Grant of Individual Exemptions; Massachusetts Mutual Life Insurance Company (MM), et al.

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 99-49; Exemption Application No. D-

10244, et al.]

Grant of Individual Exemptions; Massachusetts Mutual Life

Insurance Company (MM), et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

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SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) 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).

Notices were published in the Federal Register of the pendency

before the Department of proposals to grant such exemptions. The

notices set forth a summary of facts and representations contained in

each application for exemption and referred interested persons to the

respective applications for a complete statement of the facts and

representations. The applications have been available for public

inspection at the Department in Washington, D.C. The notices also

invited interested persons to submit comments on the requested

exemptions to the Department. In addition the notices stated that any

interested person might submit a written request that a public hearing

be held (where appropriate). The applicants have represented that they

have complied with the requirements of the notification to interested

persons. No public comments and no requests for a hearing, unless

otherwise stated, were received by the Department.

The notices of proposed exemption were issued and the exemptions

are being granted solely by the Department because, 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 proposed to the Secretary

of Labor.

Statutory Findings

In accordance with section 408(a) of the Act and/or section

4975(c)(2) of the Code and the procedures set forth in 29 CFR Part

2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon

the entire record, the Department makes the following findings:

(a) The exemptions are administratively feasible;

(b) They are in the interests of the plans and their participants

and beneficiaries; and

(c) They are protective of the rights of the participants and

beneficiaries of the plans.

Massachusetts Mutual Life Insurance Company (MM) Located in

Springfield, MA

[Prohibited Transaction Exemption 99-49; Exemption Application No. D-

10244]

Exemption

Section I. Covered Transactions

The restrictions of sections 406(a), 406(b)(1) and (b)(2) and

407(a) 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 sale and/or exchange by MM of

a partial or complete interest in certain properties (the Properties)

from its general investment account assets to one or more separate

investment accounts (Separate Accounts), or other types of entities

(such as limited partnerships or limited liability companies, hereafter

referred to as ``Other Entities'' as defined in Section III) managed by

MM or an affiliate which are deemed to hold plan assets under 29 CFR

section 2510.3-101 (the Plan Asset Regulation), for which MM shall

receive as consideration cash and/or a corresponding interest in such

Separate Account or Separate Accounts or Other Entities, provided the

conditions set forth in section II are satisfied.

Section II. Conditions

(A) The sale and exchange of the Properties is a one-time

transaction with respect to each Separate Account or Other Entity of MM

which will be established for the Properties; i.e., all Properties

transferred in that transaction will be conveyed at the same time, and

no further properties will be transferred from MM to such Separate

Account or Other Entity;

(B) In no event shall MM provide any financing with respect to any

sale or exchange transaction which is the subject of this exemption;

(C) Before the subject transaction is consummated, (i) an

independent appraisal firm will have valued each Property to be

transferred by MM to one or more Separate Accounts or Other Entities;

(ii) if the appraisal is more than one year old, the value of each

Property so appraised will be updated by the appraiser as of a date not

less than two weeks prior to the issuance of interests to third party

investors in the Separate Accounts or Other Entities, and if a material

change has occurred the appraiser will revise its appraisal to reflect

that new value; (iii) an independent fiduciary for each employee

benefit plan subject to the Act (collectively, the Plans) will, prior

to agreeing to invest in the Separate Account or Other Entity, be

provided with all information regarding the Properties to be sold to

the Separate Account or Other Entity, including third party appraisals

and a private placement memorandum or other offering document, which

will describe the legal structure and include risk disclosures, a

summary of principal terms and a schedule of fees; and (iv) such

independent fiduciary will have reviewed all pertinent terms of the

sale and exchange of the Properties to the Separate Accounts or Other

Entities and will have concluded that the transaction is in the best

interest of the Plan;

(D) Any Covered Transaction will be effected at fair market value

as of the time of the transaction; and

(E) Only Plans with total assets having an aggregate fair market

value of at least $50 million are permitted to engage in the Covered

Transactions, provided, however, that--

(1) In the case of two or more Plans which are maintained by the

same employer, controlled group of corporations or employee

organization,

[[Page 533]]

whose assets are commingled for investment purposes in a single master

trust or any other entity the assets of which are ``plan assets'' under

the Plan Asset Regulation, which entity engages in a Covered

Transaction, the foregoing $50 million requirement shall be deemed

satisfied if such trust or other entity has aggregate assets which are

in excess of $50 million; provided that if the fiduciary responsible

for making the investment decision on behalf of such group trust or

other entity is not the employer or an affiliate of the employer, such

fiduciary has total assets under its management and control, exclusive

of the $50 million threshold amount attributable to plan investment in

the commingled entity, which are in excess of $100 million.

(2) In the case of two or more Plans which are not maintained by

the same employer, controlled group of corporations or employee

organization, whose assets are commingled for investment purposes in a

group trust or any other form of entity the assets of which are ``plan

assets'' under the Plan Asset Regulation, which engages in a Covered

Transaction, the foregoing $50 million requirement is satisfied if such

trust or other entity has aggregate assets which are in excess of $50

million (excluding the assets of any Plan with respect to which the

fiduciary responsible for making the investment decision on behalf of

such group trust or other entity or any member of the controlled group

of corporations including such fiduciary is the employer maintaining

such Plan or an employee organization whose members are covered by such

Plan). However, the fiduciary responsible for making the investment

decision on behalf of such group trust or other entity--

(i) Has full investment responsibility with respect to Plan assets

invested therein; and

(ii) Has total assets under its management and control, exclusive

of the $50 million threshold amount attributable to Plan investment in

the commingled entity, which are in excess of $100 million. (In

addition, none of the entities described above are formed for the sole

purpose of engaging in the Covered Transactions.)

Section III. Definitions

(A) The term ``Other Entities'' means any investment advisory

account, trust, limited partnership or other investment account or fund

managed by MM or its affiliate, as defined below in (C), that is

neither a separate account managed by MM or its affiliate, nor a

general account maintained by MM or its affiliate,

(B) The terms ``general account'' or ``general investment account''

mean the general asset account of MM and any of its affiliates, as

defined below in (C), which are insurance companies licensed to do

business in at least one State, as defined in section 3(10) of the Act.

(C) The term ``affiliate'' of MM includes:

(i) Any person directly or indirectly, through one or more

intermediaries, controlling, controlled by, or under common control

with MM,

(ii) Any officer, director, or employee of MM or person described

in (C)(i), and

(iii) Any partnership in which MM is a partner.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption (the Notice) published on August 11,

1999 at 64 FR 43738.

Written Comments

The only written comments received by the Department were submitted

by the applicant, MM. These comments sought several changes to the

Notice, each of which is discussed below.

First, the exemption as proposed had permitted transfers of partial

or complete interests in real property from MM to one or more separate

investment accounts. The applicant requested that the exemption be

expanded to include transfers to one or more other types of entities,

such as limited partnerships or limited liability companies, managed by

MM or its affiliates, so long as these Other Entities are deemed to

hold ``plan assets'' under the Plan Asset Regulation. MM stated that it

was requesting this change to provide Plans with the opportunity to

invest in vehicles which are most advantageous to the particular type

of real estate investment involved in the transaction. Since the Plan

fiduciary would still receive all pertinent information about the

investment and have adequate opportunity to evaluate the terms of the

Plan's investment, the Department has agreed to expand the Covered

Transactions of Section I of the exemption to include Other Entities as

requested by MM.

In addition, the Department has added a definition of the term

``Other Entities'' as well as definitions of the terms ``general

account'' and ``affiliate'' of MM in order to clarify the meaning of

these terms with respect to the Covered Transactions in Section I.

These definitions are included in Section III of this exemption and are

based on similar definitions included in a prior exemption for MM

covering the sale or transfer of an interest in a shared investment

between two or more accounts (subject to the conditions described

therein). In this regard, interested persons should see Prohibited

Transaction Exemption 98-28 (63 FR 33727, June 19, 1998).

With respect to the appraisals of the Properties to be furnished to

the independent Plan fiduciaries, the applicant had represented in the

Notice that the value of each Property so appraised will be confirmed

by the appraiser as of a date not more than two weeks prior to the

issuance of interests to third party investors in the Separate

Accounts, and if a material change has occurred, the appraiser will

revise its appraisal to reflect that new value. The applicant in its

comment letter noted that the updated appraisal should be provided to

the independent fiduciary not later than two weeks before the issuance

of interests to third party investors in the Separate Accounts (or

Other Entities) in order to provide the independent fiduciaries

adequate opportunity to review the updated appraisals and re-evaluate

their investment decisions by the closing date. The applicant also

confirmed that any Covered Transaction will be effected at fair market

value as of the time of the transaction.

Accordingly, the Department has agreed to this change, and has

revised Section II.(C)(ii) of the granted exemption to require that if

the appraisal is more than one year old, the value of each Property so

appraised will be updated by the appraiser as of a date not less than

two weeks prior to the issuance of interests to third party investors

in the Separate Accounts or Other Entities, and if a material change

has occurred the appraiser will revise its appraisal to reflect that

new value. The Department has added Section II.(D) to reflect MM's

representation that any Covered Transaction will be effected at fair

market value as of the time of the transaction. The Department notes

that Section II.(D) would not be satisfied if the appraisal did not

accurately represent the fair market value of each Property at the time

of the transaction. It is the responsibility under the granted

exemption for MM to have the appraisals updated as necessary to reflect

fair market value.

MM also sought clarification with respect to the requirement

contained in Section II.(C)(iii) of the Notice that independent

appraisals of the Properties will be provided to the independent

fiduciaries for the Plans prior to their agreement to invest in a

Separate Account. MM commented that in an investment vehicle with a

large number

[[Page 534]]

of Properties, the appraisals may contain thousands of pages.

Accordingly, MM asked the Department to confirm that Section

II.(C)(iii) will be satisfied if executive summaries of the appraisals

of each Property are delivered to the independent fiduciary for each

Plan, with the full text of any appraisal available upon request by the

independent fiduciary for the Plan, and the appraisals and accompanying

exhibits readily available for inspection and copying by such fiduciary

at a central site. The Department has agreed that this procedure would

satisfy the condition contained in Section II.(C)(iii). The Department

notes that such executive summaries should be reasonably comprehensive

and convey sufficient information to enable a Plan fiduciary to

determine whether a review of the full text of an appraisal is

necessary.

In its comment letter, MM also noted a correction to Representation

2 of the Summary of Facts and Representations contained in the Notice

(the Summary). MM stated that its life and health insurance business

was sold on March 31, 1996. After a transition period under the

purchase and sale agreement, MM will no longer offer group life and

health insurance. Also, with respect to Representation 3 of the

Summary, MM stated that effective June 1, 1999, the defined benefit

plan for Connecticut Mutual Life Insurance Company employees was merged

into the MassMutual Employee Pension Plan.

The Department has considered the entire record and has determined

to grant the exemption with the revisions noted herein.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

Bankers Trust Company (BT) Located in New York, NY

[Prohibited Transaction Exemption 99-50; Exemption Application No. D-

10756]

Exemption

Section I. Covered Transactions

The restrictions of sections 406(a)(1)(A) through (D) and 406(b)(1)

and (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 (1) the lending of securities to

affiliates of BT, a wholly owned subsidiary of Deutsche Bank AG (DB),

which are (i) either banks, supervised by the United States or by a

State within the United States, or broker-dealers registered under the

Securities Exchange Act of 1934 (the 1934 Act), or (ii) certain foreign

affiliates (the Foreign Affiliates) of BT and DB which are broker-

dealers or banks in jurisdictions specified in this exemption

(collectively, the Affiliated Borrowers), by employee benefit plans

(the Client Plans), including commingled investment funds holding

Client Plan assets, for which BT, DB, or either of their current or

future affiliates or successors acts as securities lending agent (or

sub-agent) (the DB Lending Agent); and (2) the receipt of compensation

by the DB Lending Agent in connection with these transactions, provided

the general conditions set forth below in Section II are met.

Section II. General Conditions

(a) For each Client Plan, neither the DB Lending Agent nor an

Affiliated Borrower, nor an affiliate of either, has or exercises

discretionary authority or control with respect to the investment of

Client Plan assets involved in the transaction, or renders investment

advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to

those assets.

(b) Any arrangement for a DB Lending Agent to lend Client Plan

securities to an Affiliated Borrower in either an agency or sub-agency

capacity is approved in advance by a Client Plan fiduciary who is

independent of the DB Lending Agent.1 In this regard, the

independent Client Plan fiduciary also approves the general terms of

the securities loan agreement (the Loan Agreement) between the Client

Plan and the Affiliated Borrowers, although the specific terms of the

Loan Agreement are negotiated and entered into by the DB Lending Agent

and the DB Lending Agent acts as a liaison between the lender and the

borrower to facilitate the lending transaction.

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\1\ The Department, herein, is not providing exemptive relief

for securities lending transactions engaged in by primary lending

agents, other than the DB Lending Agent, beyond that provided

pursuant to Prohibited Transaction Exemption (PTE) 81-6 (46 FR 7527,

January 23, 1981, as amended at 52 FR 18754, May 19, 1987) and PTE

82-63 (47 FR 14804, April 6, 1982).

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(c) The terms of each loan of securities by a Client Plan to the

Affiliated Borrowers is at least as favorable to such Client Plans as

those of a comparable arm's length transaction between unrelated

parties.

(d) A Client Plan may terminate the agency or sub-agency

arrangement at any time without penalty to such Client Plan on five

business days notice, whereupon the Affiliated Borrowers will deliver

securities identical to the borrowed securities (or the equivalent in

the event of reorganization, recapitalization or merger of the issuer

of the borrowed securities) to the Client Plan within (1) the customary

delivery period for such securities, (2) five business days, or (3) the

time negotiated for such delivery of by the Client Plan and the

Affiliated Borrowers, whichever is less.

(e) The Client Plan receives from the Affiliated Borrower (either

by physical delivery or by book entry in a securities depository

located in the United States, wire transfer or similar means) by the

close of business on or before the day the loaned securities are

delivered to the Affiliated Borrower, collateral consisting of cash,

securities issued or guaranteed by the United States Government or its

agencies or instrumentalities, or irrevocable United States bank

letters of credit issued by a person other than the DB Lending Agent or

an affiliate thereof, or any combination thereof, or other collateral

permitted under PTE 81-6, as it may be amended or superseded.

(f) As of the close of business on the preceding business day, the

fair market value of the collateral initially equals at least 102

percent of the market value of the loaned securities and, if the market

value of the collateral falls below 100 percent, the applicable

Affiliated Borrower delivers additional collateral on the following day

such that the market value of the collateral is again at least equal to

102 percent.

(g) Prior to entering into the lending program, the Affiliated

Borrower furnishes the DB Lending Agent its most recently available

audited and unaudited statements, which are, in turn, provided to a

Client Plan, as well as a representation by such Affiliated Borrower,

that as of each time it borrows securities, there has been no material

adverse change in its financial condition since the date of the most

recently-furnished statement that has been disclosed to such Client

Plan; provided, however, that in the event of a material adverse

change, the DB Lending Agent does not make any further loans to such

Affiliated Borrower unless an independent fiduciary of the Client Plan

is provided notice of any material adverse change and approves the loan

in view of the changed financial condition.

(h) In return for lending securities, the Client Plan either--

(1) Receives a reasonable fee, which is related to the value of the

borrowed securities and the duration of the loan; or

(2) Has the opportunity to derive compensation through the

investment of cash collateral. (Under such circumstances, the Client

Plan may pay

[[Page 535]]

a loan rebate or similar fee to an Affiliated Borrower, if such fee is

not greater than the fee the Client Plan would pay in a comparable

arm's length transaction with an unrelated party.)

(i) All procedures regarding the securities lending activities

conform to the applicable provisions of PTE 81-6 and PTE 82-63 as such

class exemptions may be amended or superseded as well as to applicable

securities laws of the United States or the jurisdiction in which the

Foreign Affiliate is domiciled, as appropriate.

(j) The DB Lending Agent or an affiliate which is domiciled in the

United States will indemnify and hold harmless each lending Client Plan

in the United States against any shortfall in the collateral, as set

forth in the applicable Loan Agreement, plus interest and any

transaction costs incurred (including attorney's fees of the Client

Plan arising out of the default on the loans or the failure to

indemnify properly under this provision) which the Client Plan may

incur or suffer directly arising out of the lending of securities of

such Client Plan to such Affiliated Borrower, to the extent permitted

by law.2 In the event that an Affiliated Borrower defaults

on a loan, the DB Lending Agent will liquidate the loan collateral to

purchase identical securities for the Client Plan. If the collateral is

insufficient to accomplish such purchase, the DB Lending Agent or the

applicable affiliate will indemnify the Client Plan for any shortfall

in the collateral, as set forth in the Loan Agreement, plus interest on

such amount and any transaction costs incurred (including attorney's

fees of the Client Plan arising out of the default on the loans or the

failure to indemnify properly under this provision). Alternatively, if

such identical securities are not available on the market, the DB

Lending Agent or the applicable affiliate will pay the Client Plan cash

equal to (1) the market value of the borrowed securities as of the date

they should have been returned to the Client Plan, plus (2) all the

accrued financial benefits derived from the beneficial ownership of

such loaned securities as of such date, plus (3) interest from such

date to the date of payment.

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\2\ Where the law prohibits such indemnification by the DB

Lending Agent, the Affiliated Borrower will provide the identical

indemnification.

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(k) The Client Plan receives the equivalent of all distributions

made to holders of the borrowed securities during the term of the loan,

including, but not limited to, cash dividends, interest payments,

shares of stock as a result of stock splits and rights to purchase

additional securities, or other distributions.

(l) The DB Lending Agent provides to Client Plans, prior to any

Client Plan's approval of the lending of its securities to an

Affiliated Borrower, copies of the notice of proposed exemption (the

Notice) and the final exemption.

(m) Each Client Plan receives monthly reports with respect to its

securities lending transactions, including, but not limited to, the

information described in Representation 31 of the Notice (published on

October 22, 1999 at 64 FR 57142, 57150), so that an independent

fiduciary of the Client Plan may monitor such transactions with

Affiliated Borrowers.

(n) Only Client Plans with total assets having an aggregate market

value of at least $50 million are permitted to lend securities to

Affiliated Borrowers; provided, however, that--

(1) In the case of two or more Client Plans which are maintained by

the same employer, controlled group of corporations or employee

organization (i.e., the Related Client Plans), whose assets are

commingled for investment purposes in a single master trust or any

other entity the assets of which are ``plan assets'' under 29 CFR

2510.3-101 (the Plan Asset Regulation), which entity is engaged in

securities lending arrangements with a DB Lending Agent, the foregoing

$50 million requirement shall be deemed satisfied if such trust or

other entity has aggregate assets which are in excess of $50 million;

provided that if the fiduciary responsible for making the investment

decision on behalf of such master trust or other entity is not the

employer or an affiliate of the employer, such fiduciary has total

assets under its management and control, exclusive of the $50 million

threshold amount attributable to plan investment in the commingled

entity, which are in excess of $100 million.

(2) In the case of two or more Client Plans which are not

maintained by the same employer, controlled group of corporations or

employee organization (i.e., the Unrelated Client Plans), whose assets

are commingled for investment purposes in a group trust or any other

form of entity the assets of which are ``plan assets'' under the Plan

Asset Regulation, which entity is engaged in securities lending

arrangements with a DB Lending Agent, the foregoing $50 million

requirement is satisfied if such trust or other entity has aggregate

assets which are in excess of $50 million (excluding the assets of any

Client Plan with respect to which the fiduciary responsible for making

the investment decision on behalf of such group trust or other entity

or any member of the controlled group of corporations including such

fiduciary is the employer maintaining such Plan or an employee

organization whose members are covered by such Plan). However, the

fiduciary responsible for making the investment decision on behalf of

such group trust or other entity--

(i) Has full investment responsibility with respect to plan assets

invested therein; and

(ii) Has total assets under its management and control, exclusive

of the $50 million threshold amount attributable to plan investment in

the commingled entity, which are in excess of $100 million.

In addition, none of the entities described above are formed for

the sole purpose of making loans of securities.

(o) With respect to each successive two-week period, on average, at

least 50 percent or more of the outstanding dollar value of securities

loans negotiated on behalf of Client Plans will be to unrelated

borrowers.

(p) In addition to the above, all loans involving a Foreign

Affiliate have the following supplemental requirements:

(1) As applicable, such Foreign Affiliate is registered as a

broker-dealer or bank with--

(i) The Securities and Futures Authority (the SFA) or the Financial

Services Authority (the FSA) in the United Kingdom;

(ii) The Deutsche Bundesbank and/or the Federal Banking Supervisory

Authority, i.e., der Bundesaufsichsamt fuer das Kreditwesen (the BAK)

or the Bundesaufsichtsamt fur den Wertpapierhandel (the BAWe) in

Germany;

(iii) The Ministry of Finance (the MOF) and/or the Tokyo Stock

Exchange in Japan;

(iv) The Ontario Securities Commission (the OSC) and/or the

Investment Dealers Association (the IDA), or the Office of the

Superintendent of Financial Institutions (the OSFI) in Canada;

(v) The Swiss Federal Banking Commission in Switzerland; and (vi)

The Australian Prudential Regulation Authority (APRA) or the Australian

Securities and Investments Commission (ASIC), and/or the Australian

Stock Exchange Limited (ASEL) in Australia.

(2) Such broker-dealer or bank is in compliance with all applicable

provisions of Rule 15a-6 (17 CFR 240.15a-6) under the 1934 Act which

provides for foreign broker-dealers a limited exemption from United

States registration requirements;

(3) All collateral is maintained in United States dollars or

dollar-denominated securities or letters of

[[Page 536]]

credit (unless an applicable exemption provides otherwise);

(4) All collateral is held in the United States (unless an

applicable exemption provides otherwise) and the situs of the

Securities Loan Agreements are maintained in the United States under an

arrangement that complies with the indicia of ownership requirements

under section 404(b) of the Act and the regulations promulgated under

29 CFR 2550.404(b)-1; and

(5) Each Foreign Affiliate provides the DB Lending Agent a written

consent to service of process in the United States and to the

jurisdiction of the courts of the United States for any civil action or

proceeding brought in respect of the securities lending transaction,

which consent provides that process may be served on such borrower by

service on the DB Lending Agent.

(q) The DB Lending Agent and its affiliates maintain, or cause to

be maintained within the United States for a period of six years from

the date of such transaction, in a manner that is convenient and

accessible for audit and examination, such records as are necessary to

enable the persons described in paragraph (r)(1) to determine whether

the conditions of the exemption have been met, except that--

(1) A prohibited transaction will not be considered to have

occurred if, due to circumstances beyond the control of the DB Lending

Agent and/or its affiliates, the records are lost or destroyed prior to

the end of the six year period; and

(2) No party in interest other than the DB Lending Agent and/or its

affiliates shall be subject to the civil penalty that may be assessed

under section 502(i) of the Act, or to the taxes imposed by section

4975(a) and (b) of the Code, if the records are not maintained, or are

not available for examination as required below by paragraph (r)(1).

(r)(1) Except as provided in subparagraph (r)(2) of this paragraph

and notwithstanding any provisions of subsections (a)(2) and (b) of

section 504 of the Act, the records referred to in paragraph (q) are

unconditionally available at their customary location during normal

business hours by:

(i) Any duly authorized employee or representative of the

Department, the Internal Revenue Service or the Securities and Exchange

Commission;

(ii) Any fiduciary of a participating Client Plan or any duly

authorized representative of such fiduciary;

(iii) Any contributing employer to any participating Client Plan or

any duly authorized employee representative of such employer; and

(iv) Any participant or beneficiary of any participating Client

Plan, or any duly authorized representative of such participant or

beneficiary.

(r)(2) None of the persons described above in paragraphs

(r)(1)(ii)-(r)(1)(iv) of this paragraph (r)(1) are authorized to

examine the trade secrets of the DB Lending Agent or commercial or

financial information which is privileged or confidential.

III. Definitions

For purposes of this exemption,

(a) The term ``affiliate'' means any entity now or in the future,

directly or indirectly controlling, controlled by or under common

control with BT, DB or their successors.

(b) The term ``Affiliated Borrower'' means an affiliate of BT or DB

that is a bank, as defined in section 202(a)(2) of the Investment

Advisers Act of 1940 (the Advisers Act), that is supervised by the

United States or a State, or a broker-dealer registered under the 1934

Act, or any Foreign Affiliate.

(c) The term ``Foreign Affiliate'' means an affiliate of BT or DB

that is a broker-dealer or bank that is supervised by (1) the SFA or

the FSA in the United Kingdom; (2) the Deutsche Bundesbank and/or the

BAK, or the BAWe in Germany; (3) the MOF and/or the Tokyo Stock

Exchange in Japan; (4) the OSC, the IDA and/or OSFI in Canada; (5) the

Swiss Federal Banking Commission in Switzerland; and (6) APRA, ASIC

and/or ASEL in Australia.

EFFECTIVE DATE: This exemption is effective as of April 9, 1999.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the Notice published on October 22, 1999 at 64 FR 57142.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

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/or section 4975(c)(2) of the Code

does not relieve a fiduciary or other party in interest or disqualified

person from certain other provisions to which the exemptions does not

apply and the general fiduciary responsibility provisions of section

404 of the Act, which among other things require a fiduciary to

discharge his duties respecting the plan solely in the interest 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) These exemptions are supplemental to and not in derogation of,

any other provisions of the Act and/or the Code, including statutory or

administrative exemptions and transactional 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; and

(3) The availability of these exemptions is subject to the express

condition that the material facts and representations contained in each

application are true and complete and accurately describe all material

terms of the transaction which is the subject of the exemption. In the

case of continuing exemption transactions, if any of the material facts

or representations described in the application change after the

exemption is granted, the exemption will cease to apply as of the date

of such change. In the event of any such change, application for a new

exemption may be made to the Department.

Signed at Washington, D.C., this 30th day of December, 1999.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, Department of Labor.

[FR Doc. 00-220 Filed 1-4-00; 8:45 am]

BILLING CODE 4510-29-P