[Federal Register Volume 86, Number 73 (Monday, April 19, 2021)]
[Notices]
[Pages 20410-20417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-07963]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2021-01; Exemption Application No. D-
12018]


Exemption for Certain Prohibited Transaction Restrictions 
Involving DWS Investment Management Americas, Inc. (DIMA or the 
Applicant) and Certain Current and Future Asset Management Affiliates 
of Deutsche Bank AG (each a DB QPAM) Located in New York, New York

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of exemption.

-----------------------------------------------------------------------

SUMMARY: This document is a notice of exemption 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). The exemption allows entities with specified relationships 
to Deutsche Bank AG to continue to rely on the exemptive relief 
provided by Prohibited Transaction Class Exemption 84-14, if certain 
conditions are met.

DATES: This exemption will be in effect for a period of up to three (3) 
years beginning on April 18, 2021.

FOR FURTHER INFORMATION CONTACT: Frank Gonzalez of the Department at 
(202) 693-8553. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On February 12, 2021, the Department 
published a notice of proposed exemption in the Federal Register at 86 
FR 9376, for certain qualified professional asset managers within the 
corporate family of Deutsche Bank AG (Deutsche Bank), including DWS 
Investment Management Americas Inc. (DIMA or the Applicant), to 
continue relying on the class exemptive relief granted in Prohibited 
Transaction Exemption (PTE) 84-14 (PTE 84-14 or the QPAM Class 
Exemption), for up to three years, notwithstanding the 2017 criminal 
conviction of DB Group Services (UK) Limited (the U.S. Conviction). The 
Department is granting this exemption to ensure that Covered Plans with 
assets managed by an asset manager within the corporate family of 
Deutsche Bank may continue to benefit from the relief provided by PTE 
84-14, with the protection of this exemption's additional 
conditions.\1\
---------------------------------------------------------------------------

    \1\ For purposes of this exemption, a ``Covered Plan'' is a plan 
subject to Part 4 of Title 1 of ERISA (``ERISA-covered plan'') or a 
plan subject to section 4975 of the Code (``IRA'') with respect to 
which a DB QPAM relies on PTE 84-14, or with respect to which a DB 
QPAM (or any Deutsche Bank affiliate) has expressly represented that 
the manager qualifies as a QPAM or relies on the QPAM class 
exemption (PTE 84-14). A Covered Plan does not include an ERISA-
covered plan or IRA to the extent the DB QPAM has expressly 
disclaimed reliance on QPAM status or PTE 84-14 in entering into its 
contract, arrangement, or agreement with the ERISA-covered plan or 
IRA. Notwithstanding the above, a DB QPAM may disclaim reliance on 
QPAM status or PTE 84-14 in a written modification of a contract, 
arrangement, or agreement with an ERISA-covered plan or IRA, where: 
The modification is made in a bilateral document signed by the 
client; the client's attention is specifically directed toward the 
disclaimer; and the client is advised in writing that, with respect 
to any transaction involving the client's assets, the DB QPAM will 
not represent that it is a QPAM, and will not rely on the relief 
described in PTE 84-14.
---------------------------------------------------------------------------

    The grant of this three-year exemption does not imply that the 
Department will grant additional relief for the DB QPAMs to continue to 
rely on the relief in PTE 84-14 beyond the end of this exemption's 
three-year term. This exemption provides only the relief specified in 
the text of the exemption, and only with respect to the criminal 
convictions or criminal conduct described herein. It provides no relief 
from violations of any law other the prohibited transaction provisions 
of ERISA and the Code.
    The Department intends for the terms of this exemption to promote 
adherence to basic fiduciary standards under ERISA and the Code. This 
exemption also aims to ensure that Covered Plans can terminate 
relationships in an orderly and cost-effective fashion in the event the 
fiduciary of a Covered Plan determines it is prudent to terminate the 
relationship with a DB QPAM. The Department makes the requisite 
findings under ERISA section 408(a) based on adherence to all the 
conditions of the exemption. Accordingly, affected parties should be 
aware that the conditions incorporated in this exemption are,

[[Page 20411]]

taken as a whole, necessary for the Department to grant the relief 
requested by the Applicant. Absent these or similar conditions, the 
Department would not have granted this exemption.
    The Applicant requested an individual exemption pursuant to section 
408(a) of ERISA and section 4975(c)(2) of the Code, and in accordance 
with the procedures set forth in 29 CFR part 2570, subpart B (76 FR 
66637, 66644, October 27, 2011). Effective December 31, 1978, section 
102 of the Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), 
transferred the authority of the Secretary of the Treasury to issue 
administrative exemptions under section 4975(c)(2) of the Code to the 
Secretary of Labor. Accordingly, the Department grants this exemption 
under its sole authority.

Department's Comment

    The Department cautions that the relief in this exemption will 
terminate immediately if an entity within the Deutsche Bank corporate 
structure is convicted of a crime described in Section I(g) of PTE 84-
14 (other than the judgment of conviction against DB Group Services 
(UK) Limited for one (1) count of wire fraud, as further defined below) 
during the Exemption Period. Although the DB QPAMs could apply for a 
new exemption in that circumstance, the Department would not be 
obligated to grant the exemption. The Department specifically designed 
the terms of this exemption to permit plans to terminate their 
relationships in an orderly and cost effective fashion in the event of 
an additional conviction, or the expiration of this exemption without 
additional relief, or a determination that it is otherwise prudent for 
a plan to terminate its relationship with an entity covered by the 
exemption.

Written Comments

    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. In this regard, the Applicant was given 
seven days to provide notice to interested persons, and all comments 
and requests for a hearing were due by March 22, 2021. The Department 
received two written comments. One commenter raised issues unrelated to 
and outside of the scope of the proposed exemption. The other commenter 
was the Applicant. After considering the entire record developed in 
connection with the Applicant's exemption request, the Department has 
determined to grant the exemption, as described below.

Comments From the Applicant

    I. Revision to Section I(i)(8). Section I(i)(8) of the proposed 
exemption provides: ``The Audit Committee of Deutsche Bank's 
Supervisory Board is provided a copy of each Audit Report; and a senior 
executive officer with a direct reporting line to the highest ranking 
legal compliance officer of Deutsche Bank must review the Audit Report 
for each DB QPAM and must certify in writing, under penalty of perjury, 
that such officer has reviewed each Audit Report. Deutsche Bank must 
provide notice to the Department in the event of a switch in the 
committee to which the Audit Report will be provided.''
    Applicant's Request: The Applicant notes that Section I(i)(8) of 
the proposed extension requires review and certification of the audit 
report by a ``senior executive officer with a direct reporting line to 
the highest ranking legal compliance officer of Deutsche Bank.'' The 
Applicant requests that the term ``legal'' be deleted.
    Department's Response: The Department has revised the exemption 
consistent with the Applicant's request.
    II. Revision to Section I(j)(7). Section I(j)(7) of the proposed 
exemption provides: ``By August 18, 2021, each DB QPAM must provide a 
notice of its obligations under this Section I(j) to each Covered Plan. 
For Covered Plans that enter into a written asset or investment 
management agreement with a DB QPAM on or after April 18, 2021, the DB 
QPAM must agree to its obligations under this section I(j) in an 
updated investment management agreement between the DB QPAM and such 
clients or other written contractual agreement. . . .''
    Applicant's Request: The Applicant requests that Section I(j)(7) be 
revised to provide that, for Covered Plans that enter into a written 
asset or investment management agreement (IMA) on or after August 18, 
2021 (rather than April 18, 2021), the DB QPAM must agree to its 
obligations in an updated IMA.
    Department's Response: The Department has revised the exemption 
consistent with the Applicant's request.
    Department's Note: The first sentence of Section I(j)(4) of the 
proposed exemption read: ``Not to restrict the ability of such Covered 
Plan to terminate or withdraw from its arrangement with the DB QPAM 
with respect to any investment in a separately managed account or 
pooled fund subject to ERISA and managed by such QPAM, with the 
exception of reasonable restrictions, appropriately disclosed in 
advance, that are specifically designed to ensure equitable treatment 
of all investors in a pooled fund in the event such withdrawal or 
termination may have adverse consequences for all other investors.''
    The Department has revised this sentence for purposes of this 
exemption, by striking the phrase ``with respect to any investment in a 
separately managed account or pooled fund subject to ERISA and managed 
by such QPAM.'' It is the Department's understanding, based on 
representations from the Applicant, that no other accounts are 
applicable.
    III. Revision to Section I(k). Section I(k) of the proposed 
exemption provides: ``Each DB QPAM provides a notice regarding the 
proposed exemption, along with a separate summary describing the facts 
that led to the U.S. Conviction (the Summary), which have been 
submitted to the Department, and a prominently displayed statement (the 
Statement) that the U.S. Conviction results in a failure to meet a 
condition in PTE 84-14, to each sponsor and beneficial owner of a 
Covered Plan that entered into a written asset or investment management 
agreement with a DB QPAM, or the sponsor of an investment fund in any 
case where a DB QPAM acts as a sub-adviser to the investment fund in 
which such ERISA-covered plan and IRA invests. The notice, Summary and 
Statement must be provided prior to, or contemporaneously with, the 
client's receipt of a written asset management agreement from the DB 
QPAM. The clients must receive a Federal Register copy of the notice of 
final exemption within sixty (60) days of this exemption's effective 
date. The notice may be delivered electronically (including by an email 
that has a link to this exemption).''
    Applicant's Request: The Applicant requests that the DB QPAMs have 
until August 18, 2021 to provide the required disclosures to Covered 
Plans that enter or have entered into an IMA before that date. The 
Applicant states that it will be operationally difficult for the DB 
QPAMs to provide clients with physical copies of the required documents 
beginning on the effective date of the exemption, given the various 
system-driven account opening processes utilized among the impacted 
lines of business. The Applicant states that it is probable that many 
such prospective clients have already received copies of current 
account opening agreements, which they are reviewing and will sign and 
return over the following several weeks or months. These account 
opening documents would not include the new exemption materials. The 
Applicant requests further that a similar

[[Page 20412]]

period of time be provided for prospective Covered Plan clients that 
enter into an IMA on or after that date. In addition, the Applicant 
requests that the DB QPAMs should not fail this condition solely 
because a Covered Plan refuses to sign an updated IMA.
    Department's Response: The Department is revising the exemption, in 
part, as requested by the Applicant. The Department has revised Section 
I(k) to allow the DB QPAMs sixty days to provide the required notices, 
and has revised the exemption to provide that the DB QPAMs will not 
fail Section I(k) solely because a Covered Plan refuses to sign an 
updated IMA.
    IV. Revision to Section I(m)(1)(ii) of the Proposed Exemption. 
Section I(m)(1)(ii) states: ``The Compliance Officer must have a direct 
reporting line to the highest-ranking corporate officer in charge of 
legal compliance for asset management.''
    Applicant's Request: The Applicant seeks removal of the term 
``legal'' from this condition.
    Department's Response: The Department has made the requested 
revision.
    V. Definition of Covered Plan. Section II(b) of the proposed 
exemption defines the term ``Covered Plan'' as: ``A plan subject to 
Part 4 of Title I of ERISA (an ``ERISA-covered plan'') or a plan 
subject to section 4975 of the Code (an ``IRA''), in each case, with 
respect to which a DB QPAM relies on PTE 84-14, or with respect to 
which a DB QPAM (or any Deutsche Bank affiliate) has expressly 
represented that the manager qualifies as a QPAM or relies on PTE 84-
14. A Covered Plan does not include an ERISA-covered plan or IRA to the 
extent the DB QPAM has expressly disclaimed reliance on QPAM status or 
PTE 84-14 in entering into a contract, arrangement, or agreement with 
the ERISA-covered plan or IRA.''
    Applicant's Request: The Applicant requests that new language be 
added to the proposed exemption's definition of Covered Plan, 
clarifying that a DB QPAM may disclaim reliance on QPAM status or PTE 
84-14 where the disclaimer is made in a modification of a contract, 
arrangement, or agreement with an ERISA-covered plan or IRA. The 
Applicant states that the modification would be made in a bilateral 
document signed by the client, where the client's attention is 
specifically directed toward the disclaimer, and where the client is 
advised in writing what it means to not use the QPAM Exemption.
    Department's Response: The Department has added the following new 
language to the definition of Covered Plan: Notwithstanding the above, 
a DB QPAM may disclaim reliance on QPAM status or PTE 84-14 in a 
written modification of a contract, arrangement, or agreement with an 
ERISA-covered plan or IRA, where: The modification is made in a 
bilateral document signed by the client; the client's attention is 
specifically directed toward the disclaimer; and the client is advised 
in writing that, with respect to any transaction involving the client's 
assets, the DB QPAM will not represent that it is a QPAM, and will not 
rely on the relief described in PTE 84-14.
    VI. Revision to Section II(f). Section II(f) of the proposed 
exemption provides that the term ``Plea Agreement'' means: ``The Plea 
Agreement entered into between DB Group Services and the U.S. 
Department of Justice, Fraud Section, Criminal Division, on April 23, 
2015 in connection with Case Number 3:15-cr-00062-RNC filed in the U.S. 
District Court for the District of Connecticut, subsequently adjudged 
by the Court on March 28, 2017.''
    Applicant's Request: The Applicant requests a revision to Section 
II(f) of the proposed exemption to clarify that the Plea Agreement was 
entered into on April 23, 2015, and DB Group Services was sentenced on 
March 28, 2017.
    Department's Response: The Department has revised the exemption 
consistent with the Applicant's request.
    Other Requested Revisions: In its comment letter, the Applicant 
requested: (1) Deletion of the word ``certain'' from the Section II(a) 
phrase ``any certain current and future, Deutsche Bank asset management 
affiliates . . . ;'' and (2) revision of the Section II(c) term ``DB 
Group Services UK Limited'' to ``DB Group Services (UK) Limited.''
    Department's Response: The Department has made the requested 
revisions.
    After full consideration and review of the entire record, the 
Department has decided to grant the exemption, with the modifications 
discussed above. The complete application file (D-12018) is available 
in the Public Disclosure Room of the Employee Benefits Security 
Administration, Room N-1515, U.S. Department of Labor, 200 Constitution 
Avenue NW, Washington, DC 20210. 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 
February 12, 2021 at 86 FR 9376.

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 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 of the Act and/or 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, among other things, require 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 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) In accordance with section 408(a) of ERISA and section 
4975(c)(2) of the Code, the Department makes the following 
determinations: The exemption is administratively feasible, the 
exemption is in the interests of affected plans and of their 
participants and beneficiaries, and the exemption is protective of the 
rights of participants and beneficiaries of such plans;
    (3) The exemption is supplemental to, and not in derogation of, any 
other provisions of ERISA, including statutory or administrative 
exemptions and transitional 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
    (4) The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application are accurate.
    Accordingly, the following exemption is granted under the authority 
of section 408(a) of ERISA and section 4975(c)(2) of the Code and in 
accordance with the procedures set forth in 29 CFR part 2570, subpart B 
(76 FR 66637, 66644, October 27, 2011):

Three Year Exemption

    The Department is granting this three-year exemption under the 
authority of section 408(a) of the Act (or ERISA) and section 
4975(c)(2) of the Internal Revenue Code (or Code), and in accordance 
with the procedures set forth in 29 CFR part 2570, subpart B (76 FR 
66637, 66644, October 27, 2011).\2\

[[Page 20413]]

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 requested to 
the Secretary of Labor. Therefore, this notice of exemption is issued 
solely by the Department.
---------------------------------------------------------------------------

    \2\ For purposes of this three-year exemption, references to 
section 406 of Title I of the Act, unless otherwise specified, 
should be read to refer as well to the corresponding provisions of 
section 4975 of the Code.
---------------------------------------------------------------------------

Section I. Covered Transactions

    The DB QPAMs, as further defined in Section II(c), will not be 
precluded from relying on the exemptive relief provided by Prohibited 
Transaction Exemption 84-14 (PTE 84-14),\3\ notwithstanding the ``U.S. 
Conviction'' against DB Group Services (as further defined in Section 
II(a)), during the Exemption Period, provided that the following 
conditions are satisfied: \4\
---------------------------------------------------------------------------

    \3\ 49 FR 9494 (March 13, 1984), as corrected at 50 FR 41430, 
(October 10, 1985), as amended at 70 FR 49305(August 23, 2005), and 
as amended at 75 FR 38837 (July 6, 2010).
    \4\ Section I(g) of PTE 84-14 generally provides relief only if 
``[n]either the QPAM nor any affiliate thereof . . . nor any owner . 
. . of a 5 percent or more interest in the QPAM is a person who 
within the 10 years immediately preceding the transaction has been 
either convicted or released from imprisonment, whichever is later, 
as a result of'' certain felonies including fraud.
---------------------------------------------------------------------------

    (a) The DB QPAMs (including their officers, directors, agents other 
than Deutsche Bank, and employees of such QPAMs) did not know of, have 
reason to know of, or participate in the criminal conduct of DB Group 
Services that is the subject of the U.S. Conviction. For purposes of 
this exemption, ``participate in'' or ``participated in'' refers not 
only to active participation in the criminal conduct that is the 
subject of the U.S. Conviction, but also to knowing approval of the 
criminal conduct that is the subject of the U.S. Conviction, or 
knowledge of the conduct without taking active steps to prevent the 
conduct, including reporting the conduct to the individual's 
supervisors, and to the Board of Directors;
    (b) The DB QPAMs (including their officers, directors, agents other 
than Deutsche Bank, and employees of such QPAMs) did not receive direct 
compensation, or knowingly receive indirect compensation, in connection 
with the criminal conduct that is the subject of the U.S. Conviction.
    (c) The DB QPAMs do not currently and will not in the future employ 
or knowingly engage any of the individuals that ``participated in'' the 
criminal conduct that is the subject of the U.S. Conviction;
    (d) At all times during the Exemption Period, no DB QPAM will use 
its authority or influence to direct an ``investment fund'' (as defined 
in Section VI(b) of PTE 84-14) that is subject to ERISA or the Code and 
managed by such DB QPAM with respect to one or more Covered Plan (as 
defined in Section II(b), to enter into any transaction with DB Group 
Services, or to engage DB Group Services to provide any service to such 
investment fund, for a direct or indirect fee borne by such investment 
fund, regardless of whether such transaction, or service, may otherwise 
be within the scope of relief provided by an administrative or 
statutory exemption;
    (e) Any failure of the DB QPAMs to satisfy Section I(g) of PTE 84-
14 arose solely from the U.S. Conviction;
    (f) A DB QPAM did not exercise authority over the assets of any 
plan subject to Part 4 of Title I of ERISA (an ERISA-covered plan) or 
section 4975 of the Code (an IRA) in a manner that it knew, or should 
have known, would: Further the criminal conduct that is the subject of 
the U.S. Conviction; or cause the DB QPAM or its affiliates to 
directly, or indirectly, profit from the criminal conduct that is the 
subject of the U.S. Conviction;
    (g) Other than with respect to employee benefit plans maintained or 
sponsored for its own employees or the employees of an affiliate, DB 
Group Services will not act as a fiduciary within the meaning of 
section 3(21)(A)(i) or (iii) of ERISA, or section 4975(e)(3)(A) and (C) 
of the Code, with respect to ERISA-covered plan and IRA assets; 
provided, however, DB Group Services will not be treated as violating 
the conditions of this exemption solely because it acted as an 
investment advice fiduciary within the meaning of section 3(21)(A)(ii) 
of ERISA, or section 4975(e)(3)(B) of the Code, or because DB Group 
Services employees may be double-hatted, seconded, supervised or 
otherwise subject to the control of a DB QPAM, including in a 
discretionary fiduciary capacity with respect to the DB QPAM clients;
    (h)(1) Each DB QPAM must continue to maintain, adjust (to the 
extent necessary), implement and follow written policies and procedures 
(the Policies). The Policies must require, and must be reasonably 
designed to ensure that:
    (i) The asset management decisions of the DB QPAM are conducted 
independently of the corporate management and business activities of DB 
Group Services;
    (ii) The DB QPAM fully complies with ERISA's fiduciary duties and 
with ERISA and the Code's prohibited transaction provisions, in each 
such case as applicable with respect to each Covered Plan, and does not 
knowingly participate in any violation of these duties and provisions 
with respect to Covered Plans;
    (iii) The DB QPAM does not knowingly participate in any other 
person's violation of ERISA or the Code with respect to Covered Plans;
    (iv) Any filings or statements made by the DB QPAM to regulators, 
including, but not limited to, the Department, the Department of the 
Treasury, the Department of Justice, and the Pension Benefit Guaranty 
Corporation, on behalf of or in relation to Covered Plans, are 
materially accurate and complete, to the best of such QPAM's knowledge 
at that time;
    (v) To the best of the DB QPAM's knowledge at the time, the DB QPAM 
does not make material misrepresentations or omit material information 
in its communications with such regulators with respect to Covered 
Plans, or make material misrepresentations or omit material information 
in its communications with Covered Plans;
    (vi) The DB QPAM complies with the terms of this exemption; and
    (2) Any violation of, or failure to comply with an item in 
subparagraphs (h)(1)(ii) through (h)(1)(vi), is corrected as soon as 
reasonably possible upon discovery, or as soon after the QPAM 
reasonably should have known of the noncompliance (whichever is 
earlier), and any such violation or compliance failure not so corrected 
is reported, upon the discovery of such failure to so correct, in 
writing, to the head of compliance and the DB QPAM's general counsel 
(or their functional equivalent) of the relevant DB QPAM that engaged 
in the violation or failure, and the independent auditor responsible 
for reviewing compliance with the Policies. A DB QPAM will not be 
treated as having failed to develop, implement, maintain, or follow the 
Policies, provided that it corrects any instance of noncompliance as 
soon as reasonably possible upon discovery, or as soon as reasonably 
possible after the QPAM reasonably should have known of the 
noncompliance (whichever is earlier), and provided that it adheres to 
the reporting requirements set forth in this subparagraph (2);
    (3) Each DB QPAM must maintain, adjust (to the extent necessary) 
and implement a program of training (the Training), to be conducted at 
least annually, for all relevant DB QPAM asset/portfolio management, 
trading, legal, compliance, and internal audit personnel. The Training 
must:

[[Page 20414]]

    (i) At a minimum, cover the Policies, ERISA and Code compliance 
(including applicable fiduciary duties and the prohibited transaction 
provisions), ethical conduct, the consequences for not complying with 
the conditions of this exemption (including any loss of exemptive 
relief provided herein), and prompt reporting of wrongdoing; and
    (ii) Be conducted by a professional who has been prudently selected 
and who has appropriate technical training and proficiency with ERISA 
and the Code; and
    (iii) Be conducted in-person, electronically or via a website;
    (i)(1) Each DB QPAM submits to three audits conducted annually by 
an independent auditor, who has been prudently selected and who has 
appropriate technical training and proficiency with ERISA and the Code, 
to evaluate the adequacy of, and each DB QPAM's compliance with, the 
Policies and Training described herein. The audit requirement must be 
incorporated in the Policies. The first audit must cover a 12 month 
period that begins on April 18, 2021 and ends on April 17, 2022. The 
second and third audits must cover the 12 month period that begins on 
April 18, 2022, and April 18, 2023, respectively. Each of the three 
annual audits must be completed no later than six (6) months after the 
corresponding audit's ending period;
    (2) Within the scope of the audit and to the extent necessary for 
the auditor, in its sole opinion, to complete its audit and comply with 
the conditions described herein, and only to the extent such disclosure 
is not prevented by state or federal statute, or involves 
communications subject to attorney-client privilege, each DB QPAM and, 
if applicable, Deutsche Bank, will grant the auditor unconditional 
access to its business, including, but not limited to: Its computer 
systems; business records; transactional data; workplace locations; 
Training materials; and personnel. Such access is limited to 
information relevant to the auditor's objectives, as specified by the 
terms of this exemption;
    (3) The auditor's engagement must specifically require the auditor 
to determine whether each DB QPAM has developed, implemented, 
maintained, and followed the Policies in accordance with the conditions 
of this exemption, and has developed and implemented the Training, as 
required herein;
    (4) The auditor's engagement must specifically require the auditor 
to test each DB QPAM's operational compliance with the Policies and 
Training. In this regard, the auditor must test, for each QPAM, a 
sample of such QPAM's transactions involving Covered Plans, sufficient 
in size and nature to afford the auditor a reasonable basis to 
determine such QPAM's operational compliance with the Policies and 
Training;
    (5) For each audit, on or before the end of the relevant period 
described in Section I(i)(1) for completing the audit, the auditor must 
issue a written report (the Audit Report) to Deutsche Bank, and the DB 
QPAM to which the audit applies that describes the procedures performed 
by the auditor in connection with its examination. The auditor, at its 
discretion, may issue a single consolidated Audit Report that covers 
all the DB QPAMs. The Audit Report must include the auditor's specific 
determinations regarding:
    (i) The adequacy of each DB QPAM's Policies and Training; each DB 
QPAM's compliance with the Policies and Training; the need, if any, to 
strengthen such Policies and Training; and any instance of the 
respective DB QPAM's noncompliance with the written Policies and 
Training described above. The DB QPAM must promptly address any 
noncompliance. The DB QPAM must promptly address or prepare a written 
plan of action to address any determination as to the adequacy of the 
Policies and Training and the auditor's recommendations (if any) with 
respect to strengthening the Policies and Training of the respective 
QPAM. Any action taken or the plan of action to be taken by the DB QPAM 
must be included in an addendum to the Audit Report (such addendum must 
be completed prior to the certification described in Section I(i)(7) 
below). In the event such a plan of action to address the auditor's 
recommendation regarding the adequacy of the Policies and Training is 
not completed by the time of submission of the Audit Report, the 
following period's Audit Report must state whether the plan was 
satisfactorily completed. Any determination by the auditor that the 
respective DB QPAM has implemented, maintained, and followed sufficient 
Policies and Training must not be based solely or in substantial part 
on an absence of evidence indicating noncompliance. In this last 
regard, any finding that a DB QPAM has complied with the requirements 
under this subparagraph must be based on evidence that the particular 
DB QPAM has actually implemented, maintained, and followed the Policies 
and Training required by this exemption. Furthermore, the auditor must 
not solely rely on the Exemption Report created by the compliance 
officer (the Compliance Officer), as described in Section I(m) below as 
the basis for the auditor's conclusions in lieu of independent 
determinations and testing performed by the auditor as required by 
Section I(i)(3) and (4) above;
    (ii) The adequacy of the most recent Exemption Review described in 
Section I(m);
    (6) The auditor must notify the respective DB QPAM of any instance 
of noncompliance identified by the auditor within five (5) business 
days after such noncompliance is identified by the auditor, regardless 
of whether the audit has been completed as of that date;
    (7) With respect to each Audit Report, the DB QPAM's general 
counsel, or one of the three most senior executive officers of the line 
of business engaged in discretionary asset management services through 
the DB QPAM with respect to which the Audit Report applies, must 
certify in writing, under penalty of perjury, that the officer has 
reviewed the Audit Report and this exemption; that, to the best of such 
officer's knowledge at the time, the DB QPAM has addressed, corrected, 
remedied any noncompliance and inadequacy or has an appropriate written 
plan to address any inadequacy regarding the Policies and Training 
identified in the Audit Report. Such certification must also include 
the signatory's determination that, to the best of such officer's 
knowledge at the time, the Policies and Training in effect at the time 
of signing are adequate to ensure compliance with the conditions of 
this exemption, and with the applicable provisions of ERISA and the 
Code;
    (8) The Audit Committee of Deutsche Bank's Supervisory Board is 
provided a copy of each Audit Report; and a senior executive officer 
with a direct reporting line to the highest ranking compliance officer 
of Deutsche Bank must review the Audit Report for each DB QPAM and must 
certify in writing, under penalty of perjury, that such officer has 
reviewed each Audit Report. Deutsche Bank must provide notice to the 
Department in the event of a switch in the committee to which the Audit 
Report will be provided;
    (9) Each DB QPAM provides its certified Audit Report, by regular 
mail to: Office of Exemption Determinations (OED), 200 Constitution 
Avenue NW, Suite 400, Washington, DC 20210; or by private carrier to: 
122 C Street NW, Suite 400, Washington, DC 20001-2109. This delivery 
must take place no later than forty-five (45) days following completion 
of the Audit Report. The Audit Report will be made part of the public 
record regarding this exemption. Furthermore, each DB QPAM must make 
its Audit Report unconditionally

[[Page 20415]]

available, electronically or otherwise, for examination upon request by 
any duly authorized employee or representative of the Department, other 
relevant regulators, and any fiduciary of a Covered Plan;
    (10) Any engagement agreement with an auditor to perform the audit 
required by this exemption must be submitted to OED no later than two 
months after the execution of such agreement;
    (11) The auditor must provide the Department, upon request, for 
inspection and review, access to all the workpapers created and used in 
connection with the audit, provided such access and inspection is 
otherwise permitted by law; and
    (12) Deutsche Bank must notify the Department of a change in the 
independent auditor no later than two (2) months after the engagement 
of a substitute or subsequent auditor and must provide an accurate 
explanation of the basis for the substitution or change including an 
accurate description of any material disputes between the terminated 
auditor and Deutsche Bank or any of its affiliates;
    (j) As of April 18, 2021, with respect to any arrangement, 
agreement, or contract between a DB QPAM and a Covered Plan, the DB 
QPAM agrees and warrants to Covered Plans:
    (1) To comply with ERISA and the Code, as applicable with respect 
to such Covered Plan; to refrain from engaging in prohibited 
transactions that are not otherwise exempt (and to promptly correct any 
prohibited transactions); and to comply with the standards of prudence 
and loyalty set forth in section 404 of ERISA, with respect to each 
such ERISA-covered plan and IRA to the extent that section 404 is 
applicable;
    (2) To indemnify and hold harmless the Covered Plan for any actual 
losses resulting directly from a DB QPAM's violation of ERISA's 
fiduciary duties, as applicable, and of the prohibited transaction 
provisions of ERISA and the Code, as applicable; a breach of contract 
by the QPAM; or any claim arising out of the failure of such DB QPAM to 
qualify for the exemptive relief provided by PTE 84-14 as a result of a 
violation of Section I(g) of PTE 84-14 other than the U.S. Conviction. 
This condition applies only to actual losses caused by the DB QPAM's 
violations.
    (3) Not to require (or otherwise cause) the Covered Plan to waive, 
limit, or qualify the liability of the DB QPAM for violating ERISA or 
the Code or engaging in prohibited transactions;
    (4) Not to restrict the ability of such Covered Plan to terminate 
or withdraw from its arrangement with the DB QPAM with the exception of 
reasonable restrictions, appropriately disclosed in advance, that are 
specifically designed to ensure equitable treatment of all investors in 
a pooled fund in the event such withdrawal or termination may have 
adverse consequences for all other investors. In connection with any 
such arrangements involving investments in pooled funds subject to 
ERISA entered into after the effective date of PTE 2017-04, the adverse 
consequences must relate to a lack of liquidity of the underlying 
assets, valuation issues, or regulatory reasons that prevent the fund 
from promptly redeeming an ERISA-covered plan's or IRA's investment, 
and such restrictions must be applicable to all such investors and 
effective no longer than reasonably necessary to avoid the adverse 
consequences;
    (5) Not to impose any fees, penalties, or charges for such 
termination or withdrawal with the exception of reasonable fees, 
appropriately disclosed in advance, that are specifically designed to 
prevent generally recognized abusive investment practices or 
specifically designed to ensure equitable treatment of all investors in 
a pooled fund in the event such withdrawal or termination may have 
adverse consequences for all other investors, provided that such fees 
are applied consistently and in like manner to all such investors; and
    (6) Not to include exculpatory provisions disclaiming or otherwise 
limiting liability of the DB QPAM for a violation of such agreement's 
terms. To the extent consistent with Section 410 of ERISA, however, 
this provision does not prohibit disclaimers for liability caused by an 
error, misrepresentation, or misconduct of a plan fiduciary or other 
party hired by the plan fiduciary who is independent of Deutsche Bank, 
and its affiliates, or damages arising from acts outside the control of 
the DB QPAM; and
    (7) By August 18, 2021, each DB QPAM must provide a notice of its 
obligations under this Section I(j) to each Covered Plan. For Covered 
Plans that enter into a written asset or investment management 
agreement with a DB QPAM on or after August 18, 2021, the DB QPAM must 
agree to its obligations under this section I(j) in an updated 
investment management agreement between the DB QPAM and such clients or 
other written contractual agreement. Notwithstanding the above, a DB 
QPAM will not violate the condition solely because a Covered Plan or 
IRA refuses to sign an updated investment management agreement. This 
condition will be deemed met for each Covered Plan that received notice 
pursuant to PTE 2017-04 that meets the terms of this condition.
    (k) Within 60 days of the effective date of this three-year 
exemption, each DB QPAM provides a Federal Register notice regarding 
the exemption, along with a separate summary describing the facts that 
led to the U.S. Conviction (the Summary), which has been submitted to 
the Department, and a prominently displayed statement (the Statement) 
that the U.S. Conviction results in a failure to meet a condition in 
PTE 84-14, to each sponsor and beneficial owner of a Covered Plan that 
entered into a written asset or investment management agreement with a 
DB QPAM, or the sponsor of an investment fund in any case where a DB 
QPAM acts as a sub-adviser to the investment fund in which such ERISA-
covered plan and IRA invests. All Covered Plan clients that enter into 
a written asset or investment management agreement with a DB QPAM after 
the date that is sixty days after the effective date of this exemption 
must receive a copy of the notice of the exemption,, the Summary and 
the Statement prior to, or contemporaneously with, the client's receipt 
of a written asset management agreement from the DB QPAM. The notice 
may be delivered electronically (including by an email that has a link 
to this exemption). Notwithstanding the above, a DB QPAM will not 
violate the condition solely because a Plan or IRA refuses to sign an 
updated investment management agreement;
    (l) The DB QPAMs must comply with each condition of PTE 84-14, as 
amended, with the sole exception of the violation of Section I(g) of 
PTE 84-14 that is attributable to the U.S. Conviction;
    (m)(1) Deutsche Bank continues to designate a senior compliance 
officer (the Compliance Officer) who will be responsible for compliance 
with the Policies and Training requirements described herein. The 
Compliance Officer must conduct an annual review for each twelve month 
period, beginning on April 18, 2021, (the Exemption Review) to 
determine the adequacy and effectiveness of the implementation of the 
Policies and Training. With respect to the Compliance Officer, the 
following conditions must be met:
    (i) The Compliance Officer must be a professional who has extensive 
experience with, and knowledge of, the regulation of financial services 
and products, including under ERISA and the Code; and
    (ii) The Compliance Officer must have a direct reporting line to 
the highest ranking corporate officer in charge of compliance for asset 
management;

[[Page 20416]]

    (2) With respect to each Exemption Review, the following conditions 
must be met:
    (i) The Exemption Review includes a review of the DB QPAM's 
compliance with and effectiveness of the Policies and Training and of 
the following: Any compliance matter related to the Policies or 
Training that was identified by, or reported to, the Compliance Officer 
or others within the compliance and risk control function (or its 
equivalent) during the previous year; the most recent Audit Report 
issued pursuant to this exemption or PTE 2017-04; any material change 
in the relevant business activities of the DB QPAMs; and any change to 
ERISA, the Code, or regulations related to fiduciary duties and the 
prohibited transaction provisions that may be applicable to the 
activities of the DB QPAMs;
    (ii) The Compliance Officer prepares a written report for each 
Exemption Review (each, an Exemption Report) that (A) summarizes his or 
her material activities during the preceding year; (B) sets forth any 
instance of noncompliance discovered during the preceding year, and any 
related corrective action; (C) details any change to the Policies or 
Training to guard against any similar instance of noncompliance 
occurring again; and (D) makes recommendations, as necessary, for 
additional training, procedures, monitoring, or additional and/or 
changed processes or systems, and management's actions on such 
recommendations;
    (iii) In each Exemption Report, the Compliance Officer must certify 
in writing that to the best of his or her knowledge at the time: (A) 
The report is accurate; (B) the Policies and Training are working in a 
manner which is reasonably designed to ensure that the Policies and 
Training requirements described herein are met; (C) any known instance 
of noncompliance during the preceding year and any related correction 
taken to date have been identified in the Exemption Report; and (D) the 
DB QPAMs have complied with the Policies and Training, and/or corrected 
(or are correcting) any known instances of noncompliance in accordance 
with Section I(h) above;
    (iv) Each Exemption Report must be provided to appropriate 
corporate officers of Deutsche Bank and to each DB QPAM to which such 
report relates, and to the head of compliance and the DB QPAM's general 
counsel (or their functional equivalent) of the relevant DB QPAM; and 
the Exemption Report must be made unconditionally available to the 
independent auditor described in Section I(i) above;
    (v) Each Exemption Review, including the Compliance Officer's 
written Exemption Report, must be completed within three (3) months 
following the end of the period to which it relates. The Exemption 
Review for the period April 18, 2020 through April 17, 2021 must be 
conducted, and completed, under the requirements of PTE 2017-04;
    (n) In connection with the deferred prosecution agreement entered 
on January 8, 2021, between Deutsche Bank and the U.S. Department of 
Justice, to resolve the U.S. government's investigation into violations 
of the Foreign Corrupt Practices Act and a separate investigation into 
a commodities fraud scheme, no DB QPAMs were involved in the conduct 
that gave rise to the deferred prosecution agreement, and no Covered 
Plan assets were involved in the transactions that gave rise to the 
deferred prosecution agreement;
    (o) Each DB QPAM will maintain records necessary to demonstrate 
that the conditions of this exemption have been met for six (6) years 
following the date of any transaction for which the DB QPAM relies upon 
the relief in the exemption;
    (p) During the Exemption Period, Deutsche Bank: (1) Immediately 
discloses to the Department any Deferred Prosecution Agreement or a 
Non-Prosecution Agreement with the U.S. Department of Justice entered 
into by Deutsche Bank or any of its affiliates (as defined in Section 
VI(d) of PTE 84-14) in connection with conduct described in Section 
I(g) of PTE 84-14 or section 411 of ERISA; and (2) immediately provides 
the Department any information requested by the Department, as 
permitted by law, regarding the agreement and/or conduct and 
allegations that led to the agreement;
    (q) Each DB QPAM, in its agreements with, or in other written 
disclosures provided to Covered Plans, clearly and prominently informs 
Covered Plan clients of their right to obtain a copy of the Policies or 
a description (Summary Policies) which accurately summarizes key 
components of the DB QPAM's written Policies developed in connection 
with this exemption. If the Policies are thereafter changed, each 
Covered Plan client must receive a new disclosure within six (6) months 
following the end of the calendar year during which the Policies were 
changed.\5\ With respect to this requirement, the description may be 
continuously maintained on a website, provided that such website links 
to the Policies or Summary Policies is clearly and prominently 
disclosed to each Covered Plan; and
---------------------------------------------------------------------------

    \5\ In the event the Applicant meets this disclosure requirement 
through Summary Policies, changes to the Policies shall not result 
in the requirement for a new disclosure unless, as a result of 
changes to the Policies, the Summary Policies are no longer 
accurate.
---------------------------------------------------------------------------

    (r) A DB QPAM will not fail to meet the terms of this exemption 
solely because a different DB QPAM fails to satisfy a condition for 
relief described in Sections I(c), (d), (h), (i), (j), (k), (l), (o) 
and (q) or, if the independent auditor described in Section I(i) fails 
a provision of the exemption other than the requirement described in 
Section I(i)(11), provided that such failure did not result from any 
actions or inactions of Deutsche Bank or its affiliates.

Section II. Definitions

    (a) The term ``U.S. Conviction'' means the judgment of conviction 
against DB Group Services (UK) Limited (DB Group Services), entered on 
April 18, 2017, by the United States District Court for the District of 
Connecticut, in case number 3:15-cr-00062-RNC, for one (1) count of 
wire fraud, in violation of 18 U.S.C. 1343. For all purposes under this 
exemption, ``conduct'' of any person or entity that is the ``subject of 
[a] Conviction'' encompasses the factual allegations described in 
Paragraph 13 of the Plea Agreement filed in the District Court in case 
number 3:15-cr-00062-RNC.
    (b) The term ``Covered Plan'' means a plan subject to Part 4 of 
Title I of ERISA (an ``ERISA-covered plan'') or a plan subject to 
section 4975 of the Code (an ``IRA''), in each case, with respect to 
which a DB QPAM relies on PTE 84-14, or with respect to which a DB QPAM 
(or any Deutsche Bank affiliate) has expressly represented that the 
manager qualifies as a QPAM or relies on PTE 84-14. A Covered Plan does 
not include an ERISA-covered plan or IRA to the extent the DB QPAM has 
expressly disclaimed reliance on QPAM status or PTE 84-14 in entering 
into a contract, arrangement, or agreement with the ERISA-covered plan 
or IRA. Notwithstanding the above, a DB QPAM may disclaim reliance on 
QPAM status or PTE 84-14 in a written modification of a contract, 
arrangement, or agreement with an ERISA-covered plan or IRA, where: The 
modification is made in a bilateral document signed by the client; the 
client's attention is specifically directed toward the disclaimer; and 
the client is advised in writing that, with respect to any transaction 
involving the client's assets, the DB QPAM will not represent that it 
is a QPAM, and will not

[[Page 20417]]

rely on the relief described in PTE 84-14.
    (c) The term ``DB QPAM'' or ``DB QPAMs'' means DWS Investment 
Management Americas, Inc., and any current and future, Deutsche Bank's 
asset management affiliates that qualify as a ``qualified professional 
asset manager'' (as defined in Section VI(a) of PTE 84-14),\6\ and that 
rely on the relief provided by PTE 84-14, and with respect to which 
Deutsche Bank is an ``affiliate'' (as defined in section VI(d)(1) of 
PTE 84-14). The term ``DB QPAM'' excludes DB Group Services.
---------------------------------------------------------------------------

    \6\ In general terms, a QPAM is an independent fiduciary that is 
a bank, savings and loan association, insurance company, or 
investment adviser that meets certain equity or net worth 
requirements and other licensure requirements and that has 
acknowledged in a written management agreement that it is a 
fiduciary with respect to each plan that has retained the QPAM.
---------------------------------------------------------------------------

    (d) The term ``Deutsche Bank'' means Deutsche Bank AG, a publicly-
held global banking and financial services company headquartered in 
Frankfurt, Germany;
    (e) The term ``Exemption Period'' means the three year period from 
April 18, 2021 and ending on April 17, 2024;
    (f) The term ``Plea Agreement'' means the Plea Agreement entered 
into between DB Group Services and the U.S. Department of Justice, 
Fraud Section, Criminal Division, on April 23, 2015 in connection with 
Case Number 3:15-cr-00062-RNC filed in the U.S. District Court for the 
District of Connecticut, subsequently adjudged by the Court on March 
28, 2017.
    Effective Date: This exemption will be in effect for up to three 
years, beginning on April 18, 2021.

    Signed at Washington, DC, this 9th day of April 2021.
Christopher Motta,
Chief, Division of Individual Exemptions, Office of Exemption 
Determinations, Employee Benefits Security Administration, U.S. 
Department of Labor.
[FR Doc. 2021-07963 Filed 4-16-21; 8:45 am]
BILLING CODE 4510-29-P