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Grant of Individual Exemption To Replace Prohibited Transaction Exemption (PTE) 2000-45, Involving Citigroup Global Markets Inc. (CGMI), Formerly Salomon Smith Barney Inc. (Salomon Smith Barney), Located in New York, NY   [3/26/2009]
[PDF]
FR Doc E9-6621
[Federal Register: March 26, 2009 (Volume 74, Number 57)]
[Notices]               
[Page 13231-13235]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26mr09-104]                         

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2009-12; Exemption Application No. D-
11341]

 
Grant of Individual Exemption To Replace Prohibited Transaction 
Exemption (PTE) 2000-45, Involving Citigroup Global Markets Inc. 
(CGMI), Formerly Salomon Smith Barney Inc. (Salomon Smith Barney), 
Located in New York, NY

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Grant of individual exemption to replace PTE 2000-45.

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    This document contains a final exemption before the Department of 
Labor (the Department) that replaces PTE 2000-45 (65 FR 54315, 
September 7, 2000), an exemption granted to Salomon Smith Barney. On 
December 1, 2005, PTE 2000-45 became ineffective due to a material 
change in the exemption.
    PTE 2000-45 related to the operation of the TRAK Personalized 
Investment Advisory Service (the TRAK Program) and the Trust for 
Consulting Group Capital Markets Funds (the Trust) as described in a 
notice of proposed exemption (65 FR 35138, June 1, 2000), which 
underlies PTE 2000-45.
    The final exemption incorporates by reference many of the 
conditions contained in PTE 2000-45. The exemption also revises and 
updates certain facts and representations set forth in PTE 2000-45 to 
include a new fee offset procedure and the terms of a past merger (the 
Merger Transaction) between Citigroup Inc. (Citigroup) and Legg Mason, 
Inc. (Legg Mason). In this regard, the Applicants have requested that a 
limited and temporary exception to the definition of ``affiliate'' be 
incorporated in a new Section IV.

DATES: Effective Date: This exemption is effective (1) from December 1, 
2005 until March 10, 2006 with respect to the limited exception 
described in Section IV; (2) as of December 1, 2005 with respect to the 
Covered Transactions, the General Conditions and the Definitions 
described in Sections I, II, and III; and (3) as of January 1, 2008 
with respect to the new fee offset procedure.

FOR FURTHER INFORMATION CONTACT: Mrs. Anna Vaughan or Ms. Jan D. 
Broady, Office of Exemptions Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor, telephone (202) 693-8565 or 
(202) 693-8556. (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION: On December 23, 2008, the Department 
published a notice of proposed exemption in the Federal Register at 73 
FR 78846 from the prohibited transaction restrictions of section 406(a) 
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)(A) through (D) of the Code. The proposed exemption 
has been requested in an application filed on behalf of CGMI 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 part 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 exemption is being issued solely by the Department.
    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption on or before February 23, 2009.
    During the comment period, the Department received 29 telephone 
calls from participants or beneficiaries in plans with investments in 
the TRAK Program. All of these comments concerned the commenters' 
inability to understand the notice of proposed exemption or the effect 
of the exemption on the commenters' benefits.
    The Department also received one written comment with respect to 
the proposed exemption. The comment, which was submitted by Citigroup, 
is intended to clarify and update certain factual information discussed 
in the proposed exemption, as follows:
    1. TRAK Program Assets. On page 78847 of the notice of proposed 
exemption, the first sentence of the first paragraph states that the 
TRAK Program held assets that were in excess of $9.4 billion. Citigroup 
states that the sentence should be revised to read as follows: ``As of 
July 29, 2008, the TRAK Program held assets of approximately $8.8 
billion.''
    Also, on page 78847 of the proposal, the first sentence in the last 
paragraph of the third column reads: ``The assets sold by Citigroup to 
Legg Mason included Smith Barney Mutual Funds Management Inc. (now 
Smith Barney Fund Management LLC) but excluded the Consulting Group and 
the TRAK Program.'' Citigroup explains that the first sentence should 
be revised to read: ``The assets sold by Citigroup to Legg Mason 
included Smith Barney Fund Management LLC, but excluded the Consulting 
Group and the TRAK Program.''
    2. Citigroup Loan to Legg Mason. On page 78847 of the notice of 
proposed exemption, the last sentence in the last paragraph of the 
third column discusses a loan provided by Legg Mason to Citigroup. 
Citigroup explains that it provided the loan to Legg Mason. Therefore, 
this sentence should be revised to read as follows: ``Also, Citigroup 
Corporate and Investment Banking provided to Legg Mason approximately 
$550 million in the form of a five-year loan facility.''
    3. Merger Transaction. On page 78848 of the notice of proposed 
exemption, Footnote 6 states that Citigroup Asset Management or ``CAM'' 
was sold to Legg Mason subsequent to the Merger Transaction. Citigroup 
explains that based on its knowledge, CAM was sold to Legg Mason as 
part of the Merger Transaction.
    4. General Conditions. On pages 78850 and 78854 of the proposed 
exemption, Section II(j) makes reference to the ``Government Money 
Investments Portfolio'' and the ``GIC Fund Portfolio''. Citigroup 
wishes to clarify that these funds have been re-named the ``Money 
Market Investments Portfolio'' and the ``Stable Value Investments 
Portfolio,'' respectively.

[[Page 13232]]

    Also, on pages 78850 and 78854 of the proposal, Section II(k)(1)(E) 
uses the term ``Financial Consultant.'' Citigroup explains that it now 
refers to these employees as ``Financial Advisors.''
    In response to Citigroup's comment letter, the Department has made 
revisions to the operative language of the final exemption and, where 
applicable, has taken note of the foregoing clarifications and updates 
to the Summary of Facts and Representations of the proposed exemption.
    For further information regarding the comments and other matters 
discussed herein, interested persons are encouraged to obtain copies of 
the exemption application file (Exemption Application No. D-11341) 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 Employee Benefits Security 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, 
including the written comment, the Department has decided to grant the 
exemption subject to the modifications described above.

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.
    (2) In accordance with section 408(a) of the Act, the Department 
makes the following determinations:
    (a) The exemption is administratively feasible;
    (b) The exemption is in the interest of the plan and of its 
participants and beneficiaries; and
    (c) The exemption is protective of the rights of participants and 
beneficiaries of employee benefit plans participating in the TRAK 
Program.
    (3) The exemption is 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.
    Accordingly, the following exemption is granted 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, 32847, August 10, 1990).

Section I. Covered Transactions

    A. The restrictions of section 406(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 (D) of the Code, shall not apply, 
effective December 1, 2005, to the purchase or redemption of shares by 
an employee benefit plan, an individual retirement account (an IRA), a 
retirement plan for self-employed individuals (a Keogh Plan), or an 
individual account pension plan that is subject to the provisions of 
Title I of the Act and established under section 403(b) of the Code 
(the section 403(b) Plan; collectively, the Plans) in the Trust for 
Consulting Group Capital Markets Funds (the Trust), established by 
Citigroup, Inc. (Citigroup), in connection with such Plans' 
participation in the TRAK Personalized Investment Advisory Service (the 
TRAK Program).
    B. The restrictions of section 406(b) of the Act and the sanctions 
resulting from the application of section 4975 of the Code, by reason 
of section 4975(c)(1)(E) and (F) of the Code, shall not apply, 
effective December 1, 2005, with respect to the provision, by 
Citigroup's Consulting Group (the Consulting Group), of (1) investment 
advisory services or (2) an automatic reallocation option (the 
Automatic Reallocation Option) to an independent fiduciary of a 
participating Plan (the Independent Plan Fiduciary), which may result 
in such fiduciary's selection of a portfolio (the Portfolio) in the 
TRAK Program for the investment of Plan assets.
    This exemption is subject to the following conditions set forth 
below in Section II.

Section II. General Conditions

    (a) The participation of Plans in the TRAK Program is approved by 
an Independent Plan Fiduciary. For purposes of this requirement, an 
employee, officer or director of Citigroup Global Markets Inc. (CGMI) 
and/or its affiliates covered by an IRA not subject to Title I of the 
Act will be considered an Independent Plan Fiduciary with respect to 
such IRA.
    (b) The total fees paid to the Consulting Group and its affiliates 
constitute not more than reasonable compensation.
    (c) No Plan pays a fee or commission by reason of the acquisition 
or redemption of shares in the Trust.
    (d) The terms of each purchase or redemption of Trust shares remain 
at least as favorable to an investing Plan as those obtainable in an 
arm's length transaction with an unrelated party.
    (e) The Consulting Group provides written documentation to an 
Independent Plan Fiduciary of its recommendations or evaluations based 
upon objective criteria.
    (f) Any recommendation or evaluation made by the Consulting Group 
to an Independent Plan Fiduciary is implemented only at the express 
direction of such Independent Plan Fiduciary, provided, however, that:
    (1) If such Independent Plan Fiduciary elects in writing, on a form 
designated by CGMI from time to time for such purpose, to participate 
in the Automatic Reallocation Option under the TRAK Program, the 
affected Plan or participant account is automatically reallocated 
whenever the Consulting Group modifies the particular asset allocation 
recommendation which the Independent Plan Fiduciary has chosen. Such 
Election continues in effect until revoked or terminated by the 
Independent Plan Fiduciary in writing.
    (2) Except as set forth below in paragraph II(f)(3), at the time of 
a change in the Consulting Group's asset allocation recommendation, 
each account based upon the asset allocation model (the Allocation 
Model) affected by such change is adjusted on the business day of the 
release of the new Allocation Model by the Consulting Group, except to 
the extent that market conditions, and order purchase and redemption 
procedures, may delay such processing through a series of purchase and 
redemption transactions to shift assets among the affected Portfolios.
    (3) If the change in the Consulting Group's asset allocation 
recommendation exceeds an increase or decrease of more than 10 percent 
in the absolute percentage allocated to any one investment medium 
(e.g., a suggested increase in a 15 percent allocation to greater than 
25 percent, or a decrease of such 15 percent allocation to less than 5 
percent), CGMI sends out a written

[[Page 13233]]

notice (the Notice) to all Independent Plan Fiduciaries whose current 
investment allocation may be affected, describing the proposed 
reallocation and the date on which such allocation is to be instituted. 
If the Independent Plan Fiduciary notifies CGMI, in writing, at any 
time within the period of 30 calendar days prior to the proposed 
Effective Date that such fiduciary does not wish to follow such revised 
asset allocation recommendation, the Allocation Model remains at the 
current level, or at such other level as the Independent Plan Fiduciary 
then expressly designated, in writing. If the Independent Plan 
Fiduciary does not affirmatively opt out of the new Consulting Group 
recommendation, in writing, prior to the proposed Effective Date, such 
new recommendation is automatically effected by a dollar-for-dollar 
liquidation and purchase of the required amounts in the respective 
account.
    (4) An Independent Plan Fiduciary receives a trade confirmation of 
each reallocation transaction. In this regard, for all Plan investors 
other than Section 404(c) Plan accounts (i.e., 401(k) Plan accounts), 
CGMI mails trade confirmations on the next business day after the 
reallocation trades are executed. In the case of Section 404(c) Plan 
participants, notification depends upon the notification provisions 
agreed to by the Plan recordkeeper.
    (g) The Consulting Group generally gives investment advice in 
writing to an Independent Plan Fiduciary with respect to all available 
Portfolios. However, in the case of a Plan providing for participant-
directed investments (the section 404(c) Plan), the Consulting Group 
provides investment advice that is limited to the Portfolios made 
available under the Plan.
    (h) Any sub-adviser (the Sub-Adviser) that acts for the Trust to 
exercise investment discretion over a Portfolio is independent of CGMI 
and its affiliates.
    (i) Immediately following the acquisition by a Portfolio of any 
securities that are issued by CGMI and/or its affiliates such as 
Citigroup common stock (the Citigroup Common Stock), the percentage of 
that Portfolio's net assets invested in such securities does not exceed 
one percent. However, this percentage limitation may be exceeded if:
    (1) The amount held by a Sub-Adviser in managing a Portfolio is 
held in order to replicate an established third-party index (the 
Index).
    (2) The Index represents the investment performance of a specific 
segment of the public market for equity securities in the United States 
and/or foreign countries. The organization creating the Index is:
    (i) Engaged in the business of providing financial information;
    (ii) A publisher of financial news information; or
    (iii) A public stock exchange or association of securities dealers.
    The Index is created and maintained by an organization independent 
of CGMI and its affiliates and is a generally-accepted standardized 
Index of securities which is not specifically tailored for use by CGMI 
and its affiliates.
    (3) The acquisition or disposition of Citigroup Common Stock does 
not include any agreement, arrangement or understanding regarding the 
design or operation of the Portfolio acquiring the Citigroup Common 
Stock, which is intended to benefit CGMI or any party in which CGMI may 
have an interest.
    (4) The Independent Plan Fiduciary authorizes the investment of a 
Plan's assets in an Index Fund which purchases and/or holds Citigroup 
Common Stock and the Sub-Adviser is responsible for voting any shares 
of Citigroup Common Stock that are held by an Index Fund on any matter 
in which shareholders of Citigroup Common Stock are required or 
permitted to vote.
    (j) The quarterly investment advisory fee that is paid by a Plan to 
the Consulting Group for investment advisory services rendered to such 
Plan is offset by such amount as is necessary to assure that the 
Consulting Group retains no more than 20 basis points from any 
Portfolio (with the exception of the Money Market Investments Portfolio 
and the Stable Value Investments Portfolio for which the Consulting 
Group and the Trust retains no investment management fee) which 
contains investments attributable to the Plan investor.
    (k) With respect to its participation in the TRAK Program prior to 
purchasing Trust shares,
    (1) Each Plan receives the following written or oral disclosures 
from the Consulting Group:
    (A) A copy of the Prospectus for the Trust discussing the 
investment objectives of the Portfolios comprising the Trust, the 
policies employed to achieve these objectives, the corporate 
affiliation existing between the Consulting Group, CGMI and its 
subsidiaries and the compensation paid to such entities.\*\
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    \*\ The fact that certain transactions and fee arrangements are 
the subject of an administrative exemption does not relieve the 
Independent Plan Fiduciary from the general fiduciary responsibility 
provisions of section 404 of the Act. In this regard, the Department 
expects the Independent Plan Fiduciary to consider carefully the 
totality of the fees and expenses to be paid by the Plan, including 
the fees paid directly to CGMI or to other third parties.
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    (B) Upon written or oral request to CGMI, a Statement of Additional 
Information supplementing the Prospectus which describes the types of 
securities and other instruments in which the Portfolios may invest, 
the investment policies and strategies that the Portfolios may utilize 
and certain risks attendant to those investments, policies and 
strategies.
    (C) A copy of the investment advisory agreement between the 
Consulting Group and such Plan which relates to participation in the 
TRAK Program and describes the Automatic Reallocation Option.
    (D) Upon written request of CGMI, a copy of the respective 
investment advisory agreement between the Consulting Group and the Sub-
Advisers.
    (E) In the case of Section 404(c) Plan, if required by the 
arrangement negotiated between the Consulting Group and the Plan, an 
explanation by a CGMI Consultant to eligible participants in such Plan, 
of the services offered under the TRAK Program and the operation and 
objectives of the Portfolios.
    (F) A copy of the Proposed Exemption and the Final Exemption 
pertaining to the exemptive relief described herein.
    (2) If accepted as an investor in the TRAK Program, an Independent 
Plan Fiduciary of an IRA or Keogh Plan is required to acknowledge, in 
writing, prior to purchasing Trust shares that such fiduciary has 
received copies of the documents described above in subparagraph (k)(1) 
of this section.
    (3) With respect to a Section 404(c) Plan, written acknowledgement 
of the receipt of such documents is provided by the Independent Plan 
Fiduciary (i.e., the Plan administrator, trustee or named fiduciary, as 
the recordholder of Trust shares). Such Independent Plan Fiduciary is 
required to represent in writing to CGMI that such fiduciary is (a) 
independent of CGMI and its affiliates and (b) knowledgeable with 
respect to the Plan in administrative matters and funding matters 
related thereto, and able to make an informed decision concerning 
participation in the TRAK Program.
    (4) With respect to a Plan that is covered under Title I of the 
Act, where investment decisions are made by a trustee, investment 
manager or a named fiduciary, such Independent Plan Fiduciary is 
required to acknowledge, in writing, receipt of such documents and

[[Page 13234]]

represent to CGMI that such fiduciary is (a) independent of CGMI and 
its affiliates, (b) capable of making an independent decision regarding 
the investment of Plan assets and (c) knowledgeable with respect to the 
Plan in administrative matters and funding matters related thereto, and 
able to make an informed decision concerning participation in the TRAK 
Program.
    (l) Subsequent to its participation in the TRAK Program, each Plan 
receives the following written or oral disclosures with respect to its 
ongoing participation in the TRAK Program:
    (1) The Trust's semi-annual and annual report including a financial 
statement for the Trust and investment management fees paid by each 
Portfolio.
    (2) A written quarterly monitoring statement containing an analysis 
and an evaluation of a Plan investor's account to ascertain whether the 
Plan's investment objectives have been met and recommending, if 
required, changes in Portfolio allocations.
    (3) If required by the arrangement negotiated between the 
Consulting Group and a Section 404(c) Plan, a quarterly, detailed 
investment performance monitoring report, in writing, provided to an 
Independent Plan Fiduciary of such Plan showing Plan level asset 
allocations, Plan cash flow analysis and annualized risk adjusted rates 
of return for Plan investments. In addition, if required by such 
arrangement, Financial Consultants meet periodically with Independent 
Plan Fiduciaries of Section 404(c) Plans to discuss the report as well 
as with eligible participants to review their accounts' performance.
    (4) If required by the arrangement negotiated between the 
Consulting Group and a Section 404(c) Plan, a quarterly participant 
performance monitoring report provided to a Plan participant which 
accompanies the participant's benefit statement and describes the 
investment performance of the Portfolios, the investment performance of 
the participant's individual investment in the TRAK Program, and gives 
market commentary and toll-free numbers that enable the participant to 
obtain more information about the TRAK Program or to amend his or her 
investment allocations.
    (5) On a quarterly and annual basis, written disclosures to all 
Plans of (a) the percentage of each Portfolio's brokerage commissions 
that are paid to CGMI and its affiliates and (b) the average brokerage 
commission per share paid by each Portfolio to CGMI and its affiliates, 
as compared to the average brokerage commission per share paid by the 
Trust to brokers other than CGMI and its affiliates, both expressed as 
cents per share.
    (m)(1) CGMI maintains or causes to be maintained for a period of 
(6) six years the records necessary to enable the persons described in 
paragraph (m)(2) of this section to determine whether the applicable 
conditions of this exemption have been met. Such records are readily 
available to assure accessibility by the persons identified in 
paragraph (2) of this section.
    (2) Notwithstanding any provisions of section 504(a)(2) and (b) of 
the Act, the records referred to in paragraph (1) of this section 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 a participating Plan or any duly authorized 
employee of such employer;
    (iii) Any contributing employer to any participating Plan or any 
duly authorized employee representative of such employer; and;
    (iv) Any participant or beneficiary of any participating Plan, or 
any duly authorized representative of such participant or beneficiary.
    (3) A prohibited transaction is not deemed to have occurred if, due 
to circumstances beyond the control of CGMI, the records are lost or 
destroyed prior to the end of the six-year period, and no party in 
interest other than CGMI is subject to the civil penalty that may be 
assessed under section 502(i) of the Act or to the taxes imposed by 
sections 4975(a) and (b) of the Code if the records are not maintained 
or are not available for examination as required by paragraph (2) of 
this section.
    (4) None of the persons described in subparagraphs (ii)-(iv) of 
this section (m)(2) is authorized to examine the trade secrets of CGMI 
or commercial or financial information which is privileged or 
confidential.

Section III. Definitions

    For purposes of this exemption:
    (a) The term ``CGMI'' means Citigroup Global Markets Inc. and any 
affiliate of Citigroup Global Markets Inc., as defined in paragraph (b) 
of this Section III.
    (b) An ``affiliate'' of CGMI includes:
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with CGMI. (For purposes of this subparagraph, the term ``control'' 
means the power to exercise a controlling influence over the management 
or policies of a person other than an individual);
    (2) Any individual who is an officer (as defined in Section III(d) 
hereof), director or partner in CGMI or a person described in 
subparagraph (b)(1);
    (3) Any corporation or partnership of which CGMI, or an affiliate 
described in subparagraph (b)(1), is a 10 percent or more partner or 
owner; and
    (4) Any corporation or partnership of which any individual which is 
an officer or director of CGMI is a 10 percent or more partner or 
owner.
    (c) An ``Independent Plan Fiduciary'' is a Plan fiduciary which is 
independent of CGMI and its affiliates and is either:
    (1) A Plan administrator, sponsor, trustee or named fiduciary, as 
the recordholder of Trust shares under a Section 404(c) Plan;
    (2) A participant in a Keogh Plan;
    (3) An individual covered under (i) a self-directed IRA or (ii) a 
Section 403(b) Plan, which invests in Trust shares;
    (4) A trustee, investment manager or named fiduciary responsible 
for investment decisions in the case of a Title I Plan that does not 
permit individual direction as contemplated by Section 404(c) of the 
Act; or
    (5) A participant in a Plan, such as a Section 404(c) Plan, who is 
permitted under the terms of such Plan to direct, and who elects to 
direct, the investment of assets of his or her account in such Plan.
    (d) The term ``officer'' means a president, any vice president in 
charge of a principal business unit, division or function (such as 
sales, administration or finance), or any other officer who performs a 
policymaking function for the entity.

Section IV. Limited Exception

    (a) Notwithstanding the condition set forth in Section II(h) of the 
General Conditions or the definition of ``affiliate'' set forth in 
Section III(b) of the Definitions herein, during the period, December 
1, 2005 until March 10, 2006, when Citigroup Inc. (Citigroup) held a 10 
percent or greater economic ownership interest in Legg Mason, Inc. 
(Legg Mason) as a result of the merger transaction (Merger Transaction) 
consummated on December 1, 2005, between Citigroup and Legg Mason, 
Brandywine Asset Management LLC (Brandywine) and Western Asset 
Management Company (Western), both of which are wholly owned 
subsidiaries of Legg Mason, continued to be deemed ``independent'' of 
Citigroup Global Markets Inc. (CGMI) and its affiliates for purposes of 
Section II(h) of the General Conditions and

[[Page 13235]]

Section III(b) of the Definitions, as long as the following conditions 
were met:
    (1) The Merger Transaction resulted in Citigroup receiving, among 
other things, approximately 4 percent of the Legg Mason voting common 
stock (Legg Mason Common Stock), and non-voting convertible preferred 
stock (Legg Mason Preferred Stock) which was convertible into 
approximately 10 percent of Legg Mason Common Stock (together, Legg 
Mason Stock).
    (2) Following the Merger Transaction, Legg Mason Stock was being 
held by a subsidiary of Citigroup that is not in the vertical chain of 
ownership with CGMI, and CGMI was not controlling or controlled by the 
entity holding Legg Mason Stock.
    (3) Legg Mason Preferred Stock was converted into Legg Mason Common 
Stock only after it was sold by Citigroup.
    (4) Citigroup engaged in efforts to sell Legg Mason Preferred Stock 
within a reasonable amount of time pursuant to an underwritten broadly 
distributed public offering.
    (5) Citigroup reduced its holdings in Legg Mason Stock below 10 
percent within three months following the consummation of the Merger 
Transaction.
    (6) Citigroup did not participate in any proxy contest or other 
activities concerning the management of Legg Mason.
    (7) Citigroup did not acquire more than 5 percent of Legg Mason 
Common Stock at any time.
    (8) Brandywine and Western operated as separate and autonomous 
business units within Legg Mason.
    (9) The Consulting Group had no ability to exercise control or 
influence over the business of Brandywine or Western. Similarly, 
Brandywine and Western had no ability to exercise control or influence 
over the business of the Consulting Group.
    (10) For so long as Citigroup's ownership interest in Legg Mason 
remained greater than 10 percent, with respect to each Portfolio for 
which Brandywine or Western currently serves as a Sub-Adviser, the 
percentage of Portfolio assets allocated for management purposes to 
these entities by the Consulting Group was not increased.
    (11) For so long as Citigroup's ownership interest in Legg Mason 
remained greater than 10 percent, Brandywine and Western were not 
permitted to manage assets for any other Portfolio in the TRAK Program.
    (12) For so long as Citigroup's ownership interest in Legg Mason 
remained greater than 10 percent, the fee rates paid to Brandywine and 
Western were not increased.
    (13) For so long as Citigroup's ownership interest in Legg Mason 
remained greater than 10 percent, no other affiliates of Legg Mason 
were retained to act as Sub-Advisers in the TRAK Program.
    (14) The Board of Trustees of the Trust for the Consulting Group 
subjected Brandywine and Western to the same review process and 
fiduciary requirements as in effect for all other Sub-Advisers, and to 
the same performance standards.

Section V. Effective Dates

    This exemption is effective: (1) December 1, 2005 until March 10, 
2006 with respect to the limited exception described in Section IV; (2) 
as of December 1, 2005 with respect to the Covered Transactions, the 
General Conditions and the Definitions that are described in Sections 
I, II and III; and (3) as of January 1, 2008 with respect to the new 
fee offset procedure.

    Signed at Washington, DC, this 20th day of March, 2009.
Ivan L. Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. E9-6621 Filed 3-25-09; 8:45 am]

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