[Federal Register: January 23, 2003 (Volume 68, Number 15)]
[Notices]
[Page 3279-3280]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23ja03-93]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
Proposed Extension of Information Collection Request Submitted
for Public Comment; Prohibited Transaction Class Exemption 2002-12,
Cross-Trades of Securities by Index and Model Funds
AGENCY: Pension and Welfare Benefits Administration, Department of
Labor.
ACTION: Notice.
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SUMMARY: The Department of Labor, as part of its continuing effort to
reduce paperwork and respondent burden, conducts a preclearance
consultation program to provide the general public and Federal agencies
with an opportunity to comment on proposed and continuing collections
of information in accordance with the Paperwork Reduction Act of 1995
(PRA 95). This program helps to ensure that requested data can be
provided in the desired format, reporting burden (time and financial
resources) is minimized, collection instruments are clearly understood,
and the impact of collection requirements on respondents can be
properly assessed. Currently, the Pension and Welfare Benefits
Administration is soliciting comments on the proposed extension of the
disclosure provisions of the Prohibited Transaction Class Exemption
2002-12, Cross-Trades of Securities by Index and Model Funds.
A copy of the information collection request (ICR) can be obtained
by contacting the individual shown in the Addresses section of this
notice.
DATES: Written comments must be submitted to the office shown in the
Addresses section on or before March 24, 2003.
ADDRESSES: Joseph S. Piacentini, Department of Labor, Pension and
Welfare Benefits Administration, 200 Constitution Avenue NW.,
Washington, DC 20210, (202) 693-8410, FAX (202) 219-5333. (These are
not toll-free numbers.)
SUPPLEMENTARY INFORMATION:
I. Background
PTE 2002-12 exempts certain transactions that would be prohibited
under the Employee Retirement Income Security Act of 1974 (the Act or
ERISA) and the Federal Employees' Retirement System Act (FERSA), and
provides relief from certain sanctions of the Internal Revenue Code of
1986 (the Code). The exemption permits cross-trades of securities among
index and model-driven funds (Funds) managed by investment managers,
and among such Funds and certain large accounts (Large Accounts) that
engage such managers to carry out a specific portfolio restructuring
program or to otherwise act as a ``trading adviser'' for such a
program. By removing existing barriers to these types of transactions,
the exemption increases the incidences of cross-trading, thereby
lowering fees to plans from what they would otherwise be if based on
multiple individual trades.
In order for the Department to grant an exemption for a transaction
or class of transactions that would otherwise be impermissible under
ERISA, the statute requires the Department to make a finding that the
exemption is administratively feasible, in the interest of the plan and
its participants and beneficiaries, and protective of the rights of the
participants and beneficiaries. To insure that investment managers have
complied with the requirements of the exemption, the Department has
included in the exemption certain recordkeeping and disclosure
obligations that are designed to safeguard plan assets by periodically
providing information to independent plan fiduciaries about changes in
the cross-trading program. Initially, where plans are not invested in
Funds, investment managers must have authorization from a plan
fiduciary to invest plan assets in Funds. For plans that are currently
invested in Funds, certain notices must be provided that describe the
cross-trading program, update changes in Funds, and provide the plan
with an opportunity to withdraw from the program. For Large Accounts,
information must be provided by the investment manager about the
results of transactions involved in a portfolio-restructuring program.
Finally, the exemption requires that Funds and Large Accounts maintain
for a period of 6 years the records necessary to enable certain persons
authorized by the exemption (e.g., Department representatives or
contributing employers, to determine whether the conditions of the
exemption have been met.)
The exemption affects participants and beneficiaries of employee
benefit plans whose assets are invested in Index or Model-Driven Funds,
large pension plans and other large accounts involved in portfolio
restructuring programs, as well as the Funds and their investment
managers.
II. Desired Focus of Comments
[sbull] The Department of Labor (Department) is particularly
interested in comments that:
[sbull] Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
[sbull] Evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
[sbull] Enhance the quality, utility, and clarity of the
information to be collected; and
[sbull] Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques of forms of information technology, e.g., permitting
electronic submissions of responses.
III. Current Actions
Extension of the information collection provision of the exemption
is important because, without the disclosures and recordkeeping
provided for in the exemption, participants and beneficiaries'
investments in a pension plan might not be protected. In addition,
investment managers, that cross trade securities among Funds or engage
in the restructuring of a portfolio of a Large Account would be subject
to statutorily imposed sanctions under ERISA. Lastly, the exemption
provides a benefit to plans and participants through savings that
result from index/model cross-trading. No change to the existing ICR is
proposed or made at this time.
Agency: Pension and Welfare Benefits Administration, Department of
Labor.
Title: Prohibited Transaction Class Exemption 2002-12, Cross-Trades
of
[[Page 3280]]
Securities by Index and Model-Driven Funds.
Type of Review: Extension of a currently approved collection of
information.
OMB Number: 1210-0115.
Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
Respondents: 66.
Responses: 924.
Estimated Total Burden Hours: 4,707.
Estimated Total Burden Cost (Operating and Maintenance): $109,000.
Comments submitted in response to this notice will be summarized
and/or included in the request for Office of Management and Budget
approval of the information collection request; they will also become a
matter of public record.
Dated: January 16, 2003.
Joseph S. Piacentini,
Deputy Director, Pension and Welfare Benefits Administration, Office of
Policy and Research.
[FR Doc. 03-1427 Filed 1-22-03; 8:45 am]
BILLING CODE 4510-29-M