[Federal Register Volume 75, Number 151 (Friday, August 6, 2010)]
[Notices]
[Pages 47637-47639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19367]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
Prohibited Transaction Exemptions and Grant of Individual
Exemptions Involving: 2010-23, D-11500, Carle Foundation Hospital &
Affiliates Pension Plan; 2010-24, D-11565, Citizens Bank Wealth
Management, N.A.; and 2010-25, D-11602, State Street Bank and Trust
Company (State Street); et al.
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Grant of Individual Exemptions.
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SUMMARY: This document contains exemptions 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).
A notice was published in the Federal Register of the pendency
before the Department of a proposal to grant such exemption. The notice
set forth a summary of facts and representations contained in the
application for exemption and referred interested persons to the
application for a complete statement of the facts and representations.
The application has been available for public inspection at the
Department in Washington, DC. The notice also invited interested
persons to submit comments on the requested exemption to the
Department. In addition the notice stated that any interested person
might submit a written request that a public hearing be held (where
appropriate). The applicant has represented that it has complied with
the requirements of the notification to interested persons. No requests
for a hearing were received by the Department. Public comments were
received by the Department as described in the granted exemption.
The notice of proposed exemption was issued and the exemption is
being granted solely by the Department because, effective December 31,
1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1
(1996), transferred the authority of the Secretary of the Treasury to
issue exemptions of the type proposed to the Secretary of Labor.
Statutory Findings
In accordance with section 408(a) of the Act and/or section
4975(c)(2) of the Code and the procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon
the entire record, the Department makes the following findings:
(a) The exemption is administratively feasible;
(b) The exemption is in the interests of the plan and its
participants and beneficiaries; and
(c) The exemption is protective of the rights of the participants
and beneficiaries of the plan.
Carle Foundation Hospital & Affiliates Pension Plan, Located in
Urbana, Illinois. [Prohibited Transaction Exemption 2010-23;
Exemption Application No. D-11500]
Exemption
The restrictions in section 406(a)(1)(A) and (D) and section 406
(b)(1) and (b)(2) of the Act, and the sanctions resulting from the
application of section 4975 of the Code, by reason of section
4975(c)(1)(A), (D), and (E) of the Code, shall not apply to the sale
of a certain limited partnership interest (the LPI) by the Carle
Foundation Hospital & Affiliates Pension Plan (the Plan) to Carle
Foundation Hospital (the Employer), a party in interest with respect
to the Plan, provided that the following conditions are satisfied:
(a) The sale is a one-time transaction for cash;
(b) The terms and conditions of the sale are at least as
favorable to the Plan as those that the Plan could obtain in an
arm's length transaction with an unrelated third party;
(c) The sales price is the greater of: (1) The fair market value
of the LPI as of the date of the sale, as determined by a qualified,
independent appraiser, or (2) the Plan's total capital contributions
as of the date of the sale, plus imputed earnings (calculated based
upon the applicable one-month Treasury bill rates) from the date of
the Plan's acquisition of the LPI to the date of the sale;
(d) The Plan pays no commissions, fees, or other expenses in
connection with the sale; and
(e) The Plan fiduciaries review and approve the methodology used
by the qualified, independent appraiser, ensure that such
methodology is properly applied in determining the fair market value
of the LPI, and also determine whether it is prudent to go forward
with the proposed transaction.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer
to the notice of proposed exemption published on March 15, 2010 at
75 FR 12305.
Written Comments
The Department received two written comments from participants
of the Plan with respect to the notice of proposed exemption. One
participant, a former employee, inquired how much longer she must
wait to obtain a distribution of her remaining account balance.
Another participant, who is a retiree and requested a hearing, also
inquired about the distribution of her remaining account balance and
expressed concern about lost investment opportunities and earnings.
The applicant responded that it intends to consummate the
proposed sale of the LPI as soon as practicable following
publication of a final exemption, if granted, in the Federal
Register. Each affected participant will then receive his or her pro
rata share of the cash proceeds from the sale of the LPI, as well as
his or her pro rata share of the imputed earnings. Because the LPI
is an illiquid investment (constituting less than one percent of
total Plan assets) and the applicant was unable to identify an
unrelated purchaser, it requested an administrative exemption from
the Department to purchase the LPI from the Plan. The Department
also notes that the grant of the exemption will facilitate the
commenters' requested distribution, and the conditions, including
the sales price formula described in condition (c), provide
appropriate safeguards consistent with the requirements of section
408(a).
The Department has determined not to hold a public hearing. The
Department's regulations provide that a hearing will be held where
necessary to fully explore material factual issues identified by the
person requesting the hearing. See 29 CFR 2570.46. In this case, the
Department concludes that the commenter has not identified any
material factual issues that would require a hearing.
Based upon the information contained in the entire record, the
Department has determined to grant the proposed exemption.
FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,
telephone (202) 693-8557. (This is not a toll-free number.)
Citizens Bank Wealth Management, N.A., Located in Flint, Michigan.
[Prohibited Transaction Exemption 2010-24; Exemption Application No.
D-11565]
Exemption
Section I. Transaction
The restrictions of section 406(a)(1)(A) and (D) and section 406
(b)(1) and (b)(2) of the Act, and the sanctions resulting from the
application of section 4975 of the Code, by reason of section
4975(c)(1)(A), (D), and (E) of the Code, shall not apply, effective
December 16, 2008, to the past sale of certain Auction Rate
Securities (ARS) by the Four-Way Tool & Die, Inc. Profit Sharing
Plan and Trust (the Plan) to Citizens Republic Bancorp (Citizens
Republic), a party in interest with respect to the Plan, provided
that the following conditions were satisfied: \1\
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\1\ For purposes of this exemption, references to section 406 of
the Act should be read to refer also to the corresponding provisions
of section 4975 of the Code.
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(A) The subject ARS were acquired for the Plan by Citizens Bank
Wealth Management, N.A. (the Trustee), acting in its capacity as
trustee of the Plan, from an independent broker;
(B) The last auction for each of the ARS was unsuccessful;
(C) The sale of the ARS was directly between the Plan and
Citizens Republic for solely cash consideration against prompt
delivery of the ARS;
(D) The sale price for each of the ARS was equal to the par
value, plus any accrued but unpaid interest;
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(E) The Plan did not waive any rights or claims in connection
with the sale;
(F) The decision to sell the ARS to the Trustee was made by a
Plan fiduciary independent of the Trustee;
(G) The Plan did not pay any commissions or transaction costs in
connection with the sale;
(H) The sale was not part of an arrangement, agreement, or
understanding designed to benefit a party in interest to the Plan;
(I) Upon termination of the Plan, the Plan participants received
100 percent of their account balances, and as a result of the pre-
termination sale of the ARS to Citizens Republic at face value, plus
any accrued but unpaid interest, no participant was adversely
affected by the absence of an auction market for the ARS or the
resulting decline in their market value;
(J) The Trustee and its affiliate, as applicable, maintain, or
cause to be maintained, for a period of at least six (6) years from
the date of the sale, such records as are necessary to enable the
persons described in paragraph (K), below, to determine whether the
conditions of this exemption have been met, except that--
(i) No party in interest with respect to the Plan that engaged
in the sale, other than the Trustee and its affiliate, as
applicable, shall be subject to a civil penalty under section 502(i)
of the Act or the taxes imposed by section 4975(a) and (b) of the
Code, if such records are not maintained, or are not available for
examination, as required, below, by paragraph (K); and
(ii) A separate prohibited transaction shall not be considered
to have occurred solely because, due to circumstances beyond the
control of the Trustee or its affiliate, as applicable, such records
are lost or destroyed prior to the end of the six-year period; and
(K)(i) Except as provided in subparagraph (ii), below, and
notwithstanding any provisions of subsections (a)(2) and (b) of
section 504 of the Act, the records referred to in paragraph (J),
above, are unconditionally available at their customary location for
examination during normal business hours by--
(a) Any duly authorized employee or representative of the
Department, the Internal Revenue Service, or the U.S. Securities and
Exchange Commission;
(b) Any fiduciary of the Plan, or any duly authorized employee
or representative of such fiduciary; or
(c) The employer of participants of the Plan, and any employee
organization whose members are covered by the Plan, or any
authorized employee or representative of these entities;
(ii) None of the persons described above in paragraph (K)(i)(b)
or (c) of shall be authorized to examine trade secrets of the
Trustee, or commercial or financial information which is privileged
or confidential; and
(iii) If the Trustee refuses to disclose information on the
basis that such information is exempt from disclosure, the Trustee
shall, by the close of the thirtieth (30th) day following the
request, provide a written notice advising that person of the
reasons for the refusal and that the Department may request such
information.
Section II. Definitions
For purposes of this exemption:
(A) The term ``affiliate'' means any person, directly or
indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such other person (with
respect to the Trustee, ``affiliate'' includes, but is not limited
to, its parent corporation, Citizens Republic Bancorp)
(B) The term ``control'' means the power to exercise a
controlling influence over the management or policies of a person
other than an individual;
(C) The term ``Auction Rate Securities'' or ``ARS'' means
securities that are debt instruments (generally with a long-term
nominal maturity) with an interest rate that is reset at specific
intervals through a Dutch Auction process;
(D) A person is ``independent'' of the Trustee if the person is
(1) not the Trustee or an affiliate, and (2) not a ``relative'' (as
defined in section 3(15) of the Act) of the party engaging in the
transaction; and
(E) The term ``Plan'' means the Four-Way Tool & Die, Inc. Profit
Sharing Plan and Trust, which is an employee benefit plan as defined
in section 3(3) of the Act, and its related trust, which is an
entity holding plan assets within the meaning of 29 CFR 2510.3-101,
as modified by section 3(42) of the Act.
Effective Date: This exemption is effective as of December 16,
2008.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the notice of proposed exemption published on April 8, 2010 at 75 FR
17966.
Written Comments
No comments were received by the Department with respect to the
notice of proposed exemption.
FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,
telephone (202) 693-8557. (This is not a toll-free number.)
State Street Bank and Trust Company (State Street), Located in
Boston, MA. [Prohibited Transaction Exemption 2010-25; Exemption
Application No. D-11602]
Exemption
The restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of
the Act and the sanctions resulting from the application of section
4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of
the Code,\2\ shall not apply as of December 22, 2009 to the cash
sale of certain fixed income securities (the Securities) for an
aggregate purchase price of $113,977,880.15 by the Quality D Short-
Term Investment Fund (the Fund) to State Street, a fiduciary with
respect to the Fund and a party in interest with respect to employee
benefit plans (the Plans) invested, directly or indirectly, in the
Fund, provided that the following conditions are met:
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\2\ For purposes of this exemption, references to section 406 of
the Act should be read to refer as well to the corresponding
provisions of section 4975 of the Code.
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(a) The sale was a one-time transaction for cash;
(b) The Fund received an amount which was equal to the sum of
(1) the aggregate current amortized cost of the Securities as of the
date of the transaction plus (2) the aggregate accrued interest on
the Securities through the date of the transaction, calculated at
the applicable contract rate for each of the Securities;
(c) The Fund did not bear any commissions, fees, transaction
costs, or other expenses in connection with the sale;
(d) The amount received by the Fund with respect to each of the
Securities was no less than the fair market value of each such
Security, based upon the closing price obtained from an independent
pricing service, as of the close of business on the date prior to
the date of the transaction;
(e) State Street, as trustee of the Fund, determined that the
sale of the Securities was appropriate for and in the best interests
of the Fund, and the Plans invested, directly or indirectly, in the
Fund, at the time of the transaction;
(f) State Street took all appropriate actions necessary to
safeguard the interests of the Fund and the Plans invested, directly
or indirectly, in the Fund, in connection with the transaction;
(g) State Street and its affiliates, as applicable, maintain, or
cause to be maintained, for a period of six (6) years from the date
of any covered transaction such records as are necessary to enable
the person described below in paragraph (h)(1), to determine whether
the conditions of this exemption have been met, except that:
(1) No party in interest with respect to a Plan which engages in
the covered transaction, other than State Street and its affiliates,
as applicable, shall be subject to a civil penalty under section
502(i) of the Act or the taxes imposed by sections 4975(a) and (b)
of the Code, if such records are not maintained, or not available
for examination, as required, below, by paragraph (h)(1); and
(2) A separate prohibited transaction shall not be considered to
have occurred solely because, due to circumstances beyond the
control of State Street or its affiliates, as applicable, such
records are lost or destroyed prior to the end of the six-year
period.
(h)(1) Except as provided, in paragraph (h)(2), and
notwithstanding any provisions of subsections (a)(2) and (b) of
section 504 of the Act, the records referred to in paragraph (g) are
unconditionally available at their customary location for
examination during normal business hours by:
(A) Any duly authorized employee or representative of the
Department, the Internal Revenue Service, or the Securities and
Exchange Commission;
(B) Any fiduciary of any Plan that engages in the covered
transaction, or any duly authorized employee or representative of
such fiduciary;
(C) Any employer of participants and beneficiaries and any
employee organization whose members are covered by a Plan that
engages in the covered transaction, or any
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authorized employee or representative of these entities; or
(D) Any participant or beneficiary of a Plan that engages in the
covered transaction, or duly authorized employee or representative
of such participant or beneficiary;
(2) None of the persons described, above, in paragraphs
(h)(1)(B)-(D) shall be authorized to examine trade secrets of State
Street or its affiliates, or commercial or financial information
which is privileged or confidential; and
(3) Should State Street refuse to disclose information on the
basis that such information is exempt from disclosure, State Street
shall, by the close of the thirtieth (30th) day following the
request, provide a written notice advising that person of the
reasons for the refusal and that the Department may request such
information.
Effective Date: This exemption is effective as of December 22,
2009.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the notice of proposed exemption published on April 30, 2010 at 75 FR
22860.
FOR FURTHER INFORMATION CONTACT: Brian Shiker of the Department,
telephone (202) 693-8552. (This is not a toll-free number.)
General Information
The attention of interested persons is directed to the
following:
(1) The fact that a transaction is the subject of an exemption
under section 408(a) of the Act and/or section 4975(c)(2) of the
Code does not relieve a fiduciary or other party in interest or
disqualified person from certain other provisions to which the
exemption does not apply and the general fiduciary responsibility
provisions of section 404 of the Act, which among other things
require a fiduciary to discharge his duties respecting the plan
solely in the interest of the participants and beneficiaries of the
plan and in a prudent fashion in accordance with section
404(a)(1)(B) of the Act; nor does it affect the requirement of
section 401(a) of the Code that the plan must operate for the
exclusive benefit of the employees of the employer maintaining the
plan and their beneficiaries;
(2) This exemption is supplemental to and not in derogation of,
any other provisions of the Act and/or the Code, including statutory
or administrative exemptions and transactional rules. Furthermore,
the fact that a transaction is subject to an administrative or
statutory exemption is not dispositive of whether the transaction is
in fact a prohibited transaction; and
(3) The availability of this exemption is subject to the express
condition that the material facts and representations contained in
the application accurately describes all material terms of the
transaction which is the subject of the exemption.
Signed at Washington, DC, this 29th day of July, 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 2010-19367 Filed 8-5-10; 8:45 am]
BILLING CODE 4510-29-P