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EBSA
Notices
Proposed Extension of Information Collection Comment Request; Prohibited Transaction Class Exemption 2002-12, Cross-Trades of Securities by Index and Model-Driven Funds
[ 4/20/2009]
[ PDF]
FR Doc E9-8904
[Federal Register: April 20, 2009 (Volume 74, Number 74)]
[Notices]
[Page 17985-17986]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ap09-70]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
Proposed Extension of Information Collection Comment Request;
Prohibited Transaction Class Exemption 2002-12, Cross-Trades of
Securities by Index and Model-Driven Funds
AGENCY: Employee Benefits Security 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 respondents can provide the
requested data in the desired format, that the reporting burden (time
and financial resources) on the public is minimized, that the public
can understand the Department's collection instruments, and that the
Department can properly assess the impact of its information collection
requirements on respondents. Currently, the Employee Benefits Security
Administration (EBSA) is soliciting comments on a proposed extension of
the information collection provisions of Prohibited Transaction Class
Exemption 2002-12, Cross-Trades of Securities by Index and Model-Driven
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 June 19, 2009.
ADDRESSES: Direct all written comments to G. Christopher Cosby, Office
of Policy and Research, Employee Benefits Security Administration, U.S.
Department of Labor, 200 Constitution Avenue, NW., Room N-5718,
Washington, DC 20210, (202) 693-8410, FAX (202) 219-4745 (These are not
toll-free numbers.). Comments may also be submitted electronically to
the following Internet e-mail address: ebsa.opr@dol.gov.
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 managers (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 the transaction costs to plans in a number of ways from what
they would be otherwise.
In order for the Department to grant an exemption for a transaction
or class of transactions that would otherwise be prohibited 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 ensure that 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 plan fiduciaries, who generally must be independent, about the
cross-trading program. Initially, where plans are not invested in
Funds, Managers must furnish information to plan fiduciaries about the
cross-trading program, provide a statement that the Manager will have a
potentially conflicting division of loyalties, and obtain written
authorization from a plan fiduciary for a plan to participate in a
cross-trading program. For plans that are currently invested in Funds,
the Manager must provide annual notices to update the
[[Page 17986]]
plan fiduciary and provide the plan with an opportunity to withdraw
from the program. For Large Accounts, prior to the cross-trade, the
Manager must provide information about the cross-trading program and
obtain written authorization from the fiduciary of a Large Account to
engage in cross-trading in connection with a portfolio restructuring
program. Following completion of the Large Account's restructuring,
information must be provided by the Manager about all cross-trades
executed in connection with a portfolio-restructuring program. Finally,
the exemption requires that Managers maintain for a period of 6 years
from the date of each cross-trade the records necessary to enable plan
fiduciaries and certain other persons specified in the exemption (e.g.,
Department representatives or contributing employers), to determine
whether the conditions of the exemption have been met.
EBSA previously submitted the information collection provisions of
PTE 2002-12 to the Office of Management and Budget (OMB) for review in
connection with promulgation of the prohibited transaction exemption.
OMB approved the information collection request (ICR) under OMB Control
No. 1210-0115. The ICR approval is currently scheduled to expire on
August 31, 2009.
II. Desired Focus of Comments
The Department of Labor (Department) is particularly interested in
comments that:
Provide information related to the number of entities
offering Index and Model-Driven Funds and their client plans, and the
number of Large Accounts that may make use of the exemption;
Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the
Department, including whether the information will have practical
utility;
Evaluate the accuracy of the Department's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
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 or other forms of information technology, e.g., permitting
electronic submissions of responses.
III. Current Actions
This notice requests comments on an extension of the information
collections in PTE 2002-12. After considering comments received in
response to this notice, the Department intends to submit the ICR to
OMB for continuing approval. 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 adequately protected. In addition, Managers that cross trade
securities among Funds or cross trade securities in connection with 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
being proposed or made at this time. A summary of the ICR and the
current burden estimates follows:
Agency: Employee Benefits Security Administration, Department of
Labor.
Title: Prohibited Transaction Class Exemption 2002-12, Cross-Trades
of 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: 60.
Responses: 960.
Estimated Total Burden Hours: 855.
Comments submitted in response to this notice will be summarized
and/or included in the ICR submitted to OMB for approval; they will
also become a matter of public record.
Dated: April 13, 2009.
Joseph S. Piacentini,
Director, Office of Policy and Research, Employee Benefits Security
Administration.
[FR Doc. E9-8904 Filed 4-17-09; 8:45 am]
BILLING CODE 4510-29-P
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