Proposed Exemptions Carle Foundation Hospital & Affiliates Pension Plan; and Barclays California Corporation; et al.
Federal Register: March 15, 2010 (Volume 75, Number 49)
Notices
Page 12305-12310
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr15mr10-87
DEPARTMENT OF LABOR
Employee Benefits Security Administration
Application Nos. and Proposed Exemptions; D-11500, Carle
Foundation Hospital & Affiliates Pension Plan; and Barclays California
Corporation (Barcal); et al.
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of proposed exemptions.
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
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(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:
``moffitt.betty@dol.gov'', 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 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.
Carle Foundation Hospital & Affiliates Pension Plan; Located in Urbana,
Illinois
Application No. D-11500
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 proposed exemption is granted, the restrictions in section 406(a)(1)(A) and (D) and section 406(b)(1) and (b)(2) of the Act, and the sanctions resulting from the application of section 4975 of the
Code, by reason of section 4975(c)(1)(A), (D), and (E) of the Code, shall not apply to the sale of a certain limited partnership interest
(the LPI) by the Carle Foundation Hospital & Affiliates Pension Plan
(the Plan) to Carle Foundation Hospital (the Employer), a party in interest with respect to the Plan, provided that the following conditions are satisfied:
(a) The sale is a one-time transaction for cash;
(b) The terms and conditions of the sale are at least as favorable to the Plan as those that the Plan could obtain in an arm's length transaction with an unrelated third party;
(c) The sales price is the greater of: (1) The fair market value of the LPI as of the date of the sale, as determined by a qualified, independent appraiser, or (2) the Plan's total capital contributions as of the date of the sale, plus imputed earnings (calculated based upon the applicable one-month Treasury bill rates) from the date of the
Plan's acquisition of the LPI to the date of the sale;
(d) The Plan pays no commissions, fees, or other expenses in connection with the sale; and
(e) The Plan fiduciaries review and approve the methodology used by the qualified, independent appraiser, ensure that such methodology is properly applied in determining the fair market value of the LPI, and also determine whether it is prudent to go forward with the proposed transaction.
Summary of Facts and Representations 1. The Carle Foundation Hospital & Affiliates Pension Plan (the
Plan) is a money purchase pension plan sponsored by Carle Foundation
Hospital (the Employer), who is located in Urbana, Illinois. The Plan had approximately 2,361 participants and beneficiaries, as of November 13, 2009, and total net assets of approximately $54,499,485, as of the same date. First Busey Trust & Investment Co. is the Plan's directed trustee.
The Plan historically did not allow participant-directed investments. Since the Plan's initial investment in the subject limited partnership interest (LPI), the Employer determined that it would be appropriate and in the best interests of the participants and beneficiaries to make the Plan a participant-directed plan under section 404(c) of the Act. Thus, the Plan was restructured to permit participant direction, effective March 1, 2008. In order to finalize this conversion to a participant-directed plan, the Plan must liquidate the LPI. 2. The LPI is an interest in the Pantheon USA Fund VII, L.P. (the
Fund). The Fund is a limited partnership that invests in private equity funds (i.e., a ``fund of funds''). The Fund's objective is to generate superior, risk-adjusted returns for its investors through a diversified portfolio of leveraged buyout, venture capital, and special situation funds. According to the applicant, the Plan made a $1,500,000 commitment to the Fund in December 2006.\1\ As of September 14, 2009, the Plan's capital contributions to the Fund totaled $457,500.\2\
\1\ The Department expresses no opinion herein as to whether the acquisition and holding of the LPI by the Plan meets the requirements of Part 4 in Title I of the Act.
\2\ According to the applicant, the Employer has made a
$15,000,000 commitment to the Fund, with capital contributions to the Fund totaling $4,575,000, as of September 14, 2009. It is represented that the decision to purchase an interest in the Fund on behalf of the Plan was a decision made independently of the
Employer's decision to purchase its own interest in the Fund; thus, according to the applicant, there was no agreement, arrangement, or understanding that the Plan's investment would be a means of enabling the Employer or any other Plan fiduciary to invest in the
Fund or otherwise use the Plan's assets in a manner designed to benefit such fiduciary.
Pantheon Ventures, Inc. (Pantheon) is the Fund's investment adviser. It is represented that the fees charged by the Fund are based on a percentage of the capital commitment made by investors to the
Fund; the Plan is currently paying a fee of 0.75%. The terms of the
Fund provide that the Fund will continue for thirteen years from the date of its first investment, which was made in May 2006, and may be extended for up to three additional years. Furthermore, the Plan may not sell or otherwise transfer its LPI to another investor without the written consent of Pantheon (acting as
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manager of the Fund's General Partner, PUSA VII GP, LLC).
The Plan's investment adviser, Summit Strategies Group (Summit), consulted with Pantheon, and communicated information regarding the limited secondary market for the LPI to the Employer. Therefore, the
Employer proposes to purchase the LPI from the Plan.\3\ However, the
Carle Pension Plan Administrative Committee (the Plan Committee) will make the ultimate determination whether or not to sell the Plan's LPI to the Employer; the Plan Committee is a named fiduciary of the Plan, along with the Employer's Board of Directors, which monitors the Plan
Committee.
\3\ Because the Fund was closed to new investors as of June 29, 2007, Pantheon would need to grant a special waiver of the required
$10 million commitment to any unrelated purchaser who is not already invested in the Fund. Pantheon has expressed a strong preference that the purchaser of the Plan's LPI be an investor already invested in the Fund. Summit has not identified any investors, other than the
Employer, whose stated investment goals would be consistent with purchasing the Plan's LPI without a discount. The Department notes that no relief is being provided in this proposed exemption beyond the Plan's sale of the LPI to the Employer for any additional prohibited transactions, if any, that may have occurred as a result of co-investing in the same Fund by the Plan and the Employer.
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The LPI was appraised for the Plan Committee by Andrew S. Ward,
Managing Director, and Mark F. Fournier, Director, of Stout Risius
Ross, Inc. (SRR), consistent with the standards of Financial Accounting
Standard (FAS) 157, Fair Value Measurements, which is effective for financial statements issued for fiscal years beginning after November 15, 2007.\4\ The applicant represents that SRR is a qualified, independent appraiser located in Chicago, Illinois. SRR is a financial advisory firm that specializes in investment banking, valuation and financial opinions, and dispute advisory and forensic services. SRR represents that it has considerable experience providing valuation opinions of private equity funds, hedge funds, and similar private companies. It is represented that SRR is not related to, and has no interest in, the Employer or an affiliate thereof and that less than 1% of SRR's gross annual income is derived from the Employer or an affiliate thereof.
\4\ FAS 157 provides guidance for measuring the fair value of assets and liabilities, including hard-to-value alternative investments.
SRR's valuation report of September 11, 2009 states that the principal sources of information used to estimate the fair market value of the LPI included, but were not limited to:
The Fund's Limited Partnership Agreement, dated April 28, 2006;
The Fund's financial statements for the year ended
December 31, 2008, audited by PriceWaterhouseCoopers;
The Fund's Investment Adviser's Report for the quarter ending March 31, 2009;
The Fund's Private Placement Memorandum, dated March 2006;
Discussions with Pantheon representatives concerning the assets and liabilities held by the Partnership; and
Public information regarding market evidence of lack of control and lack of marketability discounts.
Regarding SRR's valuation methodology, the report states that several valuation approaches were considered, including a Market
Approach, an Income Approach, and an Asset Approach. SRR relied primarily on a Market Approach, a valuation technique whereby the value of the subject company is calculated based on the prices of actual transactions for similar companies. These observations make it possible to determine the value of shares that have no active market. This can be accomplished via either the Guideline Public Company Method or the
Merger and Acquisition Method. SRR used the Guideline Public Company
Method, a valuation technique whereby the value of a company is estimated by comparing it to similar public companies. SRR states that if the Fund were publicly traded, a Marketable, Non-controlling
Interest Value of Equity in the Fund as a whole was estimated to be
$440,000,000. They then calculated the Plan's 0.07% interest in the
Fund ($440,000,000 x 0.0007 = $308,000) and subtracted a 20% discount for lack of marketability ($308,000 x 0.20 = $62,000) to arrive at a fair market value of $246,000 for the LPI ($308,000 - $62,000 =
$246,000), as of August 31, 2009. 4. The Employer proposes to pay the Plan the greater of: (1) The fair market value of the LPI as of the date of the sale, as determined by SRR, or (2) the Plan's total capital contributions, as of the date of the sale, plus imputed earnings (based upon the applicable one-month
Treasury bill rates) from the date of the Plan's acquisition of the LPI to the date of the sale. As of September 14, 2009, the Plan's capital contributions totaled $457,500 and imputed earnings were calculated to be $9,241. These amounts will be updated to reflect any additional capital contributions made to the Fund and earnings through the date of the actual sale.
The applicant represents that the sale of the Plan's LPI to the
Employer is in the best interests of the Plan because it will enable the Plan to recoup its investment in the LPI, as well as realize a reasonable gain on investment. In addition, the continued holding of the LPI by the Plan following its conversion to a participant-directed
Plan imposes a significant recordkeeping burden on the Plan.
The sale of the LPI will be a one-time transaction for cash, and the Plan will incur no fees, commissions, or other expenses in connection with the sale. The Plan Committee will review and approve the methodology used by SRR and ensure that such methodology is properly applied in determining the fair market value of the LPI. The
Plan Committee will also make the decision whether or not to proceed with the proposed sale of the LPI to the Employer; if the Plan
Committee decides to proceed, it will have SRR update its valuation of the LPI as of the date of the sale.
The Employer is bearing the costs of the exemption application, the appraisal of the LPI, and notification of interested persons. 5. In summary, the applicant represents that the proposed transaction satisfies the statutory criteria for an exemption under section 408(a) of the Act for the following reasons: (a) The sale will be a one-time transaction for cash; (b) the terms and conditions of the sale will be at least as favorable to the Plan as those that the Plan could obtain in an arm's length transaction with an unrelated third party; (c) the sales price will be the greater of: (1) The fair market value of the LPI as of the date of the sale, as determined by a qualified, independent appraiser, or (2) the Plan's total capital contributions as of the date of the sale, plus imputed earnings
(calculated based upon the applicable one-month Treasury bill rates) from the date of the Plan's acquisition of the LPI to the date of the sale; (d) the Plan will pay no commissions, fees, or other expenses in connection with the sale; and (e) the Plan Committee will review and approve the methodology used by SRR, ensure that such methodology is properly applied in determining the fair market value of the LPI, and also determine whether it is prudent to go forward with the proposed transaction.
FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department, telephone (202) 693-8557. (This is not a toll-free number.)
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Barclays California Corporation (Barcal); Located in San Francisco,
California
Exemption Application Number D-11527
Proposed Exemption
The Department is considering granting an exemption under the authority of section 408(a) of the Employee Retirement Income Security
Act of 1974 (ERISA or the Act) and section 4975(c)(2) of the Internal
Revenue Code of 1986, as amended (the Code), and in accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).\5\
\5\ For purposes of this proposed exemption, references to section 406 of ERISA should be read to refer as well to the corresponding provisions of section 4975 of the Code.
If the proposed exemption is granted, the restrictions of sections 406(a), 406(b)(1) and (b)(2) of the Act, section 8477(c)(2) of the
Federal Employees' Retirement System Act of 1986, as amended (FERSA), 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 September 4, 2008, to the cash sales (the Sales) by the Barclays Global Investors ``Money Market Fund'' and ``Cash
Equivalent Fund II,'' which are short-term collective investment funds
(STIFs) managed or maintained by Barclays Global Investors, N.A. (BGI), of certain short-term debt instruments (the Notes) to Barcal, provided that the following conditions are met:
(a) The Sales were one-time transactions for cash payment made on a delivery versus payment (i.e., same day) basis in the amount described in paragraph (b);
(b) The STIFs received an amount equal to the greater of:
(1) The amortized cost (including accrued and unpaid interest) of the Notes, determined as of the dates of the Sales, or
(2) The fair market value (including accrued and unpaid interest) of the Notes, determined by an independent third party source;
(c) The STIFs did not bear any commissions, transaction costs or other expenses in connection with the Sales;
(d) The terms and conditions of the Sales were at least as favorable to the STIFs as those available in an arm's-length transaction with an unrelated party.
(e) BGI, as fiduciary of the STIFs, determined that the Sales were in the best interest of the STIFs and any employee benefit plans (the
Plans) invested in the STIFs as of the dates of the Sales.
(f) BGI took all appropriate actions necessary to safeguard the interests of the STIFs and any Plans invested in the STIFs in connection with the Sales.
(g) If the exercise of any of Barcal's rights, claims, or causes of action in connection with its ownership of the Notes results in Barcal recovering from the issuer of the Notes, or from any third party, an aggregate amount that is more than the sum of:
(1) The purchase price paid for such Notes by Barcal; and
(2) The interest due on the notes from and after the date Barcal purchased the Notes from the STIFs,
Barcal will refund such excess amount promptly to the STIFs (after deducting all reasonable expenses incurred in connection with the recovery).
(h) BGI maintains, or causes 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 paragraph (i)(1), to determine whether the conditions of this exemption have been met, except that--
(1) No party in interest with respect to a Plan which engages in the covered transactions, other than BGI and 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 paragraph (i)(1);
(2) A separate prohibited transaction shall not be considered to have occurred solely because due to circumstances beyond the control of
BGI, such records are lost or destroyed prior to the end of the six- year period.
(i)(1) Except as provided, below, in paragraph (i)(2), and notwithstanding any provisions of subsections (a)(2) and (b) of section 504 of the Act, the records referred to, above, in paragraph (h) are unconditionally available at their customary location for examination during normal business hours by--
(A) Any duly authorized employee or representative of the
Department, the Internal Revenue Service, or the Securities and
Exchange Commission; or
(B) Any fiduciary of any Plan that engages in the covered transactions, 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 covered transactions, or any authorized employee or representative of these entities; or
(D) Any participant or beneficiary of a Plan that engages in a covered transaction, or duly authorized employee or representative of such participant or beneficiary;
(2) None of the persons described, above, in paragraph (i)(1)(B)-
(D) shall be authorized to examine trade secrets of BGI, or commercial or financial information which is privileged or confidential; and
(3) Should BGI refuse to disclose information on the basis that such information is exempt from disclosure, BGI shall, by the close of the thirtieth (30th) day following the request, provide a written notice advising that person of the reasons for the refusal and that the
Department may request such information.
Effective Date: This proposed exemption, if granted, will be effective September 4, 2008.
Summary of Facts and Representations 1. BGI is a national banking association headquartered in San
Francisco, California. BGI serves as fiduciary investment manager for employee benefit plans invested in separately managed accounts and pooled funds. BGI also manages certain assets for the Federal Thrift
Savings Plan established pursuant to the provisions of FERSA. As of
June 2008, BGI and its worldwide investment advisory affiliates had over $1.9 trillion in assets under management. BGI is a wholly owned subsidiary of Barcal, and an indirect majority-owned subsidiary of
Barclays Bank PLC, a British bank.\6\
\6\ As of December 1, 2009, BGI became a wholly-owned subsidiary of BlackRock, Inc.
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The pooled funds managed or maintained by BGI include short-term collective investment funds (STIFs). The STIFs generally invest in short-term investments of high quality and low risk, with the goal of protecting capital while securing a return better than a relevant benchmark, such as three-month LIBOR. STIF investments include cash, as well as bank notes, corporate notes, government bills and other relatively safe short-term debt instruments. Employee benefit plans, including the Federal Thrift Savings Plan (collectively, the Plans), may invest in the STIFs. 3. STIFs managed or maintained by BGI purchased notes issued by a structured investment vehicle (SIV) called Whistlejacket Capital Ltd.
(Whistlejacket).\7\ SIVs are off-balance-
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sheet vehicles that issue short and medium-term debt to finance their purchase of longer-term assets, including collateralized debt obligations. Many SIVs, including Whistlejacket, have lost significant value in the current credit crisis because the value of their underlying assets has dropped and investors who have bought their short-term debt have left the market. Whistlejacket is not managed or sponsored by or affiliated with Barcal or BGI or any of their affiliates (collectively, the Applicant).
\7\ In June 2007, Whistlejacket Capital, LLC, White Pine Corp.
Ltd., and White Pine Finance, LLC merged into Whistlejacket. The applicant requests that the exemption proposed herein apply to the purchase by Barcal of securities issued by Whistlejacket or any of the merged entities or their predecessors.
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In February 2008, the market value of Whistlejacket's assets less its senior liabilities fell to less than half the amount of its capital, which triggered the appointment of a receiver on February 11, 2008. On February 12, 2008, two nationally-recognized statistical rating organizations downgraded short-term senior debt instruments issued by Whistlejacket (the Notes). On February 21, 2008,
Whistlejacket began defaulting on the Notes. The Notes have dropped significantly in value. 5. In September 2008, Barcal purchased the Notes from the STIFs to eliminate the negative impact of the Notes on the STIFs' net asset value. As consideration for the Notes, Barcal paid the greater of: (a)
The amortized cost (including accrued and unpaid interest) of the
Notes, as of the dates of the Sales, or (b) the fair market value
(including accrued and unpaid interest) of the Notes, as of the dates of the Sales, determined by an independent third party source. The
Sales were on a ``delivery versus payment'' (i.e., same day) basis in immediately available United States dollars. The STIFs incurred no commission or transaction costs in connection with the Sales. BGI represents that it determined that the Sales were in the best interest of the STIFs and any employee benefit plans (the Plans) invested in the
STIFs, and that it took all appropriate actions necessary to safeguard the interests of the STIFs and the Plans. BGI represents that it will maintain all the records necessary to explain the transactions described herein for at least six years, and will make those records available to the Department and to the named fiduciary of each affected
Plan. 6. The Applicant represents that there were three Notes purchased by Barcal from two different STIFs. On September 19, 2008, Barcal purchased $15,000,000 of White Pine Finance LLC debt, CUSIP 96432XKD4 from the Money Market Fund, with an acquisition price of 99.99961824.
The maturity date on the Note was September 26, 2008. There were no bids in the market for these securities, and the Applicant's internal committee which prices those assets which cannot otherwise be priced estimated a fair market value for the Note of 93.0539. The Receiver for the Issuer of the Note, which is unrelated to Barcal, valued the Note at 95.1225.
The second STIF that was involved was Cash Equivalent Fund II
(CEFII). On September 4, 2008, Barcal purchased $40,000,000 of
Whistlejacket Capital, LLC debt, CUSIP 96335WFT5, from CEFII, with an acquisition price of 99.9997822. The maturity date on the Note was
September 8, 2008. There were no bids in the market for these securities, and the Applicant's internal committee which prices those assets which cannot otherwise be priced estimated a fair market value for the Note of 93.5312. The Receiver for the Issuer of the Note, which is unrelated to Barcal, valued the Note at 96.2597.
On September 19, 2008, Barcal purchased $135,000,000 of White Pine
Finance LLC debt, CUSIP 96432XKD4, from CEFII, with an acquisition price of 99.99961824. The maturity date on the Note was September 26, 2008. There were no bids in the market for these securities, and the
Applicant's internal committee which prices those assets which cannot otherwise be priced estimated a fair market value for the Note of 93.0539. The Receiver for the Issuer of the Note, which is unrelated to
Barcal, valued the Note at 95.1225.
With respect to all three purchases, the Applicant represents that the price paid by Barcal was the amortized cost of the Note plus accrued interest. The Applicant represents that all three Sales took place within a week of the maturity date of the Notes because, within the judgment of BGI, the timing of the Sales maximized the value for the STIFs and did not result in the STIFs holding a defaulted Note. 7. The Applicant represents that if the exercise of any of Barcal's rights, claims, or causes of action in connection with its ownership of the Notes results in Barcal recovering from the issuer of the Notes, or from any third party, an aggregate amount that is more than the sum of:
(1) The purchase price paid for such Notes by Barcal; and
(2) The interest due on the Notes from and after the date Barcal purchased the Notes from the STIFs,
Barcal will refund such excess amount promptly to the STIFs (after deducting all reasonable expenses incurred in connection with the recovery). 8. In summary, the Applicant represents that the transactions satisfied the statutory criteria of section 408(a) of the Act, section 4975(c)(2) of the Code and section 8477(c)(3) of FERSA because: (a)
Each Sale was a one-time transaction for cash; (b) with respect to all three Sales, the price paid by Barcal was the amortized cost of the
Note plus accrued interest, which was greater than the fair market value of the Note as determined by the Receiver for the issuer of the
Note; (c) no STIF paid any commissions or other transaction expenses with respect to the Sales; (d) BGI took all appropriate actions necessary to safeguard the interests of the STIFs and any Plans invested in the STIFs in connection with the Sales; (e) the terms and conditions of the Sales were at least as favorable to the STIFs as those available in an arm's-length transaction with an unrelated party;
(f) BGI determined that the Sales were in the best interest of the
STIFs and any Plans invested in the STIFs as of the dates of the Sales;
(g) BGI will maintain all the records necessary to explain the transactions described herein for at least six years, and will make those records available to the Department and to the named fiduciary of each affected Plan; and (h) Barcal will promptly refund to the STIFs any amount recovered from the issuer of the Notes or any third party in connection with the exercise of any rights, claims or causes of action resulting from its ownership of the Notes, if such amounts are in excess of:
(1) The purchase price paid for such Notes by Barcal; and
(2) The interest due on the Notes from and after the date Barcal purchased the Notes from the STIFs.
Notice to Interested Persons
The Applicant represents that because one of the STIFs was a sweep vehicle in which investing Plans changed over time, hundreds of Plans would need to be notified, at great additional expense to the
Applicant, despite the fact that all the details of the Sales were disclosed in the STIFs' financial statements which were made available to all Plan clients at the end of the year of the transactions.
Therefore, the only practical means of notifying participants and beneficiaries of such Plans of this proposed exemption is by the publication of this notice in the Federal Register. Comments and requests for a hearing must be received by the Department not later than 30 days from the date of publication of this notice of proposed exemption in the Federal Register.
Page 12310
FOR FURTHER INFORMATION CONTACT: 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 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 is the subject of the exemption.
Signed at Washington, DC, this 9th day of March 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
FR Doc. 2010-5536 Filed 3-12-10; 8:45 am
BILLING CODE 4510-29-P
