[Federal Register Volume 88, Number 236 (Monday, December 11, 2023)]
[Notices]
[Pages 85931-85932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27084]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Technical Correction to PTE 2016-10, Exemption From Certain 
Prohibited Transaction Restrictions: Royal Bank of Canada (Together 
With Its Current and Future Affiliates, RBC or the Applicant)

AGENCY: Employee Benefits Security Administration (EBSA), Labor.

ACTION: Notice of technical correction.

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SUMMARY: This document makes a technical correction to Prohibited 
Transaction Exemption (PTE) 2016-10 granted to the Royal Bank of Canada 
(D-11868) on October 28, 2016.

DATES: 
    Issuance date: These technical corrections are issued on December 
11, 2023 without further action or notice.
    Exemption Date: PTE 2016-10 will remain in effect for the period 
beginning on the Conviction Date (as corrected herein) until the 
earlier of: (1) the date that is twelve months following the Conviction 
Date; or (2) the effective date of a final agency action made by the 
Department in connection with an application for long-term exemptive 
relief for the covered transactions described in PTE 2016-10.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department, 
telephone (202) 693-8456. (This is not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    On October 28, 2016, the Department published PTE 2016-10 in the 
Federal Register.\1\ PTE 2016-10 is a temporary administrative 
exemption that permits certain entities (the RBC Qualified Professional 
Asset Managers (QPAMs)) with specified relationships to Royal Bank of 
Canada (Bahamas) Limited (RBCTC Bahamas) to continue to rely upon the 
relief provided by the Department's QPAM Exemption \2\ for a one-year 
period, notwithstanding a potential judgment of conviction against 
RBCTC Bahamas for aiding and abetting tax fraud.\3\
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    \1\ 81 FR 75147 (October 28, 2016).
    \2\ PTE 84-14 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), hereinafter 
referred to as PTE 84-14 or the QPAM exemption.
    \3\ Section I(g) of PTE 84-14 prevents an entity that may 
otherwise meet the definition of a QPAM from utilizing the exemptive 
relief provided by PTE 84-14 for itself and its client plans, if 
that entity or an ``affiliate'' thereof, or any owner, direct or 
indirect, of a five percent or more interest in the QPAM has within 
10 years immediately preceding the transaction, been either 
convicted or released from imprisonment, whichever is later, as a 
result of criminal activity described in that section.
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    The Department granted PTE 2016-10 to protect Covered Plans \4\ 
from the harm that may arise if and when RBCTC were convicted in the 
District Court of Paris.\5\ Therefore, PTE 2016-10, as initially 
granted, defined the term ``Conviction'' as ``the potential judgment of 
conviction against RBCTC Bahamas for aiding and abetting tax fraud to 
be entered in France in the District Court of Paris, French Special 
Prosecutor No. 1120392066, French Investigative Judge No. JIRSIF/11/
12.''
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    \4\ 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 an RBC QPAM relies on PTE 
84-14, or with respect to which an RBC QPAM (or any RBC affiliate) 
has expressly represented that the manager qualifies as a QPAM or 
relies on the QPAM class exemption. A Covered Plan does not include 
an ERISA-covered Plan or IRA to the extent the RBC 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.
    \5\ RBC's exemption request (D-11868) is available by contacting 
EBSA's Public Disclosure Room at (202) 693-8673.
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    In January 2017, the trial court in France acquitted RBCTC of the 
aiding and abetting the tax fraud charge, so the exemptive relief 
provided in PTE 2016-01 was unnecessary. However, RBCTC recently 
informed the Department that the French prosecutor has appealed the 
lower court's acquittal and the case is now being heard de novo as a 
new trial by a French appellate court. According to RBCTC, the alleged 
crime, the parties, and the case numbers remain the same as the 
District Court of Paris case that is defined as the ``Conviction'' in 
PTE 2016-01. RBCTC has requested confirmation from the Department that 
the relief provided in PTE 2016-10 would be available for one year, if 
RBCTC were ultimately convicted by the French appellate court.
    As noted above, PTE 2016-10 is intended to protect Covered Plans 
from harm if RBCTC were convicted for the alleged crime in France. This 
same harm would arise whether RBCTC is convicted for the same crime, 
stemming from the same conduct, in a French appellate court or ``the 
District Court of Paris.'' Therefore, to ensure that Covered Plans are 
protected from any harm that would arise from the appellate court's 
conviction of RBCTC, the Department is revising the definition of 
``Conviction'' in PTE 2016-10 to refer to ``the potential judgment of 
conviction against RBCTC Bahamas for aiding and abetting tax fraud to 
be entered in France in the Court of Appeal, French

[[Page 85932]]

Special Prosecutor No. 1120392066, French Investigative Judge No. 
JIRSIF/11/12 or another court of competent jurisdiction.''
    RBC represents to the Department that to the best of RBC's 
knowledge, there have been no material changes since September 2, 2015, 
the date of RBC's application for PTE 2016-10, that are relevant to 
that application or the technical corrections set forth herein, other 
than changes in RBC's number of clients and assets under management RBC 
makes these representations with the caveat that, as a large global 
financial institution, it has been subject to a variety of legal 
proceedings, including civil claims and lawsuits, regulatory 
examinations, investigations, audits, and requests for information. To 
the best of its knowledge at this time, however, RBC does not believe 
that the outcome of any current investigation or other such proceeding 
would cause the exemption to be unavailable. Moreover, no affiliate of 
RBC has been convicted of any crime described in section I(g) of the 
QPAM Exemption and, to the best of RBC's knowledge, neither RBC nor any 
affiliate has entered into a deferred prosecution or non-prosecution 
agreement since September 2, 2015.
    The Department notes that it is making this technical correction 
based upon RBC's certified representation that since September 2, 2015: 
(1) there have in fact been no material changes other than those 
changes noted above; (2) no affiliate of RBC has been convicted of any 
crime described in section I(g) of the QPAM Exemption, other than the 
conviction covered under PTE 2016-10; and (3) neither RBC nor any 
affiliate of RBC has entered into a deferred prosecution or non-
prosecution agreement. If, at any time, RBC discovers any of these 
representations is no longer true, RBC must immediately contact the 
Department and submit a written statement that provides the Department 
with the complete details on the circumstances discovered.
    The Department is not taking a position regarding whether the 
outcome of any proceedings will cause the exemption to be unavailable 
and also notes that the availability of PTE 2016-10 is conditioned upon 
RBC's compliance with all of the conditions included therein, including 
the condition that expressly states: ``During the effective period of 
this temporary exemption, RBC: (1) Immediately discloses to the 
Department any Deferred Prosecution Agreement (a DPA) or Non-
Prosecution Agreement (an NPA) that RBC or an affiliate enters into 
with the U.S Department of Justice, to the extent such DPA or NPA 
involves conduct described in Section I(g) of PTE 84-14 or section 411 
of ERISA.'' As noted in the preceding paragraph, if RBC discovers that 
RBC or any RBC affiliate has entered into a DPA or NPA at any time 
since September 2, 2015, RBC must inform the Department promptly upon 
RBC or its affiliates' discovery of such fact.

Technical Correction

    Section II(a) of PTE 2016-10 is amended to read as follows:

    ``(a) The term ``Conviction'' means the potential judgment of 
conviction against RBCTC Bahamas for aiding and abetting tax fraud 
to be entered in France in the Court of Appeal, French Special 
Prosecutor No. 1120392066, French Investigative Judge No. JIRSIF/11/
12 or another court of competent jurisdiction''

    Signed at Washington, DC, this 5th day of December 2023.
George Christopher Cosby,
Director, Office of Exemption Determinations Employee Benefits Security 
Administration U.S. Department of Labor.
[FR Doc. 2023-27084 Filed 12-8-23; 8:45 am]
BILLING CODE 4510-29-P