Prohibited Transaction Class Exemption for Principal Transactions

ICR 201607-1210-003

OMB: 1210-0157

Federal Form Document

Forms and Documents
Document
Name
Status
Supporting Statement A
2016-07-08
Justification for No Material/Nonsubstantive Change
2016-07-08
Supplementary Document
2016-07-06
Supplementary Document
2016-04-06
IC Document Collections
IC ID
Document
Title
Status
213824 Modified
ICR Details
1210-0157 201607-1210-003
Historical Active 201603-1210-003
DOL/EBSA
Prohibited Transaction Class Exemption for Principal Transactions
No material or nonsubstantive change to a currently approved collection   No
Regular
Approved without change 09/08/2016
Retrieve Notice of Action (NOA) 07/11/2016
  Inventory as of this Action Requested Previously Approved
06/30/2019 06/30/2019 06/30/2019
3,700,000 0 3,700,000
66,000 0 66,000
939,700,000 0 939,700,000

The Department is granting this prohibited transaction class exemption (PTE) in connection with its regulation under ERISA section 3(21)(A)(ii) and Code section 4975(e)(3)(B). The Regulation amends the definition of a "fiduciary" under ERISA and the Code to specify when a person is a fiduciary by reason of the provision of investment advice for a fee or other compensation regarding assets of a plan or IRA (i.e., an investment advice fiduciary). The Regulation replaces an existing regulation dating to 1975, with the aim of more appropriately distinguishing between the sorts of advice relationships that should be treated as fiduciary in nature and those that should not. The proposed exemption would allow an individual investment advice fiduciary (an adviser) and the firm that employs or otherwise contracts with the adviser (a financial institution) to engage in principal transactions involving certain debt securities with plans and IRAs. The proposed exemption limits the type of debt securities that may be purchased or sold and contains conditions which the adviser and financial institution must satisfy in order to rely on the exemption. To safeguard the interests of plans and IRAs, the exemption would require the adviser and financial institution to contractually acknowledge fiduciary status and commit to adhere to certain impartial conduct standards when providing advice to the plan or IRA, including providing advice that is in the plan's or IRA's Best Interest. The financial institution would further be required to warrant that it has adopted policies and procedures designed to mitigate the impact of conflicts of interest and ensure that the individual advisers adhere to the impartial conduct standards. The plan or IRA would be required to consent to the principal transactions following disclosure of the conflicts of interest associated with such transactions. Additional disclosure of the mark-up or mark-down applied to the prevailing market price of the security would be required and financial institutions would be subject to recordkeeping requirements. The Department is issuing technical corrections to its final Principal Transactions Exemption which was published in the Federal Register on April 8, 2016 (81 FR 21089). All of the corrections either fix typographical errors or make minor clarifications to provisions that might otherwise be confusing.

US Code: 29 USC 1108 Name of Law: Employee Retirement Income Security Act
  
None

1210-ZA25 Final or interim final rulemaking 81 FR 21089 04/08/2016

  80 FR 21989 04/20/2015
80 FR 21898 04/20/2015
Yes

1
IC Title Form No. Form Name
Conditions of Principal Transactions PTE

  Total Approved Previously Approved Change Due to New Statute Change Due to Agency Discretion Change Due to Adjustment in Estimate Change Due to Potential Violation of the PRA
Annual Number of Responses 3,700,000 3,700,000 0 0 0 0
Annual Time Burden (Hours) 66,000 66,000 0 0 0 0
Annual Cost Burden (Dollars) 939,700,000 939,700,000 0 0 0 0
No
No

No
No
No
No
No
Uncollected
Chris Cosby 202 693-8540

  No

On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
 
 
 
 
 
 
 
    (i) Why the information is being collected;
    (ii) Use of information;
    (iii) Burden estimate;
    (iv) Nature of response (voluntary, required for a benefit, or mandatory);
    (v) Nature and extent of confidentiality; and
    (vi) Need to display currently valid OMB control number;
 
 
 
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
07/11/2016


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