[Federal Register: January 18, 2002 (Volume 67, Number 13)]
[Notices]               
[Page 2688-2689]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja02-92]                         

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 02-08; Exemption Application No. D-
10997]

 
Grant of Individual Exemption To Modify Prohibited Transaction 
Exemption 97-08 (PTE 97-08) Involving Morgan Stanley Dean Witter & Co. 
Incorporated (MSDW&Co) Located in New York, NY

AGENCY: Pension and Welfare Benefits Administration, U.S. Department of 
Labor.

ACTION: Grant of individual exemption to modify PTE 97-08.

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SUMMARY: This document contains a final exemption before the Department 
of Labor (the Department) which amends PTE 97-08 (62 FR 4811, January 
31, 1997), an exemption granted to Morgan Stanley & Co., Incorporated 
(MSC), a subsidiary of MSDW&Co.
    PTE 97-08 provided relief for certain securities lending, principal 
transactions, and extensions of credit. This exemption modifies PTE 97-
08 to permit a U.S. affiliate of a foreign broker-dealer to guaranty 
the obligations of such broker-dealer that arise in connection with 
transactions described in PTE 97-08 and affects the participants and 
beneficiaries of certain employee benefit plans (the Plans or Plan) 
participating in such transactions and the fiduciaries with respect to 
such plans.

EFFECTIVE DATE: The amendments to PTE 97-08 are effective, as of August 
25, 1995, the effective date of PTE 97-08.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena C. Le Blanc, Office of 
Exemption Determinations, Pension and Welfare Benefits Administration, 
U.S. Department of Labor, telephone (202) 693-8540. (This is not a 
toll-free number.)

SUPPLEMENTARY INFORMATION: On September 7, 2001, the Department 
published in the Federal Register, at 66 FR 46843, a Notice of Proposed 
Exemption that would amend PTE 97-08. PTE 97-08 provides an exemption 
from certain prohibited transaction restrictions of section 406 of the 
Employee Retirement Income Security Act of 1974 (the Act) and from the 
sanctions resulting from the application of section 4975 of the 
Internal Revenue Code of 1986 (the Code), as amended, by reason of 
section 4975(c)(1) of the Code. Specifically, PTE 97-08 provides 
retroactive exemptive relief from 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, for certain principal 
transactions between Plans and broker-dealers affiliated with MSC which 
are subject to British law (the MSC/UK Affiliates), the lending of 
securities that are assets of Plans to MSC/UK Affiliates, and any 
extensions of credit to Plans by MSC/UK Affiliates to permit the 
settlement of securities transactions or in connection with the writing 
of options contracts; provided certain conditions are satisfied.
    The amendment was requested in an application filed on behalf of 
MSDW&Co, MSC, and any current and future U.K. broker-dealer affiliates 
of MSDW&CO and MSC, 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 2570, Subpart B (55 FR 32836, 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. Accordingly, this final exemption is issued solely 
by the Department.
    The Notice of Proposed Exemption invited all interested persons to 
comment on the proposed amendment to PTE 97-08 and to request a public 
hearing. During the comment period, the Department received no comments 
and no requests for a hearing.
    For further information regarding the matters discussed herein, 
interested persons are encouraged to obtain copies

[[Page 2689]]

of the exemption application file (Exemption Application No. D-10997) 
that 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 
Disclosure Room of the Pension and Welfare Benefits Administration, 
Room N-1513, U.S. Department of Labor, 200 Constitution Avenue, NW, 
Washington, DC 20210.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption to modify PTE 97-08.

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, a fiduciary to 
discharge his or her 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 requirements of section 401(a) of the Code that the plan 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) The exemption will not extend to transactions prohibited under 
section 406(b)of the Act and section 4975(c)(1)(E) or (F) of the Code;
    (3) In accordance with section 408(a) of the Act and section 
4975(c)(2) of the Code, and the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, August 10, 1990), and based upon the 
entire record, the Department finds that the exemption is 
administratively feasible, in the interest of plans and of their 
participants and beneficiaries and protective of the rights of 
participants and beneficiaries of such plans;
    (4) The exemption will be supplemental to, and not in derogation 
of, any other provisions of the Act and the Code, including statutory 
or administrative exemptions. 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
    (5) This exemption is subject to the express condition that the 
Summary of Facts and Representations set forth in the Notice of 
Proposed Exemption relating to PTE 97-08, as amended by the Notice of 
Proposed Exemption relating to this exemption, accurately describes, 
where relevant, the material terms of the transactions to be 
consummated pursuant to this exemption.

Exemption

    Based on the facts and representations set forth in the 
application, 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, August 10, 
1990), the Department hereby amends PTE 97-08 to include in Section I 
an additional transaction (D), as set forth below:

Section I. Transactions

    D. Effective August 25, 1995, 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, to a guaranty 
given to a Plan by MSDW&Co or any U.S. affiliate of MSDW&Co, provided 
that the guaranty when given:
    (a) Is in connection with one of the transactions, described in 
section I (A), (B), or (C) of PTE 97-08, for which the specific 
conditions for such transaction and all of the general conditions, as 
set forth in PTE 97-08 have been satisfied;
    (b) Is lawful under the applicable securities laws;
    (c) Is provided at no separate cost to the Plan; and
    (d) Is not a prohibited transaction under section 503(b) of the 
Code.
    The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application for exemption are true and complete and accurately describe 
all material terms of the transactions. In the case of continuing 
transactions, if any of the material facts or representations described 
in the application change, the exemption will cease to apply as of the 
date of such change. In the event of any such change, an application 
for a new exemption must be made to the Department.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant PTE 97-08, refer to the 
Notice of Proposed Exemption (61 FR 58237, November 13, 1996) and the 
Final Exemption (62 FR 4811, January 31, 1997). For a more complete 
statement of the facts and representations supporting the Department's 
decision to grant this amendment to PTE 97-08, refer to the Notice of 
Proposed Exemption to Modify PTE 97-08 (66 FR 46843, September 7, 
2001).

    Signed at Washington, DC, this 15th day of January, 2002.
Ivan L. Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 02-1366 Filed 1-17-02; 8:45 am]
BILLING CODE 4510-29-P