[Federal Register Volume 75, Number 49 (Monday, March 15, 2010)]
[Notices]
[Pages 12296-12305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5535]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
Prohibited Transaction Exemptions and Grant of Individual
Exemptions Involving: 2010-04, JPMorgan Chase Bank, N.A. (JPMCB or the
Applicants), D-11491; 2010-05, Goldman Sachs & Its Affiliates (Goldman
or the Applicants, D-11509; 2010-06, Louis B. Chaykin, M.D., P.A.
Cross-Tested Profit Sharing Plan (the Plan), D-11532; and 2010-07,
Columbia Management Advisors, LLC (Columbia, or the Applicant) and Its
Current and Future Affiliates (Collectively, the Applicants), D-11556
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
[[Page 12297]]
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.
JPMorgan Chase Bank, N.A. (JPMCB or the Applicant), Located in New
York, New York
[Prohibited Transaction Exemption 2010-04; Application No. D-11491]
Exemption
Section I--Transactions
The restrictions of sections 406(a), 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) through (E) of the
Code, shall not apply, effective July 1, 2004, to the continued and
future provision by JPMCB or by its current or future affiliates of
letters of credit to guarantee the commercial lease obligations of
unrelated third-party tenants in connection with commercial properties
owned by a Fund (as defined below in Section III) or commercial
properties for which a Fund has a security interest, where JPMCB is the
manager and trustee (Trustee) of such Funds that hold the assets of
certain employee benefit plans (the Plans), provided that the
conditions set forth below in Section II are satisfied.
Section II--Conditions
A. With respect to existing or future letters of credit, each of
the Funds is represented by an independent fiduciary to perform the
following functions:
(1) Monitor monthly reports of rental payments of tenants utilizing
such letters of credit issued by JPMCB, or any current or future
affiliate of JPMCB, to guarantee their lease payments;
(2) Confirm whether an event has occurred that calls for a letter
of credit to be drawn upon; and
(3) Represent each of the Funds, and the Plans to the extent they
are invested in the Funds, as an independent fiduciary in any
circumstances with respect to a letter of credit which would present a
conflict of interest for the Trustee or otherwise violate section
406(b), including but not limited to: the need to enforce a remedy
against JPMCB or a current or future affiliate with respect to its
obligations under a letter of credit.
B. With respect to future letters of credit issued by JPMCB, or any
current or future affiliate of JPMCB, the following additional
conditions are met:
(1) JPMCB, or any current or future affiliate of JPMCB, as the
issuer of a letter of credit, has at least an ``A'' credit rating by at
least one nationally recognized statistical rating service at the time
of the issuance of the letter of credit;
(2) The letter of credit has objective market drawing conditions
and states precisely the documents against which payment is to be made;
(3) JPMCB and its affiliates do not ``steer'' the Funds' tenants to
JPMCB or its affiliates in order to obtain a letter of credit;
(4) Letters of credit are issued only to third-party tenants which
are unrelated to JPMCB; and
(5) The terms of any future letters of credit are not more
favorable to the tenants than the terms generally available in
transactions with other similarly situated unrelated third-party
commercial clients of JPMCB or of its current or future affiliates.
C. JPMCB or its affiliates maintain, or cause to be maintained, for
a period of six (6) years from the date of any transactions involving
letters of credit described in Section I above such records as are
necessary to enable the persons, described below in Section II(D), to
determine whether the conditions of this exemption have been met,
except that--
(1) No party in interest with respect to a Plan whose assets are
involved in letter of credit transactions described in Section I above,
other than JPMCB or its affiliates, 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 not
available for examination, as required below by Section II(D); and
(2) A separate prohibited transaction shall not be considered to
have occurred if, due to circumstances beyond the control of JPMCB or
its affiliates, such records are lost or destroyed prior to the end of
the six-year period.
D. (1) Except as provided below in Section II(D)(2), and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to above in Section II(C) are
unconditionally available at their customary location for examination
during normal business hours by--
(i) Any duly authorized employee or representative of the
Department, the Internal Revenue Service, the Securities and Exchange
Commission (SEC), and any U.S. banking regulatory agency;
(ii) Any fiduciary of any Plan whose assets are involved in the
letter of credit transactions described in Section I above, or any duly
authorized employee or representative of such fiduciary; or
(iii) Any employer of participants and beneficiaries and any
employee organization whose members are covered by a Plan whose assets
are involved in the letter of credit transactions described in Section
I above, or any authorized employee or representative of these
entities; or
(iv) Any participant or beneficiary of a Plan whose assets are
involved in the letter of credit transactions described in Section I
above, or duly authorized employee or representative of such
participant or beneficiary;
(2) None of the persons described above in Section II(D)(1)(ii)-
(iv) shall be authorized to examine trade secrets of JPMCB or its
affiliates, or commercial or financial information which is privileged
or confidential; and
(3) Should JPMCB or its affiliates refuse to disclose information
on the basis that such information is exempt from disclosure, pursuant
to Section II(D)(2) above, JPMCB or its affiliates 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 III--Definitions
A. The term ``independent fiduciary'' means Fiduciary Counselors
Inc. (Fiduciary Counselors) or any successor Independent Fiduciary,
provided that Fiduciary Counselors or its successor is: (1) Independent
of, and unrelated to, JPMCB and its affiliates, and (2) appointed to
act on behalf of each Fund
[[Page 12298]]
for the purposes described in Section II.A and II.B above. For purposes
of this exemption, a fiduciary will not be deemed to be independent of,
and unrelated to, JPMCB if: (i) Such fiduciary directly or indirectly,
controls, is controlled by, or is under common control with JPMCB; (ii)
such fiduciary directly or indirectly receives any compensation or
other consideration in connection with any transaction described in
this exemption, except that it may receive compensation for acting as
an independent fiduciary from JPMCB in connection with the transactions
described herein, if the amount or payment of such compensation is not
contingent upon, or in any way affected by such fiduciary's decision;
and (iii) more than 5 percent of such fiduciary's annual gross revenue
in its prior tax year will be paid by JPMCB and its affiliates in the
fiduciary's current tax year with respect to any particular 12-month
tax period.
B. The term ``affiliate'' means: (1) Any person, directly or
indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with such person; (2) any officer,
director, or partner, employee, or relative (as defined in section
3(15) of the Act) of such person; and (3) any corporation or
partnership of which such person is an officer, director, or partner or
employee. For purposes of this definition, 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 ``Fund'' or ``Funds'' means ``collective investment
funds,'' of JPMCB and its current or future affiliates, within the
meaning of Prohibited Transaction Class Exemption 91-38 (PTE 91-38) and
``investment funds,'' of JPMCB and its current or future affiliates,
within the meaning of Prohibited Transaction Class Exemption (PTE 84-
14) and encompasses the following Funds: (i) The Commingled Pension
Trust Fund (Strategic Property) of JPMorgan Chase Bank, N.A. (the
Strategic Property Fund); (ii) the Commingled Pension Trust Fund
(Special Situation Property) of JPMorgan Chase Bank, N.A. (the Special
Situation Property Fund); and (iii) the Commingled Pension Trust Fund
(Mortgage Private Placement) of JPMorgan Chase Bank, N.A. (the Mortgage
Fund).
Written Comments
1. The Notice of Proposed Exemption (the Notice), published in the
Federal Register on November 16, 2009 beginning at page 58987, invited
all interested persons to submit written comments and requests for a
hearing to the Department within forty-five (45) days of the date of
its publication. On December 29, 2009, the Department received a
written comment from the Applicant regarding the content of the Notice.
This comment, which was the only one received by the Department in
connection with the Notice, suggested several minor editorial
adjustments to Sections II and III of the Notice. Specifically, the
Applicant requested that the text of Section II.A.(3) of the Notice
(located at the first column of page 58988 of the November 16, 2009
issue of the Federal Register) be amended in the final grant of
exemption by clarifying that each of the Funds, and the Plans to the
extent that they are invested in the Funds, will be represented by an
independent fiduciary in any circumstances with respect to an existing
or future letter of credit provided by JPMCB or by its current or
future affiliates which would present a conflict of interest for the
Trustee or otherwise violate section 406(b) of the Act. In addition,
the Applicant also suggested amending the text of Section III.C. of the
Notice (beginning at the third column of page 58988 and continuing onto
the first column of page 58989 of the same issue of the Federal
Register) to more precisely describe the official names of the three
Funds (the Strategic Property Fund, the Special Situation Property
Fund, and the Mortgage Fund) that are parties to the exemption
transaction. After due consideration, the Department has adopted each
of these amendments suggested by the Applicant.
2. In its written comment, the Applicant also requested that the
Department amend the information contained in the first paragraph of
Representation 3 of the Notice (located at the second column of page
58989 of the aforementioned issue of the Federal Register) to provide a
more accurate description of the real estate assets generally held by
each of the Funds as of December 31, 2008. Accordingly, the Department
notes that the Applicant has revised the text of the first paragraph of
Representation 3 of the Notice to read as follows: ``As of December 31,
2008, the Strategic Property Fund had net assets of approximately $13.7
billion, which were invested in 152 developed real estate properties,
primarily office buildings, industrial parks, residential properties,
and retail properties. As of December 31, 2008, the Special Situation
Property Fund had net assets of approximately $2.5 billion, which were
invested in real estate properties, primarily office buildings,
industrial parks, residential properties, hotels and retail properties.
As of December 31, 2008, the Mortgage Fund had net assets of
approximately $5.4 billion, which were invested primarily in non-
recourse secured mortgage loans collateralized by office, industrial,
retail, multi-family, residential and senior citizen residential
properties.''
The Department further notes that it did not receive any requests
for a hearing from the Applicant or from any other person during the
aforementioned 45-day comment period.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the text of the Notice at 74 FR 58987.
FOR FURTHER INFORMATION CONTACT: Mr. Mark Judge of the Department at
(202) 693-8550. (This is not a toll-free number).
Goldman, Sachs & Co. and Its Affiliates (Goldman or the Applicant);
Located in New York, New York
[Prohibited Transaction Exemption 2010-05; Exemption Application No. D-
11509]
Exemption
Section I. Sales of Auction Rate Securities From Plans To Goldman:
Unrelated to a Settlement Agreement
The restrictions of section 406(a)(1)(A) and (D) and section
406(b)(1) and (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
February 1, 2008, to the sale by a Plan (as defined in Section V(e)) of
an Auction Rate Security (as defined in Section V(c)) to Goldman, where
such sale (an Unrelated Sale) is unrelated to, and not made in
connection with, a Settlement Agreement (as defined in Section V(f)),
provided that the conditions set forth in Section II have been met.\1\
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\1\ 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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Section II. Conditions Applicable to Transactions Described in Section
I
(a) The Plan acquired the Auction Rate Security in connection with
brokerage or advisory services provided by Goldman to the Plan;
(b) The last auction for the Auction Rate Security was
unsuccessful;
(c) Except in the case of a Plan sponsored by Goldman for its own
[[Page 12299]]
employees (a Goldman Plan), the Unrelated Sale is made pursuant to a
written offer by Goldman (the Offer) containing all of the material
terms of the Unrelated Sale. Either the Offer or other materials
available to the Plan provide: (1) The identity and par value of the
Auction Rate Security; (2) the interest or dividend amounts that are
due and unpaid with respect to the Auction Rate Security; and (3) the
most recent rate information for the Auction Rate Security (if reliable
information is available). Notwithstanding the foregoing, in the case
of a pooled fund maintained or advised by Goldman, this condition shall
be deemed met to the extent each Plan invested in the pooled fund
(other than a Goldman Plan) receives written notice regarding the
Unrelated Sale, where such notice contains the material terms of the
Unrelated Sale;
(d) The Unrelated Sale is for no consideration other than cash
payment against prompt delivery of the Auction Rate Security;L.Hill -
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(e) The sales price for the Auction Rate Security is equal to the
par value of the Auction Rate Security, plus any accrued but unpaid
interest or dividends;
(f) The Plan does not waive any rights or claims in connection with
the Unrelated Sale;
(g) The decision to accept the Offer or retain the Auction Rate
Security is made by a Plan fiduciary or Plan participant or IRA owner
who is independent (as defined in Section V(d)) of Goldman.
Notwithstanding the foregoing: (1) in the case of an IRA (as defined in
Section V(e)) which is beneficially owned by an employee, officer,
director or partner of Goldman, the decision to accept the Offer or
retain the Auction Rate Security may be made by such employee, officer,
director or partner; or (2) in the case of a Goldman Plan or a pooled
fund maintained or advised by Goldman, the decision to accept the Offer
may be made by Goldman after Goldman has determined that such purchase
is in the best interest of the Goldman Plan or pooled fund; \2\
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\2\ The Department notes that the Act's general standards of
fiduciary conduct also apply to the transactions described herein.
In this regard, section 404 of the Act requires, among other things,
that a fiduciary discharge his duties respecting a plan solely in
the interest of the plan's participants and beneficiaries and in a
prudent manner. Accordingly, a plan fiduciary must act prudently
with respect to, among other things, the decision to sell the
Auction Rate Security to Goldman for the par value of the Auction
Rate Security, plus unpaid interest and dividends. The Department
further emphasizes that it expects Plan fiduciaries, prior to
entering into any of the transactions, to fully understand the risks
associated with this type of transaction following disclosure by
Goldman of all relevant information.
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(h) Except in the case of a Goldman Plan or a pooled fund
maintained or advised by Goldman, neither Goldman nor any affiliate
exercises investment discretion or renders investment advice within the
meaning of 29 CFR 2510.3-21(c) with respect to the decision to accept
the Offer or retain the Auction Rate Security;
(i) The Plan does not pay any commissions or transaction costs with
respect to the Unrelated Sale;
(j) The Unrelated Sale is not part of an arrangement, agreement or
understanding designed to benefit a party in interest to the Plan;
(k) Goldman and its affiliates, as applicable, maintain, or cause
to be maintained, for a period of six (6) years from the date of the
Unrelated Sale, such records as are necessary to enable the persons
described below in paragraph (l)(1), to determine whether the
conditions of this exemption, if granted, have been met, except that:
(1) No party in interest with respect to a Plan which engages in an
Unrelated Sale, other than Goldman and its affiliates, 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 not available for examination, as
required, below, by paragraph (l)(1); and
(2) A separate prohibited transaction shall not be considered to
have occurred solely because, due to circumstances beyond the control
of Goldman or its affiliates, as applicable, such records are lost or
destroyed prior to the end of the six-year period;
(l)(1) Except as provided below in paragraph (l)(2), and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to above in paragraph (k) 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 any Plan, including any IRA owner, that
engages in a Sale, or any duly authorized employee or representative of
such fiduciary; or
(C) Any employer of participants and beneficiaries and any employee
organization whose members are covered by a Plan that engages in the
Unrelated Sale, or any authorized employee or representative of these
entities;
(2) None of the persons described above in paragraphs (l)(1)(B)-(C)
shall be authorized to examine trade secrets of Goldman, or commercial
or financial information which is privileged or confidential; and
(3) Should Goldman refuse to disclose information on the basis that
such information is exempt from disclosure, Goldman 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 III. Sales of Auction Rate Securities From Plans to Goldman:
Related to a Settlement Agreement
The restrictions of section 406(a)(1)(A) and (D) and section
406(b)(1) and (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
February 1, 2008, to the sale by a Plan of an Auction Rate Security to
Goldman, where such sale (a Settlement Sale) is related to, and made in
connection with, a Settlement Agreement, provided that the conditions
set forth in Section IV have been met.
Section IV. Conditions Applicable to Transactions Described in Section
III
(a) The terms and delivery of the Offer are consistent with the
requirements set forth in the Settlement Agreement and acceptance of
the offer does not constitute a waiver of any claim of the tendering
Plan;
(b) The Offer or other documents available to the Plan specifically
describe, among other things:
(1) The securities available for purchase under the Offer;
(2) The background of the Offer;
(3) The methods and timing by which Plans may accept the Offer;
(4) The purchase dates, or the manner of determining the purchase
dates, for Auction Rate Securities tendered pursuant to the Offer, if
the Offer had any limitation on such dates;
(5) The timing for acceptance by Goldman of tendered Auction Rate
Securities, if there were any limitations on such timing;
(6) The timing of payment for Auction Rate Securities accepted by
Goldman for payment, if payment was materially delayed beyond the
acceptance of the Offer;
(7) The expiration date of the Offer; and
(8) How to obtain additional information concerning the Offer;
[[Page 12300]]
(c) The terms of the Settlement Sale are consistent with the
requirements set forth in the Settlement Agreement; and
(d) All of the conditions in Section II have been met.
Section V. 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;
(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 Security'' means a security: (1) that
is either a debt instrument (generally with a long-term nominal
maturity) or preferred stock; and (2) with an interest rate or dividend
that is reset at specific intervals through a Dutch auction process;
(d) A person is ``independent'' of Goldman if the person is: (1)
Not Goldman or an affiliate; and (2) not a relative (as defined in
section 3(15) of the Act) of the party engaging in the transaction;
(e) The term ``Plan'' means an individual retirement account or
similar account described in section 4975(e)(1)(B) through (F) of the
Code (an IRA); an employee benefit plan as defined in section 3(3) of
the Act; or an entity holding plan assets within the meaning of 29 CFR
2510.3-101, as modified by section 3(42) of the Act; and
(f) The term ``Settlement Agreement'' means a legal settlement
involving Goldman and a U.S. state or federal authority that provides
for the purchase of an ARS by Goldman from a Plan.
DATES: Effective Date: This exemption is effective as of February 1,
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 December 22, 2009 at 74
FR 68102.
FOR FURTHER INFORMATION CONTACT: Brian Shiker of the Department,
telephone (202) 693-8552. (This is not a toll-free number.)
Louis B. Chaykin, M.D., P.A., Cross-Tested Profit Sharing Plan (the
Plan), Located in Lakewood Ranch, Florida
[Prohibited Transaction Exemption No. 2010-06; Application Number D-
11532]
Exemption
The restrictions of sections 406(a), 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), through (E) of the
Code, shall not apply to the proposed sale (the Sale) at fair market
value by the Plan of certain coins (the Collectibles), to Louis B.
Chaykin, M.D. (the Applicant), 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 Plan pays no commissions, fees or other expenses in
connection with the Sale;
(c) The terms and conditions of the Sale are at least as favorable
as those obtainable in an arm's length transaction with an unrelated
third party;
(d) The fair market value of the Collectibles was determined by a
qualified, independent appraiser;
(e) The Plan receives no less than the fair market value of the
Collectibles at the time of the Sale; and
(f) All of the participants of the Plan, with the exception of the
Applicant, have been paid their benefits in full.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the text of the Notice of Proposed Exemption that appears at 74 FR
68105 (December 22, 2009).
FOR FURTHER INFORMATION CONTACT: Mr. Mark Judge of the Department,
telephone (202) 693-8550. (This is not a toll-free number).
Columbia Management Advisors, LLC (Columbia, or the Applicant) and Its
Current and Future Affiliates (collectively, the Applicants); Located
in Boston, Massachusetts
[Prohibited Transaction Exemption 2010-07; Exemption Application No. D-
11556]
Exemption
Section I--Transactions
The restrictions of section 406 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 (F) of the Code, shall not apply to
the purchase of certain securities (the Securities), as defined, below
in Section III(i), by an Asset Manager, as defined, below, in Section
III(d), from any person other than such Asset Manager, during the
existence of an underwriting or selling syndicate with respect to such
Securities, where a broker-dealer affiliated with Columbia (the
Affiliated Broker-Dealer), as defined, below, in Section III(b), is a
manager or member of such syndicate and the Asset Manager purchases
such Securities, as a fiduciary:
(a) On behalf of an employee benefit plan or employee benefit plans
(Client Plan(s)), as defined, below, in Section III(f); or
(b) On behalf of Client Plans, and/or In-House Plans, as defined,
below, in Section III(m), which are invested in a pooled fund or in
pooled funds (Pooled Fund(s)), as defined, below, in Section III(g);
provided that the conditions as set forth, below, in Section II, are
satisfied (An affiliated underwriter transaction (AUT)).\3\
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\3\ For purposes of this exemption an In-House Plan may engage
in AUTs only through investment in a Pooled Fund.
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Section II--Conditions
The exemption is conditioned upon adherence to the material facts
and representations described herein and upon satisfaction of the
following requirements:
(a)(1) The Securities to be purchased are either--
(i) Part of an issue registered under the Securities Act of 1933
(the 1933 Act) (15 U.S.C. 77a et seq.). If the Securities to be
purchased are part of an issue that is exempt from such registration
requirement, such Securities:
(A) Are issued or guaranteed by the United States or by any person
controlled or supervised by and acting as an instrumentality of the
United States pursuant to authority granted by the Congress of the
United States,
(B) Are issued by a bank,
(C) Are exempt from such registration requirement pursuant to a
federal statute other than the 1933 Act, or
(D) Are the subject of a distribution and are of a class which is
required to be registered under section 12 of the Securities Exchange
Act of 1934 (the 1934 Act) (15 U.S.C. 781), and are issued by an issuer
that has been subject to the reporting requirements of section 13 of
the 1934 Act (15 U.S.C. 78m) for a period of at least ninety (90) days
immediately preceding the sale of such Securities and that has filed
all reports required to be filed thereunder with the Securities and
Exchange Commission (SEC) during the preceding twelve (12) months; or
(ii) Part of an issue that is an Eligible Rule 144A Offering, as
defined in SEC Rule 10f-3 (17 CFR 270.10f-3(a)(4)).\4\
[[Page 12301]]
Where the Eligible Rule 144A Offering of the Securities is of equity
securities, the offering syndicate shall obtain a legal opinion
regarding the adequacy of the disclosure in the offering memorandum;
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\4\ SEC Rule 10f-3(a)(4), 17 CFR 270.10f-3(a)(4), states that
the term ``Eligible Rule 144A Offering'' means an offering of
securities that meets the following conditions:
(i) The securities are offered or sold in transactions exempt
from registration under section 4(2) of the Securities Act of 1933
[15 U.S.C. 77d(d)], rule 144A thereunder [Sec. 230.144A of this
chapter], or rules 501-508 thereunder [Sec. Sec. 230.501-230.508 of
this chapter];
(ii) The securities are sold to persons that the seller and any
person acting on behalf of the seller reasonably believe to include
qualified institutional buyers, as defined in Sec. 230.144A(a)(1)
of this chapter; and
(iii) The seller and any person acting on behalf of the seller
reasonably believe that the securities are eligible for resale to
other qualified institutional buyers pursuant to Sec. 230.144A of
this chapter.
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(2) The Securities to be purchased are purchased prior to the end
of the first day on which any sales are made, pursuant to that
offering, at a price that is not more than the price paid by each other
purchaser of the Securities in that offering or in any concurrent
offering of the Securities, except that--
(i) If such Securities are offered for subscription upon exercise
of rights, they may be purchased on or before the fourth day preceding
the day on which the rights offering terminates; or
(ii) If such Securities are debt securities, they may be purchased
at a price that is not more than the price paid by each other purchaser
of the Securities in that offering or in any concurrent offering of the
Securities and may be purchased on a day subsequent to the end of the
first day on which any sales are made, pursuant to that offering,
provided that the interest rates, as of the date of such purchase, on
comparable debt securities offered to the public subsequent to the end
of the first day on which any sales are made and prior to the purchase
date are less than the interest rate of the debt Securities being
purchased; and
(3) The Securities to be purchased are offered pursuant to an
underwriting or selling agreement under which the members of the
syndicate are committed to purchase all of the Securities being
offered, except if--
(i) Such Securities are purchased by others pursuant to a rights
offering; or
(ii) Such Securities are offered pursuant to an over-allotment
option.
(b) The issuer of the Securities to be purchased pursuant to this
exemption must have been in continuous operation for not less than
three years, including the operation of any predecessors, unless the
Securities to be purchased are--
(1) Non-convertible debt securities rated in one of the four
highest rating categories by Standard & Poor's Rating Services, Moody's
Investors Service, Inc., FitchRatings, Inc., Dominion Bond Rating
Service Limited, Dominion Bond Rating Service, Inc., or any successors
thereto (collectively, the Rating Organizations), provided that none of
the Rating Organizations rates such Securities in a category lower than
the fourth highest rating category; or
(2) Debt securities issued or fully guaranteed by the United States
or by any person controlled or supervised by and acting as an
instrumentality of the United States pursuant to authority granted by
the Congress of the United States; or
(3) Debt securities which are fully guaranteed by a person (the
Guarantor) that has been in continuous operation for not less than
three years, including the operation of any predecessors, provided that
such Guarantor has issued other securities registered under the 1933
Act; or if such Guarantor has issued other securities which are exempt
from such registration requirement, such Guarantor has been in
continuous operation for not less than three years, including the
operation of any predecessors, and such Guarantor is:
(a) A bank; or
(b) An issuer of securities which are exempt from such registration
requirement, pursuant to a Federal statute other than the 1933 Act; or
(c) An issuer of securities that are the subject of a distribution
and are of a class which is required to be registered under section 12
of the 1934 Act (15 U.S.C. 781), and are issued by an issuer that has
been subject to the reporting requirements of section 13 of the 1934
Act (15 U.S.C. 78m) for a period of at least ninety (90) days
immediately preceding the sale of such securities and that has filed
all reports required to be filed thereunder with the SEC during the
preceding twelve (12) months.
(c) The aggregate amount of Securities of an issue purchased,
pursuant to this exemption, by the Asset Manager with: (i) The assets
of all Client Plans; and (ii) The assets, calculated on a pro-rata
basis, of all Client Plans and In-House Plans investing in Pooled Funds
managed by the Asset Manager; and (iii) The assets of plans to which
the Asset Manager renders investment advice within the meaning of 29
CFR 2510.3-21(c) does not exceed:
(1) Ten percent (10%) of the total amount of the Securities being
offered in an issue, if such Securities are equity securities;
(2) Thirty-five percent (35%) of the total amount of the Securities
being offered in an issue, if such Securities are debt securities rated
in one of the four highest rating categories by at least one of the
Rating Organizations, provided that none of the Rating Organizations
rates such Securities in a category lower than the fourth highest
rating category; or
(3) Twenty-five percent (25%) of the total amount of the Securities
being offered in an issue, if such Securities are debt securities rated
in the fifth or sixth highest rating categories by at least one of the
Rating Organizations; provided that none of the Rating Organizations
rates such Securities in a category lower than the sixth highest rating
category; and
(4) The assets of any single Client Plan (and the assets of any
Client Plans and any In-House Plans investing in Pooled Funds) may not
be used to purchase any Securities being offered, if such Securities
are debt securities rated lower than the sixth highest rating category
by any of the Rating Organizations;
(5) Notwithstanding the percentage of Securities of an issue
permitted to be acquired, as set forth in Section II(c)(1), (2), and
(3), above, of this exemption, the amount of Securities in any issue
(whether equity or debt securities) purchased, pursuant to this
exemption, by the Asset Manager on behalf of any single Client Plan,
either individually or through investment, calculated on a pro-rata
basis, in a Pooled Fund may not exceed three percent (3%) of the total
amount of such Securities being offered in such issue, and;
(6) If purchased in an Eligible Rule 144A Offering, the total
amount of the Securities being offered for purposes of determining the
percentages, described, above, in Section II(c)(1)-(3) and (5), is the
total of:
(i) The principal amount of the offering of such class of
Securities sold by underwriters or members of the selling syndicate to
``qualified institutional buyers'' (QIBs), as defined in SEC Rule 144A
(17 CFR 230.144A(a)(1)); plus
(ii) The principal amount of the offering of such class of
Securities in any concurrent public offering.
(d) The aggregate amount to be paid by any single Client Plan in
purchasing any Securities which are the subject of this exemption,
including any amounts paid by any Client Plan or In-House Plan in
purchasing such Securities through a Pooled Fund, calculated on a pro-
rata basis, does not exceed three percent (3%) of the fair market value
of the net assets of such Client Plan or In-House Plan, as of the last
day of the most recent fiscal quarter of such Client Plan or In-House
Plan prior to such transaction.
(e) The covered transactions are not part of an agreement,
arrangement, or understanding designed to benefit the Asset Manager or
its affiliate.
[[Page 12302]]
(f) The Affiliated Broker-Dealer does not receive, either directly,
indirectly, or through designation, any selling concession, or other
compensation or consideration that is based upon the amount of
Securities purchased by any single Client Plan, or that is based on the
amount of Securities purchased by Client Plans or In-House Plans
through Pooled Funds, pursuant to this exemption. In this regard, the
Affiliated Broker-Dealer may not receive, either directly or
indirectly, any compensation or consideration that is attributable to
the fixed designations generated by purchases of the Securities by the
Asset Manager on behalf of any single Client Plan or any Client Plan or
In-House Plan in Pooled Funds.
(g)(1) The amount the Affiliated Broker-Dealer receives in
management, underwriting, or other compensation or consideration is not
increased through an agreement, arrangement, or understanding for the
purpose of compensating the Affiliated Broker-Dealer for foregoing any
selling concessions for those Securities sold pursuant to this
exemption. Except as described above, nothing in this Section II(g)(1)
shall be construed as precluding the Affiliated Broker-Dealer from
receiving management fees for serving as manager of the underwriting or
selling syndicate, underwriting fees for assuming the responsibilities
of an underwriter in the underwriting or selling syndicate, or other
compensation or consideration that is not based upon the amount of
Securities purchased by the Asset Manager on behalf of any single
Client Plan, or on behalf of any Client Plan or In-House Plan
participating in Pooled Funds, pursuant to this exemption; and
(2) The Affiliated Broker-Dealer shall provide to the Asset Manager
a written certification, dated and signed by an officer of the
Affiliated Broker-Dealer, stating the amount that the Affiliated
Broker-Dealer received in compensation or consideration during the past
quarter, in connection with any offerings covered by this exemption,
was not adjusted in a manner inconsistent with Section II(e), (f), or
(g) of this exemption.
(h) The covered transactions are performed under a written
authorization executed in advance by an independent fiduciary of each
single Client Plan (the Independent Fiduciary), as defined, below, in
Section III(h).
(i) Prior to the execution by an Independent Fiduciary of a single
Client Plan of the written authorization described, above, in Section
II(h), the following information and materials (which may be provided
electronically) must be provided by the Asset Manager to such
Independent Fiduciary:
(1) A copy of the Notice of Proposed Exemption (the Notice) and a
copy of the final exemption (the Grant) as published in the Federal
Register, provided that the Notice and the Grant are supplied
simultaneously; and
(2) Any other reasonably available information regarding the
covered transactions that such Independent Fiduciary requests the Asset
Manager to provide.
(j) Subsequent to the initial authorization by an Independent
Fiduciary of a single Client Plan permitting the Asset Manager to
engage in the covered transactions on behalf of such single Client
Plan, the Asset Manager will continue to be subject to the requirement
to provide within a reasonable period of time any reasonably available
information regarding the covered transactions that the Independent
Fiduciary requests the Asset Manager to provide.
(k)(1) In the case of an existing employee benefit plan investor
(or existing In-House Plan investor, as the case may be) in a Pooled
Fund, such Pooled Fund may not engage in any covered transactions
pursuant to this exemption, unless the Asset Manager provides the
written information, as described, below, and within the time period
described, below, in this Section II(k)(2), to the Independent
Fiduciary of each such plan participating in such Pooled Fund (and to
the fiduciary of each such In-House Plan participating in such Pooled
Fund).
(2) The following information and materials (which may be provided
electronically) shall be provided by the Asset Manager not less than 45
days prior to such Asset Manager engaging in the covered transactions
on behalf of a Pooled Fund, pursuant to this exemption, and provided
further that the information described below, in this Section
II(k)(2)(i) and (iii) is supplied simultaneously:
(i) A notice of the intent of such Pooled Fund to purchase
Securities pursuant to this exemption, a copy of the Notice, and a copy
of the Grant, as published in the Federal Register;
(ii) Any other reasonably available information regarding the
covered transactions that the Independent Fiduciary of a plan (or
fiduciary of an In-House Plan) participating in a Pooled Fund requests
the Asset Manager to provide; and
(iii) A termination form expressly providing an election for the
Independent Fiduciary of a plan (or fiduciary of an In-House Plan)
participating in a Pooled Fund to terminate such plan's (or In-House
Plan's) investment in such Pooled Fund without penalty to such plan (or
In-House Plan). Such form shall include instructions specifying how to
use the form. Specifically, the instructions will explain that such
plan (or such In-House Plan) has an opportunity to withdraw its assets
from a Pooled Fund for a period of no more than 30 days after such
plan's (or such In-House Plan's) receipt of the initial notice of
intent, described, above, in Section II(k)(2)(i), and that the failure
of the Independent Fiduciary of such plan (or fiduciary of such In-
House Plan) to return the termination form to the Asset Manager in the
case of a plan (or In-House Plan) participating in a Pooled Fund by the
specified date shall be deemed to be an approval by such plan (or such
In-House Plan) of its participation in the covered transactions as an
investor in such Pooled Fund.
Further, the instructions will identify the Asset Manager and the
Affiliated Broker-Dealer and will provide the address of the Asset
Manager. The instructions will state that this exemption may be
unavailable, unless the fiduciary of each plan participating in the
covered transactions as an investor in a Pooled Fund is, in fact,
independent of the Asset Manager and the Affiliated Broker-Dealer. The
instructions will also state that the fiduciary of each such plan must
advise the Asset Manager, in writing, if it is not an ``Independent
Fiduciary,'' as that term is defined, below, in Section III(h).
For purposes of this Section II(k), the requirement that the
fiduciary responsible for the decision to authorize the transactions
described, above, in Section I of this exemption for each plan be
independent of the Asset Manager shall not apply in the case of an In-
House Plan.
(l)(1) In the case of each plan (and in the case of each In-House
Plan) whose assets are proposed to be invested in a Pooled Fund after
such Pooled Fund has satisfied the conditions set forth in this
exemption to engage in the covered transactions, the investment by such
plan (or by such In-House Plan) in the Pooled Fund is subject to the
prior written authorization of an Independent Fiduciary representing
such plan (or the prior written authorization by the fiduciary of such
In-House Plan, as the case may be), following the receipt by such
Independent Fiduciary of such plan (or by the fiduciary of such In-
House Plan, as the case may be) of the written information described,
above, in Section II(k)(2)(i) and (ii), provided that the Notice and
the Grant, described
[[Page 12303]]
above in Section II(k)(2)(i), are provided simultaneously.
(2) For purposes of this Section II(l), the requirement that the
fiduciary responsible for the decision to authorize the transactions
described, above, in Section I of this exemption for each plan
proposing to invest in a Pooled Fund be independent of the Asset
Manager and its affiliates shall not apply in the case of an In-House
Plan.
(m) Subsequent to the initial authorization by an Independent
Fiduciary of a plan (or by a fiduciary of an In-House Plan) to invest
in a Pooled Fund that engages in the covered transactions, the Asset
Manager will continue to be subject to the requirement to provide
within a reasonable period of time any reasonably available information
regarding the covered transactions that the Independent Fiduciary of
such plan (or the fiduciary of such In-House Plan, as the case may be)
requests the Asset Manager to provide.
(n) At least once every three months, and not later than 45 days
following the period to which such information relates, the Asset
Manager shall furnish:
(1) In the case of each single Client Plan that engages in the
covered transactions, the information described, below, in this Section
II(n)(3)-(7), to the Independent Fiduciary of each such single Client
Plan.
(2) In the case of each Pooled Fund in which a Client Plan (or in
which an In-House Plan) invests, the information described, below, in
this Section II(n)(3)-(6) and (8), to the Independent Fiduciary of each
such Client Plan (and to the fiduciary of each such In-House Plan)
invested in such Pooled Fund.
(3) A quarterly report (the Quarterly Report) (which may be
provided electronically) which discloses all the Securities purchased
pursuant to this exemption during the period to which such report
relates on behalf of the Client Plan, In-House Plan, or Pooled Fund to
which such report relates, and which discloses the terms of each of the
transactions described in such report, including:
(i) The type of Securities (including the rating of any Securities
which are debt securities) involved in each transaction;
(ii) The price at which the Securities were purchased in each
transaction;
(iii) The first day on which any sale was made during the offering
of the Securities;
(iv) The size of the issue of the Securities involved in each
transaction;
(v) The number of Securities purchased by the Asset Manager for the
Client Plan, In-House Plan, or Pooled Fund to which the transaction
relates;
(vi) The identity of the underwriter from whom the Securities were
purchased for each transaction;
(vii) The underwriting spread in each transaction (i.e., the
difference, between the price at which the underwriter purchases the
Securities from the issuer and the price at which the Securities are
sold to the public);
(viii) The price at which any of the Securities purchased during
the period to which such report relates were sold; and
(ix) The market value at the end of the period to which such report
relates of the Securities purchased during such period and not sold;
(4) The Quarterly Report contains:
(i) A representation that the Asset Manager has received a written
certification signed by an officer of the Affiliated Broker-Dealer, as
described, above, in Section II(g)(2), affirming that, as to each AUT
covered by this exemption during the past quarter, the Affiliated
Broker-Dealer acted in compliance with Section II(e), (f), and (g) of
this exemption, and
(ii) A representation that copies of such certifications will be
provided upon request;
(5) A disclosure in the Quarterly Report that states that any other
reasonably available information regarding a covered transaction that
an Independent Fiduciary (or fiduciary of an In-House Plan) requests
will be provided, including, but not limited to:
(i) The date on which the Securities were purchased on behalf of
the Client Plan (or the In-House Plan) to which the disclosure relates
(including Securities purchased by Pooled Funds in which such Client
Plan (or such In-House Plan) invests);
(ii) The percentage of the offering purchased on behalf of all
Client Plans (and the pro-rata percentage purchased on behalf of Client
Plans and In-House Plans investing in Pooled Funds); and
(iii) The identity of all members of the underwriting syndicate;
(6) The Quarterly Report discloses any instance during the past
quarter where the Asset Manager was precluded for any period of time
from selling Securities purchased under this exemption in that quarter
because of its status as an affiliate of an Affiliated Broker-Dealer
and the reason for this restriction;
(7) Explicit notification, prominently displayed in each Quarterly
Report sent to the Independent Fiduciary of each single Client Plan
that engages in the covered transactions that the authorization to
engage in such covered transactions may be terminated, without penalty
to such single Client Plan, within five (5) days after the date that
the Independent Fiduciary of such single Client Plan informs the person
identified in such notification that the authorization to engage in the
covered transactions is terminated; and
(8) Explicit notification, prominently displayed in each Quarterly
Report sent to the Independent Fiduciary of each Client Plan (and to
the fiduciary of each In-House Plan) that engages in the covered
transactions through a Pooled Fund that the investment in such Pooled
Fund may be terminated, without penalty to such Client Plan (or such
In-House 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 the non-withdrawing plans, after the date that that the
Independent Fiduciary of such Client Plan (or the fiduciary of such In-
House Plan, as the case may be) informs the person identified in such
notification that the investment in such Pooled Fund is terminated.
(o) For purposes of engaging in covered transactions, each Client
Plan (and each In-House Plan) shall have total net assets with a value
of at least $50 million (the $50 Million Net Asset Requirement). For
purposes of engaging in covered transactions involving an Eligible Rule
144A Offering, each Client Plan (and each In-House Plan) shall have
total net assets of at least $100 million in securities of issuers that
are not affiliated with such Client Plan (or such In-House Plan, as the
case may be) (the $100 Million Net Asset Requirement).
For purposes of a Pooled Fund engaging in covered transactions,
each Client Plan (and each In-House Plan) in such Pooled Fund shall
have total net assets with a value of at least $50 million.
Notwithstanding the foregoing, if each such Client Plan (and each such
In-House Plan) in such Pooled Fund does not have total net assets with
a value of at least $50 million, the $50 Million Net Asset Requirement
will be met if 50 percent (50%) or more of the units of beneficial
interest in such Pooled Fund are held by Client Plans (or by In-House
Plans) each of which has total net assets with a value of at least $50
million. For purposes of a Pooled Fund engaging in covered transactions
involving an Eligible Rule 144A Offering, each Client Plan (and each
In-House Plan) in such Pooled Fund shall have total net assets of at
least $100 million in securities of issuers that are not affiliated
with such Client Plan (or such In-House Plan, as the case may be).
Notwithstanding the foregoing, if each
[[Page 12304]]
such Client Plan (and each such In-House Plan) in such Pooled Fund does
not have total net assets of at least $100 million in securities of
issuers that are not affiliated with such Client Plan (or In-House
Plan, as the case may be), the $100 Million Net Asset Requirement will
be met if 50 percent (50%) or more of the units of beneficial interest
in such Pooled Fund are held by Client Plans (or by In-House Plans)
each of which have total net assets of at least $100 million in
securities of issuers that are not affiliated with such Client Plan (or
such In-House Plan, as the case may be), and the Pooled Fund itself
qualifies as a QIB, as determined pursuant to SEC Rule 144A (17 CFR
230.144A(a)(1)(i)(F)).
For purposes of the net asset requirements described above, in this
Section II(o), where a group of Client 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 (or in the
case of an Eligible Rule 144A Offering, the $100 Million Net Asset
Requirement) may be met by aggregating the assets of such Client Plans,
if the assets of such Client Plans are pooled for investment purposes
in a single master trust.
(p) The Asset Manager qualifies as a ``qualified professional asset
manager'' (QPAM), as that term is defined under Part V(a) of PTE 84-14.
Further, the Asset Manager, which qualifies as a QPAM, must also have
total client assets under its management and control in excess of $5
billion, as of the last day of its most recent fiscal year and
shareholders' or partners' equity in excess of $1 million.
(q) No more than 20 percent of the assets of a Pooled Fund at the
time of a covered transaction are comprised of assets of In-House Plans
for which the Asset Manager or the Affiliated Broker-Dealer exercises
investment discretion.
(r) The Asset Manager and the Affiliated Broker-Dealer, 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 persons, described, below, in Section II(s), 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 transactions, other than the Asset Manager and the
Affiliated Broker-Dealer, 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 not
available for examination, as required, below, by Section II(s); and
(2) A separate prohibited transaction shall not be considered to
have occurred solely because, due to circumstances beyond the control
of the Asset Manager, or the Affiliated Broker-Dealer, as applicable,
such records are lost or destroyed prior to the end of the six-year
period.
(s)(1) Except as provided, below, in Section II(s)(2), and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to above, in Section II(r), are
unconditionally available at their customary location for examination
during normal business hours by--
(i) Any duly authorized employee or representative of the
Department, the Internal Revenue Service, or the SEC; or
(ii) Any fiduciary of any plan that engages in the covered
transactions, or any duly authorized employee or representative of such
fiduciary; or
(iii) Any employer of participants and beneficiaries and any
employee organization whose members are covered by a plan that engages
in the covered transactions, or any authorized employee or
representative of these entities; or
(iv) Any participant or beneficiary of a plan that engages in the
covered transactions, or duly authorized employee or representative of
such participant or beneficiary;
(2) None of the persons described above, in Section II(s)(1)(ii)-
(iv), shall be authorized to examine trade secrets of the Asset
Manager, or the Affiliated Broker-Dealer, or commercial or financial
information which is privileged or confidential; and
(3) Should the Asset Manager or the Affiliated Broker-Dealer refuse
to disclose information on the basis that such information is exempt
from disclosure, pursuant to Section II(s)(2) above, the Asset Manager
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 III--Definitions
(a) The term, ``the Applicant,'' means Columbia Management
Advisors, LLC.
(b) The term, ``Affiliated Broker-Dealer,'' means any broker-dealer
affiliate, as ``affiliate'' is defined, below, in Section III(c), of
the Applicant, as ``Applicant'' is defined, above, in Section III(a),
that meets the requirements of this exemption. Such Affiliated Broker-
Dealer may participate in an underwriting or selling syndicate as a
manager or member. The term, ``manager,'' with respect to a syndicate,
means any member of an underwriting or selling syndicate who, either
alone or together with other members of the syndicate, is authorized to
act on behalf of the members of the syndicate in connection with the
sale and distribution of the Securities, as defined below, in Section
III(i), being offered or who receives compensation from the members of
the syndicate for its services as a manager of the syndicate.
(c) The term ``affiliate'' of a person includes:
(1) Any person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control
with such person;
(2) Any officer, director, partner, employee, or relative, as
defined in section 3(15) of the Act, of such person; and
(3) Any corporation or partnership of which such person is an
officer, director, partner, or employee.
For purposes of this exemption, the definition of ``affiliate''
shall include any entity that satisfies such definition in the future.
(d) The term ``Asset Manager'' means Columbia or an affiliate of
Columbia as defined above in Section III(c), which entity acts as the
fiduciary with respect to Client Plan(s), as defined in Section III(f),
below, or Pooled Fund(s), as defined in Section III(g), below.
(e) The term, ``control,'' means the power to exercise a
controlling influence over the management or policies of a person other
than an individual.
(f) The term, ``Client Plan(s),'' means an employee benefit plan(s)
that is subject to the Act and/or the Code, and for which plan(s) an
Asset Manager exercises discretionary authority or discretionary
control respecting management or disposition of some or all of the
assets of such plan(s), but excludes In-House Plans, as defined, below,
in Section III(m).
(g) The term, ``Pooled Fund(s),'' means a common or collective
trust fund(s) or a pooled investment fund(s):
(1) In which employee benefit plan(s) subject to the Act and/or
Code invest,
(2) Which is maintained by an Asset Manager, and
(3) For which such Asset Manager exercises discretionary authority
or discretionary control respecting the management or disposition of
the assets of such fund(s).
(h)(1) The term, ``Independent Fiduciary,'' means a fiduciary of a
plan who is unrelated to, and independent of the Asset Manager and the
Affiliated Broker-Dealer. For purposes of this
[[Page 12305]]
exemption, a fiduciary of a plan will be deemed to be unrelated to, and
independent of the Asset Manager and the Affiliated Broker-Dealer, if
such fiduciary represents in writing that neither such fiduciary, nor
any individual responsible for the decision to authorize or terminate
authorization for the transactions described above, in Section I of
this exemption, is an officer, director, or highly compensated employee
(within the meaning of Code section 4975(e)(2)(H)) of the Asset Manager
and the Affiliated Broker-Dealer, and represents that such fiduciary
shall advise the Asset Manager within a reasonable period of time after
any change in such facts occur.
(2) Notwithstanding anything to the contrary in this Section
III(h), a fiduciary of a plan is not independent:
(i) If such fiduciary directly or indirectly controls, is
controlled by, or is under common control with the Asset Manager or the
Affiliated Broker Dealer;
(ii) If such fiduciary directly or indirectly receives any
compensation or other consideration from the Asset Manager, or the
Affiliated Broker-Dealer for his or her own personal account in
connection with any transaction described in this exemption;
(iii) If any officer, director, or highly compensated employee
(within the meaning of Code section 4975(e)(2)(H)) of the Asset Manager
responsible for the transactions described above, in Section I of this
exemption, is an officer, director, or highly compensated employee
(within the meaning of Code section 4975(e)(2)(H)) of the sponsor of
the plan or of the fiduciary responsible for the decision to authorize
or terminate authorization for the transactions described above, in
Section I. However, if such individual is a director of the sponsor of
the plan or of the responsible fiduciary, and if he or she abstains
from participation in: (A) The choice of the plan's investment manager/
adviser; and (B) the decision to authorize or terminate authorization
for transactions described above, in Section I, then this Section
III(h)(2)(iii) shall not apply.
(3) The term, ``officer,'' means a president, any vice president in
charge of a principal business unit, division, or function (such as
sales, administration, or finance), or any other officer who performs a
policy-making function for Columbia or any affiliate thereof.
(i) The term, ``Securities,'' shall have the same meaning as
defined in section 2(36) of the Investment Company Act of 1940 (the
1940 Act), as amended (15 U.S.C. 80a-2(36)(2001)). For purposes of this
exemption, mortgage-backed or other asset-backed securities rated by
one of the Rating Organizations, as defined, below, in Section III(l),
will be treated as debt securities.
(j) The term, ``Eligible Rule 144A Offering,'' shall have the same
meaning as defined in SEC Rule 10f-3(a)(4) (17 CFR 270.10f-3(a)(4))
under the 1940 Act).
(k) The term, ``qualified institutional buyer,'' or the term,
``QIB,'' shall have the same meaning as defined in SEC Rule 144A (17
CFR 230.144A(a)(1)) under the 1933 Act.
(l) The term, ``Rating Organizations,'' means Standard & Poor's
Rating Services, Moody's Investors Service, Inc., Fitch Ratings, Inc.,
Dominion Bond Rating Service Limited, and Dominion Bond Rating Service,
Inc., or any successors thereto.
(m) The term, ``In-House Plan(s),'' means an employee benefit
plan(s) that is subject to the Act and/or the Code, and that is
sponsored by the Applicant as defined, above, in Section III(a), or its
affiliate, as defined in Section III(c), for its own employees.
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 December 22, 2009 at 74
FR 68110.
FOR FURTHER INFORMATION CONTACT: Mr. Gary H. Lefkowitz of the
Department, telephone (202) 693-8546. (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 9th day of March 2010.
Ivan Strasfel,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 2010-5535 Filed 3-12-10; 8:45 am]
BILLING CODE 4510-29-P