NOTICE OF INTENT TO ENGAGE IN SECURITIES TRANSACTIONS WITH AFFILIATED BROKER DEALERS IN ACCORDANCE WITH PROHIBITED TRANSACTION EXEMPTION

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1 NOTICE OF INTENT TO ENGAGE IN SECURITIES TRANSACTIONS WITH AFFILIATED BROKER DEALERS IN ACCORDANCE WITH PROHIBITED TRANSACTION EXEMPTION To: Authorizing Fiduciaries (each, an Independent Fiduciary ) of one or more employee benefit plans (each, a Plan ) that participate in one or more collective funds managed by State Street Global Advisors (each, an SSGA Fund ) or for which SSGA manages a separate account with respect to which State Street Global Advisors Trust Company acts as Fiduciary ( SSGA or "State Street") or for which SSGA provides transition, liquidation or restructuring services ( Transition Account ) In accordance with the powers it is afforded as trustee under the Sixth Amended and Restated Declaration of Trust for the State Street Global Advisors Trust Company Investment Funds for Tax Exempt Retirement Plans (the Funds ), State Street Global Advisors ( SSGA ), may, but is not required to, place security transactions for the Funds through affiliated broker dealers pursuant to Department of Labor Prohibited Transaction Class Exemption ( PTE ), and any other applicable statutory or administrative exemptions. Subject to its duty of best execution, SSGA may, but is not required to, place equity or fixed income securities orders that are executed on behalf of (i) the SSGA Fund or (ii) the Transition Account through its Affiliated Brokers, including State Street Global Markets, LLC and State Street Global Markets International Limited, for execution. These securities orders will be executed by SSGA and its Affiliated Brokers either in open market transactions, including through the use of external crossing networks, or in internal agency cross transactions (each, a "Market Transaction"). PTE , among other things, that the Independent Fiduciary be provided, not less than thirty (30) days prior to any Market Transaction: (i) a copy of State Street s Brokerage Practices, (ii) a copy of PTE and (iii) any other reasonably available information regarding the brokerage services provided by SSGA that the Independent Fiduciary has requested. Additional, the Independent Fiduciary may terminate, without penalty, the authorization to place any or all Market Transactions through Affiliated Brokers at any time by sending SSGA a termination notice in substantially the form attached hereto. Attachments: Prohibited Transaction Class Exemption State Street s Brokerage Placement Practices Special Termination Form

2 Federal Register / Vol. 67, No. 201 / Thursday, October 17, 2002 / Notices Dated: October 4, Robert F. Diegelman, Acting Assistant Attorney General for Administration. JUSTICE/INS 004 SYSTEM NAME: The Asset Management Information System (AMIS). AUTHORITY FOR MAINTENANCE OF THE SYSTEM: (1) 40 U.S.C. 486; (2) 41 CFR part 101; (3) 41 CFR part 128; and (4) 41 CFR part 102. POLICIES AND PRACTICES FOR STORING, RETRIEVING, ACCESSING, RETAINING AND DISPOSING OF RECORDS IN THE SYSTEM: STORAGE: RETRIEVABILITY: SAFEGUARDS: INS offices are located in buildings under security guard, and access to the premises is by official identification. All records are stored in space which is locked outside of normal office hours. In addition, paper records with social security numbers are stored in locked cabinets or machines. Access to the automated system is controlled by restricted password for use at remote terminals in secured areas. JUSTICE/INS 023 SYSTEM NAME: Law Enforcement Support Center Database. SYSTEM LOCATION: Immigration and Naturalization Service (INS), Law Enforcement Support Center (LESC), Eastern Regional Office Building, 188 Harvest Lane, Williston, Vermont POLICIES AND PRACTICES FOR STORING, RETRIEVING, ACCESSING, RETAINING, AND DISPOSING OF RECORDS IN THE SYSTEM: STORAGE: These records are stored in electronic format. Electronic records are stored on magnetic or optical media (i.e., computer hard drives, floppy disks, tapes and optical disks). SYSTEM MANAGER(S) AND ADDRESS: Director, Law Enforcement Support Center, Eastern Regional Office, Immigration and Naturalization Service, 188 Harvest Lane, Williston, VT [FR Doc Filed ; 8:45 am] BILLING CODE M DEPARTMENT OF LABOR Pension and Welfare Benefits Administration [Application Number D 10845] Amendment to Prohibited Transaction Exemption (PTE ) For Securities Transactions Involving Employee Benefit Plans and Broker- Dealers AGENCY: Pension and Welfare Benefits Administration, U.S. Department of Labor. ACTION: Adoption of Amendment to PTE SUMMARY: This document amends PTE , a class exemption that permits certain persons who serve as fiduciaries for employee benefit plans to effect or execute securities transactions on behalf of those plans, provided that specified conditions are met. The exemption also allows sponsors of pooled separate accounts and other pooled investment funds to use their affiliates to effect or execute securities transactions for such accounts when certain conditions are met. The amendment affects participants and beneficiaries of employee benefit plans, fiduciaries with respect to such plans, and other persons engaging in the described transactions. DATES: The amendment is effective October 17, FOR FURTHER INFORMATION CONTACT: Christopher Motta, Office of Exemption Determinations, Pension and Welfare Benefits Administration, U.S. Department of Labor, (202) , (this is not a toll-free number); or Charles Jackson, Plan Benefits Security Division, Office of the Solicitor, U.S. Department of Labor, (202) , (this is not a toll-free number). SUPPLEMENTARY INFORMATION: On May 10, 2002, notice was published in the Federal Register (67 FR 31838) of the pendency before the Department of a proposed amendment to PTE (51 FR 41686, Nov. 18, 1986). PTE provides an exemption from the restrictions of section 406(b) 1 of the Employee Retirement Income Security 1 References to section 406 of ERISA as they appear throughout this amendment should be read to refer as well to the corresponding provisions of section 4975 of the Internal Revenue Code of 1986 (the Code). Act of 1974 (ERISA or the Act) and from the taxes imposed by section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(E) or (F) of the Code. The amendment to PTE adopted by this notice was requested in an application, dated October 29, 1999, on behalf of the Securities Industry Association (the SIA), a trade association for securities broker-dealers. The Department proposed the amendment to PTE pursuant to section 408(a) of ERISA and section 4975(c)(2) of the Code, and in accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 2 The notice of pendency gave interested persons an opportunity to comment on the proposed amendment or request a hearing. The Department received one comment on the proposed amendment which subsequently was withdrawn. The amendment adopted in this document is identical to the proposed amendment. Paperwork Reduction Act In accordance with the provisions of the Paperwork Reduction Act of 1995, the Department submitted the proposed revision of the information collection provisions of Prohibited Transaction Exemption to the Office of Management and Budget (OMB) at the time of publication of the proposed amendment. OMB approved the revised information collection request on June 20, 2002 under OMB control number An application for continuing approval will be made before the currently scheduled expiration date of June 30, Description of the Exemption PTE provides relief from the restrictions of section 406(b) for a plan fiduciary to use its authority to cause a plan to pay a fee to such fiduciary for effectuating or executing securities transactions as agent for the plan. Section I of PTE contains definitions and special rules. Notably, for purposes of the class exemption, a person is defined to include the person and affiliates of the person, and an affiliate of a person is defined, in part, to include: (1) Any person directly or indirectly controlling, controlled by, or under common control with, the person; (2) any officer, director, partner, employee, relative (as defined in section 3(15) of ERISA), brother, sister, or spouse of a brother or 2 Section 102 of the Reorganization Plan No. 4 of 1978 (5 U.S.C. App. 1 [1996] generally transferred the authority of the Secretary of the Treasury to issue administrative exemptions under section 4975 of the Code to the Secretary of Labor. VerDate 0ct<09> :36 Oct 16, 2002 Jkt PO Frm Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1

3 64138 Federal Register / Vol. 67, No. 201 / Thursday, October 17, 2002 / Notices sister, of the person; and (3) any corporation or partnership of which the person is an officer, director or partner. Section II describes the transactions covered under PTE to include: a plan fiduciary using his or her authority to cause a plan to pay a fee for effecting or executing securities transactions to that person as agent for the plan, but only to the extent that such transactions are not excessive, under the circumstances, in either amount or frequency; a plan fiduciary acting as the agent in an agency cross transaction for both the plan and one or more other parties to the transaction; and the receipt by a plan fiduciary of reasonable compensation for effecting or executing an agency cross transaction to which a plan is a party from one or more other parties to the transaction. Section III contains conditions designed to protect the interests of plan participants and beneficiaries. These conditions require prior authorization to engage in covered transactions and periodic disclosure of the fiduciary s activities to the authorizing plan fiduciary. Section III(a), prior to this amendment, provided that the person engaging in a covered transaction may not be a trustee (other than a nondiscretionary trustee) or an administrator of the plan, or an employer any of whose employees are covered by the plan. The term person is defined to include affiliates of the person, thus discretionary trustees, plan administrators, sponsoring employers, and their affiliates are generally precluded from relying on the relief provided by the exemption. Section IV contains exceptions to several of the conditions in section III. Specifically, section IV provides that the conditions of section III do not apply to covered transactions to the extent such transactions are engaged in on behalf of individual retirement accounts which meet the requirements set forth in 29 CFR (d) or plans, other than training programs, that do not cover any employees within the meaning of 29 CFR In addition, section IV provides that the conditions of section III do not apply in the case of agency cross transactions to the extent that the person effecting or executing the transaction: does not render investment advice to any plan for a fee with respect to the transaction; is not otherwise a fiduciary who has investment discretion with respect to any plan assets involved in the transaction; and does not have the authority to engage, retain or discharge any person who is, or is proposed to be, a fiduciary regarding any such plan assets. Section IV also provides that a plan trustee, plan administrator, or sponsoring employer may engage in a covered transaction if he or she returns or credits to the plan all profits earned by that person in connection with the securities transactions associated with the covered transaction. Finally, section IV contains special rules for pooled investment funds. Description of the Exemption as Amended The amendment to PTE granted pursuant to this notice enables a discretionary trustee of an ERISA covered plan, or an affiliate of such trustee, to use its fiduciary authority to cause the plan to pay a fee to such trustee for effectuating or executing securities transactions as agent for the plan. In so doing, the trustee (other than a nondiscretionary trustee) must furnish to the authorizing fiduciary of each plan, at least annually, the information specified in section III(i) of the exemption, as amended. In general terms, this section requires the trustee to provide to such fiduciary the aggregate and the average brokerage commissions paid by the plan to brokerage firms affiliated and unaffiliated with the trustee. In addition, as described in section III(h) of the exemption, a trustee (other than a nondiscretionary trustee) may only engage in a covered transaction on behalf of a plan to the extent such plan has at least $50 million in total net assets. This section provides further that, in the case of a pooled fund, the $50 million requirement will be met if 50 percent or more of the units of beneficial interest in such pooled fund are held by plans having total net assets with a value of at least $50 million. General Information The attention of interested persons is directed to the following: (1) The fact that a transaction is the subject of an exemption under section 408(a) of ERISA and section 4975(c)(2) of the Code does not relieve a fiduciary, or other party in interest or disqualified person with respect to a plan, from certain other provisions of ERISA and the Code, including any prohibited transaction provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of ERISA which require, among other things, that a fiduciary discharge his or her duties respecting the plan solely in the interests of the participants and beneficiaries of the plan. Additionally, the fact that a transaction is the subject of an exemption does not affect the requirement of section 401(a) of the Code that the plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries; (2) This exemption does not extend to transactions prohibited under section 406(a) of the Act; (3) In accordance with section 408(a) of ERISA and 4975(c)(2) of the Code, the Department makes the following determinations: (i) the amendment set forth herein is administratively feasible; (ii) the amendment set forth herein is in the interests of plans and of their participants and beneficiaries; and (iii) the amendment set forth herein is protective of the rights of participants and beneficiaries of plans; (4) The amendment is applicable to a particular transaction only if the transaction satisfies the conditions specified in the exemption; and (5) The amendment is supplemental to, and not in derogation of, any other provisions of ERISA and the Code, including statutory or administrative exemptions and transitional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction. Exemption Accordingly, PTE is amended as follows under the authority of section 408(a) of the Act and section 4975(c)(2) of the Code and in accordance with the procedures set forth in 29 CFR 2570, Subpart B (55 FR 32836, 32847, August 10, 1990): (1) Section III(a) is amended to read: The person engaging in the covered transaction is not an administrator of the plan or an employer any of whose employees are covered by the plan. (2) A new paragraph (h) is added to section III which reads: (h) A trustee [other than a nondiscretionary trustee] may only engage in a covered transaction with a plan that has total net assets with a value of at least $50 million and in the case of a pooled fund, the $50 million requirement will be met if 50 percent or more of the units of beneficial interest in such pooled fund are held by plans having total net assets with a value of at least $50 million. For purposes of the net asset tests described above, where a group of plans is maintained by a single employer or controlled group of employers, as defined in section 407(d)(7) of the Act, the $50 million net asset requirement may be met by aggregating the assets of such plans, if the assets are pooled for investment purposes in a single master trust. (3) A new paragraph (i) is added to section III which reads: VerDate 0ct<09> :36 Oct 16, 2002 Jkt PO Frm Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1

4 Federal Register / Vol. 67, No. 201 / Thursday, October 17, 2002 / Notices (i) The trustee (other than a nondiscretionary trustee) engaging in a covered transaction furnishes, at least annually, to the authorizing fiduciary of each plan the following: (1) the aggregate brokerage commissions, expressed in dollars, paid by the plan to brokerage firms affiliated with the trustee; (2) the aggregate brokerage commissions, expressed in dollars, paid by the plan to brokerage firms unaffiliated with the trustee; (3) the average brokerage commissions, expressed as cents per share, paid by the plan to brokerage firms affiliated with the trustee; and (4) the average brokerage commissions, expressed as cents per share, paid by the plan to brokerage firms unaffiliated with the trustee. For purposes of this paragraph (i), the words paid by the plan shall be construed to mean paid by the pooled fund when the trustee engages in covered transactions on behalf of a pooled fund in which the plan participates. Signed at Washington, DC, this 11th day of October, Ivan L. Strasfeld, Director, Office of Exemption Determinations, Pension and Welfare Benefits Administration, U.S. Department of Labor. [FR Doc Filed ; 8:45 am] BILLING CODE P DEPARTMENT OF LABOR Mine Safety and Health Administration Proposed Information Collection Request Submitted for Public Comment and Recommendations; Independent Contractor Register ACTION: Notice. SUMMARY: The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden conducts a pre-clearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C. 3506(c)(2)(A)]. This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. Currently, the Mine Safety and Health Administration (MSHA) is soliciting comments concerning the proposed extension of the information collection related to the Independent Contractor Register. DATES: Submit comments on or before December 16, ADDRESSES: Send comments to David Meyer, Director, Administration and Management, 1100 Wilson Boulevard, Room 2125, Arlington, VA Commenters are encouraged to send their comments on a computer disk, or via to Meyer-David@msha.gov, along with an original printed copy. Mr. Meyer can be reached at (202) (voice), or (202) (facsimile). FOR FURTHER INFORMATION CONTACT: Jane E. Tarr, Program Analyst, Records Management Group, U.S. Department of Labor, Mine Safety and Health Administration, Room 2171, 1100 Wilson Boulevard, Arlington, VA Ms. Tarr can be reached at TarrlJane@msha.gov (Internet ), (202) (voice), or (202) (facsimile). SUPPLEMENTARY INFORMATION: I. Background Independent contractors performing services or construction at mines are subject to the Federal Mine Safety and Health Act of CFR 45.4(b) requires mine operators to maintain a written summary of information concerning each independent contractor present on the mine site. The information includes the trade name, business address, and telephone number; a brief description and the location on the mine of the work to be performed; MSHA location on the mine of the work to be performed; MSHA identification number, if any; and the contractor s business address of record. This information is required to be provided for inspection and enforcement purposes by the mine operator to any MSHA inspector upon request. II. Desired Focus of Comments MSHA is particularly interested in comments which: * Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; * Evaluate the accuracy of the agency s estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; * Enhance the quality, utility, and clarity of the information to be collected; and * Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses. A copy of the proposed information collection request can be obtained by contacting the employee listed below in the ADDRESSES section of this notice or viewed on the Internet by accessing the MSHA Home Page ( and then choosing Statutory and Regulatory Information and Federal Register Documents. III. Current Actions The information obtained from the contractors is used by MSHA during inspections to determine proper responsibility for compliance with safety and health standards. Type of Review: Extension. Agency: Mine Safety and Health Administration. Title: Independent Contractor Register. OMB Number: Affected Public: Business or other forprofit. Cite/Reference/Form/etc: 30 CFR part 45. Total Respondents: 15,292. Frequency: On occasion. Total Responses: 99,398. Average Time Per Response: 0.87 hours. Estimated Total Burden Hours: 13,250 hours. Estimated Total Burden Cost: $174,789. Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they will also become a matter of public record. Dated at Arlington, Virginia, this 10th day of October, David L. Meyer, Director, Office of Administration and Management. [FR Doc Filed ; 8:45 am] BILLING CODE M VerDate 0ct<09> :36 Oct 16, 2002 Jkt PO Frm Fmt 4703 Sfmt 4703 E:\FR\FM\17OCN1.SGM 17OCN1

5 State Street s Brokerage Placement Practices State Street shall use reasonable diligence to ascertain the best market for the subject security and buy or sell in such market so that the resultant price to the customer is as favorable as possible under prevailing market conditions. The principal of best execution takes into account many factors in measuring the quality of equity executions. In executing any securities transaction for a client, a broker dealer should use reasonable diligence to ascertain the best inter dealer market for the subject security and buy or sell in such market so that the resultant price to the client is as favorable as possible under prevailing market conditions. When fulfilling best execution responsibilities regarding the routing and execution of client order flow, a number of factors should be considered in determining whether a broker dealer has used "reasonable diligence" in obtaining quality executions in the market, including: (i) the character of the market for the security, e.g., price, volatility, relative liquidity, and pressure on available communications; (ii) the size and type of transaction; (iii) the number of primary markets checked; (iv) the location and accessibility of the markets and quotations sources for the broker dealer and (v) the terms and conditions of the order. State Street acknowledges that certain broker dealers may execute orders at prices superior to the publicly quoted market in accordance with their rules or practices. These broker dealers have execution quality reports that measure the quality of executions routed to a particular broker dealer and the venues utilized by the brokerdealer for execution. With respect to agency cross transactions effected under Section III (g) of Prohibited Transaction Exemption from the Employee Retirement Income Security Act of 1974, as amended, the broker dealer effecting or executing such transactions will have a potentially conflicting division of loyalties and responsibilities regarding the parties to the transactions. Payment for Order Flow Disclosure State Street and its affiliated broker dealers route customer equity orders to national securities exchanges, alternative trading systems, including electronic communications networks, market centers and broker dealers unaffiliated with State Street. Certain of these execution venues offer cash credits for orders that provide liquidity to their books and charge explicit fees for orders that extract liquidity from their books. From time to time, the amount of credits that State Street and its affiliated broker dealers receive from one or more such market centers may exceed the amount that State Street and its affiliated broker dealers are charged. In addition, State Street and its affiliated brokerdealers may facilitate trades through execution venues, including unaffiliated brokerdealers, who may provide State Street or its affiliated broker dealers with a payment, discount or other compensation based upon orders referred to such execution venue. Further information about the source and nature of the foregoing will be provided upon your written request.

6 Affiliated Broker Dealer Trading Special Termination Form Under the terms of Prohibited Transaction Class Exemption (the Exemption ), as amended, we are required to provide you with a special termination form that may be returned to us in the event that you object to the use by State Street of its affiliated broker dealers to execute Equity Market Transactions in performing the portfolio liquidation or restructuring program on your behalf. We would not anticipate you would have any objection to the use of our affiliated broker dealers to execute Equity Market Transactions. Nonetheless, pursuant to the requirements of the Exemption, if you do in fact wish to terminate your authorization for State Street to use its affiliated broker dealers you may do so by completing this form and either mailing it to the address below. State Street Global Advisors One Lincoln Street Boston, Massachusetts Attn: Compliance Officer In accordance with the requirements of the Exemption the plan s investment in the SSGA Fund will be terminated without penalty to the plan, within such time as may be necessary to effect the withdrawal in an orderly manner that is equitable to all withdrawing plans and to all non withdrawing plans. Such authorization shall terminate with respect to any Transition Account sixty (60) days from the date of receipt by SSGA of the Transition Notice related thereto, unless extended by the Investing Fiduciary in writing for an additional thirty (30) days Independent Fiduciary: Account Number: Authorized Signatory: Printed Signatory Name: Telephone Number: Date: