[Federal Register Volume 89, Number 76 (Thursday, April 18, 2024)]
[Notices]
[Pages 27789-27802]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08337]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2024-02; Exemption Application No. D-
12090]


Exemption From Certain Prohibited Transaction Restrictions 
Involving DWS Investment Management Americas, Inc. and Certain Current 
and Future Asset Management Affiliates of Deutsche Bank AG Located in 
New York, NY

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of exemption.

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SUMMARY: This document contains 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). This exemption extends for three years the exemptive relief 
provided by PTE 2021-01, which allows 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), and certain current and future affiliates of 
Deutsche Bank (each a DB QPAM), to continue to rely on the exemptive 
relief provided by Prohibited Transaction Exemption (PTE) 84-14 (PTE 
84-14 or the QPAM Exemption), notwithstanding the 2017 judgment of 
conviction against DB Group Services (UK) Limited (DB Group Services), 
as described below.

DATES: The exemption will be in effect for a period of three years, 
beginning on April 18, 2024, and ending on April 17, 2027.

FOR FURTHER INFORMATION CONTACT: Mr. Frank Gonzalez and Ms. Blessed 
Chuksorji-Keefe of the Department at (202) 693-8553 and (202) 693-8567, 
respectively. (These are not toll-free numbers.).

SUPPLEMENTARY INFORMATION: The Applicant requested an individual 
exemption pursuant to ERISA section 408(a) in accordance with the 
Department's exemption procedures set forth in 29 CFR part 2570, 
subpart B.\1\ On February 21, 2024, the Department published a notice 
of proposed exemption in the Federal Register \2\ that would permit 
certain qualified professional asset managers within the corporate 
family of Deutsche Bank, including the Applicant, and certain current 
and future DB QPAMs,\3\ to continue to rely on the exemptive relief 
provided by the QPAM Exemption \4\ for a period of three years, 
notwithstanding the judgment of conviction against Deutsche Bank's 
affiliate DB Group Services under U.S. law for one count of wire fraud 
in connection with its role in manipulating the United States Dollar-
based LIBOR (the U.S. Conviction).\5\ After considering the public 
comments that the Department received in response to the notice of 
proposed exemption, the Department is granting this exemption to 
protect the interests of participants and beneficiaries of plans that 
are subject to Part 4, Title I of ERISA (ERISA-covered plans) and 
Individual Retirement Accounts subject to Code Section 4975 (IRAs) 
(together, Covered Plans).\6\ This exemption provides only the relief 
specified in the text of the exemption and does not provide relief from 
violations of any law other than the prohibited transaction provisions 
of Title I of ERISA and the Code expressly stated herein.
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    \1\ 76 FR 66637, 66644, (October 27, 2011).
    \2\ 89 FR 13091 (February 21, 2024).
    \3\ This exemption defines ``DB QPAM'' or ``DB QPAMs'' to mean 
DWS Investment Management Americas, Inc. and any current and future 
Deutsche Bank asset management affiliates that (i) qualify as a 
``qualified professional asset manager'' (as defined in PTE 84-14, 
Section VI(a)), (ii) rely on the relief provided by PTE 84-14, and 
(iii) with respect to which Deutsche Bank is an ``affiliate'' (as 
defined in PTE 84-14, Section VI(d)(1)). The term ``DB QPAM'' 
excludes DB Group Services (UK) Limited.
    \4\ 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).
    \5\ Section I(g) of PTE 84-14 generally provides that 
``[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 crimes.
    \6\ The term ``Covered Plan'' means a plan subject to ERISA 
Title I, Part 4 (an ERISA-covered plan) or a plan subject to Code 
Section 4975 (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 its contract, arrangement, or agreement with the 
ERISA-covered plan or IRA.
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    Furthermore, the Department cautions that this individual exemption 
only provides exemptive relief from Section I(g) of PTE 84-14 for the 
DB QPAMs with respect to the U.S. Conviction. This exemption does not 
affect the requirement for the DB QPAMs to adhere to all conditions of 
PTE 84-14 as amended on April 3, 2024, effective June 17, 2024.\7\ 
Therefore, the DB QPAMs will become ineligible to rely on the QPAM 
Exemption again based on a Criminal Conviction or Prohibited Misconduct 
as specified in PTE 84-14, Section I(g)(1) subject to the Ineligibility 
Date provision in Section I(h).\8\
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    \7\ 89 FR 23090 (April 3, 2024).
    \8\ See Section I(g)(1) of PTE 84-14, as amended at id.
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    Based on the Applicant's adherence to all the conditions of PTE 
2021-01 \9\ and this exemption, the Department makes the requisite 
findings under ERISA section 408(a) that the exemption is: (1) 
administratively feasible for the Department, (2) in the interest of 
Covered Plans and their participants and beneficiaries, and (3) 
protective of the rights of the participants and beneficiaries of 
Covered Plans. Accordingly, affected parties should be aware that the 
conditions incorporated in this exemption are necessary, individually 
and taken as a whole, for the Department to grant the relief requested 
by the Applicant. Absent these conditions, the Department would not 
have granted this exemption.
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    \9\ 86 FR 20410 (April 19, 2021).
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Background

    1. Deutsche Bank is a publicly held global banking and financial 
services company headquartered in Frankfurt, Germany.
    2. Deutsche Bank has several affiliated asset managers, including: 
DIMA, a Delaware corporation; RREEF America L.L.C. (RREEF), a Delaware 
limited liability company; DWS Alternatives Global Limited (Global), an 
entity based in London, United Kingdom; and DWS Investments Australia 
Limited (DIAL), an entity based in Sydney, Australia.\10\ These 
entities (and future affiliated asset managers of Deutsche Bank) are 
collectively referred to herein as the DB QPAMs. The DB QPAMs are 
investment advisers (Advisers) registered under the Investment Advisers 
Act of 1940, as

[[Page 27790]]

amended, with the U.S. Securities and Exchange Commission.
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    \10\ Deutsche Bank reorganized Deutsche Asset Management into a 
separate financial services firm, DWS Group GmbH & Co. KGaA (DWS 
Group). On March 23, 2018, DWS Group completed the sale of a 
minority ownership interest and is now a separate, publicly listed 
financial services firm, but remains a majority-owned subsidiary of 
Deutsche Bank. DIMA, and its investment advisory affiliates, 
including RREEF, Global and Dial, became wholly owned subsidiaries 
of DWS Group.
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    3. The DB QPAMs are part of the DWS Group (formerly Deutsche Asset 
Management), a separate, publicly listed financial services firm that 
is majority-owned by Deutsche Bank. According to DIMA, the DWS Group is 
in a separate corporate ownership line than DB Group Services, the 
convicted entity, i.e., DB Group Services is not an upstream or 
downstream corporate affiliate of any DB QPAM. DWS Group is not itself 
a QPAM, but instead is the parent entity that indirectly owns the DB 
QPAMs. The DB QPAMs have separate boards of directors (in the case of 
RREEF, which is a limited liability company, its own managers) than DB 
Group Services.
    4. The DB QPAMs provide discretionary asset management services in 
reliance on PTE 84-14 to Covered Plans under two DWS business lines: 
(1) Alternatives (including the Liquid Real Assets, Direct Real Estate 
and Private Equity businesses) and (2) Active Institutional. 
Collectively, DB QPAMs provide discretionary asset management services 
to ERISA-covered plans, governmental plans and IRAs as follows: \11\
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    \11\ The Applicant states that all statistical data is as of 
December 31, 2022, to the best of the Applicant's knowledge.
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    a. ERISA Accounts: The DB QPAMs provide discretionary asset 
management services to a total of 10 ERISA-covered plan accounts 
through eight separately managed accounts and two pooled funds subject 
to ERISA, with total assets under management (``AUM'') of approximately 
$619 million.
    b. Governmental Plan Accounts: The DB QPAMs additionally provide 
discretionary asset management services to a total of 13 governmental 
plan accounts through separately managed accounts with total AUM of 
approximately $5.5 billion.
    c. IRAs: DIMA began to offer discretionary model portfolios to 
financial sponsors with IRA clients, but, in connection with DIMA's 
provision of such services, DIMA has expressly disclaimed, and intends 
to continue to expressly disclaim, its reliance on PTE 84-14.\12\
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    \12\ For purposes of this exemption, the term ``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, 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.
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ERISA and Code Prohibited Transactions and PTE 84-14

    5. The rules set forth in ERISA Section 406 and Code Section 
4975(c)(1) proscribe certain ``prohibited transactions'' between plans 
and certain parties in interest with respect to those plans.\13\ ERISA 
Section 3(14) defines parties in interest with respect to a plan to 
include, among others, the plan fiduciary, a sponsoring employer of the 
plan, a union whose members are covered by the plan, service providers 
with respect to the plan, and certain of their affiliates.\14\ The 
prohibited transaction provisions under ERISA Section 406(a) prohibit, 
in relevant part, (1) sales, leases, loans, or the provision of 
services between a party in interest and a plan (or an entity whose 
assets are deemed to constitute the assets of a plan), (2) the use of 
plan assets by or for the benefit of a party in interest, or (3) a 
transfer of plan assets to a party in interest.\15\
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    \13\ For purposes of this section, references to specific 
provisions of Title I of ERISA, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
    \14\ Under the Code, such parties, or similar parties, are 
referred to as ``disqualified persons.''
    \15\ The prohibited transaction provisions also include certain 
fiduciary prohibited transactions under ERISA Section 406(b). These 
include transactions involving fiduciary self-dealing, fiduciary 
conflicts of interest, and kickbacks to fiduciaries.
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    6. Under the authority of ERISA Section 408(a), the Department has 
the authority to grant an exemption from such ``prohibited 
transactions'' in accordance with the procedures set forth in the 
exemption procedure regulation \16\ if the Department finds an 
exemption is: (a) administratively feasible, (b) in the interests of 
the plan and of its participants and beneficiaries, and (c) protective 
of the rights of participants and beneficiaries.
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    \16\ 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 
27, 2011).
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    7. PTE 84-14 exempts certain prohibited transactions between a 
party in interest and an ``investment fund'' (as defined in Section 
VI(b) of PTE 84-14) in which a plan has an interest if the investment 
manager satisfies the definition of ``qualified professional asset 
manager'' (QPAM) and additional conditions of the exemption. PTE 84-14 
was developed and granted based on the essential premise that broad 
relief could be afforded for all types of transactions in which a plan 
engages only if the commitments and the investments of plan assets and 
the negotiations leading thereto are the sole responsibility of an 
independent, discretionary manager.\17\
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    \17\ See 75 FR 38837, 38839 (July 6, 2010).
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    8. Section I(g) of PTE 84-14 prevents an entity that may otherwise 
meet the definition of QPAM from utilizing the exemptive relief 
provided by the QPAM Exemption for itself and its client plans if that 
entity, an ``affiliate'' thereof,\18\ or any direct or indirect five 
percent or more owner in the QPAM has been either convicted or released 
from imprisonment, whichever is later, because of criminal activity 
described in section I(g) within the 10 years immediately preceding a 
transaction. Section I(g) was included in PTE 84-14, in part, based on 
the Department's expectation that QPAMs, and those who may be in a 
position to influence the QPAM's policies, must maintain a high 
standard of integrity.\19\
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    \18\ Section VI(d) of PTE 84-14 defines the term ``affiliate'' 
for purposes of Section I(g) as ``(1) Any person directly or 
indirectly through one or more intermediaries, controlling, 
controlled by, or under common control with the person, (2) Any 
director of, relative of, or partner in, any such person, (3) Any 
corporation, partnership, trust or unincorporated enterprise of 
which such person is an officer, director, or a 5 percent or more 
partner or owner, and (4) Any employee or officer of the person 
who--(A) Is a highly compensated employee (as defined in Section 
4975(e)(2)(H) of the Code) or officer (earning 10 percent or more of 
the yearly wages of such person), or (B) Has direct or indirect 
authority, responsibility or control regarding the custody, 
management or disposition of plan assets.''
    \19\ See 47 FR 56947 (December 21, 1982).
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LIBOR Conviction and PTE 84-14 Disqualification

    9. On April 23, 2015, the Fraud Section of the Criminal Division 
and the Antitrust Division of the United States Department of Justice 
filed a one-count criminal information in the U.S. District Court for 
the District of Connecticut (the District Court) charging DB Group 
Services, a Deutsche Bank indirect wholly-owned subsidiary based in 
London, United Kingdom, with one count of wire fraud in violation of 
Title 18, United States Code, Section 1343 for its role in manipulating 
the United States Dollar based LIBOR. Pursuant to a plea agreement (the 
Plea Agreement), DB Group Services entered a guilty plea in the 
District Court relating to the conduct described therein (including the 
conduct described in any of the exhibits thereto), and on April 18, 
2017, the District Court entered a judgment against DB Group Services 
that required remedies that are materially the same as those set forth 
in the Plea Agreement. The Conviction, effective on April 18, 2017, 
would have triggered DIMA's disqualification under Section I(g) of PTE 
84-14 without the exemption described in more detail below.

[[Page 27791]]

The Deferred Prosecution Agreement

    10. On January 8, 2021, Deutsche Bank entered into a deferred 
prosecution agreement (DPA) with the U.S. Department of Justice in 
which Deutsche Bank agreed to pay more than $87 million to resolve 
criminal charges for violations of the Foreign Corrupt Practices Act 
(FCPA) and a commodities fraud scheme. Although the DPA did not result 
in ineligibility under Section I(g) of PTE 84-14 at that time, the 
Department believes it is important that Deutsche Bank's Covered Plan 
clients are aware of the DPA and Deutsche Bank's admissions of 
culpability. The DPA's resolution included criminal penalties of 
$85,186,206, criminal disgorgement of $681,480, victim compensation 
payments of $1,223,738. In addition to the $87,091,424 paid to the U.S. 
Department of Justice, Deutsche Bank also paid $43,329,622 to settle 
related charges brought by the U.S. Securities & Exchange Commission.
    11. In the DPA, Deutsche Bank admitted, accepted, and acknowledged 
that, among other things, it was responsible under United States law 
for the acts of its officers, directors, employees, and agents, as 
charged. The charges stem from a scheme to conceal corrupt payments and 
bribes made to third-party intermediaries by making false entries on 
Deutsche Bank's books and records and related internal accounting 
control violations, and a separate scheme to engage in fraudulent and 
manipulative commodities trading practices involving publicly traded 
precious metals futures contracts. The FCPA misconduct occurred between 
2009 and 2016, and the Commodities fraud misconduct occurred between 
2009 and 2013.\20\
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    \20\ This exemption would require that, in connection with the 
DPA, no DB QPAMs were involved in the conduct that gave rise to the 
DPA, and no Covered Plan assets were involved in the transactions 
that gave rise to the DPA. Furthermore, the DB QPAMs are not 
permitted to employ or knowingly engage any of the individuals that 
participated in the conduct that is the subject of the DPA.
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The Korean Conviction and DIMA's Prior Exemption Requests

    12. On October 11, 2011, DIMA requested an administrative exemption 
from the Department (the First Request) to allow certain DB QPAMs to 
continue utilizing the relief set forth in PTE 84-14 notwithstanding 
the then impending criminal conviction of a Deutsche Bank affiliate in 
South Korea (DSK), under Korean law for spot/futures-linked market 
price manipulation (the Korean Conviction). Specifically, on January 
25, 2016, the Seoul Central District Court (the Korean Court) convicted 
DSK of violations of certain provisions of Articles 176, 443, and 448 
of the Korean Financial Investment Services and Capital Markets Act 
(FSCMA) for spot/futures linked market manipulation in connection with 
the unwinding of an arbitrage position that in turn caused a decline in 
the Korean market. Upon the entering of the Korean Conviction, the 
Korean Court sentenced DSK to pay a criminal fine of 1.5 billion South 
Korean Won (KRW). Furthermore, the Korean Court ordered Deutsche Bank 
AG to forfeit KRW 43,695,371,124, and DSK to forfeit KRW 
1,183,362,400.\21\ While the Department considered the First Request, 
DIMA submitted a second exemption application (the Second Request) to 
allow certain DB QPAMs to continue relying on PTE 84-14 for a period of 
10 years, notwithstanding both the Korean Conviction and the then-
anticipated LIBOR Conviction.
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    \21\ The Korean Court determined that the forfeitures the 
government collected from both DB and DSK represents the amount of 
illegal profits that the entities received as result of the criminal 
conduct.
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    13. In response to DIMA's First and Second Requests, the Department 
granted several temporary short-term exemptions to provide sufficient 
time for the Department to (a) analyze the facts underlying each of the 
criminal convictions to determine whether Covered Plans would be 
harmed; and (b) determine whether long-term relief was appropriate. In 
this regard, the Department proposed and granted PTEs 2015-15,\22\ 
2016-12,\23\ and 2016-13,\24\ which cumulatively provided exemptive 
relief for DB QPAMs to rely on the relief provided in PTE 84-14, 
notwithstanding the Korean Conviction and the U.S. Conviction, until 
April 17, 2018. Thereafter, the Department granted PTE 2017-04,\25\ 
which extended the relief provided by PTE 2016-13 for an additional 3 
years, until April 17, 2021.
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    \22\ 80 FR 53574 (September 4, 2015).
    \23\ 81 FR 75153 (October 28, 2016).
    \24\ 81 FR 94028 (December 22, 2016).
    \25\ 82 FR 61840 (December 29, 2017), technical correction at 83 
FR 7227 (February 20, 2018).
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    14. On December 12, 2018, Korea's Seoul High Court for the 7th 
Criminal Division (the Seoul High Court) reversed the Korean Court's 
decision and declared the defendants not guilty, obviating the need for 
exemptive relief related to the Korean Conviction.\26\ Thereafter, on 
April 19, 2021, the Department granted PTE 2021-01, which allowed the 
DB QPAMs to continue to rely on the relief provided in PTE 84-14, 
notwithstanding the U.S. Conviction for three more years, until April 
17, 2024.\27\
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    \26\ On December 21, 2023, the Supreme Court of Korea affirmed 
the reversal of the Korean Conviction, and dismissed all judicial 
proceedings against DSK.
    \27\ 86 FR 20410 (April 19, 2021). Because of the Seoul High 
Court's decision reversing the Korean Conviction, the Applicant did 
not request an extension of the relief under PTE 2017-04 for the 
Korean Conviction.
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    15. The three-year effective periods provided by PTE 2017-04 and 
PTE 2021-01 were justified by the magnitude, gravity, duration, and 
pervasiveness of the misconduct relating to the criminal prosecutions 
by U.S. and foreign authorities. Importantly, the shorter terms of 
exemptive relief enabled the Department to review the DB QPAMs' 
compliance efforts periodically to ascertain whether any adjustments to 
the exemption's conditions were necessary for the Department to make a 
finding that continuation of exemptive relief to the DB QPAMs remained 
in the interest of, and protective of the rights of, Covered Plans.

DB QPAMs' Compliance With Prior Exemptions' Conditions 28
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    \28\ Unless otherwise noted, PTEs 2015-15, 2016-12, 2016-13, 
2017-04, and 2021-01, are also referred to herein as the ``Prior 
Exemptions.''
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    16. The Department included a set of conditions in PTE 2021-01 that 
are designed to protect Covered Plans that entrust their assets for 
investment by the DB QPAMs despite the serious nature of the criminal 
misconduct underlying the U.S. Conviction. DIMA states that DB QPAMs 
have demonstrated a clean compliance record that the DB QPAM's 
independent auditor, Fiduciary Counselors Inc. (the Independent 
Auditor), confirmed after it examined the DB QPAMs compliance programs 
and culture through the course of six audits. According to DIMA, the DB 
QPAMs have demonstrated a strong culture of compliance through:
    a. Continued compliance with applicable ERISA regulatory 
requirements, as reflected by the consistent results of six audits 
performed by the Independent Auditor over more than six years;
    b. Continued compliance with other applicable regulatory 
requirements;
    c. A thorough training module dedicated to ERISA, reviewed, and 
approved by the Independent Auditor, mandatory for all in-scope 
employees, at the outset of their employment and then on a periodic 
basis;
    d. Centralized, focused, and comprehensive ERISA policies and 
procedures relating to ERISA and the Code, generally, as well as the 
specific

[[Page 27792]]

requirements of PTE 84-14, PTE 2017-04, and PTE 2021-01;
    e. Effective internal compliance processes, including testing and 
monitoring of DB QPAMs, with continuous improvement; and
    f. Not being subject to any regulatory or judicial findings that a 
DB QPAM failed to meet the requirements of ERISA during the entire six-
year period.
    17. Independent Audits. The DB QPAMs have undergone six audits in 
connection with the Prior Exemptions, most recently for the period from 
April 18, 2022, through April 17, 2023. The Department thoroughly 
reviewed the audits as part of its determination to propose individual 
exemptive relief. In its latest audit, the Independent Auditor 
determined that ``the DB QPAMs have developed, implemented, maintained 
and followed the requisite policies and procedures required in 
connection with [PTE 2017-04]. Additionally . . . the DB QPAMs have 
developed and implemented the requisite training in connection with 
these policies and procedures required in connection with the [PTE 
2017-04].'' \29\
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    \29\ The notice of proposed exemption provides a more detailed 
description of the audits conducted by the Independent Auditor, 
including the materials, systems, procedures, and records that the 
Independent Auditor reviewed in order to make conclusions about the 
DB QPAMs compliance with the conditions for relief. The most recent 
audit is also available for inspection by the public and is included 
in its entirety as part of the public record for this exemption 
under Application No. D-12090.
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Hardship to Covered Plans

    18. In its application for exemptive relief, and as further 
described in the notice of proposed exemption, DIMA represented that 
while exemptions other than PTE 84-14 may apply with respect to certain 
transactions, PTE 84-14 is particularly important for securities and 
other instruments that may be traded on behalf of Covered Plans, now or 
in the future, on a principal basis, such as real estate investments 
(including purchases and sales, leases and financings), corporate debt, 
municipal debt, other US fixed income securities, Rule 144A securities, 
non-US fixed income securities, non-US equity securities, US and non-US 
over-the-counter instruments (e.g., swaps, forwards, and options), 
structured products, and foreign exchange. According to DIMA, PTE 84-14 
is also important to Plans with respect to the extensions of credit 
inherent in leveraged investments.
    19. DIMA represented that because counterparties are familiar and 
comfortable with PTE 84-14 for a broad variety of transactions, PTE 84-
14 is generally the most commonly used prohibited transaction exemption 
that counterparties generally rely on as the backup exemption for all 
transactions. According to DIMA, counterparties may provide less 
advantageous pricing or may not bid at all where the Covered Plan's 
investment manager is not a QPAM.
    20. DIMA represented that plan fiduciaries expend significant 
resources, including time and money, in selecting asset managers for 
their plans. DIMA stated that forcing Covered Plan clients to terminate 
their chosen managers because the managers no longer have access to the 
broad coverage and efficiencies of PTE 84-14 will cause such plans to 
incur a number of additional costs. Additionally, according to DIMA, 
Covered Plan clients will incur direct transaction costs from 
liquidating and reinvesting their portfolios, which costs and harms are 
discussed below.
    21. According to DIMA, the costs and harms to Covered Plans 
resulting from the DB QPAMs' inability to rely on PTE 84-14 can best be 
described by discussing the following services for which the DB QPAMs 
rely on PTE 84-14. DIMA provided the following statements in support of 
its application:
    a. Alternatives: As noted above, the DB QPAMs provide discretionary 
asset management services in reliance on PTE 84-14 to Covered Plans 
under two DWS business lines: (1) Alternatives (including the Liquid 
Real Assets, Direct Real Estate and Private Equity businesses) 
(hereinafter Alternatives) and (2) Active Institutional. Alternatives 
provides discretionary asset management services to, among others, 
eight ERISA-covered accounts and ten governmental plan accounts. The 
largest ERISA account is $198 million. Total ERISA AUM is $498 million. 
The largest governmental plan account is $2.8 billion, and total 
governmental plan AUM is $4.9 billion. Alternatives provides these 
services through separately managed accounts and pooled funds subject 
to ERISA. Terminating Alternatives' management may result in the 
following specific harm to the relevant ERISA plan or governmental 
plan:
    i. Approximately six to eight months and thousands of dollars to 
find, evaluate, choose, and engage a new manager;
    ii. Consulting fees to search for a new private manager of 
approximately $30,000 to $40,000;
    iii. Approximately 25-50 hours of additional client time to 
evaluate alternative new managers;
    iv. Legal fees to review/negotiate new management agreement and 
guidelines of approximately $10,000 to $30,000;
    v. Transaction costs for direct real estate of between 30-100 bps 
in direct transaction costs for early liquidation (e.g., $8.4 million 
to $27.8 million loss for Alternatives' largest governmental plan 
client);
    vi. Early liquidation discounts for direct real estate of between 
10-20% (e.g., $278.4 million to $556.8 million loss for Alternatives' 
largest governmental plan client);
    vii. Transaction costs for non-direct real estate in other 
portfolios of between 20-60 bps in direct transaction costs for 
liquidation (e.g., $5.6 million to $16.7 million for Alternatives' 
largest ERISA client);
    b. Active Institutional: The Active Institutional team provides 
institutional discretionary asset management services to a number of 
separately managed plan accounts, including two ERISA plan accounts and 
three governmental plan accounts. The Active Institutional team also 
provides discretionary model portfolio services to financial sponsors 
with IRA clients. Total ERISA AUM is $125.5 million. Total governmental 
plan AUM is $644.6 million. The Active Institutional team currently 
manages these institutional accounts to a broad variety of strategies, 
including: (I) equities, (II) fixed income, (III) overlay, (IV) 
commodities, and (V) cash.
    22. According to DIMA, given the institutional nature of the 
underlying accounts, these strategies may involve a wide range of asset 
classes and types, including: (1) US and foreign fixed income 
(Treasuries, Agencies, corporate bonds, asset-backed securities, 
mortgage and commercial mortgage-backed securities, deposits); (2) US 
and foreign mutual funds and ETFs; (3) US and foreign futures, (4) 
currency; (5) swaps (interest rate and credit default); (6) US and 
foreign equities; and (7) short term investment funds.
    23. According to the Applicant, terminating a plan's chosen manager 
under any strategy involves various costs, including loss of the 
investor's preferred manager, transaction costs, search costs and legal 
costs, with the particular cost turning on the strategy and the assets 
in which it invests. Estimated costs for the Active Institutional 
strategy are as follows:
    a. Consulting Fees of between $30,000 to $40,000 for a new manager 
search;
    b. Approximately 25-50 hours of additional client time to evaluate 
new managers, assuming the task is handled by an institutional board of 
trustees, plan committee or similar group of individuals;
    c. Legal Fees of approximately $10,000 to $30,000 to review/
negotiate new management agreement and

[[Page 27793]]

guidelines, given that institutional agreements are almost invariably 
negotiated;
    d. Transaction Costs of approximately 8.0 bps for liquidations 
(e.g., $414,430.44 for Active Institution's largest governmental plan 
client)--based on the account's holdings as of December 31, 2022;
    e. Legal Costs to negotiate each new futures, cleared derivatives, 
swaps, or other trading agreement of between approximately $15,000 and 
$30,000.
    24. The Department notes that this exemption includes protective 
conditions that allow Covered Plans to continue to utilize the services 
of DB QPAMs if the Covered Plans determine that it is prudent to do so. 
In this regard, this exemption allows Covered Plans to avoid cost and 
disruption to investment strategies that may arise if such Covered 
Plans are forced, on short notice, to hire a different QPAM or asset 
manager because DB QPAMs are no longer able to rely on the relief 
provided by PTE 84-14 due to the U.S. Conviction.

Comments Received Regarding the Proposed Exemption

Written Comments

    25. In the notice of proposed exemption, the Department invited all 
interested persons to submit written comments and/or requests for a 
public hearing with respect to such notice, which were due by February 
8, 2024. Additionally, the Department requested comments from Covered 
Plans, the DB QPAMs, and the public as to the specific costs or harms, 
if any, that would flow from denial of the exemption, and data from the 
Applicant that identifies and quantifies in dollar amounts any valuable 
investment opportunities that plans would have to forego, and the basis 
for concluding that those investments would no longer be available to 
Covered Plans on advantageous terms from the DB QPAMs or other 
financial service providers. The Department specifically requested 
comments from Covered Plans, the DB QPAMs, and the public as to the 
specific ``opportunity cost'' of having assets ``invested in cash 
pending reinvestment with a new manager.'' In this regard, the 
Department requested information validating that there is no way to 
avoid investing assets in cash during the transition to a new manager 
and information quantifying the costs of having assets uninvested 
during such a transition using objective assumptions. Lastly, the 
Department requested comments whether the Applicant should be required 
to provide information regarding adverse regulatory actions (e.g., 
fines, censures, penalties, civil lawsuits, settlements of civil or 
criminal lawsuits), that are taken by other regulators against Deutsche 
Bank and its affiliates.
    26. The Department received three written comments: one from an 
anonymous submitter; one from an individual financial consultant 
(Consultant); and one from the Applicant. The Department did not 
receive a request for a public hearing pertaining to the notice of 
proposed exemption. The comments are as follows:
    Anonymous Comment: The anonymous commenter opined that the 
Applicant should not receive an exemption because of Deutsche Bank's 
unethical practices with a former US president's company. The anonymous 
commenter did not provide supporting information for the Department to 
consider.
    Consultant's Comment: The Consultant shared their concern that the 
exemption may: (1) create conflicts of interest by allowing DWS to 
engage in certain transactions with affiliates that may create 
conflicts of interest that could harm Covered Plans' participants; (2) 
undermine fiduciary obligations potentially leading to breaches of 
fiduciary duty by plan fiduciaries; and (3) expose plans to additional 
risk if affiliates engage in risky investment strategies or 
transactions. The Consultant urged the Department to conduct thorough 
reviews of DWS' conflicts of interest policies and procedures, impose 
robust conditions to prevent fiduciary breaches, and require regular 
reporting and monitoring to ensure compliance with the exemption.
    Department's Response: The Department believes that its extensive 
review of the record developed in connection with the Applicant's 
exemption request, including the Department's extensive review of the 
audits submitted by the Applicant pursuant to prior exemptions, and the 
protective conditions that the DB QPAMs must adhere to, address the 
Consultant's concerns described above. Section III(h)(1) of the 
exemption, which is a mainstay of exemptions providing relief from 
Section I(g) of PTE 84-14, generally requires the DB QPAMs to maintain, 
adjust, implement, and follow written policies and procedures designed 
to avoid conflicts of interest in asset management decisions; comply 
with ERISA's fiduciary duties; avoid engaging in prohibited 
transactions under ERISA and the Code; and avoid participating in any 
other person's violation of ERISA or the Code with respect to Covered 
Plans. The exemption requires an annual audit performed by an 
independent auditor, and the auditor must determine whether each DB 
QPAM has developed, implemented, maintained, and followed the Policies 
in accordance with the conditions of this exemption. The results of 
each audit are reduced to a written audit report that is delivered to, 
and reviewed by, the Department to ensure that the audit and the 
auditor's determinations are consistent with the requirements of the 
exemption. The Department reviewed and considered each audit received 
by the Applicant prior to determining whether to grant this exemption.
    The exemption is also subject to the DB QPAMs' adherence to Section 
III(j), which requires the QPAMs to indemnify and hold harmless their 
Covered Plan clients for any actual losses resulting directly from a DB 
QPAM's violation of ERISA's fiduciary duties, the prohibited 
transaction provisions of ERISA and the Code, and a breach of contract; 
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 Conviction. The Department 
included the protections of Section III(j) in order to ensure that 
Covered Plans were adequately protected in the event the DB QPAMs 
violated applicable laws or their contractual obligations to their 
clients. Section III(j) also makes it easier for Covered Plan clients 
to change managers if Covered Plan fiduciaries determine it is prudent 
to do so, given Deutsche Bank's long history of corporate malfeasance.
    Finally, the exemption requires additional reporting and notice 
obligations designed to create a culture of compliance and 
transparency. Section III(m) requires Deutsche Bank to designate a 
compliance officer responsible for ensuring compliance with the 
policies and procedures and training requirements of the exemption, and 
for performing an annual review to determine the effectiveness of the 
policies and procedures and training. The compliance officer is 
required to produce an annual report setting forth, among other things, 
instances of noncompliance and the correcting action taken to address 
them. The exemption also requires the DB QPAMs to provide notice of the 
exemption and the conduct leading to disqualification under Section 
I(g) to all Covered Plans, and to maintain the records required in 
order to prove the QPAMs' compliance with the conditions for relief. 
The independent auditor's reports, the compliance officer's annual 
reports, and

[[Page 27794]]

the records required to be maintained by QPAMs, are a part of the 
public record available to interested persons by contacting the Public 
Disclosure Room of the Employee Benefits Security Administration.
    Applicant's Comment: The Applicant submitted several comments, as 
well as responses to requests the Department made in the proposed 
exemption, for additional information.
    Applicant's Response Regarding Costs to Covered Plans. In response 
to the Department's request for additional information regarding 
potential costs and harm to Covered Plan clients from denial of the 
exemption, the Applicant submitted reports from NERA Economic 
Consulting (the NERA Report) and Mr. Lawrence Davanzo, an independent 
pension consultant (Davanzo Statement), respectively. These reports 
were also previously submitted by the Applicant in connection with PTE 
2021-01.\30\ According to the Applicant, the reports are still valid, 
as there have not been any material changes in how managers are 
selected, retained, and terminated by plan investors and the associated 
costs with such decisions.\31\
---------------------------------------------------------------------------

    \30\ 86 FR 9376 (February 12, 2021).
    \31\ The reports from NERA Economic Consulting and Mr. Lawrence 
Davanzo are available in their entirety as part of the public record 
for this exemption and may be requested from the Office of Public 
Disclosure.
---------------------------------------------------------------------------

    The NERA Report lists various adverse impacts of the costs and 
harms associated with the denial of the exemption, with estimates 
ranging as high as 20.68 percent for certain investments. The NERA 
Report concludes that it could not identify any benefits to Covered 
Plans from the denial of the exemption that would outweigh the costs 
associated with such denial. The Davanzo Statement provides a list of 
the direct and indirect costs that may be incurred when an investment 
manager's portfolio is transitioned to another replacement manager, and 
the less liquid the asset class involved in the termination, the higher 
the costs, which will directly impact Covered Plans' participants. The 
Davanzo Statement distinguishes between a criminal conviction of the 
asset manager and that of its affiliated entity, noting that the 
majority of asset management subsidiaries of financial institutions 
operate with significant autonomy from the parent company, and such 
asset management subsidiaries, which frequently have separate risk and 
control functions, are structured among other things to demonstrate 
their independence from their parent companies. Lastly, the Davanzo 
Statement concludes that Covered Plans (and their beneficiaries) would 
incur significant costs associated with the investment manager's 
termination despite that it was an affiliate's illegal actions and not 
the manager's conduct that caused the denial of the QPAM Exemption.
    Applicant's Response Regarding ``Opportunity Cost.'' In its request 
for an exemption, the Applicant had represented that an investment 
fund's investing in cash pending a client plan's reinvestment of those 
assets with a new manager is an ``opportunity cost'' to the client 
plan. In the proposed exemption, the Department requested additional 
information regarding these ``opportunity costs.''
    In its comment, the Applicant states that the exemption 
application's mention of the opportunity costs of investing in cash 
pending reinvestment with a new manager was merely intended to 
differentiate such costs from costs such as consulting fees, legal 
fees, liquidation costs, and similar transaction costs. The NERA Report 
expounds on opportunity costs generally, explaining that opportunity 
costs due to a change in investment managers refer to the loss of value 
that could have been gained during the transition between managers, 
such as potential return lost due to not being fully invested in 
desired asset classes, which the NERA Report estimates to be up to 3.75 
percent.
    Department's Note: The Department stresses that each DB QPAM has 
the fiduciary duty to manage the assets of each Covered Plan prudently, 
at all times, and in such plan's best interests, including when the 
Covered Plan is transitioning assets to a new manager.
    Applicant's Response Regarding Disclosures of Adverse Actions. In 
the proposed exemption, the Department requested comments whether the 
Applicant should be required to provide information regarding adverse 
regulatory actions (e.g., fines, censures, penalties, civil lawsuits, 
settlements of civil or criminal lawsuits), that are taken by other 
regulators against Deutsche Bank and its affiliates.
    The Applicant states that the granting of the exemption should not 
depend upon regulatory actions, other than the conviction that 
necessitated the request for relief. According to the Applicant, doing 
so is an unwarranted expansion of the QPAM Exemption as currently 
existing, as well as inconsistent with the Department's stated 
objectives in creating the QPAM Exemption. The Applicant states that 
the named fiduciaries for Covered Plans are responsible for selecting 
an investment manager after a careful and rigorous diligence process, 
and that material regulatory investigations and settlements are 
disclosed to shareholders in Deutsche Bank's Annual Reports as 
appropriate. DIMA states that plans' fiduciaries and their consultants 
receive, and have access to, information from multiple sources: they 
are provided with presentations and ask questions during the due 
diligence phase and during regular update meetings, they receive Form 
ADV and Form BD, they have access to Deutsche Bank's Form 20-F and 
Annual Reports, and they have access to news reports.\32\ The Applicant 
states that Form ADV Part 1, which mentions both the DPA and the U.S. 
Conviction, is provided to plan fiduciaries every year.
---------------------------------------------------------------------------

    \32\ Although the Applicant did not provide an explanation for 
the forms it mentioned in its comment, the Department clarifies for 
the public that Forms ADV, BD, and 20-F are forms under the 
jurisdiction of the U.S. Securities and Exchange Commission (SEC). 
To this extent, while the exemption uses the singular term Annual 
Report for certain conditions thereunder, SEC Form 20-F is also used 
for Annual Reports disclosures that are separate from the Annual 
Report required by this exemption.
---------------------------------------------------------------------------

    In addition, the Applicant disagrees that regulatory actions such 
as civil settlements should prevent applicants from obtaining 
individual QPAM exemptions. Although the Applicant notes that that the 
disclosure of such regulatory actions is now required by the Department 
in its amended procedural regulation, such disclosure is not applicable 
to DIMA with respect to this particular application because the 
application for this exemption was filed with the Department prior to 
April 8, 2024.
    The Department's position is that the mere existence of such a 
regulatory action, the target of which is a DB QPAM or an affiliate of 
the DB QPAM, will not necessarily preclude a finding by the Department 
that exemptive relief from Section I(g) meets the statutory standard 
under ERISA Section 408(a). The Department notes that, pursuant to its 
exemption procedure regulation, during the pendency of an application 
for exemption with the Department, an applicant must promptly notify 
the Department if they discover that any fact or representation changes 
during this period, anything occurs that may affect the continuing 
accuracy of any such fact or representation, or if a material fact or 
representation has been omitted from the exemption application.\33\ If 
the Applicant has reason to believe that information

[[Page 27795]]

regarding an adverse regulatory action (e.g., fine, censure, penalty, 
civil lawsuit, settlement of civil or criminal lawsuit), taken by other 
regulators (e.g., the IRS, SEC, OCC, UK FCA) may constitute a material 
fact or representation that should be considered by the Department in 
connection with an exemption application, the Applicant should contact 
the Department for guidance.
---------------------------------------------------------------------------

    \33\ 29 CFR 2570.37(a), found at 76 FR 66650. The Applicant 
submitted its application under the Exemption Procedure Regulation 
published at 76 FR 66637 (October 7, 2011).
---------------------------------------------------------------------------

    Applicant's Comment Regarding Sections III(a) and III(b). Section 
III(a) of the notice of proposed exemption provides in pertinent part 
that [italics added]:

    Other than a single individual who worked for a non-fiduciary 
business within Deutsche Bank and who had no responsibility for, nor 
exercised any authority in connection with, the management of plan 
assets, the DB QPAMs (including their officers, directors, agents 
other than DB Group Services, and employees of such QPAMs) did not 
know or have reason to know of, and did not participate in the 
criminal conduct of DB Group Services that is the subject of the 
U.S. Conviction or the 2021 DPA . . .

    Section III(b) of the notice of proposed exemption provides in 
pertinent part that [italics added]:

    Apart from a non-fiduciary line of business within Deutsche 
Bank, the DB QPAMs (including their officers, directors, agents 
other than DB Group Services, 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 or the 2021 DPA . . .

    The Applicant states that none of the Prior Exemptions contained 
the italicized language relating to a single individual and a non-
fiduciary business within Deutsche Bank, and that the language to added 
to Sections III(a) and (b) of the proposed exemption is in error. 
Furthermore, the Applicant states that the italicized language is not 
supported by the facts of the U.S. Conviction or the DPA and should be 
deleted.
    Department's Response: The Department concurs and has revised both 
Section III(a) and Section III(b) in the final exemption, by deleting 
the italicized language above and capitalizing ``the'' at the beginning 
of each section.
    Applicant's Comment Regarding Revision to Section III(a). Section 
III(a) of the notice of proposed exemption provides in pertinent part 
that:

    . . . [T]he DB QPAMs (including their officers, directors, 
agents other than DB Group Services, and employees of such QPAMs) 
did not know or have reason to know of, and did not participate in 
the criminal conduct of DB Group Services that is the subject of the 
U.S. Conviction or the 2021 DPA [italics added] . . .

    The Applicant states that the condition suggests that ``the subject 
of . . . the 2021 DPA'' was criminal conduct of DB Group Services even 
though the DPA was entered into between the Department of Justice and 
Deutsche Bank.
    Department's Response: The Department concurs and has revised 
Section III(a) by modifying the italicized language to read as follows: 
``or the criminal conduct of Deutsche Bank that is the subject of the 
2021 DPA.''
    Applicant's Comment Regarding Revisions to Sections III(i)(7), 
III(i)(8), and III(m)(1). The Applicant states that the notice of 
proposed exemption prohibits certain actions by individuals who knew 
of, should have known of, or participated in the ``misconduct 
underlying the U.S. Conviction or the 2021 DPA.'' The Applicant 
requests the Department to replace the language that ``misconduct 
underlying the U.S. Conviction or the 2021 DPA'' with ``the criminal 
conduct that is the subject of the U.S. Conviction or the 2021 DPA,'' 
for consistency with the formulation used in the notice of proposed 
exemption and in all of the Prior Exemptions.
    Department's Response: The Department concurs and has revised 
Sections III(i)(7), III(i)(8), and III(m)(1) accordingly.
    Applicant's Comment Regarding Revision to Section III(g). Section 
III(g) of the notice of proposed exemption provides:

    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 
ERISA Sections 3(21)(A)(i) or (iii) or Code Sections 4975(e)(3)(A) 
and (C) with respect to ERISA-covered plan and IRA assets; provided, 
however, that DB Group Services will not be treated as violating the 
conditions of this exemption solely because they acted as investment 
advice fiduciaries within the meaning of ERISA Section 3(21)(A)(ii) 
or Code Section 4975(e)(3)(B).

    The Applicant requests that the language, ``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'' 
be added to the end of Section III(g) of the proposed exemption, above. 
According to the Applicant, the quoted language appears at the end of 
Section III(g) in PTE 2021-01 and it should have been included in 
Section III(g) of the proposed exemption as well. The Applicant 
explains that like many foreign banks, Deutsche Bank uses foreign 
service companies, like DB Group Services, to hire and pay employees 
who then work for, and are supervised by, other entities in the 
Deutsche Bank controlled group. According to the Applicant, DB Group 
Services provides employees to the DB QPAMs, which are then responsible 
for the employees' training, supervision, compliance, etc., as if they 
were employed by such affiliates.
    The Applicant submitted to the Department its definition for the 
term double-hatted, which the Applicant defines as ``. . . the process 
of employing a person in one company, such as a service company, but 
actually having the person perform functions and duties for another 
affiliated company, which supervises such person's performance.'' 
Further, the Applicant submitted to the Department its definition for 
the term seconded employees, which the Applicant defines as ``a person 
who is seconded from one company to another is on the payroll of the 
first company but performs job duties and is supervised by the second 
company.''
    Department's Response: The Department crafted the condition in 
Section III(g) of the Prior Exemptions and the proposed exemption in 
order to ensure the separation of the convicted entity's employees, 
including such employees' management oversight and compliance 
structure, from any discretionary management activity by the DB QPAMs. 
Upon reviewing the definitions of ``dual-hatted'' and ``seconded'' 
employees provided by the Applicant, the Department's position is that 
the exact employment relationship of such employees needs to be 
specified, including but not limited to, information pertaining to 
matters such as hiring, firing, discipline, conditions of employment, 
promulgation of work rules, assignment of day-to-day job duties, and 
issuance of operating instructions. Accordingly, the Department has 
revised Section III(g) as follows:

    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 
ERISA Sections 3(21)(A)(i) or (iii) or Code Sections 4975(e)(3)(A) 
and (C) with respect to ERISA-covered plan and IRA assets; provided, 
however, that DB Group Services will not be treated as violating the 
conditions of this exemption solely because (1) they acted as 
investment advice fiduciaries within the meaning of ERISA Section 
3(21)(A)(ii) or Code Section 4975(e)(3)(B); or (2) DB Group Services 
employees perform work on behalf

[[Page 27796]]

of a DB QPAM that is solely responsible for the management and 
oversight of the DB Group Services employees' day to day activities 
performed on behalf of such QPAM, including the employee's 
performance, training, and terms of employment (including 
compensation, promotions, and benefits), including any such 
employees acting in a discretionary fiduciary capacity with respect 
to the DB QPAM clients.

    Applicant's Comment Regarding Revision to Section III(i)(9). 
Section III(i)(9) of the notice of proposed exemption requires delivery 
of the certified Audit Report to the Department's Office of Exemption 
Determinations within 30 days following completion of the Audit Report. 
The Applicant requests that the period for delivery be extended to 45 
days, because, according to the Applicant, 45 days was provided to 
provide delivery of the audit report in PTE 2017-04 and PTE 2021-01, 
and in the majority of other recent exemptions. The Applicant explains 
that ``the certification process can be lengthy, especially for an 
organization as large and as globally diverse as Deutsche Bank, and the 
Applicant respectfully submits that the additional time will ensure 
that the Applicant encounters no logistical hurdles in fulfilling the 
requirements of the exemption.''
    Department's Response: The Department concurs and has revised 
Section III(i)(9) to reflect that the required delivery of the 
certified Audit Report to the Department's Office of Exemption 
Determinations is 45 days following completion of the Audit Report.
    Revision to Section III(j)(7). Section III(j)(7) of the notice of 
proposed exemption provides in pertinent part that: ``[w]ithin 60 
calendar days after this exemption's effective date, each DB QPAM must 
provide a notice of its obligations under this Section III(j) to each 
Covered Plan.'' The obligations under Section III(j) include the DB 
QPAM's obligation to, in general, provide indemnification to Covered 
Plans for violations of ERISA and the Code, breaches of contract and 
failure to comply with PTE 84-14; 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; and 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; not to impose any fees, 
penalties, or charges for such termination or withdrawal with the 
exception of reasonable fees, etc.
    The Applicant requests the Department to replace the sixty calendar 
days requirement with a four-month period for the provision of such 
notices, as the Department provided in PTE 2017-04 and PTE 2021-01. The 
Applicant's request is based on its view that this exemption must be 
consistent with the soon to expire PTE 2021-01, and the ``inevitable 
delivery difficulties that must be corrected . . . to ensure proper and 
complete delivery of notices.''
    Department's Response: The Department declines to revise the sixty 
(60) calendar days requirement that Section III(j)(7) mandates. In the 
Department's view, Covered Plans should receive the notice of the 
contractual undertakings from the DB QPAMs as soon as possible so that 
(among other things) Covered Plan fiduciaries are made aware of their 
rights to, and are able to, withdraw from their arrangement with the DB 
QPAM as soon as possible without the imposition of any restrictions or 
fees if they determine that such action is prudent, in light of the 
Applicant's numerous instances of misconduct. Balanced against the 
important need for Covered Plans fiduciaries to understand the 
modifications to their contractual rights as soon as possible, the 
Applicant did not meet its burden to support a finding by the 
Department that four months' time to delivery notice of the DB QPAMs' 
contractual obligations in Section III(j) is as protective as 60 days' 
notice.
    Applicant's Comment Regarding Revision to Section III(u). Section 
III(u) of the notice of proposed exemption provides, in pertinent part, 
that ``[t]he DB QPAM(s) must provide the Department with the records 
necessary to demonstrate that each condition of this exemption has been 
met within 30 days of a request for the records by the Department.''
    The Applicant requests that this condition be deleted or amended to 
delete the 30-day requirement, because: (1) The condition in Section 
III(u) has not been imposed upon any previous applicant; (2) the 
requirement poses significant logistical difficulties in practice; (3) 
whether a record is necessary to demonstrate fulfillment of the 
exemption is a subjective determination, requiring knowledgeable 
personnel to collect, review, and organize all potentially relevant 
documents; (4) the breadth of potential relevancy could render the 
document request extremely voluminous; (5) depending on the nature of 
the documents, there could be privacy, confidentiality, or similar 
concerns to consider and address before production; (6) and the 
necessary diversion of resources from normal operations for such un 
undertaking is not in the best interest of Covered Plans or their 
participants or beneficiaries. Furthermore, according to the Applicant, 
the proposed exemption already requires retention of records pertaining 
to exemption transactions, and as such the exemption's relief becomes 
unavailable if Section III(u) is not met.
    Department's Response: The Department declines to remove the 30-day 
requirement in Section III(u). The Department notes that Section III(n) 
already mandates that each DB QPAM must maintain all records necessary 
to demonstrate that the conditions of this exemption have been met, for 
a period of six years after a related transaction is executed The 
Department's position is that the records necessary to demonstrate 
compliance with the conditions of this exemption should be maintained 
by the DB QPAMs in a manner consistent with the requirement in Section 
III(n). DB QPAMs should have systems in place to avoid unnecessary 
delays and expenses in connection with a records request. However, in 
light of the possibility that unforeseen administrative complexities 
may arise in the production of records within 30 days of a request by 
the Department, the Department is revising Section III(u) to permit the 
Department to extend the 30-day period upon a showing of necessity by 
the DB QPAM, as follows:

    ``The DB QPAM(s) must provide the Department with the records 
necessary to demonstrate that each condition of this exemption has 
been met within 30 days of a request for the records by the 
Department except that the Department may extend the 30-day 
deadline, in its sole discretion, upon the submission of a written 
extension request by the DB QPAM(s) that specifically describes why 
additional time is necessary to submit the records.''

    Applicant's Comment Regarding Summary of Facts and Representations. 
The Applicant represents that the following language in paragraph 19 in 
the Summary of Facts and Representations section of the notice of 
proposed exemption (the Summary), is inaccurate and should be 
clarified. Paragraph 19 in the Summary provides:

    On January 8, 2021, Deutsche Bank entered into a deferred 
prosecution agreement (DPA) with the U.S. Department of Justice in 
which Deutsche Bank agreed to pay more than $130 million to resolve 
criminal charges for violations of the Foreign Corrupt Practices

[[Page 27797]]

Act (FCPA) and a commodities fraud scheme. Although the DPA did not 
result in ineligibility under Section I(g) of PTE 84-14, the 
Department believes it is important that Deutsche Bank's Covered 
Plan clients are aware of the DPA and Deutsche Bank's admissions of 
culpability. The DPA's resolution included criminal penalties of 
$85,186,206, criminal disgorgement of $681,480, victim compensation 
payments of $1,223,738, and $43,329,622 to be paid to the U.S. 
Securities & Exchange Commission . . .

    The Applicant states that Deutsche Bank agreed to pay $87,091,424 
to the U.S. Department of Justice in connection with the DPA rather 
than $130 million--the $130 million amount included the settlement with 
the U.S. Securities and Exchange Commission of $43 million, which did 
not involve a civil penalty.
    Department's Response: The Department notes the Applicant's 
clarification, and further notes that Section III(s) of the exemption 
requires that all the material facts and representations set forth in 
the Summary of Facts and Representations are true and accurate.

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 ERISA Section 408(a) and/or Code Section 4975(c)(2) does not 
relieve a fiduciary or other party in interest or disqualified person 
from certain other provisions of ERISA and/or the Code, including any 
prohibited transaction provisions to which the exemption does not apply 
and the general fiduciary responsibility provisions of ERISA Section 
404, which, among other things, require a fiduciary to discharge their 
duties respecting the plan solely in the interest of the participants 
and beneficiaries of the plan and in a prudent fashion in accordance 
with ERISA Section 404(a)(1)(b); nor does it affect the requirement of 
Code Section 401(a) that the plan must operate for the exclusive 
benefit of the employees of the employer maintaining the plan and their 
beneficiaries;
    (2) As required by ERISA section 408(a), the Department hereby 
finds that the exemption is: (a) Administratively feasible for the 
Department; (b) in the interests of Covered Plans and their 
participants and beneficiaries; and (c) protective of the rights of the 
Covered Plans' participants and beneficiaries.
    (3) This exemption is supplemental to, and not in derogation of, 
any other ERISA provisions, 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 for determining whether the transaction is in fact a 
prohibited transaction.
    (4) The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describe all material terms of the transactions 
that are the subject of the exemption and are true at all times.
    Accordingly, after considering the entire record developed in 
connection with the Applicant's exemption application, the Department 
has determined to grant the following exemption under the authority of 
ERISA section 408(a) in accordance with the Department's exemption 
procedures set forth in 29 CFR part 2570, subpart B.\34\
---------------------------------------------------------------------------

    \34\ 76 FR 66637, 66644 (October 27, 2011).
---------------------------------------------------------------------------

Exemption

Section I. Definitions
    (a) The term ``Covered Plan'' means a plan subject to ERISA Title 
I, Part 4 (an ERISA-covered plan) or a plan subject to Code Section 
4975 (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 (the QPAM Exemption). 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.
    (b) The term ``DB QPAM'' or ``DB QPAMs'' means DWS Investment 
Management Americas, Inc. and any current and future Deutsche Bank 
asset management affiliates that (i) qualify as a ``qualified 
professional asset manager'' (as defined in PTE 84-14, Section VI(a)), 
(ii) rely on the relief provided by PTE 84-14, and (iii) with respect 
to which Deutsche Bank is an ``affiliate'' (as defined in PTE 84-14, 
Section VI(d)(1)). The term ``DB QPAM'' excludes DB Group Services (UK) 
Limited.
    (c) The term ``Deutsche Bank'' or ``DB'' means Deutsche Bank AG, a 
publicly held global banking and financial services company 
headquartered in Frankfurt, Germany.
    (d) The term ``Exemption Period'' means the period of time 
beginning on April 18, 2024, and ending on April 17, 2027.
    (e) The term ``U.S. Conviction'' means the judgment of conviction 
against DB Group Services (UK) Limited (DB Group Services), a Deutsche 
Bank ``affiliate'' (as defined in PTE 84-14, Section VI(d)), 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 
the [U.S. 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.
    (f) The term ``2021 DPA'' means 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.
    (g) Wherever found, any reference in this exemption to ``the best 
knowledge'' of a party, ``best of [a party's] knowledge,'' and similar 
formulations of the ``best knowledge'' standard, will be deemed to mean 
the actual knowledge of the party and the knowledge which they would 
have had if they had conducted their reasonable due diligence required 
under the circumstances into the relevant subject matter. If a 
condition of the exemption requires an individual to provide 
certification pursuant to their ``best knowledge,'' then such 
individual, in order to make such certification, must perform their 
reasonable due diligence required under the circumstances to determine 
whether the information such individual is certifying is complete and 
accurate in all respects. Furthermore, with respect to an entity other 
than a natural person, the ``best knowledge'' of the entity includes 
matters that are known to the directors and officers of the entity or 
should be known to such individuals upon the exercise of such 
individuals' due diligence required under the circumstances.

[[Page 27798]]

Section II: Transactions
    The DB QPAMs will not be precluded from relying on the exemptive 
relief provided by Prohibited Transaction Exemption 84-14 (PTE 84-14) 
\35\ notwithstanding the U.S. Conviction (as defined above in Sections 
I(e)), during the Exemption Period, provided that the conditions in 
Section III are satisfied.\36\
---------------------------------------------------------------------------

    \35\ 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).
    \36\ 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.
---------------------------------------------------------------------------

Section III. Conditions
    (a) The DB QPAMs (including their officers, directors, agents other 
than DB Group Services, and employees of such QPAMs) did not know or 
have reason to know of, and did not participate in the criminal conduct 
of DB Group Services that is the subject of the U.S. Conviction or the 
criminal conduct of Deutsche Bank that is the subject of the 2021 DPA. 
Further, any other party engaged on behalf of the DB QPAMs who had 
responsibility for, or exercised authority in connection with the 
management of plan assets did not know or have reason to know of and 
did not participate in the criminal conduct that is the subject of the 
U.S. Conviction or the 2021 DPA. 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 or the 2021 DPA, but also applies to knowing approval of the 
criminal conduct that is the subject of the U.S. Conviction or the 2021 
DPA or knowledge of the conduct without taking active steps to prevent 
the conduct, including reporting the conduct to the individual's 
supervisors and the Board of Directors;
    (b) The DB QPAMs (including their officers, directors, agents other 
than DB Group Services, 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 or the 2021 DPA. Further, any other party engaged on behalf 
of the DB QPAMs who had responsibility for, or exercised authority in 
connection with the management of plan assets 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 or 
the 2021 DPA;
    (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 or the 2021 
DPA;
    (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 a DB QPAM in reliance of PTE 84-14, or with respect to which 
to which a DB QPAM has expressly represented to a Covered Plan that it 
qualifies as a QPAM or relies on the QPAM Exemption, to enter into any 
transaction with DB Group Services, or to engage DB Group Services to 
provide any service to such Covered Plan, for a direct or indirect fee 
borne by such Covered Plan, 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 PTE 84-14, Section I(g) 
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 the 2021 DPA; 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 or the 2021 DPA;
    (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 ERISA 
Sections 3(21)(A)(i) or (iii) or Code Sections 4975(e)(3)(A) and (C) 
with respect to ERISA-covered plan and IRA assets; provided, however, 
that DB Group Services will not be treated as violating the conditions 
of this exemption solely because: (1) they acted as investment advice 
fiduciaries within the meaning of ERISA Section 3(21)(A)(ii) or Code 
Section 4975(e)(3)(B); or (2) DB Group Services' employees perform work 
on behalf of a DB QPAM that is solely responsible for the management 
and oversight of the DB Group Services' employee's day to day 
activities performed on behalf of such QPAM, including the employee's 
performance, training, and terms of employment (including compensation, 
promotions, and benefits), including any such employees acting 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 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's and the Code's prohibited transaction provisions, 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 the 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 the exemption;
    (vii) Any violation of or failure to comply with a requirement 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

[[Page 27799]]

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 (vii);
    (2) Each DB QPAM must maintain, adjust (to the extent necessary) 
and implement a training program (the Training) that is conducted at 
least annually for all relevant DB QPAM asset/portfolio management, 
trading, legal, compliance, and internal audit personnel. The Training 
must:
    (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;
    (ii) Be conducted in-person, electronically or via a website by a 
professional who has been prudently selected and who has appropriate 
technical training and proficiency with ERISA and the Code to perform 
the tasks required by this exemption; and
    (iii) Be verified, through in-training knowledge checks, 
``graduation'' tests, and/or other technological tools designed to 
confirm that personnel fully and in good faith participate in the 
Training;
    (i)(1) Each DB QPAM must submit to an audit 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 each DB QPAM's compliance with the Policies 
and Training conditions described herein. The audit requirement must be 
incorporated in the Policies, and the first audit must cover the period 
that begins on the first day this exemption is effective, if granted. 
Each audit 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 a sample of each QPAM's 
transactions involving Covered Plans that is 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, 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 on or before the end of the relevant 
period described in Section III(i)(1) for completing the audit. The 
auditor, at its discretion, may issue a single consolidated Audit 
Report that covers all of 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 in Section III(h) above. The DB QPAM must promptly 
address any noncompliance and promptly address or prepare a written 
plan of action to address any determination by the auditor regarding 
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 respective DB QPAM must be included in an addendum 
to the Audit Report (and such addendum must be completed before the 
certification described in Section III(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 the 
Audit Report is submitted, 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 rely solely on the Annual 
Report created by the compliance officer (the Compliance Officer) as 
described in Section III(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 III(i)(3) and (4) above; and
    (ii) The adequacy of the most recent Annual Review described in 
Section III(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 such signatory has 
reviewed the Audit Report and this exemption; and that, to the best of 
such signatory's knowledge at the time, such DB QPAM has addressed, 
corrected, or 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 signatory'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 proposed exemption, and with the 
applicable provisions of ERISA and the Code. Notwithstanding the above, 
no person who knew of, should have known of, or participated in the 
criminal conduct that is the subject of the U.S. Conviction or the 2021 
DPA may provide the certification

[[Page 27800]]

required by this exemption, unless the person took active documented 
steps to stop the misconduct underlying the U.S. Conviction or the 2021 
DPA;
    (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 
certify in writing and under penalty of perjury that such officer has 
reviewed each Audit Report. Deutsche Bank must provide notice to the 
Department if there is a switch in the committee to which the Audit 
Report will be provided. With respect to this subsection (8), such 
certifying executive officer must not have known of, had reason to know 
of, or participated in, the criminal conduct that is the subject of the 
U.S. Conviction (or the 2021 DPA), unless such person took active 
documented steps to stop the misconduct underlying the U.S. Conviction 
(or the 2021 DPA);
    (9) Each DB QPAM provides its certified Audit Report by electronic 
mail to: [email protected]. 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 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) Each DB QPAM and the auditor must submit the following 
document(s) to OED via electronic mail to [email protected]: Any engagement 
agreement(s) entered into pursuant to the engagement of the auditor 
under this exemption, no later than two (2) months after the execution 
of any such engagement agreement;
    (11) The auditor must provide the Department, upon request, for 
inspection and review, access to all the workpapers created and 
utilized in the course of 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 explanation 
for the substitution or change including a description of any material 
disputes between the terminated auditor, and Deutsche Bank or any of 
its affiliates;
    (j) Throughout the Exemption Period, with respect to any 
arrangement, agreement, or contract between a DB QPAM and a Covered 
Plan, the DB QPAM agrees and warrants:
    (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 in accordance with applicable rules under ERISA 
and the Code); and to comply with the standards of prudence and loyalty 
set forth in ERISA Section 404 with respect to each such Covered Plan 
to the extent that section 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 Conviction. This 
condition applies only to actual losses caused by the DB QPAM's 
violations. Actual losses include, but are not limited to, losses and 
related costs arising from unwinding transactions with third parties 
and from transitioning Plan assets to an alternative asset manager as 
well as costs associated with any exposure to excise taxes under Code 
section 4975 as a result of a QPAM's inability to rely upon the relief 
in the QPAM Exemption.
    (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 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. In connection with any of these 
arrangements involving investments in pooled funds subject to ERISA 
entered into after the effective date of this exemption, 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 a Covered Plan's investment, and such 
restrictions must be applicable to all investors in the pooled fund on 
equal terms 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;
    (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 ERISA Section 410, 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) Within 60 calendar days after this exemption's effective date, 
each DB QPAM must provide a notice of its obligations under this 
Section III(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 60 calendar days from this exemption's effective date, the DB 
QPAM must agree to its obligations under this Section III(j) in an 
updated investment management agreement between the DB QPAM and such 
clients or other written contractual agreement. This condition will be 
deemed met for each Covered Plan that received a notice pursuant to PTE 
2017-04 or PTE 2021-01 that meets the terms of this condition. This 
condition will also be met where the DB QPAM has already agreed to the 
same obligations required by this Section III(j) in an updated 
investment management agreement between the DB QPAM and a Covered Plan. 
Notwithstanding the above, a DB QPAM will not violate the condition 
solely because a Covered Plan client refuses to sign an updated 
investment management agreement;
    (k) Within 60 days after the effective date of this exemption, each 
DB QPAM provides notice of the exemption as published in the Federal 
Register, along

[[Page 27801]]

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, or the sponsor of 
an investment fund in any case where a DB QPAM acts only as a sub-
advisor to the investment fund in which such ERISA-covered plan and IRA 
invests. All prospective Covered Plan clients that enter into a written 
asset or investment management agreement with a DB QPAM (including a 
participation or subscription agreement in a pooled fund managed by a 
DB QPAM) after the date that is sixty days after the effective date of 
this exemption must receive the proposed and final exemptions with the 
Summary and the Statement prior to, or contemporaneously with, the 
client's receipt of a written asset management agreement from the DB 
QPAM (for avoidance of doubt, all Covered Plan clients of a DB QPAM 
during the Exemption Period must receive the disclosures described in 
this Section by the later of (i) 60 days after the effective date of 
the exemption or (ii) the date that a Covered Plan client enters into a 
written asset or investment management agreement with a DB QPAM). 
Disclosures required under this paragraph (k) may be delivered 
electronically (including by an email that has a link to this 
exemption. Notwithstanding the above paragraph, 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 PTE 84-14 Section 
I(g) that is attributable to the U.S. Conviction. If, during the 
Exemption Period, an affiliate of a DB QPAM (as defined in Section 
VI(d) of PTE 84-14) is convicted of a crime described in Section I(g) 
of PTE 84-14 (other than the U.S. Conviction), relief in this exemption 
would terminate immediately;
    (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 previously designated by the DB QPAM(s) under PTE 
2021-01 may continue to serve in the role of Compliance Officer 
provided they meet all the requirements of this Section. 
Notwithstanding the above, no person who knew of, or should have known 
of, or participated in the criminal conduct that is subject of the U.S. 
Conviction (or the 2021 DPA), by any party, may be involved with the 
designation or responsibilities required by this condition, unless the 
person took active documented steps to stop the criminal conduct that 
is subject of the U.S. Conviction (or the 2021 DPA). The Compliance 
Officer must conduct an annual review for each twelve-month period, 
beginning on this exemption's effective date, (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;
    (2) With respect to each Annual Review, the following conditions 
must be met:
    (i) The Annual 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 in connection with PTE 2017-04 or PTE 2021-01 or this exemption; 
(B) any material change in the relevant business activities of the DB 
QPAMs; and (C) 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 
Annual Review (each, an Annual Report) that: (A) summarizes their 
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 Annual Report, the Compliance Officer must certify in 
writing that to the best of their 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 Annual Report; and (D) the DB 
QPAMs have complied with the Policies and Training and/or corrected (or 
is correcting) any known instances of noncompliance in accordance with 
Section III(h) above;
    (iv) Each Annual Report must be provided to: (A) the appropriate 
corporate officers of Deutsche Bank and each DB QPAM to which such 
report relates, and (B) the head of compliance and the DB QPAM's 
general counsel (or their functional equivalent) of the relevant DB 
QPAM; and must be made unconditionally available to the independent 
auditor described in Section III(i) above;
    (v) Each Annual Review, including the Compliance Officer's written 
Annual Report, must be completed within three (3) months following the 
end of the period to which it relates;
    (n) 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;
    (o) During the Exemption Period, Deutsche Bank: (1) immediately 
discloses to the Department any Deferred Prosecution Agreement (a DPA) 
or a Non-Prosecution Agreement (an NPA) with the U.S. Department of 
Justice, entered into by Deutsche Bank any of its affiliates in 
connection with conduct described in Section I(g) of PTE 84-14 and/or 
ERISA section 411; 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 such 
agreement;
    (p) Within 60 days after the effective date of this exemption, each 
DB QPAM, in its agreements with, or in other written disclosures 
provided to Covered Plans, clearly and prominently informs Covered Plan 
clients of the Covered Plan's right to obtain a copy of the Policies or 
a description (Summary Policies), which accurately summarizes key 
components of the QPAM's written Policies developed in connection with 
this exemption. If the Policies are

[[Page 27802]]

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. If 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. With respect to this requirement, the 
description may be continuously maintained on a website, provided that 
such website link to the Policies or the Summary Policies is clearly 
and prominently disclosed to each Covered Plan;
    (q) 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 III(c), (d), (h), (i), (j), (k), (l), (n) 
and (p) or if the independent auditor described in Section III(i) fails 
to comply with a provision of the exemption, other than the requirement 
described in Section III(i)(11), provided that such failure did not 
result from any actions or inactions of Deutsche Bank or its 
affiliates;
    (r) Deutsche Bank imposes its internal procedures, controls, and 
protocols to reduce the likelihood of any recurrence of conduct that is 
the subject of the U.S. Conviction and the 2021 DPA;
    (s) All the material facts and representations set forth in the 
Summary of Facts and Representations are true and accurate;
    (t) With respect to an asset manager that becomes a DB QPAM after 
the effective date of the exemption by virtue of being acquired (in 
whole or in part) by DB or a subsidiary or affiliate of DB (a ``newly-
acquired DB QPAM''), the newly-acquired DB QPAM would not be precluded 
from relying on the exemptive relief provided by PTE 84-14 
notwithstanding the U.S. Conviction as of the closing date for the 
acquisition; however, the operative terms of the exemption shall not 
apply to the newly-acquired DB QPAM until a date that is six (6) months 
after the closing date for the acquisition. To that end, the newly 
acquired DB QPAM will initially submit to an audit pursuant to Section 
III(i) of this exemption as of the first audit period that begins 
following the closing date for the acquisition. The period covered by 
the audit must begin on the date on which the DB QPAM was acquired; and
    (u) The DB QPAM(s) must provide the Department with the records 
necessary to demonstrate that each condition of this exemption has been 
met within 30 days of a request for the records by the Department 
except that the Department may extend the 30-day deadline, in its sole 
discretion, upon the submission of a written extension request by the 
DB QPAM(s) that specifically describes why additional time is necessary 
to submit the records.
    Effective Date: The exemption will be in effect for a period of 
three years, beginning on April 18, 2024, and ending on April 17, 2027.

    Signed at Washington, DC, this 15th day of April 2024.
George Christopher Cosby,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2024-08337 Filed 4-17-24; 8:45 am]
BILLING CODE 4510-29-P