kind From a CIF
For the period from October 1, 1988
to August 8, 1997, the restrictions of
sections 406(a) and 406 (b)(1) and (b)(2)
of the Act and the taxes imposed by
section 4975 of the Code, by reason of
section 4975(c)(1) (A) through (E), shall
not apply to the purchase by an
employee benefit plan (the Client Plan)
of shares of one or more open-end
management investment companies (the
Fund or Funds) registered under the
Investment Company Act of 1940, in
exchange for assets of the Client Plan
transferred in-kind to the Fund from a
collective investment fund (the CIF)
maintained by a bank (the Bank) or a
plan adviser (the Plan Adviser), where
the Bank or Plan Adviser is the

Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices
investment adviser to the Fund and also
a fiduciary of the Client Plan. The
transfer and purchase must be in
connection with a complete withdrawal
of the Client Plan’s assets from the CIF,
and the following conditions must be
met:
(a) No sales commissions or other fees
are paid by the Client Plan in
connection with the purchase of Fund
shares.
(b) All transferred assets are securities
for which market quotations are readily
available, or cash.
(c) The transferred assets constitute
the Client Plan’s pro rata portion of all
assets that were held by the CIF
immediately prior to the transfer.
(d) The Client Plan receives Fund
shares that have a total net asset value
equal to the value of the Client Plan’s
transferred assets on the date of the
transfer, as determined with respect to
securities, in a single valuation for each
asset, with all valuations performed in
the same manner, at the close of the
same business day, in accordance with
Securities and Exchange Commission
Rule 17a–7 (using sources independent
of the Bank or Plan Adviser and the
Fund) and the procedures established
by the Funds pursuant to Rule 17a–7.
(e) An independent fiduciary with
respect to the Client Plan (the
Independent Fiduciary) receives
advance written notice of an in-kind
transfer and purchase of assets and full
written disclosure of information
concerning the Fund which includes the
following:
(1) A current prospectus for each
Fund to which the CIF assets may be
transferred;
(2) A statement describing the fees to
be charged to, or paid by, a Client Plan
and the Funds to the Bank or Plan
Adviser, including the nature and extent
of any differential between the rates of
the fees;
(3) A statement of the reasons why the
Bank or Plan Adviser may consider the
transfer and purchase to be appropriate
for the Client Plan; and
(4) A statement of whether there are
any limitations on the Bank or Plan
Adviser with respect to which plan
assets may be invested in shares of the
Funds, and, if so, the nature of such
limitations.
(f) On the basis of the foregoing
information, the Independent Fiduciary
gives prior approval, in writing, for each
purchase of Fund shares in exchange for
the Client Plan’s assets transferred from
the CIF, consistent with the
responsibilities, obligations and duties
imposed on fiduciaries by Part 4 of Title
I of the Act.

(g) The Bank or Plan Adviser sends by
regular mail or personal delivery to the
Independent Fiduciary of each Client
Plan that purchases Fund shares in
connection with the in-kind transfer, no
later than 105 days after completion of
each purchase, a written confirmation of
the transaction containing—
(1) The number of CIF units held by
the Client Plan immediately before the
in-kind transfer, the related per unit
value and the total dollar amount of
such CIF units; and
(2) The number of shares in the Funds
that are held by the Client Plan
immediately following the purchase, the
related per share net asset value and the
total dollar amount of such shares.
(h) As to each Client Plan, the
combined total of all fees received by
the Bank or Plan Adviser for the
provision of services to the Client Plan,
and in connection with the provision of
services to a Fund in which a Client
Plan holds shares purchased in
connection with the in-kind transfer, is
not in excess of ‘‘reasonable
compensation’’ within the meaning of
section 408(b)(2) of the Act.
(i) All dealings in connection with the
in-kind transfer and purchase between
the Client Plan and a Fund are on a
basis no less favorable to the Client Plan
than dealings between the Fund and
other shareholders.
Section II. Prospective Exemption for
the Purchase of Fund Shares With
Assets Transferred In-Kind From a CIF
Effective after August 8, 1997, the
restrictions of sections 406(a) and 406
(b)(1) and (b)(2) of the Act and the taxes
imposed by section 4975 of the Code, by
reason of section 4975(c)(1) (A) through
(E) of the Code, shall not apply to the
purchase by an employee benefit plan
(the Client Plan) of shares of one or
more open-end management investment
companies (the Fund or Funds)
registered under the Investment
Company Act of 1940, in exchange for
assets of the Client Plan transferred inkind to the Fund from a collective
investment fund (the CIF) maintained
by a bank (the Bank) or a plan adviser
(the Plan Adviser), where the Bank or
Plan Adviser is the investment adviser
to the Fund and also a fiduciary of the
Client Plan. The transfer and purchase
must be in connection with a complete
withdrawal of the Client Plan’s assets
from the CIF, and the following
conditions must be met:
(a) No sales commissions or other fees
are paid by the Client Plan in
connection with the purchase of Fund
shares.

42835

(b) All transferred assets are securities
for which market quotations are readily
available, or cash.
(c) The transferred assets constitute
the Client Plan’s pro rata portion of all
assets that were held by the CIF
immediately prior to the transfer.
Notwithstanding the foregoing, the
allocation of fixed-income securities
held by a CIF among Client Plans on the
basis of each Client Plan’s pro rata share
of the aggregate value of such securities
will not fail to meet the requirements of
this subsection if:
(1) The aggregate value of such
securities does not exceed one (1)
percent of the total value of the assets
held by the CIF immediately prior to the
transfer; and
(2) Such securities have the same
coupon rate and maturity, and at the
time of the transfer, the same credit
ratings from nationally recognized
statistical rating agencies.
(d) The Client Plan receives Fund
shares that have a total net asset value
equal to the value of the Client Plan’s
transferred assets on the date of the
transfer, as determined with respect to
securities, in a single valuation for each
asset, with all valuations performed in
the same manner, at the close of the
same business day, in accordance with
Securities and Exchange Commission
Rule 17a–7 (using sources independent
of the Bank or Plan Adviser and the
Fund) and the procedures established
by the Funds pursuant to Rule 17a–7.
(e) An independent fiduciary with
respect to the Client Plan (the
Independent Fiduciary) receives
advance written notice of the in-kind
transfer and purchase of assets and full
written disclosure of information
concerning the Funds which includes
the following:
(1) A current prospectus for each
Fund to which the CIF assets may be
transferred;
(2) A statement describing the fees to
be charged to, or paid by, a Client Plan
and the Funds to the Bank or Plan
Adviser, including the nature and extent
of any differential between the rates of
the fees paid by the Fund and the rates
of the fees paid by the Client Plan in
connection with the Client Plan’s
investment in the CIF;
(3) A statement of the reasons why the
Bank or Plan Adviser may consider the
transfer and purchase to be appropriate
for the Client Plan;
(4) A statement of whether there are
any limitations on the Bank or Plan
Adviser with respect to which plan
assets may be invested in shares of the
Funds, and, if so, the nature of such
limitations;

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Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices

(5) The identity of all securities that
will be valued in accordance with Rule
17a–7(b)(4) and allocated on the basis of
the Client Plan’s pro rata portion under
section II(c); and
(6) The identity of any fixed-income
securities that will be allocated on the
basis of each Client Plan’s pro rata share
of the aggregate value of such securities
pursuant to section II(c).
(f) On the basis of the foregoing
information, the Independent Fiduciary
gives prior approval, in writing, for each
purchase of Fund shares in exchange for
the Client Plan’s assets transferred from
the CIF, consistent with the
responsibilities, obligations and duties
imposed on fiduciaries by Part 4 of Title
I of the Act. In addition, the
Independent Fiduciary must give prior
approval, in writing, for the receipt of
confirmation statements described
below in paragraph (g)(1) and (g)(2) by
facsimile or electronic mail if the
Independent Fiduciary elects to receive
such statements in that form.
(g) The Bank or Plan Adviser sends by
regular mail or personal delivery or, if
applicable, by facsimile or electronic
mail to the Independent Fiduciary of
each Client Plan that purchases Fund
shares in connection with the in-kind
transfer, the following information:
(1) No later than 30 days after the
completion of the purchase, a written
confirmation which contains—
(i) The identity of each transferred
security that was valued for purposes of
the purchase of Fund shares in
accordance with Rule 17a–7(b)(4);
(ii) The current market price, as of the
date of the in-kind transfer, of each such
security involved in the purchase of
Fund shares; and
(iii) The identity of each pricing
service or market-maker consulted in
determining the current market price of
such securities.
(2) No later than 105 days after the
completion of each purchase, a written
confirmation which contains—
(i) The number of CIF units held by
the Client Plan immediately before the
in-kind transfer, the related per unit
value and the total dollar amount of
such CIF units; and
(ii) The number of shares in the Funds
that are held by the Client Plan
immediately following the purchase, the
related per share net asset value and the
total dollar amount of such shares.
(h) With respect to each of the Funds
in which the Client Plan continues to
hold shares acquired in connection with
the in-kind transfer, the Bank or Plan
Adviser provides the Independent
Fiduciary of the Client Plan with—
(1) A copy of an updated prospectus
of such Fund, at least annually; and

(2) Upon request of the Independent
Fiduciary, a report or statement (which
may take the form of the most recent
financial report, the current Statement
of Additional Information, or some
other written statement) containing a
description of all fees paid by the Fund
to the Bank or Plan Adviser.
(i) As to each Client Plan, the
combined total of all fees received by
the Bank or Plan Adviser for the
provision of services to the Client Plan,
and in connection with the provision of
services to a Fund in which a Client
Plan holds shares acquired in
connection with the in-kind transfer, is
not in excess of ‘‘reasonable
compensation’’ within the meaning of
section 408(b)(2) of the Act.
(j) All dealings in connection with the
in-kind transfer and purchase between
the Client Plan and a Fund are on a
basis no less favorable to the Client Plan
than dealings between the Fund and
other shareholders.
Section III. Availability of Prohibited
Transaction Exemption (PTE) 77–4
Any purchase of Fund shares that
complies with the conditions of either
Section I or Section II of this class
exemption shall be treated as a
‘‘purchase or sale’’ of shares of an openend investment company for purposes
of PTE 77–4 and shall be deemed to
have satisfied paragraphs (a), (d) and (e)
of section II of that exemption. 42 FR
18732 (April 8, 1977).
Section IV. Definitions
For purposes of this exemption:
(a) The term ‘‘Bank’’ means a bank or
trust company, and any affiliate thereof
[as defined below in paragraph (b)(1)],
which is supervised by a state or federal
agency.
(b) An ‘‘affiliate’’ of a person
includes—
(1) Any person directly or indirectly
through one or more intermediaries,
controlling, controlled by, or under
common control with the person.
(2) Any officer, director, employee or
relative of such person, or partner in
any such person; and
(3) Any corporation or partnership of
which such person is an officer,
director, partner or employee.
(c) The term ‘‘control’’ means the
power to exercise a controlling
influence over the management or
policies of a person other than an
individual.
(d) The term ‘‘collective investment
fund’’ or ‘‘CIF’’ means a common or
collective trust fund or pooled
investment fund maintained by a
‘‘Bank’’ as defined in paragraph (a) of
this Section IV or by a ‘‘Plan Adviser’’

as defined in paragraph (m) of this
Section IV for the collective investment
of the assets attributable to two or more
plans maintained by unrelated
employers.
(e) The term ‘‘Fund’’ or ‘‘Funds’’
means any open-end management
investment company or companies
registered under the 1940 Act for which
the Bank or Plan Adviser serves as an
investment adviser, and may also serve
as a custodian, shareholder servicing
agent, transfer agent or provide some
other secondary service (as defined
below in paragraph (i) of this section).
(f) The term ‘‘net asset value’’ means
the amount calculated by dividing the
value of all securities, determined by a
method as set forth in a Fund’s
prospectus and Statement of Additional
Information, and other assets belonging
to each of the portfolios in such Fund,
less the liabilities chargeable to each
portfolio, by the number of outstanding
shares.
(g) The term ‘‘relative’’ means a
‘‘relative’’ as that term is defined in
section 3(15) of the Act (or a ‘‘member
of the family’’ as that term is defined in
section 4975(e)(6) of the Code), or a
brother, a sister, or a spouse of a brother
or a sister.
(h) The term ‘‘Independent Fiduciary’’
means a fiduciary of a Client Plan who
is independent of and unrelated to the
Bank or Plan Adviser. For purposes of
this exemption, the Independent
Fiduciary will not be deemed to be
independent of and unrelated to the
Bank or Plan Adviser if:
(1) Such fiduciary directly or
indirectly controls, is controlled by, or
is under common control with the Bank
or Plan Adviser;
(2) Such fiduciary, or any officer,
director, partner, employee, or relative
of such fiduciary, is an officer, director,
partner, employee of the Bank or Plan
Adviser (or is a relative of such
persons);
(3) Such fiduciary, directly or
indirectly receives any compensation or
other consideration for his or her own
personal account in connection with
any transaction described in this
exemption.
If an officer, director, partner,
employee of the Bank or Plan Adviser
(or relative of such persons), is a
director of such Independent Fiduciary,
and if he or she abstains from
participation in (i) the choice of the
Client Plan’s investment adviser, and
(ii) the approval of any purchase or sale
between the Client Plan and the Funds,
as well as any transaction described in
Sections I and II above, then paragraph
(h)(2) of this Section IV shall not apply.

Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Notices
(i) The term ‘‘secondary service’’
means a service provided by a Bank or
Plan Adviser to a Fund other than
investment management, investment
advisory or similar services.
(j) The term ‘‘fixed-income security’’
means any interest-bearing or
discounted government or corporate
security with a face amount of $1,000 or
more that obligates the issues to pay the
holder a specified sum of money, at
specific intervals, and to repay the
principal amount of the loan at
maturity.
(k) The term ‘‘Client Plan’’ means a
pension plan described in 29 CFR
2510.3–2, a welfare benefit plan
described in 29 CFR 2510.3–1, and a
plan described in section 4975(e)(1) of
the Code, but does not include an
employee benefit plan established or
maintained by the Bank or a Plan
Adviser for its own employees.
(l) The term ‘‘security’’ shall have the
same meaning as defined in section
2(36) of the 1940 Act, as amended, 15
U.S.C. 80a–2(36) (1996).
(m) The term ‘‘Plan Adviser’’ means
an investment adviser registered under
the Investment Advisers Act of 1940,
and any ‘‘affiliate’’ thereof [as defined
above in paragraph (b)(1)].
(n) The term ‘‘business day’’ means a
banking day as defined by federal or
state banking regulations.
(o) The term ‘‘unrelated employers’’
means persons which are not, directly
or indirectly, affiliates, as defined above
in paragraph (b)(1).
(p) The term ‘‘personal delivery’’
means delivery of the information
described in sections I(g) and II(g) above
to an individual or individuals
designated by the Client Plan to act on
behalf of the Independent Fiduciary.
Signed at Washington, D.C., this 1st day of
August, 1997.
Alan D. Lebowitz,
Deputy Assistant Secretary for Program
Operations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 97–21003 Filed 8–7–97; 8:45 am]
BILLING CODE 4510–29–M

DEPARTMENT OF LABOR
Pension and Welfare Benefits
Administration
[Application No. D–10439, et al.]

Proposed Exemptions; Alloy Die
Casting Co. Employees Profit Sharing
Plan and Trust (the Plan), et al.
Pension and Welfare Benefits
Administration, Labor.
ACTION: Notice of proposed exemptions.
AGENCY:

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

Written Comments and Hearing
Requests
Unless otherwise stated in the Notice
of Proposed Exemption, all interested
persons are invited to submit written
comments, and with respect to
exemptions involving the fiduciary
prohibitions of section 406(b) of the Act,
requests for hearing within 45 days from
the date of publication of this Federal
Register Notice. Comments and requests
for a hearing should state: (1) the name,
address, and telephone number of the
person making the comment or request,
and (2) the nature of the person’s
interest in the exemption and the
manner in which the person would be
adversely affected by the exemption. A
request for a hearing must also state the
issues to be addressed and include a
general description of the evidence to be
presented at the hearing.
ADDRESSES: All written comments and
requests for a hearing (at least three
copies) should be sent to the Pension
and Welfare Benefits Administration,
Office of Exemption Determinations,
Room N–5649, U.S. Department of
Labor, 200 Constitution Avenue, N.W.,
Washington, D.C. 20210. Attention:
Application No. stated in each Notice of
Proposed Exemption. The applications
for exemption and the comments
received will be available for public
inspection in the Public Documents
Room of Pension and Welfare Benefits
Administration, U.S. Department of
Labor, Room N–5507, 200 Constitution
Avenue, N.W., Washington, D.C. 20210.
Notice to Interested Persons
Notice of the proposed exemptions
will be provided to all interested
persons in the manner agreed upon by
the applicant and the Department
within 15 days of the date of publication
in the Federal Register. Such notice
shall include a copy of the notice of
proposed exemption as published in the
Federal Register and shall inform
interested persons of their right to
comment and to request a hearing
(where appropriate).
SUPPLEMENTARY INFORMATION: The
proposed exemptions were requested in
applications filed pursuant to section
408(a) of the Act and/or section
4975(c)(2) of the Code, and in
accordance with procedures set forth in

42837

29 CFR Part 2570, Subpart B (55 FR
32836, 32847, August 10, 1990).
Effective December 31, 1978, section
102 of Reorganization Plan No. 4 of
1978 (43 FR 47713, October 17, 1978)
transferred the authority of the Secretary
of the Treasury to issue exemptions of
the type requested to the Secretary of
Labor. Therefore, these notices of
proposed exemption are issued solely
by the Department.
The applications contain
representations with regard to the
proposed exemptions which are
summarized below. Interested persons
are referred to the applications on file
with the Department for a complete
statement of the facts and
representations.
Alloy Die Casting Co. Employees’ Profit
Sharing Plan and Trust (the Plan),
Located in Anaheim, California
[Application No. D–10439]

Proposed Exemption
The Department is considering
granting an exemption under the
authority of section 408(a) of the Act
and section 4975(c)(2) of the Code and
in accordance with the procedures set
forth in 29 CFR Part 2570, Subpart B (55
FR 32836, 32847, August 10, 1990). If
the exemption is granted, the
restrictions of section 406(a), 406 (b)(1)
and (b)(2) of the Act and the sanctions
resulting from the application of section
4975 of the Code, by reason of section
4975(c)(1) (A) through (E) of the Code,
shall not apply to the proposed cash
sale by the Plan to the Alloy Die Casting
Co./W.E. Holmes, Inc. (Alloy), the Plan
sponsor and a party in interest with
respect to the Plan, of units (the Units)
in the Krupp Insured Plus-II Limited
Partnership (the Partnership), provided:
(a) the sale is a one-time transaction for
cash; (b) no commissions or other
expenses are paid by the Plan in
connection with the sale; (c) the Plan
will receive $1.15 above the highest bid
price for the Units at the most recent
sealed bid auction for the Units which
has occurred prior to the time of the
sale; and (d) Alloy will purchase the
Units from the Plan within 10 calendar
days following the granting of the
exemption proposed herein.
Summary of Facts and Representations
1. On June 23, 1997, the Department
proposed an exemption for the subject
transaction (62 FR 33924). However, the
exemption proposed therein provided
for a sales price for the Units of the
greater of: (1) $13.05 per Unit, or (2)
$1.15 above the highest bid price for the
Units at the most recent sealed bid
auction for the Units which has