[Federal Register Volume 68, Number 15 (Thursday, January 23, 2003)]
[Notices]
[Pages 3279-3280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1427]


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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration


Proposed Extension of Information Collection Request Submitted 
for Public Comment; Prohibited Transaction Class Exemption 2002-12, 
Cross-Trades of Securities by Index and Model Funds

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

ACTION: Notice.

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SUMMARY: The Department of Labor, as part of its continuing effort to 
reduce paperwork and respondent burden, conducts a preclearance 
consultation program to provide the general public and Federal agencies 
with an opportunity to comment on proposed and continuing collections 
of information in accordance with the Paperwork Reduction Act of 1995 
(PRA 95). This program helps to ensure that requested data can be 
provided in the desired format, reporting burden (time and financial 
resources) is minimized, collection instruments are clearly understood, 
and the impact of collection requirements on respondents can be 
properly assessed. Currently, the Pension and Welfare Benefits 
Administration is soliciting comments on the proposed extension of the 
disclosure provisions of the Prohibited Transaction Class Exemption 
2002-12, Cross-Trades of Securities by Index and Model Funds.
    A copy of the information collection request (ICR) can be obtained 
by contacting the individual shown in the Addresses section of this 
notice.

DATES: Written comments must be submitted to the office shown in the 
Addresses section on or before March 24, 2003.

ADDRESSES: Joseph S. Piacentini, Department of Labor, Pension and 
Welfare Benefits Administration, 200 Constitution Avenue NW., 
Washington, DC 20210, (202) 693-8410, FAX (202) 219-5333. (These are 
not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Background

    PTE 2002-12 exempts certain transactions that would be prohibited 
under the Employee Retirement Income Security Act of 1974 (the Act or 
ERISA) and the Federal Employees' Retirement System Act (FERSA), and 
provides relief from certain sanctions of the Internal Revenue Code of 
1986 (the Code). The exemption permits cross-trades of securities among 
index and model-driven funds (Funds) managed by investment managers, 
and among such Funds and certain large accounts (Large Accounts) that 
engage such managers to carry out a specific portfolio restructuring 
program or to otherwise act as a ``trading adviser'' for such a 
program. By removing existing barriers to these types of transactions, 
the exemption increases the incidences of cross-trading, thereby 
lowering fees to plans from what they would otherwise be if based on 
multiple individual trades.
    In order for the Department to grant an exemption for a transaction 
or class of transactions that would otherwise be impermissible under 
ERISA, the statute requires the Department to make a finding that the 
exemption is administratively feasible, in the interest of the plan and 
its participants and beneficiaries, and protective of the rights of the 
participants and beneficiaries. To insure that investment managers have 
complied with the requirements of the exemption, the Department has 
included in the exemption certain recordkeeping and disclosure 
obligations that are designed to safeguard plan assets by periodically 
providing information to independent plan fiduciaries about changes in 
the cross-trading program. Initially, where plans are not invested in 
Funds, investment managers must have authorization from a plan 
fiduciary to invest plan assets in Funds. For plans that are currently 
invested in Funds, certain notices must be provided that describe the 
cross-trading program, update changes in Funds, and provide the plan 
with an opportunity to withdraw from the program. For Large Accounts, 
information must be provided by the investment manager about the 
results of transactions involved in a portfolio-restructuring program. 
Finally, the exemption requires that Funds and Large Accounts maintain 
for a period of 6 years the records necessary to enable certain persons 
authorized by the exemption (e.g., Department representatives or 
contributing employers, to determine whether the conditions of the 
exemption have been met.)
    The exemption affects participants and beneficiaries of employee 
benefit plans whose assets are invested in Index or Model-Driven Funds, 
large pension plans and other large accounts involved in portfolio 
restructuring programs, as well as the Funds and their investment 
managers.

II. Desired Focus of Comments

    [sbull] The Department of Labor (Department) is particularly 
interested in comments that:
    [sbull] Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    [sbull] Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
    [sbull] Enhance the quality, utility, and clarity of the 
information to be collected; and
    [sbull] Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques of forms of information technology, e.g., permitting 
electronic submissions of responses.

III. Current Actions

    Extension of the information collection provision of the exemption 
is important because, without the disclosures and recordkeeping 
provided for in the exemption, participants and beneficiaries' 
investments in a pension plan might not be protected. In addition, 
investment managers, that cross trade securities among Funds or engage 
in the restructuring of a portfolio of a Large Account would be subject 
to statutorily imposed sanctions under ERISA. Lastly, the exemption 
provides a benefit to plans and participants through savings that 
result from index/model cross-trading. No change to the existing ICR is 
proposed or made at this time.
    Agency: Pension and Welfare Benefits Administration, Department of 
Labor.
    Title: Prohibited Transaction Class Exemption 2002-12, Cross-Trades 
of

[[Page 3280]]

Securities by Index and Model-Driven Funds.
    Type of Review: Extension of a currently approved collection of 
information.
    OMB Number: 1210-0115.
    Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
    Respondents: 66.
    Responses: 924.
    Estimated Total Burden Hours: 4,707.
    Estimated Total Burden Cost (Operating and Maintenance): $109,000.
    Comments submitted in response to this notice will be summarized 
and/or included in the request for Office of Management and Budget 
approval of the information collection request; they will also become a 
matter of public record.

    Dated: January 16, 2003.
Joseph S. Piacentini,
Deputy Director, Pension and Welfare Benefits Administration, Office of 
Policy and Research.
[FR Doc. 03-1427 Filed 1-22-03; 8:45 am]
BILLING CODE 4510-29-M