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EBSA Notices

Prohibited Transaction Exemptions 2008-13 Through 2008-14; Grant of Individual Exemptions Involving: Banc One Investment Advisors Corporation and J.P. Morgan Investment Management Inc. (JPMIM) and Their Affiliates (collectively JPMorgan), PTE 2008-13; and Fidelity Brokerage Services, D-11424, LLC (FBS), PTE 2008-14   [11/20/2008]
[PDF]
FR Doc E8-27615
[Federal Register: November 20, 2008 (Volume 73, Number 225)]
[Notices]               
[Page 70378-70383]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20no08-94]                         

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Prohibited Transaction Exemptions 2008-13 Through 2008-14; Grant 
of Individual Exemptions Involving: Banc One Investment Advisors 
Corporation and J.P. Morgan Investment Management Inc. (JPMIM) and 
Their Affiliates (collectively JPMorgan), PTE 2008-13; and Fidelity 
Brokerage Services, D-11424, LLC (FBS), PTE 2008-14

AGENCY: Employee Benefits Security 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 
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code).
    A notice was published in the Federal Register of the pendency 
before the Department of a proposal to grant such exemption. The notice 
set forth a summary of facts and representations contained in the 
application for exemption and referred interested persons to the 
application for a complete statement of the facts and representations. 
The application has been available for public inspection at the 
Department in Washington, DC. The notice also invited interested 
persons to submit comments on the requested exemption to the 
Department. In addition the notice stated that any interested person 
might submit a written request that a public hearing be held (where 
appropriate). The applicant has represented that it has complied with 
the requirements of the notification to interested persons. No requests 
for a hearing were received by the Department. Public comments were 
received by the Department as described in the granted exemption.
    The notice of proposed exemption was issued and the exemption is 
being granted solely by the Department because, effective December 31, 
1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 
(1996), 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 exemption is administratively feasible;
    (b) The exemption is in the interests of the plan and its 
participants and beneficiaries; and
    (c) The exemption is protective of the rights of the participants 
and beneficiaries of the plan.
    Banc One Investment Advisors Corporation (BOIA) and J.P. Morgan 
Investment Management Inc. (JPMIM) and their Affiliates (collectively, 
JPMorgan). Located in New York, New York. [Prohibited Transaction 
Exemption 2008-13; Application No. D-11263]

Exemption

Section I--Retroactive Exemption for the Acquisition, Holding, and 
Disposition of JPMorgan Chase & Co. Stock

    The restrictions of sections 406(a)(1)(D), 406(b)(1) 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)(D) and (E) of the 
Code, shall not apply, as of January 14, 2004, until November 20, 2008, 
to the acquisition, holding, and disposition of the common stock of 
JPMorgan Chase & Co. (the JPM Stock) by Index and Model-Driven Funds 
managed by JPMorgan, provided that the following conditions and the 
general conditions in Section III are satisfied:
    (a) The acquisition or disposition of the JPM Stock is for the sole 
purpose of maintaining strict quantitative conformity with the relevant 
index upon which the Index or Model-Driven Fund is based.
    (b) The acquisition or disposition of the JPM Stock does not 
involve any agreement, arrangement, or understanding regarding the 
design or operation of the Fund acquiring the JPM Stock which is 
intended to benefit JPMorgan or any party in which JPMorgan may have an 
interest.
    (c) All aggregate daily purchases of JPM Stock by the Funds do not 
exceed, on any particular day, the greater of:
    (1) Fifteen (15) percent of the aggregate average daily trading 
volume for the JPM Stock occurring on the applicable exchange and 
automated trading system (as described in paragraph (d) below) for the 
previous five business days, or
    (2) Fifteen (15) percent of the trading volume for the JPM Stock 
occurring on the applicable exchange and automated trading system on 
the date of the transaction, both as determined by the best available 
information for the trades occurring on that date or dates.
    (d) All purchases and sales of JPM Stock are either (i) Entered 
into on a principal basis in a direct, arm's length transaction with a 
broker-dealer, in the ordinary course of its business, where such 
broker-dealer is independent of JPMorgan and is either registered under 
the Securities Exchange Act of 1934 (the 1934 Act), and thereby subject 
to regulation by the Securities and Exchange Commission (SEC), (ii) 
effected on an automated trading system (as defined in Section IV(i) 
below) operated by a broker-dealer independent of JPMorgan that is 
subject to regulation by the SEC, or an automated trading system 
operated by a recognized U.S.

[[Page 70379]]

securities exchange (as defined in Section IV(j) below), which, in 
either case, provides a mechanism for customer orders to be matched on 
an anonymous basis without the participation of a broker-dealer, or 
(iii) effected on a recognized securities exchange (as defined in 
Section IV(j) below), so long as the broker is acting on an agency 
basis.
    (e) No transactions by a Fund involve purchases from, or sales to, 
JPMorgan (including officers, directors, or employees thereof), or any 
party in interest that is a fiduciary with discretion to invest plan 
assets into the Fund (unless the transaction by the Fund with such 
party in interest would otherwise be subject to an exemption); however, 
this condition would not apply to purchases or sales on an exchange or 
through an automated trading system (described in paragraph (d) of this 
Section) on a blind basis where the identity of the counterparty is not 
known.
    (f) No more than five (5) percent of the total amount of JPM Stock 
that is issued and outstanding at any time is held in the aggregate by 
Index and Model-Driven Funds managed by JPMorgan.
    (g) JPM Stock constitutes no more than three (3) percent of any 
independent third party index on which the investments of an Index or 
Model-Driven Fund are based.
    (h) A plan fiduciary which is independent of JPMorgan authorizes 
the investment of such plan's assets in an Index or Model-Driven Fund 
which purchases and/or holds JPM Stock, pursuant to the procedures 
described herein.
    (i) A fiduciary independent of JPMorgan directs the voting of the 
JPM Stock held by an Index or Model-Driven Fund on any matter in which 
shareholders of JPM Stock are required or permitted to vote.

Section II--Prospective Exemption for the Acquisition, Holding, and 
Disposition of JPMorgan Chase & Co. Stock

    The restrictions of sections 406(a)(1)(D), 406(b)(1) 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)(D) and (E) of the 
Code, shall not apply, as of November 20, 2008 to the acquisition, 
holding, and disposition of JPM Stock by Index and Model-Driven Funds 
managed by JPMorgan, provided that the following conditions and the 
general conditions in Section III are satisfied:
    (a) The acquisition or disposition of JPM Stock is for the sole 
purpose of maintaining strict quantitative conformity with the relevant 
index upon which the Index or Model-Driven Fund is based.
    (b) The acquisition or disposition of JPM Stock does not involve 
any agreement, arrangement or understanding regarding the design or 
operation of the Fund acquiring the JPM Stock which is intended to 
benefit JPMorgan or any party in which JPMorgan may have an interest.
    (c) All purchases of JPM Stock pursuant to a Buy-up (as defined in 
Section IV(d)) occur in the following manner:
    (1) Purchases on a single trading day are from, or through, only 
one broker or dealer;
    (2) Based on the best available information, purchases are not the 
opening transaction for the trading day;
    (3) Purchases are not effected in the last half hour before the 
scheduled close of the trading day;
    (4) Purchases are at a price that is not higher than the lowest 
current independent offer quotation, determined on the basis of 
reasonable inquiry from brokers that are not affiliates of JPMorgan (as 
defined in section IV(g));
    (5) Aggregate daily purchases of JPM Stock by the Funds do not 
exceed, on any particular day, the greater of: (i) Fifteen (15) percent 
of the aggregate average daily trading volume for the security 
occurring on the applicable exchange and automated trading system for 
the previous five business days, or (ii) fifteen (15) percent of the 
trading volume for the security occurring on the applicable exchange 
and automated trading system on the date of the transaction, as 
determined by the best available information for the trades occurring 
on that date;
    (6) All purchases and sales of JPM Stock occur either (i) On a 
recognized securities exchange (as defined in Section IV(j) below), 
(ii) through an automated trading system (as defined in Section IV(i) 
below) operated by a broker-dealer independent of JPMorgan that is 
registered under the 1934 Act, and thereby subject to regulation by the 
SEC, which provides a mechanism for customer orders to be matched on an 
anonymous basis without the participation of a broker-dealer, or (iii) 
through an automated trading system (as defined in Section IV(i) below) 
that is operated by a recognized securities exchange (as defined in 
Section IV(j) below), pursuant to the applicable securities laws, and 
provides a mechanism for customer orders to be matched on an anonymous 
basis without the participation of a broker-dealer; and
    (7) If the necessary number of shares of JPM Stock cannot be 
acquired within 10 business days from the date of the event that causes 
the particular Fund to require JPM Stock, JPMorgan appoints a fiduciary 
that is independent of JPMorgan to design acquisition procedures and 
monitor JPMorgan's compliance with such procedures, in accordance with 
Representation 7 in the Summary of Facts and Representations in the 
Notice of Proposed Exemption (the Notice).\1\
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    \1\ See 73 FR 39168, 39172 (July 8, 2008).
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    (d) For transactions subsequent to a Buy-up, all aggregate daily 
purchases of JPM Stock by the Funds do not exceed, on any particular 
day, the greater of:
    (1) Fifteen (15) percent of the aggregate average daily trading 
volume for the JPM Stock occurring on the applicable exchange and 
automated trading system for the previous five (5) business days, or
    (2) Fifteen (15) percent of the trading volume for JPM Stock 
occurring on the applicable exchange and automated trading system on 
the date of the transaction, as determined by the best available 
information for the trades that occurred on such date.
    (e) All transactions in JPM Stock not otherwise described in 
paragraph (c) above are either: (i) Entered into on a principal basis 
in a direct, arms-length transaction with a broker-dealer, in the 
ordinary course of its business, where such broker-dealer is 
independent of JPMorgan and is registered under the 1934 Act, and 
thereby subject to regulation by the SEC, (ii) effected on an automated 
trading system (as defined in Section IV(i) below) operated by a 
broker-dealer independent of JPMorgan that is subject to regulation by 
the SEC, or an automated trading system operated by a recognized 
securities exchange (as defined in Section IV(j) below), which, in 
either case, provides a mechanism for customer orders to be matched on 
an anonymous basis without the participation of a broker-dealer, or 
(iii) effected through a recognized securities exchange (as defined in 
Section IV(j) below), so long as the broker is acting on an agency 
basis.
    (f) No transactions by a Fund involve purchases from, or sales to, 
JPMorgan (including officers, directors, or employees thereof), or any 
party in interest that is a fiduciary with discretion to invest plan 
assets in the Fund (unless the transaction by the Fund with such party 
in interest would otherwise be subject to an exemption);

[[Page 70380]]

however, this condition would not apply to purchases or sales on an 
exchange or through an automated trading system (described in 
paragraphs (c) and (e) of this Section) on a blind basis where the 
identity of the counterparty is not known.
    (g) No more than five (5) percent of the total amount of JPM Stock 
that is issued and outstanding at any time is held in the aggregate by 
Index and Model-Driven Funds managed by JPMorgan.
    (h) JPM Stock constitutes no more than five (5) percent of any 
independent third party index on which the investments of an Index or 
Model-Driven Fund are based.
    (i) A plan fiduciary independent of JPMorgan authorizes the 
investment of such plan's assets in an Index or Model-Driven Fund which 
purchases and/or holds JPM Stock, pursuant to the procedures described 
herein.
    (j) A fiduciary independent of JPMorgan directs the voting of the 
JPM Stock held by an Index or Model-Driven Fund on any matter in which 
shareholders of JPM Stock are required or permitted to vote.

Section III--General Conditions

    (a) JPMorgan maintains or causes to be maintained, for a period of 
six years from the date of the transaction, the records necessary to 
enable the persons described in paragraph (b) of this Section to 
determine whether the conditions of this exemption have been met, 
except that (1) a prohibited transaction will not be considered to have 
occurred if, solely due to circumstances beyond the control of 
JPMorgan, the records are lost or destroyed prior to the end of the 
six-year period, and (2) no party in interest other than JPMorgan 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 by paragraph (b) below.
    (b)(1) Except as provided in paragraph (b)(2) and notwithstanding 
any provisions of section 504(a)(2) and (b) of the Act, the records 
referred to in paragraph (a) of this Section are unconditionally 
available at their customary location for examination during normal 
business hours by--
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service or the Securities and Exchange 
Commission,
    (B) Any fiduciary of a plan participating in an Index or Model-
Driven Fund who has authority to acquire or dispose of the interests of 
the plan, or any duly authorized employee or representative of such 
fiduciary,
    (C) Any contributing employer to any plan participating in an Index 
or Model-Driven Fund or any duly authorized employee or representative 
of such employer, and
    (D) Any participant or beneficiary of any plan participating in an 
Index or Model-Driven Fund, or a representative of such participant or 
beneficiary.
    (2) None of the persons described in subparagraphs (B) through (D) 
of this paragraph (b) shall be authorized to examine trade secrets of 
JPMorgan or commercial or financial information that is considered 
confidential.

Section IV--Definitions

    (a) The term ``Index Fund'' means any investment fund, account, or 
portfolio sponsored, maintained, trusteed, or managed by JPMorgan, in 
which one or more investors invest, and--
    (1) That is designed to track the rate of return, risk profile, and 
other characteristics of an independently maintained securities Index, 
as described in Section IV(c) below, by either (i) replicating the same 
combination of securities that comprise such Index, or (ii) sampling 
the securities that comprise such Index based on objective criteria and 
data;
    (2) For which JPMorgan does not use its discretion, or data within 
its control, to affect the identity or amount of securities to be 
purchased or sold;
    (3) That contains ``plan assets'' subject to the Act; and,
    (4) That involves no agreement, arrangement, or understanding 
regarding the design or operation of the Fund which is intended to 
benefit JPMorgan or any party in which JPMorgan may have an interest.
    (b) The term ``Model-Driven Fund'' means any investment fund, 
account, or portfolio sponsored, maintained, trusteed, or managed by 
JPMorgan, in which one or more investors invest, and--
    (1) That is composed of securities, the identity of which and the 
amount of which are selected by a computer model that is based on 
prescribed objective criteria using independent third party data, not 
within the control of JPMorgan, to transform an independently 
maintained Index, as described in Section IV(c) below;
    (2) That contains ``plan assets'' subject to the Act; and
    (3) That involves no agreement, arrangement, or understanding 
regarding the design or operation of the Fund or the utilization of any 
specific objective criteria that is intended to benefit JPMorgan or any 
party in which JPMorgan may have an interest.
    (c) The term ``Index'' means a securities index that represents the 
investment performance of a specific segment of the public market for 
equity or debt securities in the United States and/or foreign 
countries, but only if--
    (1) The organization creating and maintaining the index is--
    (A) Engaged in the business of providing financial information, 
evaluation, advice or securities brokerage services to institutional 
clients,
    (B) A publisher of financial news or information, or
    (C) A public stock exchange or association of securities dealers; 
and,
    (2) The index is created and maintained by an organization 
independent of JPMorgan; and,
    (3) The index is a generally accepted standardized index of 
securities that is not specifically tailored for the use of JPMorgan.
    (d) The term ``Buy-up'' means an initial acquisition of JPM Stock 
by an Index or Model-Driven Fund which is necessary to bring the Fund's 
holdings of such stock either to its capitalization-weighted or other 
specified composition in the relevant index, as determined by the 
independent organization maintaining such index, or to its correct 
weighting as determined by the model which has been used to transform 
the index.
    (e) The term ``JPMorgan'' refers to Bank One Investment Advisors 
Corporation (BOIA) and J.P. Morgan Investment Management Inc. (JPMIM), 
and their respective Affiliates, as defined in paragraph (f) below.
    (f) The term ``Affiliate'' means, with respect to BOIA or JPMIM, an 
entity which, directly or indirectly, through one or more 
intermediaries, is controlling, controlled by, or under common control 
with BOIA or JPMIM;
    (g) An ``affiliate'' of a person includes:
    (1) Any person, directly or indirectly, through one or more 
intermediaries, controlling, controlled by or under common control with 
the person;
    (2) Any officer, director, employee or relative of such person, or 
partner of any such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (h) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (i) The term ``automated trading system'' means an electronic 
trading system that functions in a manner

[[Page 70381]]

intended to simulate a securities exchange by electronically matching 
orders on an agency basis from multiple buyers and sellers, such as an 
``alternative trading system'' within the meaning of the SEC's Reg. ATS 
[17 CFR 242.300], as such definition may be amended from time to time, 
or an ``automated quotation system'' as described in Section 
3(a)(51)(A)(ii) of the 1934 Act [15 U.S.C. 78c(a)(51)(A)(ii)].
    (j) The term ``recognized securities exchange'' means a U.S. 
securities exchange that is registered as a ``national securities 
exchange'' under Section 6 of the 1934 Act (15 U.S.C. 78f), as such 
definition may be amended from time to time, which performs with 
respect to securities the functions commonly performed by a stock 
exchange within the meaning of definitions under the applicable 
securities laws (e.g., 17 CFR 240.3b-16).
    (k) The term ``Fund'' means an Index Fund (as described in Section 
IV(a)) or a Model-Driven Fund (as described in IV(b)).
    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 July 8, 2008, at 73 FR 39168.
    The Department received no written comments with respect to the 
Notice. The Department notes that the Notice incorrectly stated that, 
as of December 31, 2005, JPMIM managed $1.19 trillion in assets for 
defined benefit and defined contribution plans, endowments and 
foundations, and other institutional clients, mutual funds, and high 
net worth individuals. In fact, the applicable date for that 
information was December 31, 2007.

FOR FURTHER INFORMATION CONTACT: Ms. Karen Lloyd of the Department, 
telephone (202) 693-8554. (This is not a toll-free number.)
    Fidelity Brokerage Services, LLC (FBS) and its affiliates (together 
with FBS, Fidelity); Located Boston, Massachusetts.
    [Prohibited Transaction Exemption No. 2008-14; Application No. D-
11424]

Section I: Covered Transactions

    Effective November 20, 2008, the restrictions of sections 
406(a)(1)(D) and 406(b) of ERISA, and the sanctions resulting from the 
application of section 4975 of the Code, including the loss of 
exemption of an individual retirement account or annuity pursuant to 
section 408(e)(2)(A) of the Code, of a Coverdell education savings 
account pursuant to section 530(d) of the Code, of an Archer medical 
savings account pursuant to section 220(e)(2) of the Code, or of a 
health savings account pursuant to section 223(e)(2) of the Code, by 
reason of section 4975(c)(1)(D), (E), and (F) of the Code, shall not 
apply to the receipt of an Applicable Benefit by an individual for 
whose benefit a Covered Plan is established or maintained, or by his or 
her Family Members, with respect to a Tiered Product, pursuant to an 
arrangement offered by Fidelity under which the Account Value of the 
Covered Plan is taken into account for purposes of determining 
eligibility to receive such Applicable Benefit, provided that each 
condition of Section II of this exemption is satisfied.

Section II: Conditions

    (a) The Covered Plan whose Account Value is taken into account for 
purposes of determining eligibility to receive the Applicable Benefit 
under the arrangement is established and maintained for the exclusive 
benefit of the participant covered under the Covered Plan, his or her 
spouse, or their beneficiaries.
    (b) The Applicable Benefit with respect to the Tiered Product must 
be of the type that Fidelity itself could offer consistent with all 
applicable federal and state banking laws and all applicable federal 
and state laws regulating broker-dealers.
    (c) The Applicable Benefit with respect to the Tiered Product must 
be provided by Fidelity or its affiliate in the ordinary course of its 
business as a bank or broker-dealer to customers of Fidelity who 
qualify for such arrangement, but who do not maintain Covered Plans 
with Fidelity or its affiliate.
    (d) For purposes of determining eligibility to receive the 
Applicable Benefit, the Account Value required by Fidelity for the 
Covered Plan is as favorable as any such requirement based on the value 
of any type of account and other financial relationships an individual 
and his or her Family Members have with Fidelity that is used by 
Fidelity to determine eligibility to receive the Applicable Benefit.
    (e) The rate of interest paid with respect to any assets of the 
Covered Plan invested in a Tiered Interest Product is reasonable.
    (f) The combined total of all fees for the provision of services to 
the Covered Plan is not in excess of reasonable compensation within the 
meaning of section 4975(d)(2) of the Code and section 408(b)(2) of 
ERISA.
    (g) The investment performance of the Covered Plan's investment(s) 
is no less favorable than the investment performance of an identical 
investment(s) that could have been made at the same time by a customer 
of Fidelity who is not eligible for (or who does not receive) any 
Applicable Benefit.
    (h) The Applicable Benefits offered with respect to any Tiered 
Product under the arrangement to a Covered Plan customer must be the 
same as is offered by Fidelity with respect to such Tiered Product to 
non-Covered Plan customers of Fidelity having the same aggregate 
Account Value.
    (i) If the Covered Plan is established at a broker-dealer or bank 
that is unrelated to Fidelity, the assets of the Covered Plan must be 
custodied with Fidelity and at the time the Covered Plan is 
established, disclosures must be made to the owner of the Covered Plan 
specifying that under the arrangement, services are being provided by 
Fidelity to the Covered Plan.

III. Definitions

    (a) The term ``Fidelity'' means Fidelity Brokerage Services LLC 
(FBS) or any of its affiliates. An ``affiliate'' of Fidelity Brokerage 
Services LLC includes any person directly or indirectly controlling, 
controlled by, or under common control with FBS. The term control means 
the power to exercise a controlling influence over the management or 
policies of a person other than an individual.
    (b) The term ``Covered Plan'' means a plan sponsored by Fidelity or 
a plan with respect to which Fidelity maintains custody of its assets, 
and is an Individual Retirement Plan or other savings account described 
in section III(c), or a Keogh Plan described in section III(d).
    (c) The term ``Individual Retirement Plan'' means an individual 
retirement account (``IRA'') described in Code section 408(a), an 
individual retirement annuity described in Code section 408(b), a 
Coverdell education savings account described in section 530 of the 
Code, an Archer MSA described in section 220(d) of the Code, or a 
health savings account described in section 223(d) of the Code. For 
purposes of this exemption, the term Individual Retirement Plan shall 
not include an Individual Retirement Plan which is an employee benefit 
plan covered by Title I of ERISA, except for a Simplified Employee 
Pension (SEP) described in section 408(k) of the Code or a Simple 
Retirement Account described in section 408(p) of the Code which 
provides participants with the unrestricted authority to transfer their 
balances to IRAs or Simple Retirement Accounts sponsored by different 
financial institutions.

[[Page 70382]]

    (d) The term ``Keogh Plan'' means a pension, profit-sharing or 
stock bonus plan qualified under Code section 401(a) and exempt from 
taxation under Code section 501(a) under which some or all of the 
participants are employees described in section 401(c) of the Code. For 
purposes of this exemption, the term Keogh Plan shall not include a 
Keogh Plan which is an employee benefit plan covered by Title I of 
ERISA.
    (e) The term ``Account Value'' means the dollar value of 
investments in cash or securities held in the account for which market 
quotations are readily available. For purposes of this exemption, the 
term ``cash'' shall include (without limitation) savings accounts that 
are federally-insured and deposits as that term is defined in section 
29 CFR 2550.408b-4(c)(3). The term ``Account Value'' shall not include 
investments in securities that are offered by Fidelity exclusively to 
Covered Plans.
    (f) The term ``Tiered Product'' means an arrangement that is a 
``Tiered Interest Product'' or a ``Tiered Loan Product.''
    (g) The term ``Tiered Interest Product'' means a bank deposit, an 
arrangement for payment of interest on free cash held in a brokerage 
account, or any other arrangement under which assets in an individual's 
account that is eligible for the arrangement (including Covered Plans) 
are invested, and with respect to which interest is paid at a specified 
rate based on the aggregate amount of the accounts and other financial 
relationships an individual and his or her Family Member have with 
Fidelity that are eligible to be taken into account for purposes of the 
arrangement, including the Account Value of the Covered Plans.
    (h) The term ``Tiered Loan Product'' means any arrangement for the 
extension of credit to an individual, with respect to which the 
interest and/or Loan Expenses required to be paid are reduced to a 
specified rate or an amount based on the aggregate amount of the 
accounts and other financial relationships that an individual and his 
or her Family Member have with Fidelity that are eligible to be taken 
into account for purposes of the arrangement, including the Account 
Value of the Covered Plans.
    (i) The term ``Loan Expenses'' means application fees, points, 
attorneys'' fees, appraisal fees, title insurance, and any other fees 
or costs that an individual is required to pay in connection with the 
origination or maintenance of an extension of credit pursuant to a 
Tiered Loan Product.
    (j) The term ``Applicable Benefit'' means: (i) In the case of a 
Tiered Interest Product, an increase in the interest paid on an account 
established or maintained by an individual or any of his or her Family 
Members (including, in either case, through a Covered Plan); and (ii) 
in the case of a Tiered Loan Product, a reduction in the interest and/
or Loan Expenses that an individual or any of his or her Family Members 
is required to pay.
    (k) The term ``Family Members'' means beneficiaries of an 
individual for whose benefit the Covered Plan is established or 
maintained who would be members of the family as that term is defined 
in Code Section 4975(e)(6), or a brother, a sister, or spouse of a 
brother or sister.

DATES: Effective Date: This exemption is effective November 20, 2008.

Written Comments

    The proposed exemption gave interested persons an opportunity to 
comment and to request a hearing. In this regard, all interested 
persons were invited to submit written comments and/or requests for a 
hearing on the pending exemption on or before October 20, 2008. During 
the comment period, the Department received one written comment letter 
and no requests for a public hearing. The comment was submitted by the 
applicant, and a discussion of the comment is provided below.

Exemption Heading

    The applicant requested the Department change the heading of the 
exemption to read ``Fidelity Brokerage Services LLC (FBS) and its 
affiliates (together with FBS, Fidelity.) The Department has made the 
requested change.

Eligibility

    In its application, Fidelity discussed that an individual's 
eligibility to receive Tiered Products would be calculated based on the 
aggregate amount of accounts and other financial relationships that the 
individual and his or her Family Members have with Fidelity. In this 
regard, Sections II(d), III(g) and III(h) of the proposal relate to 
eligibility requirements and definitions of the products offered under 
Fidelity's program. Section II(d) of the proposal states:

    ``For purposes of determining eligibility to receive the 
Applicable Benefit, the Account Value required by Fidelity for the 
Covered Plan is as favorable as any such requirement based on the 
value of any type of account used by Fidelity to determine 
eligibility to receive the Applicable Benefit.''

    Section III(g) of the proposal states:

    ``The term ``Tiered Interest Product'' means a bank deposit, an 
arrangement for payment of interest on free cash held in a brokerage 
account, or any other arrangement under which assets in an 
individual's account that is eligible for the arrangement (including 
Covered Plans) are invested, and with respect to which interest is 
paid at a specified rate based on the aggregate amount of the 
accounts maintained with Fidelity by an individual and by his or her 
Family Members that are eligible to be taken into account for 
purposes of the arrangement, including the Account Value of the 
Covered Plans.''

    Lastly, Section III(h) of the proposal states:

    ``The term ``Tiered Loan Product'' means any arrangement for the 
extension of credit to an individual, with respect to which the 
interest and/or Loan Expenses required to be paid are reduced to a 
specified rate or amount based on the aggregate amount of the 
accounts and other financial relationships of the individual (and 
his or her Family Members) eligible to be taken into account for 
purposes of the arrangement, including the Account Value of the 
Covered Plans.''

    The applicant asks the Department to insert the words ``and other 
financial relationships'' in Section II(d) and Section III(g). The 
Department has made the requested change making all three sections 
consistent.

General Clarification:

    The Department makes the following clarifications in response to 
the applicant's comments: (1) Fidelity has approximately $1.7 trillion 
assets under administration, and (2) the word ``as'' should be inserted 
immediately after the word ``favorable'' in the fifth line of 
subparagraph 10(d) of the Summary of Facts and Representations of the 
notice of proposed exemption.
    For a complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption that was published in the Federal 
Register on September 3, 2008 at 73 FR 51521.

FOR FURTHER INFORMATION CONTACT: Allison Padams-Lavigne, U.S. 
Department of Labor, telephone (202) 693-8564. (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 exemption does not 
apply and the general fiduciary responsibility provisions of section 
404

[[Page 70383]]

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) This exemption is 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 this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 12th day of November 2008.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. E8-27615 Filed 11-19-08; 8:45 am]

BILLING CODE 4510-29-P