[Federal Register Volume 75, Number 63 (Friday, April 2, 2010)]
[Notices]
[Pages 16848-16852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7447]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
Application Nos. and Proposed Exemptions; D-11533 and D-11534;
CUNA Mutual Pension Plan for Non-Represented Employees (Together, the
Plans); and D-11565; Citizens Bank Wealth Management, N.A., et al.
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of Proposed Exemptions.
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SUMMARY: This document contains notices of pendency before the
Department of Labor (the Department) of proposed exemptions 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).
Written Comments and Hearing Requests
All interested persons are invited to submit written comments or
requests for a hearing on the pending exemptions, unless otherwise
stated in the Notice of Proposed Exemption, within 45 days from the
date of publication of this Federal Register Notice. Comments and
requests for a hearing should state: (1) The name, address, and
telephone number of the person making the comment or request, and (2)
the nature of the person's interest in the exemption and the manner in
which the person would be adversely affected by the exemption. A
request for a hearing must also state the issues to be addressed and
include a general description of the evidence to be presented at the
hearing.
ADDRESSES: All written comments and requests for a hearing (at least
three copies) should be sent to the Employee Benefits Security
Administration (EBSA), Office of Exemption Determinations, Room N-5700,
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC
20210. Attention: Application No.----, stated in each Notice of
Proposed Exemption. Interested persons are also invited to submit
comments and/or hearing requests to EBSA via e-mail or FAX. Any such
comments or requests should be sent either by e-mail to:
``[email protected]'', or by FAX to (202) 219-0204 by the end of
the scheduled comment period. The applications for exemption and the
comments received will be available for public inspection in the Public
Documents Room of the Employee Benefits Security Administration, U.S.
Department of Labor, Room N-1513, 200 Constitution Avenue, NW.,
Washington, DC 20210.
Warning: If you submit written comments or hearing requests, do
not include any personally-identifiable or confidential business
information that you do not want to be publicly-disclosed. All
comments and hearing requests are posted on the Internet exactly as
they are received, and they can be retrieved by most Internet search
engines. The Department will make no deletions, modifications or
redactions to the comments or hearing requests received, as they are
public records.
Notice to Interested Persons
Notice of the proposed exemptions will be provided to all
interested persons in the manner agreed upon by the applicant and the
Department within 15 days of the date of publication in the Federal
Register. Such notice shall include a copy of the notice of proposed
exemption as published in the Federal Register and shall inform
interested persons of their right to comment and to request a hearing
(where appropriate).
SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in
applications filed pursuant to section 408(a) of the Act and/or section
4975(c)(2) of the Code, and in accordance with procedures set forth in
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).
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
[[Page 16849]]
requested to the Secretary of Labor. Therefore, these notices of
proposed exemption are issued solely by the Department.
The applications contain representations with regard to the
proposed exemptions which are summarized below. Interested persons are
referred to the applications on file with the Department for a complete
statement of the facts and representations.
CUNA Mutual Pension Plan for Represented Employees and CUNA
Mutual Pension Plan for Non-Represented Employees (together, the
Plans), Located in Madison, Wisconsin.
[Application Nos. D-11533 and 11534, Respectively]
Proposed Exemption
The Department is considering granting an exemption 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 Part
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption
is granted, the restrictions of sections 406(a)(1)(A), 406(a)(1)(B),
406(a)(1)(D), 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:
(i) The February 20, 2009 cash sale (the Sale), at aggregate cost basis
plus interest, by each of the Plans of interests in certain private
equity funds (the Funds) to the CUNA Mutual Insurance Society (the
Applicant), the sponsor of the Plans and a party in interest with
respect to the Plans, pursuant to a contract between the Applicant and
the trustee of the Plans concluded on that same date; (ii) the
September 14, 2009 payment by the Applicant of certain additional cash
amounts, including interest (the Top-Up Payments); to the Plans
pursuant to the terms of the foregoing contract; and (iii) the
extension of credit between the Plans and the Applicant from the date
of the Sale (February 20, 2009) to the date of the Top-Up Payments
(September 14, 2009), provided that the following conditions were
satisfied:
(a) An independent fiduciary reviewed the terms and conditions of
the Sale and of the Top-Up Payments prior to their execution, and
determined that both were protective of the interests of the Plans;
(b) The independent fiduciary determined that the terms and
conditions of both the Sale and of the Top-Up Payments were at least as
favorable to the Plans as those that would have been obtained in an
arm's length transaction between unrelated parties;
(c) The terms and conditions of both the Sale and of the Top-Up
Payments were at least as favorable to the Plans as those that would
have been obtained in an arm's length transaction between unrelated
parties; and
(d) The independent fiduciary provided its opinion in written
reports on behalf of the Plans as to the fairness and reasonableness of
the Sale of the Plans' interests in the Funds to the Applicant, and
determined that the terms of the original Sale and subsequent Top-Up
Payments were especially beneficial to each of the Plans because: (i)
On February 20, 2009, the Plans received a return of their aggregate
cost basis of their interests in the Funds (which cost basis was
determined by the independent fiduciary to exceed the aggregate fair
market value of the Plans' interests in the Funds as of October 31,
2008), plus interest accrued on the Funds from their date of
acquisition by each Plan through the date of the Sale; and (ii) On
September 14, 2009, the independent fiduciary determined that, in
instances where the fair market value of any Fund on December 31, 2008
exceeded its original cost basis, each of the Plans received a Top-Up
Payment on September 14, 2009 comprised of the increased value of such
Fund, plus interest accrued on such increased value from December 31,
2008 to the date of the Top-Up Payments (September 14, 2009).
Summary of Facts and Representations
1. The Applicant is the parent of each of the companies forming the
CUNA Mutual Group, which is a leading provider of financial services to
cooperatives, credit unions, their members, and other customers. The
Applicant represents that its primary products include group credit
life and group credit disability products sold to credit unions;
retirement plans and group life and disability products sold to credit
union employees; and health, life, and annuity policies for credit
union members.
2. The Applicant sponsors the Plans, each of which is a defined
benefit pension plan. The Applicant represents that, as of December 31,
2008, the CUNA Mutual Pension Plan for Represented Employees had 1,271
participants and assets of $90,282,987. The Applicant also represents
that, as of December 31, 2008, the CUNA Mutual Pension Plan for Non-
Represented Employees had 5,749 participants and assets of
$326,563,333. The trustee (Trustee) of each of the Plans is the State
Street Bank and Trust Company of Boston, Massachusetts.
3. The Applicant represents that, during the years 2006 and 2007,
both it and the Plans co-invested their respective assets in ten
private equity Funds.\1\ The Applicant further represents the decision
of each Plan to invest in the Funds \2\ was made by the Employee
Benefit Plan Administrative Committee (the Committee), the named
fiduciary of both of the Plans, and that no additional interests in the
Funds were acquired by the Plans after the year 2007.\3\ The Applicant
also states that, as of November of 2008, the Plans' interest in the
Funds represented a relatively small portion (i.e., less than 7%) of
the Applicant's overall position in the Funds, and that the Applicant's
overall interest in each Fund in turn represented only a small portion
of the overall funding commitments to each Fund.
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\1\ The ten private equity Funds in which each of the Plans
acquired interests were: (1) AIG Highstar Capital III; (2) Audax
Mezzanine Fund II LP; (3) Capital Partners Private Equity Fund; (4)
Citigroup Capital Partners II; (5) CP Lone Star; (6) Crimson Capital
Partners III; (7) EnerVest Energy Institutional Fund XI; (8) New
Science Ventures Fund I; (9) Webster Capital II; and (10) Five
Arrows Realty Securities V, LP.
\2\ With respect to the co-investment arrangement of both the
Applicant and the Plans in the Funds, the Department notes that if a
plan fiduciary causes a plan to enter into a transaction where, by
the terms or nature of the transaction, a conflict of interest
between the plan and the fiduciary (or persons in which the
fiduciary has an interest) exists or will arise in the future, that
transaction would violate section 406(a)(1)(D) and 406(b)(1) of the
Act (or the parallel provisions under the Code). In this connection,
the fiduciary must not rely upon and cannot be otherwise dependent
upon the participation of the plan in order for the fiduciary (or
persons in which the fiduciary has an interest) to undertake or to
continue his or her share of the investment. Furthermore, even if at
its inception the transaction did not involve a violation, if a
divergence of interests develops between the plan and the fiduciary
(or persons in which the fiduciary has an interest), the fiduciary
must take steps to eliminate the conflict of interest in order to
avoid engaging in a prohibited transaction. See ERISA Advisory
Opinion Letter 2000-10A (July 27, 2000).
\3\ Section 404 of the Act requires, among other things, that a
plan fiduciary act prudently, solely in the interest of the plan's
participants and beneficiaries, and for the exclusive purpose of
providing benefits to participants and beneficiaries when making
decisions on behalf of a plan. Accordingly, the Department is not
expressing an opinion herein as to whether any investment decisions
or other actions taken by the Committee regarding the acquisition
and subsequent holding of the interests in the Funds by the Plans
were consistent with, or in violation of, its fiduciary obligations
under Part 4 of Title I of the Act.
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4. On November 25, 2008, the Committee contracted with U.S. Trust,
Bank of America Private Wealth Management (U.S. Trust) to serve as an
independent fiduciary (the Independent Fiduciary) on behalf of the
Plans to determine whether the terms of the
[[Page 16850]]
proposed Sale of the Plans' interests in the Funds to the Applicant
would be in the interest of the Plans.\4\ The Applicant represents that
both U.S. Trust and its eventual successor as Independent Fiduciary,
Evercore Trust Company N.A. (Evercore) are experienced and qualified
fiduciaries with extensive trust and management capabilities such as
discretionary asset management, asset allocation and diversification,
investment advice, securities trading, and the performance of
independent fiduciary assignments for plans covered by the Act. In
addition, U.S. Trust and Evercore each represent that less than 1% of
their annual revenues during their respective periods of service as
Independent Fiduciary were derived from the Applicant and its
affiliates.
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\4\ It is represented that, in accordance with this contractual
arrangement, Evercore Trust Company N.A. (a subsidiary of Evercore
LP) assumed all of U.S. Trust's existing obligations as the
Independent Fiduciary with respect to the Plans as a consequence of
the May 1, 2009 sale of U.S. Trust's Special Fiduciary Services
business to Evercore LP.
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In its engagement letter dated December 5, 2008, the original
Independent Fiduciary, U.S. Trust, agreed to: (1) Review and evaluate
the consideration to be paid to the Plans in connection with the Sale
to determine whether such consideration is fair and reasonable and in
the interests of the Plans; (2) review and evaluate the terms of the
Sale to determine whether they are at least as favorable to the Plans
as terms that would have been agreed to between unrelated parties; (3)
determine whether the Plans should enter into the Sale on such terms;
(4) direct the trustee of the Plans whether or not to enter into the
Sale; and (5) provide a written opinion on behalf of the Plans
concerning the fairness and reasonableness of the Sale.
5. In order to assist it in rendering its decision, the Independent
Fiduciary engaged LCB Capital LLC (LCB) of Chicago, Illinois to perform
an analysis of the Funds and to provide U.S. Trust with an initial
report (the Initial LCB Report) detailing its conclusions. LCB
represents that it receives less than 1% of its revenue directly from
the Applicant and its affiliates. A supplement to the Initial LCB
Report also states that the LCB managing director who conducted the
valuation analysis of the Funds, Mr. Daniel Bayston, founded LCB in
2008 after a 25-year career with the financial services and business
valuation firm of Duff & Phelps. The Applicant represents that during
his career, Mr. Bayston managed a wide range of corporate finance and
business valuation assignments for publicly-traded and privately-held
corporate clients and ERISA fiduciaries, and that such assignments have
included merger and acquisition analyses, fairness opinions,
shareholder liquidity analyses, private equity and debt placements, and
corporate valuation matters. The Applicant also represents that Mr.
Bayston is a member of the CFA Institute and the Business Valuation
Association. In December of 2008, the Initial LCB Report was issued to
the Independent Fiduciary. In the executive summary of this report, LCB
stated that it had examined all relevant information that was provided
by the Fund managers, including the amount and date of the original
investment, current valuation information provided by the Fund
managers, as well as business descriptions and relevant industry
classifications.
6. Subsequent to the issuance of the Initial LCB Report, the
Independent Fiduciary issued a report on January 15, 2009 (the Initial
I/F Report) detailing its analysis and opinion regarding the proposed
Sale of the Plans' interests in the Funds. The Independent Fiduciary
represented that the valuation analysis contained in the Initial LCB
Report focused on specific industry and financial market trends which
were likely to have had an impact on the value of the Funds. The
Independent Fiduciary further represented in the Initial I/F Report
that it had reviewed the content of the Initial LCB Report, and
determined that the assumptions, methodology, and conclusions contained
in the report were reasonable and reliable. The Initial I/F Report
stated that the comparison by LCB of market conditions at the end of
2008 relative to those prevailing in 2006 and 2007 when the interests
in the Funds were acquired by the Plans provided compelling evidence
that the value of the Funds had declined significantly from their
original cost.
7. Taking into account the foregoing contents of the Initial LCB
Report, the Independent Fiduciary determined in its Initial I/F Report
that a purchase by the Applicant of the Plans' interests in the Funds
at their original cost was fair and reasonable to, and in the interest
of, the Plans. The Independent Fiduciary represented in this report
that it had concluded that there was no separate benefit to the
Applicant in engaging in the Sale transaction, and that the only
discernible benefit was enabling the Plans to liquidate, at original
cost, a series of investments which had lost money. Pursuant to its
determination that the proposed Sale was in the interest of the Plans,
the Independent Fiduciary issued a letter to the Trustee of the Plans
on February 18, 2009 directing the Trustee to sell the Plans' interests
in the Funds to the Applicant.
In connection with the Independent Fiduciary's direction, the
Applicant and the Trustee of each of the Plans entered into agreements
(the Transfer Agreements) on February 20, 2009, pursuant to which all
of the interests in the Funds held by each Plan were sold on that same
date to the Applicant. In addition to determining the price paid by the
Applicant for the Plans' interests in the Funds, each of the Transfer
Agreements contained a provision (the Top-Up Provision) stipulating
that in the event that year-end (i.e., December 31, 2008) stated
valuations of any of the Funds in which the Plans held an interest
exceeded the Plans' original cost, the Trustee of each of the Plans
would be entitled to receive on behalf of the Plans the difference
between the December 31, 2008 valuation and the original cost. In
accordance with the requirements of the Top-Up Provision, the
Independent Fiduciary stated at the conclusion of the Initial I/F
Report that it would update its analysis to reflect year-end December
31, 2008 Fund data as soon as it became available from the Fund
managers.
The Applicant represents that, on February 20, 2009, the cash Sale
of the Plans' interests in the Funds to the Applicant was consummated.
The total cash payment to the Plans incident to the Sale was the higher
of (i) the aggregate cost basis of the Plans' interests in the Funds as
of October 31, 2008 or (ii) the aggregate stated fair market value of
the interests in the Funds held by the Plans as of October 31, 2008.
The Independent Fiduciary further represented that the total cash Sale
price of $20,754,736.58 was comprised of the Plans' aggregate cost
basis in the Funds ($19,168,999.58) plus interest ($1,585,737.00).\5\
The Applicant further represents that the total cash Sale price was
allocated between the Plans, with $4,981,186.84 being paid to the CUNA
Mutual Pension Plan for Represented Employees and $15,773,549.74 being
paid to the CUNA Mutual Pension Plan for Non-Represented Employees.
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\5\ The Applicant represents that the interest paid to the Plans
incident to the February 20, 2009 Sale was calculated based upon the
Plans' original cost basis in the Funds, plus interest accrued from
the date of the Plans' capital contribution to each Fund through the
date of the Sale. Specifically, the per annum interest rate utilized
was 5.49% for capital contributions made by the Plans in 2006 and
5.52% for capital contributions made in 2007. This interest rate
reflects the credited interest rate paid by the Applicant's general
account over the relevant time periods.
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[[Page 16851]]
8. In September of 2009, immediately after the completion of the
audits of the 2008 financial statements of the Funds (and in accordance
with Top-Up Provisions of the Transfer Agreements), the Independent
Fiduciary (which, as of July 1, 2009, was Evercore) issued an updated
analysis of the Sale transaction (the Updated I/F Report) to determine,
as of December 31, 2008, whether the fair market value of any of the
Funds held by the Plans was greater than the Plans' cost basis in the
Funds at the time of their acquisition. The Updated I/F Report relied
upon an August 2009 written valuation analysis prepared by LCB (the
Updated LCB Report) which, according to the Independent Fiduciary,
utilized a valuation approach that was identical to that employed by
LCB in its Initial Report. In the Updated LCB Report, LCB stated that
it examined information such as the date and amount of the original
investment by the Plans, relevant industry classification, and any
available current valuation information provided by the Fund manager.
LCB then determined the appropriate industry valuation multiple at or
near the time of the investment and compared that with the same
industry valuation multiple as of December 31, 2008. The Updated LCB
Report also noted that industry valuation metrics and earnings
multiples for virtually all industries had declined significantly from
the time of the Plans' original investments in the Funds through
December 31, 2008.
Utilizing the updated information provided by the managers of the
Funds and contained in the Updated LCB Report, the Independent
Fiduciary noted in its Updated I/F Report that the December 31, 2008
fair market value of eight of the ten Funds in which the Plans held an
interest on that date remained below the Plans' original cost basis in
those Funds. However, the Updated I/F Report also stated that the
December 31, 2008 stated fair market value of two of the Funds (i.e.,
CP Lone Star and New Science Venture Fund I) exceeded the Plans' cost
basis in these Funds. The aggregate valuation gains (and losses)
experienced by the Plans' combined holdings in the Funds through
December 31, 2008, as compiled in the Updated I/F Report, are
summarized below in the following chart:
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Aggregate gains
(or losses)
Date of Aggregate amount Value of each experienced by
Funds in which the plans held acquisition of invested in each fund as stated by the plans based
interests interests in each fund by the plans the fund managers upon the 12/31/08
fund by the plans (cost basis) as of 12/31/08 stated value of
each fund
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AIG Highstar Capital III............ 5/25/07 $2,490,691 $2,297,321 ($193,370)
Audax Mezzanine Fund II LP.......... 11/30/06 914,682 873,787 (40,894)
Capital Partners Private Equity Fund 5/3/07 1,128,158 1,022,935 (105,223)
Citigroup Capital Partners II....... 11/15/06 8,709,246 5,532,666 (3,176,579)
CP Lone Star........................ 5/3/07 666,667 722,280 55,613
Crimson Capital Partners III........ 9/28/07 278,275 153,390 (124,885)
EnerVest Energy Institutional Fund 6/22/07 1,496,003 1,190,539 (305,464)
XI.................................
Five Arrows Realty Securities V, LP. 8/23/07 358,123 342,081 (16,042)
New Science Ventures Fund I......... 10/31/06 2,452,255 2,489,795 37,495
Webster Capital II.................. 5/11/07 675,000 587,378 (87,622)
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9. The Independent Fiduciary's Updated I/F Report determined that a
purchase price of the Plans' interests in the Funds at original cost
plus interest (with additional Top-Up Payments plus interest to the
Plans for those individual Funds whose December 31, 2008 fair market
value exceeded their cost basis) was fair and reasonable to, and in the
interest of, the Plans. Accordingly, the Independent Fiduciary further
determined that, for those Funds whose stated fair market value was
greater than cost, the Plans were entitled to receive Top-Up Payments
totalling $96,583, comprised of $93,108 plus an interest payment of
$3,475.\6\ On September 14, 2009, pursuant to the direction of the
Independent Fiduciary and in accordance with the provisions of the
February 20, 2009 Transfer Agreements between the Applicant and the
Trustee of the Plans, the Top-Up Payments were made to the Plans.\7\
The Independent Fiduciary reaffirmed in its Updated I/F Report that
there was no separate benefit to the Applicant of engaging in the Sale.
Instead, the Independent Fiduciary represented that the only
discernible benefit was to enable the Plans to liquidate a series of
investments which had lost money at their original cost.
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\6\ This Top-Up Payment figure was the sum of (1) an aggregate
gain of $37,495 experienced by the Plans from their investment in
New Science Ventures Fund I, (2) an aggregate gain of $55,613
experienced by the Plans from their investment in the CP Lone Star
Fund, plus (3) the $3,475 interest payment described above.
\7\ In this connection, the Applicant represents that, on
September 14, 2009, it made a Top-Up Payment of $23,180 (including
$834 in interest accrued from December 31, 2008 to September 14,
2009) to the CUNA Mutual Pension Plan for Represented Employees and
a Top-Up Payment of $73,403 (including $2,641 in interest accrued
from December 31, 2008 to September 14, 2009) to the CUNA Mutual
Pension Plan for Non-Represented Employees. The Applicant represents
that the interest component of the Top-Up Payments was calculated at
the rate of 5.28%, which was the rate of interest credited to the
Plans when the Applicant purchased the Plans' interests in the Funds
on February 20, 2009.
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10. The Applicant represents that the Sale of the Plans' interests
in the Funds was beneficial to, and in the interest of, each of the
Plans for several reasons. First, the Applicant represents that the
Sale allowed the Plans to sell illiquid assets for a price that, in the
aggregate, exceeded the fair market value of those assets. Second, the
Applicant represents that the Sale allowed the Plans to reduce their
exposure to a class of investments with an uncertain future. Third, the
Applicant represents that the Sale allowed the Plans to obtain cash for
their respective interests in the Funds, thereby permitting allocation
of the assets of the Plans to more favorable investment vehicles.
Fourth, in instances where the fair market value of any Fund on
December 31, 2008 exceeded its original cost basis, each of the Plans
received a Top-Up Payment on September 14, 2009 comprised of the
increased value of such Fund, plus interest accrued on such increased
value from December 31, 2008 to the date of the Top-Up Payments.
11. In summary, the Applicant represents that the past transactions
described herein for which exemptive relief is sought satisfied the
statutory criteria of section 408(a) of the Act because: (a) The
Independent Fiduciary
[[Page 16852]]
reviewed the terms and conditions of the Sale and of the Top-Up
Payments and determined that both were protective of the interests of
the Plans; (b) The Independent Fiduciary determined that the terms and
conditions of both the Sale and the Top-Up Payments were at least as
favorable to the Plans as those that would have been obtained in an
arm's length transaction between unrelated parties; (c) The terms and
conditions of both the Sale and of the Top-Up Payments were at least as
favorable to the Plans as those that would have been obtained in an
arm's length transaction between unrelated parties; and (d) The
Independent Fiduciary provided its opinion in written reports on behalf
of the Plans as to the fairness and reasonableness of the Sale of the
Plans' interests in the Funds to the Applicant, and determined that the
terms of the original Sale and subsequent Top-Up Payments were
especially beneficial to each of the Plans because: (i) On February 20,
2009, the Plans received a return of their aggregate cost basis of
their interests in the Funds (which cost basis was determined by the
Independent Fiduciary to exceed the aggregate fair market value of the
Plans' interests in the Funds as of October 31, 2008), plus interest
accrued on the Funds from their date of acquisition by each Plan
through the date of the Sale; and (ii) On September 14, 2009, the
Independent Fiduciary determined that, in instances where the fair
market value of any Fund on December 31, 2008 exceeded its original
cost basis, each of the Plans received a Top-Up Payment on September
14, 2009 comprised of the increased value of such Fund, plus interest
accrued on such increased value from December 31, 2008 to the date of
the Top-Up Payments (September 14, 2009).
Notice to Interested Persons: Notice of the proposed exemption
shall be given to all interested persons in the manner agreed upon by
the Applicant and the Department within 15 days of the date of
publication in the Federal Register. Comments and requests for a
hearing are due forty-five (45) days after publication of the notice in
the Federal Register.
FOR FURTHER INFORMATION CONTACT: Mr. Mark Judge of the Department at
(202) 693-8550. (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 of the Act and/or the Code,
including any prohibited transaction 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) Before an exemption may be granted under section 408(a) of the
Act and/or section 4975(c)(2) of the Code, the Department must find
that the exemption is administratively feasible, in the interests of
the plan and of its participants and beneficiaries, and protective of
the rights of participants and beneficiaries of the plan;
(3) The proposed exemptions, if granted, will be supplemental to,
and not in derogation of, any other provisions of the Act and/or 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; and
(4) The proposed exemptions, if granted, will be subject to the
express condition that the material facts and representations contained
in each application are true and complete, and that each application
accurately describes all material terms of the transaction which are
the subject of the exemption.
Signed at Washington, DC, this 30th day of March 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 2010-7447 Filed 4-1-10; 8:45 am]
BILLING CODE 4510-29-P