Grant of Individual Exemptions; Pacific Life Corporation (Pacific Life), et al.

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 99-44; Exemption Application No. D-

10257, et al.]

Grant of Individual Exemptions; Pacific Life Corporation (Pacific

Life), 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, DC. 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.

Pacific Life Corporation (Pacific Life) Located in Newport Beach,

California; Exemption

[Prohibited Transaction Exemption 99-44; Exemption Application No. D-

10257]

Section I--Transactions

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

the Act and 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, shall not

apply:

(1) For the period from January 22, 1993 until October 31, 1998, to

the sale by Pacific Life of an ``actively-managed synthetic''

guaranteed investment contract (Actively-Managed Synthetic GIC) to an

employee benefit plan for which Pacific Life was a party in interest

with respect to such plan (Plan) in instances where Pacific Life or an

Affiliate manages the Plan's assets relating to the Synthetic GIC (an

Affiliated-Manager GIC); and

(2) As of January 22, 1993, to the purchase or retention of the

Affiliated-Manager GICs, described in section (a)(1) above, by the

Plans and the payments made by Pacific Life to the Plans pursuant to

the terms and conditions of the Affiliated-Manager GICs, provided that

the general conditions set forth in section II, the specific conditions

set forth in section III, the retroactive conditions set forth in

section IV, and the record-keeping requirements set forth in section V

below are met.

(b) The restrictions of sections 406(a) of the Act and the taxes

imposed by section 4975(a) and (b) of the Code, by reason of section

4975(c)(1)(A) through (D) of the Code, shall not apply:

(1) As of January 22, 1993, to the sale by Pacific Life of an

Actively-Managed Synthetic GIC to a Plan in instances where the Plan's

assets relating to the Actively-Managed Synthetic GIC are managed by an

investment manager who is unaffiliated with Pacific Life and

[[Page 61137]]

its Affiliates (an Unaffiliated-Manager GIC); and

(2) As of January 22, 1993, to the purchase or retention of the

Unaffiliated-Manager GICs, described in section (b)(1) above, by the

Plans and the payments made by Pacific Life to the Plans pursuant to

the terms and conditions of the Unaffiliated-Manager GICs, provided

that the general conditions set forth in section II and the record-

keeping requirements set forth in section V below are met.

Section II--General Conditions

(a) Prior to the sale of an Actively-Managed Synthetic GIC, an

independent fiduciary of each Plan receives a full and detailed written

disclosure of all material features of the Actively-Managed Synthetic

GIC, including all applicable fees and charges;

(b) Following receipt of such disclosure, the Plan's independent

fiduciary approves in writing the purchase of the Actively-Managed

Synthetic GIC on behalf of the Plan;

(c) All fees and charges imposed under any such Actively-Managed

Synthetic GIC are not in excess of reasonable compensation within the

meaning of section 408(b)(2) of the Act;

(d) Each Actively-Managed Synthetic GIC will specifically provide

an objective means of determining the fair market value of the

securities owned by the Plan pursuant to the Actively-Managed Synthetic

GIC;

(e) Each Actively-Managed Synthetic GIC will specifically provide

an objective formula for determining the interest rates to be credited

periodically under the Actively-Managed Synthetic GIC;

(f) Pacific Life does not maintain custody of the assets which are

the subject of the Actively-Managed Synthetic GIC or commingle those

assets with any other funds under its management;

(g) The assets subject to the Actively-Managed Synthetic GIC are

invested in high quality fixed income investments specified in the

investment guidelines agreed to, or provided by, the independent

fiduciary;

(h) The Plan may, at any time, terminate the Actively-Managed

Synthetic GIC;

(i) The fee charged under the arrangement is negotiated between

Pacific Life and a Plan fiduciary independent of Pacific Life;

(j) At all times during the term of each Actively-Managed Synthetic

GIC, a Plan may elect to receive such lump sum amount equal to the

Contract Value Record and shall be entitled to receive a lump sum

payment no more than 3 (three) years after making an election which

will establish a maturity date;

(k) The Plan may establish a maturity date by notifying Pacific

Life in writing of an intent to establish a maturity date. Each

Actively-Managed Synthetic GIC will mature within three (3) years after

the Plan notifies Pacific Life of its intent to establish a maturity

date; and

(l) Actively-Managed Synthetic GICs are sold only to Plans which

have at least $25 million in assets.

Section III--Specific Conditions

(a) With respect to any Affiliated-Manager GIC described in section

I(a), Pacific Life will notify a Plan's independent fiduciary, in

writing no later than 30 days prior to the date on which the Credited

Rate is to be reset, advising such fiduciary that the Plan may replace

Pacific Life or its affiliate as investment manager, 1 at no

expense to the Plan, when the Credited Rate with respect to any

Affiliated-Manager GIC described in section I(a) is expected to be less

than three (3) percent at the next reset of the Credited Rate.

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\1\ Although Pacific Life must approve the new investment

manager selected by the Plan, Pacific Life represents that it will

not unreasonably withhold such approval.

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Section IV--Retroactive Conditions

(a) At no time between January 22, 1993 and October 31, 1998, was

the Credited Rate with respect to any Affiliated-Manager GIC described

in section I(a) less than 3% (three percent) per annum; and

(b) At no time between January 22, 1993 and October 31, 1998, did a

Plan elect to receive an amount equal to the Contract Value Record

pursuant to an Affiliated-Manager GIC described in section I(a).

Section V--Recordkeeping

(a) The Applicant maintains or causes to be maintained for a period

of six years from the date of the transaction such records as are

necessary to enable the persons described in paragraph (b) of this

section V of this exemption, to determine whether the conditions of

this exemption have been met, except that: (1) a prohibited transaction

will not be deemed to have occurred if, due to circumstances beyond the

control of the Applicant or its affiliates, such records are lost or

destroyed prior to the end of such six year period; and (2) no party in

interest, other than the Applicant or an affiliate, shall be subject to

the civil penalty that may be accessed 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 by paragraph (b) below.

(b)(1) Notwithstanding anything to the contrary in subsections

(a)(2) and (b) of section 504 of the Act, the records referred to in

paragraph (a) of this section V are unconditionally available at their

customary location for examination during normal business hours by: (i)

any duly authorized employee or representative of the Department of

Labor or the Internal Revenue Service; (ii) any fiduciary of the plan

or any duly authorized employee or representative of such fiduciary;

(iii) any participant or beneficiary of the plan or duly authorized

representative of such participant or beneficiary; (iv) any employer of

plan participants and beneficiaries; and (v) any employee organization

any of whose members are covered by such plan; and

(2) None of the persons described in paragraph (b)(1)(ii) through

(v) shall be authorized to examine trade secrets of the applicant, or

commercial or financial information which is privileged or

confidential.

Section VI--Definitions

For purposes of this exemption:

(A) ``Actively-Managed Synthetic GIC'' means: a synthetic

guaranteed investment contact, which under certain circumstances

provides a guarantee that a pool of underlying plan assets which may be

managed by Pacific Life, an affiliate of Pacific Life, or an unrelated

investment manager, will perform at a specified rate of return.

(B) ``Affiliated-Manager GIC'' means: an Actively-Managed Synthetic

GIC under which Pacific Life guarantees the performance of an related

investment manager.

(C) ``Unaffiliated-Manager GIC'' means: an Actively-Managed

Synthetic GIC under which Pacific Life guarantees the performance of an

unrelated investment manager.

(D) ``Contract Value Record'' means: a bookkeeping account

maintained by Pacific Life, pursuant to each Actively-Managed Synthetic

GIC. Initially, the Contract Value Record will be credited with the

value of the Investment Assets (defined in (F) below), and subsequently

with a credited rate of interest (Credited Rate, defined in (E) below),

which shall be reset periodically as agreed to at the inception of the

Actively-Managed Synthetic GIC.

(E) ``Credited Rate'' means: the interest rate credited to the

Contract Value Record. The Credited Rate is reset periodically, in

accordance with an objective formula established under the

[[Page 61138]]

terms of the Actively-Managed Synthetic GIC.

(F) ``Investment Assets'' means: the underlying portfolio of

investment assets, title to which remains with the Plan.

(G) ``Managed Portfolio'' means: the total of all Investment Assets

which comprise the portfolio which is managed by either an Affiliated-

Manager or an Unaffiliated-Manager.

(H) ``Withdrawals'' means: a participant initiated payment or

transfer to other investment options available under the Plan.

EFFECTIVE DATE: This exemption is effective for the period from January

22, 1993, until October 31, 1998, for the transactions described in

section I(a)(1). Section I(a)(2) of the exemption will be effective for

the retention by the Plan of the Affiliated-Manager GICs until the

maturity date of such GICs. Lastly, the exemption is effective as of

January 22, 1993, for the transactions described in section I(b)

(including the continuing retention of any Unaffiliated-Manager GICs).

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 published on July 22, 1999, at 64 FR

39533.

Written Comments: One written comment, addressing two issues, was

received from the applicant, Pacific Life, regarding the notice of

proposed exemption (the Notice).

With respect to the first issue, the applicant states that the

relief provided for in the operative language of the Notice regarding

``synthetic'' guaranteed investment contracts that are actively-managed

by Pacific Life or an Affiliate (i.e., Affiliated-Manager GICs) is

effective only for contracts sold on or before August 12, 1998. The

applicant represents that this date was established based on the belief

that no existing Affiliated-Manager GICs had been entered into after

that date. After the Notice was published in the Federal Register on

July 22, 1998, the applicant discovered that one Plan client, which had

previously held a traditional GIC issued by Pacific Life, requested

conversion of that GIC contract to an Affiliated-Manager GIC prior to

August 12, 1998, but the parties did not actually execute this

Affiliated-Manager GIC until October 1998. Therefore, Pacific Life

requests that references in the Notice to August 12, 1998 be changed to

October 31, 1998 in order to accommodate the execution of this

Affiliated-Manager GIC.

In response to the applicant's comment, the Department has modified

Section I(a)(1) and Section IV(a) and (b) of the exemption, as well as

the effective date paragraph at the end of the operative language of

the exemption, by substituting October 31, 1998 for August 12, 1998.

With respect to the second issue, Section II(g) of the Notice

requires that the assets subject to the Actively-Managed Synthetic GIC

(i.e., Investment Assets) must be invested only in high quality fixed

income investments specified in the investment guidelines agreed to, or

provided by, the independent fiduciary. The summary of facts and

representations (the Summary) contained in the Notice also states that

the Investment Assets will be invested in securities issued or

guaranteed by the Federal government, or an instrumentality thereof, or

other investment grade debt securities whose value is readily

determinable and which can thus be objectively valued (e.g., see

Paragraph 8 of the Summary, 64 FR at 39535).

The applicant's comments state that certain Plans have requested

that a portion of the Investment Assets be allocated to non-investment

grade securities in order to enhance the rate of return to such Plans,

pursuant to certain investment guidelines established by independent

Plan fiduciaries. However, the applicant represents that at least 90%

of the Investment Assets will be allocated to investment grade

securities at all times. Thus, for purposes of this exemption, Pacific

Life wishes to clarify that while the Investment Assets will be

primarily allocated to investment grade securities, a small percentage

of such Assets may be non-investment grade securities.

The Department acknowledges the applicant's clarification to the

information and representations contained in the Summary regarding

investment grade securities. In this regard, the Department notes that

the requirements of Section II(g) of the exemption, relating to the

need for ``* * * high quality fixed income investments,'' will be

deemed to be met if at least 90% of the Investment Assets are allocated

at all times to investment grade securities. Further, in response to

the applicant's comment, the Department has modified the language of

Section II(g) of the exemption by deleting the word ``only'' from the

phrase referring to high quality fixed income investments.

Accordingly, the Department has determined to grant the exemption

as modified herein.

FOR FURTHER INFORMATION CONTACT: Janet Schmidt of the Department,

telephone (202) 219-8883. (This is not a toll-free number.)

Donaldson, Lufkin & Jenrette Securities Corporation (DLJ) Located

in New York, NY; Exemption

[Prohibited Transaction Exemption (PTE) 99-45; Application No. D-10772]

Section I. Covered Transactions

A. The restrictions of section 406(a)(1))(A) through (D) 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 (D) of the Code, shall

not apply, effective September 24, 1999, to any purchase or sale of a

security between certain affiliates of DLJ which are foreign broker-

dealers (the Foreign Affiliates, as defined below) and employee benefit

plans (the Plans) with respect to which the Foreign Affiliates are

parties in interest, including options written by a Plan, DLJ or a

Foreign Affiliate provided that the following conditions and the

General Conditions of Section II, are satisfied:

(1) The Foreign Affiliate customarily purchases and sells

securities for its own account in the ordinary course of its business

as a broker-dealer;

(2) The terms of any transaction are at least as favorable to the

Plan as those which the Plan could obtain in a comparable arm's length

transaction with an unrelated party; and

(3) Neither the Foreign Affiliate nor an affiliate thereof has

discretionary authority or control with respect to the investment of

the 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, and the Foreign Affiliate is a party in interest or

disqualified person with respect to the Plan assets involved in the

transaction solely by reason of section 3(14)(B) of the Act or section

4975(e)(2)(B) of the Code, or by reason of a relationship to a person

described in such sections. For purposes of this paragraph, the Foreign

Affiliate shall not be deemed to be a fiduciary with respect to Plan

assets solely by reason of providing securities custodial services for

a Plan.

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

406(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

(D) of the Code, shall not apply, effective September 24, 1999, to any

extension of credit to the Plans by the Foreign Affiliates to permit

the settlement of securities transactions, regardless of whether they

are effected on an agency or a principal basis, or in

[[Page 61139]]

connection with the writing of options contracts, provided that the

following conditions and the General Conditions of Section II are

satisfied:

(1) The Foreign Affiliate is not a fiduciary with respect to any

Plan assets involved in the transaction, unless no interest or other

consideration is received by the Foreign Affiliate or an affiliate

thereof, in connection with such extension of credit; and

(2) Any extension of credit would be lawful under the Securities

Exchange Act of 1934 (the 1934 Act) and any rules or regulations

thereunder if such Act, rules or regulations were applicable.

C. The restrictions of section 406(a)(1)(A) through (D) 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 (D) of the Code, shall

not apply, effective September 24, 1999, to the lending of securities

to the Foreign Affiliates by the Plans, provided that the following

conditions and the General Conditions of Section II are satisfied:

(1) Neither the Foreign Affiliate nor an affiliate thereof has

discretionary authority or control with respect to the investment of

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;

(2) The Plan receives from the Foreign Affiliate (by physical

delivery or by book entry in a securities depository, wire transfer, or

similar means) by the close of business on the day on which the loaned

securities are delivered to the Foreign Affiliate, collateral

consisting of cash, securities issued or guaranteed by the U.S.

Government or its agencies or instrumentalities, or irrevocable U.S.

bank letters of credit issued by persons other than the Foreign

Affiliate or an affiliate of the Foreign Affiliate, or any combination

thereof. All collateral shall be in U.S. dollars, or dollar-denominated

securities or bank letters of credit, and shall be held in the United

States;

(3) The collateral has, as of the close of business on the

preceding business day, a market value equal to at least 100 percent of

the then market value of the loaned securities (or, in the case of

letters of credit, a stated amount equal to same);

(4) The loan is made pursuant to a written loan agreement (the Loan

Agreement), which may be in the form of a master agreement covering a

series of securities lending transactions, and which contains terms at

least as favorable to the Plan as those the Plan could obtain in an

arm's length transaction with an unrelated party;

(5) In return for lending securities, the Plan either (a) receives

a reasonable fee, which is related to the value of the borrowed

securities and the duration of the loan, or (b) has the opportunity to

derive compensation through the investment of cash collateral. In the

latter case, the Plan may pay a loan rebate or similar fee to the

Foreign Affiliate, if such fee is not greater than the Plan would pay

an unrelated party in a comparable arm's length transaction with an

unrelated party;

(6) The Plan receives at least the equivalent of all distributions

on the borrowed securities made 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 that the Plan would have received (net of tax withholdings)

2 had it remained the record owner of such securities.

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\2\ The Department notes the applicant's representation that

dividends and other distributions on foreign securities payable to a

lending Plan may be subject to foreign tax withholdings and that the

Foreign Affiliate will always put the Plan back in at least as good

a position as it would have been in had it not lent the securities.

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(7) If the market value of the collateral as of the close of

trading on a business day falls below 100 percent of the market value

of the borrowed securities as of the close of trading on that day, the

Foreign Affiliate delivers additional collateral, by the close of the

Plan's business on the following business day, to bring the level of

the collateral back to at least 100 percent. However, if the market

value of the collateral exceeds 100 percent of the market value of the

borrowed securities, the Foreign Affiliate may require the Plan to

return part of the collateral to reduce the level of the collateral to

100 percent;

(8) Before entering into a Loan Agreement, the Foreign Affiliate

furnishes to the independent Plan fiduciary (a) the most recent

available audited statement of the Foreign Affiliate's financial

condition, (b) the most recent available unaudited statement of its

financial condition (if more recent than the audited statement), and

(c) a representation that, at the time the loan is negotiated, there

has been no material adverse change in its financial condition that has

not been disclosed since the date of the most recent financial

statement furnished to the independent Plan fiduciary. Such

representation may be made by the Foreign Affiliate's agreeing that

each loan of securities shall constitute a representation that there

has been no such material adverse change;

(9) The Loan Agreement and/or any securities loan outstanding may

be terminated by the Plan at any time, whereupon the Foreign Affiliate

shall deliver certificates for securities identical to the borrowed

securities (or the equivalent thereof in the event of reorganization,

recapitalization or merger of the issuer of the borrowed securities) to

the Plan within (a) the customary delivery period for such securities,

(b) five business days, or (c) the time negotiated for such delivery by

the Plan and the Foreign Affiliate, whichever is least, or,

alternatively such period as permitted by Prohibited Transaction Class

Exemption (PTCE) 81-6 (46 FR 7527, January 23, 1981, as amended at 52

FR 18754, May 19, 1987), as it may be amended or superseded.\3\

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\3\ PTCE 81-6 provides an exemption under certain conditions

from section 406(a)(1)(A) through (D) of the Act and the

corresponding provisions of section 4975(c) of the Code for the

lending of securities that are assets of an employee benefit plan to

a U.S. broker-dealer registered under the 1934 Act (or exempted from

registration under the 1934 Act as a dealer in exempt Government

securities, as defined therein).

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(10) In the event that the loan is terminated and the Foreign

Affiliate fails to return the borrowed securities or the equivalent

thereof within the time described in paragraph (9), the Plan may

purchase securities identical to the borrowed securities (or their

equivalent as described above) and may apply the collateral to the

payment of the purchase price, any other obligations of the Foreign

Affiliate under the Loan Agreement, and any expenses associated with

the sale and/or purchase. The Foreign Affiliate is obligated to pay,

under the terms of the Loan Agreement, and does pay, to the Plan, the

amount of any remaining obligations and expenses not covered by the

collateral, plus interest at a reasonable rate. Notwithstanding the

foregoing, the Foreign Affiliate may, in the event it fails to return

borrowed securities as described above, replace non-cash collateral

with an amount of cash not less than the then current market value of

the collateral, provided that such replacement is approved by the

independent Plan fiduciary; and

(11) The independent Plan fiduciary maintains the situs of the Loan

Agreement in accordance with the indicia of ownership requirements

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

29 CFR 2550.404b-1. However, in the event that the independent Plan

fiduciary does not maintain the situs of the Loan Agreement in

accordance with the indicia of ownership requirements of section 404(b)

of the Act, the Foreign

[[Page 61140]]

Affiliate shall not be subject to the civil penalty which may be

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

section 4975(a) and (b) of the Code.

If the Foreign Affiliate fails to comply with any condition of this

exemption in the course of engaging in a securities lending

transaction, the Plan fiduciary which caused the Plan to engage in such

transaction shall not be deemed to have caused the Plan to engage in a

transaction prohibited by section 406(a)(1)(A) through (D) of the Act

solely by reason of the Foreign Affiliate's failure to comply with the

conditions of the exemption.

Section II. General Conditions

A. The Foreign Affiliate is a registered broker-dealer subject to

regulation by a governmental agency, as described in Section III. B.,

and is in compliance with all applicable rules and regulations thereof

in connection with any transactions covered by this exemption;

B. The Foreign Affiliate, in connection with any transactions

covered by this exemption, is in compliance with the requirements of

Rule 15a-6 (17 CFR 240.15a-6) of the 1934 Act, and Securities and

Exchange Commission interpretations thereof, providing for foreign

affiliates a limited exemption from U.S. broker-dealer registration

requirements.

C. Prior to the transaction, the Foreign Affiliate enters into a

written agreement with the Plan in which the Foreign Affiliate consents

to the jurisdiction of the courts of the United States for any civil

action or proceeding brought in respect of the subject transactions.

D. The Foreign Affiliate maintains, or causes to be maintained,

within the United States for a period of six years from the date of any

transaction such records as are necessary to enable the persons

described in paragraph E. to determine whether the conditions of this

exemption have been met except that--

(1) A party in interest with respect to a Plan, other than the

Foreign Affiliate, shall not be subject to a civil penalty under

section 502(i) of the Act or the taxes imposed by section 4975(a) or

(b) of the Code, if such records are not maintained, or are not

available for examination, as required by paragraph E.; and

(2) A prohibited transaction shall not be deemed to have occurred

if, due to circumstances beyond the control of the Foreign Affiliate,

such records are lost or destroyed prior to the end of such six year

period;

E. Notwithstanding the provisions of subsections (a)(2) and (b) of

section 504 of the Act, the Foreign Affiliate makes the records

referred to above in paragraph D., unconditionally available for

examination during normal business hours at their customary location to

the following persons or an authorized representative thereof:

(1) The Department, the Internal Revenue Service or the SEC;

(2) Any fiduciary of a Plan;

(3) Any contributing employer to a Plan;

(4) Any employee organization any of whose members are covered by a

Plan; and

(5) Any participant or beneficiary of a Plan.

However, none of the persons described above in paragraphs (2)-(5)

of this paragraph E. shall be authorized to examine trade secrets of

the Foreign Affiliate, or any commercial or financial information which

is privileged or confidential.

F. Prior to any Plan's approval of any transaction with a Foreign

Affiliate, the Plan is provided copies of the proposed and final

exemption with respect to the exemptive relief granted herein.

Section III. Definitions

For purposes of this exemption,

A. The term ``DLJ'' as referred to in Parts A., B., and C. of

Section I., means Donaldson, Lufkin & Jenrette Securities Corporation.

B. The term ``affiliate'' of another person shall include:

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

intermediaries, controlling, controlled by, or under common control

with such other person;

(2) Any officer, director, or partner, employee or relative (as

defined in section 3(15) of the Act) of such other person; and

(3) Any corporation or partnership of which such other person is an

officer, director or partner. (For purposes of this definition, the

term ``control'' means the power to exercise a controlling influence

over the management or policies of a person other than an individual.)

C. The term ``Foreign Affiliate,'' shall mean a current or future

affiliate of DLJ that is subject to regulation as a broker-dealer by--

(1) The Securities and Futures Authority, in the United Kingdom; or

(2) The Australian Securities & Investments Commission in

Australia.

C. The term ``security'' shall include equities, fixed income

securities, options on equity and on fixed income securities,

government obligations, and any other instrument that constitutes a

security under U.S. securities laws. The term ``security'' does not

include swap agreements or other notional principal contracts.

EFFECTIVE DATE: This exemption is effective as of September 24, 1999.

For a more complete statement of the facts and representations

supporting this exemption, refer to notice of proposed exemption (the

Notice) published on September 24, 1999 at 64 FR 51797.

Written Comments

The Department received one written comment with respect to the

Notice and no requests for a public hearing. The comment, which was

submitted by DLJ, requested that the exemption be made retroactive to

September 24, 1999, the date the Notice was published in the Federal

Register, to ensure that any transactions entered into on or after the

publication date of the Notice by Plans and the Foreign Affiliates

would be covered by the requested exemption. In response to this

comment, the Department has made the exemption effective as of

September 24, 1999.

For further information regarding DLJ's comment or other matters

discussed herein, interested persons are encouraged to obtain copies of

the exemption application file (Exemption Application No. D-10772) the

Department is maintaining in this case. The complete application file,

as well as all supplemental submissions received by the Department, are

made available for public inspection in the Public Documents Room of

the Pension and Welfare Benefits Administration, Room N-5638, U.S.

Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C.

20210.

Accordingly, after giving full consideration to the entire record,

including the written comment provided by the DLJ, the Department has

made the aforementioned change to the Notice and has decided to grant

the exemption subject to the modification described above.

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

[[Page 61141]]

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 4th day of November, 1999.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 99-29266 Filed 11-8-99; 8:45 am]

BILLING CODE 4510-29-P