[Federal Register Volume 62, Number 209 (Wednesday, October 29, 1997)]
[Notices]
[Pages 56201-56206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28593]
[[Page 56201]]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 97-56; Exemption Application No. D-
10437, et al.]
Grant of Individual Exemptions; UNUM Life Insurance Company of
America
AGENCY: Pension and Welfare Benefits 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
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
Notices were published in the Federal Register of the pendency
before the Department of proposals to grant such exemptions. The
notices set forth a summary of facts and representations contained in
each application for exemption and referred interested persons to the
respective applications for a complete statement of the facts and
representations. The applications have been available for public
inspection at the Department in Washington, D.C. The notices also
invited interested persons to submit comments on the requested
exemptions to the Department. In addition the notices stated that any
interested person might submit a written request that a public hearing
be held (where appropriate). The applicants have represented that they
have complied with the requirements of the notification to interested
persons. No public comments and no requests for a hearing, unless
otherwise stated, were received by the Department.
The notices of proposed exemption were issued and the exemptions
are being granted solely by the Department because, effective December
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR
47713, October 17, 1978) 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 exemptions are administratively feasible;
(b) They are in the interests of the plans and their participants
and beneficiaries; and
(c) They are protective of the rights of the participants and
beneficiaries of the plans.
UNUM Life Insurance Company of America (UNUM), Located in Portland,
Maine
[Prohibited Transaction Exemption 97-56; Exemption Application No. D-
10437]
Exemption
Section I--Exemption for Certain Transactions Involving the Management
of Investments Shared by Two or More Accounts Maintained by UNUM
The restrictions of certain sections of the Act and the sanctions
resulting from the application of certain parts of section 4975 of the
Code shall not apply to the following transactions if the conditions
set forth in Section IV are met:
(a) Transfers Between Accounts
(1) The restrictions of section 406(b)(2) of the Act shall not
apply to the sale or transfer of an interest in a shared investment
(including a shared joint venture interest) between two or more
Accounts (except the General Account), provided that each ERISA-Covered
Account pays no more, or receives no less, than fair market value for
its interest in a shared investment.
(2) The restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of
the Act and the sanctions resulting from the application of section
4975 of the Code by reason of section 4975(c)(1)(A) through (E) of the
Code shall not apply to the sale or transfer of an interest in a shared
investment (including a shared joint venture interest) between ERISA-
Covered Accounts and the General Account, provided that such transfer
is made pursuant to stalemate procedures, described in the notice of
proposed exemption, adopted by the independent fiduciary for the ERISA-
Covered Account, and provided further that the ERISA-Covered Account
pays no more or receives no less than fair market value for its
interest in a shared investment.
(b) Joint Sales of Property--The restrictions of sections 406(a),
406(b)(1) and 406(b)(2) of the Act and the sanctions resulting from the
application of section 4975 of the Code by reason of section
4975(c)(1)(A) through (E) of the Code shall not apply to the sale to a
third party of the entire interest in a shared investment (including a
shared joint venture interest) by two or more Accounts, provided that
each ERISA-Covered Account receives no less than fair market value for
its interest in the shared investment.
(c) Additional Capital Contributions--The restrictions of sections
406(a), 406(b)(1) and 406(b)(2) of the Act and the sanctions resulting
from the application of section 4975 of the Code by reason of section
4975(c)(1)(A) through (E) of the Code shall not apply either to the
making of a pro rata equity capital contribution by one or more of the
Accounts to a shared investment; or to the making of a Disproportionate
[as defined in Section V(e)] equity capital contribution by one or more
of such Accounts which results in an adjustment in the equity ownership
interests of the Accounts in the shared investment on the basis of the
fair market value of such interests subsequent to such contribution,
provided that each ERISA-Covered Account is given an opportunity to
make a pro rata contribution.
(d) Lending of Funds--The restrictions of sections 406(a),
406(b)(1) and 406(b)(2) of the Act and the sanctions resulting from the
application of section 4975 of the Code by reason of section
4975(c)(1)(A) through (E) of the Code shall not apply to the lending of
funds from the General Account to an ERISA-Covered Account to enable
the ERISA-Covered Account to make an additional pro rata contribution,
provided that such loan--
(A) Is unsecured and non-recourse with respect to participating
plans,
(B) Bears interest at a rate not to exceed the prevailing rate on
90-day Treasury Bills,
(C) Is not callable at any time by the General Account, and
(D) Is prepayable at any time without penalty.
Section II--Exemption for Certain Transactions Involving the Management
of Joint Venture Interests Shared by Two or More Accounts Maintained by
UNUM
The restrictions of certain sections of the Act and the sanctions
resulting from the application of certain parts of section 4975 of the
Code shall not apply to the following transactions resulting from the
sharing of an investment in a real estate joint venture between two or
more Accounts, if the conditions set forth in Section IV are met:
(a) Additional Capital Contributions--(1) The restrictions of
sections 406(a), 406(b)(1) and 406(b)(2) of the Act and the sanctions
resulting from the application of section 4975 of the Code by reason of
section 4975(c)(1)(A) through (E) of the Code shall not apply to the
making of additional pro rata equity capital contributions by one or
[[Page 56202]]
more Accounts participating in the joint venture.
(2) The restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of
the Act and the sanctions resulting from the application of section
4975 of the Code by reason of section 4975(c)(1)(A) through (E) of the
Code shall not apply to the lending of funds from the General Account
to an ERISA-Covered Account to enable the ERISA-Covered Account to make
an additional pro rata capital contribution, provided that such loan--
(A) Is unsecured and non-recourse with respect to the participating
plans,
(B) Bears interest at a rate not to exceed the prevailing rate on
90-day Treasury Bills,
(C) Is not callable at any time by the General Account, and
(D) Is prepayable at any time without penalty.
(3) The restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of
the Act and the sanctions resulting from the application of section
4975 of the Code by reason of section 4975 (c)(1)(A) through (E) of the
Code shall not apply to the making of Disproportionate [as defined in
section V(e)] additional equity capital contributions (or the failure
to make such additional contributions) in the joint venture by one or
more Accounts which result in an adjustment in the equity ownership
interests of the Accounts in the joint venture on the basis of the fair
market value of such joint venture interests subsequent to such
contributions, provided that each ERISA-Covered Account is given an
opportunity to provide its proportionate share of the additional equity
capital contributions; and
(4) In the event a co-venturer fails to provide all or any part of
its pro rata share of an additional equity capital contribution, the
restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of the Act and
the sanctions resulting from the application of section 4975 of the
Code by reason of section 4975(c)(1)(A) through (E) of the Code shall
not apply to the making of Disproportionate additional equity capital
contributions to the joint venture by the General Account and an ERISA-
Covered Account up to the amount of such contribution not provided by
the co-venturer which result in an adjustment in the equity ownership
interests of the Accounts in the joint venture on the basis provided in
the joint venture agreement, provided that such ERISA-Covered Account
is given an opportunity to participate in all additional equity capital
contributions on a proportionate basis.
(b) Third Party Purchase Offers--(1) In the case of an offer by a
third party to purchase any property owned by the joint venture, the
restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of the Act and
the sanctions resulting from the application of section 4975 of the
Code by reason of section 4975(c)(1)(A) through (E) of the Code shall
not apply to the acquisition by the Accounts, including one or more
ERISA-Covered Account[s], on either a proportionate or Disproportionate
basis of a co-venturer's interest in the joint venture in connection
with a decision on behalf of such Accounts to reject such purchase
offer, provided that each ERISA-Covered Account is first given an
opportunity to participate in the acquisition on a proportionate basis;
and
(2) The restrictions of section 406(b)(2) of the Act shall not
apply to any acceptance by UNUM on behalf of two or more Accounts,
including one or more ERISA-Covered Account[s], of an offer by a third
party to purchase a property owned by the joint venture even though the
independent fiduciary for one (but not all) of such ERISA-Covered
Account[s] has not approved the acceptance of the offer, provided that
such declining ERISA-Covered Account[s] are first afforded the
opportunity to buy out both the co-venturer and ``selling'' Account's
interests in the joint venture.
(c) Rights of First Refusal--(1) In the case of the right to
exercise a right of first refusal described in a joint venture
agreement to purchase a co-venturer's interest in the joint venture at
the price offered for such interest by a third party, the restrictions
of sections 406(a), 406(b)(1) and 406(b)(2) of the Act and the
sanctions resulting from the application of section 4975 of the Code by
reason of section 4975(c)(1)(A) through (E) of the Code shall not apply
to the acquisition by such Accounts, including one or more ERISA-
Covered Account[s], on either a proportionate or Disproportionate basis
of a co-venturer's interest in the joint venture in connection with the
exercise of such a right of first refusal, provided that each ERISA-
Covered Account is first given an opportunity to participate on a
proportionate basis; and
(2) The restrictions of section 406(b)(2) of the Act shall not
apply to any decision by UNUM on behalf of the Accounts not to exercise
such a right of first refusal even though the independent fiduciary for
one (but not all) of such ERISA-Covered Accounts has approved the
exercise of the right of first refusal, provided that none of the
ERISA-Covered Accounts that approved the exercise of the right of first
refusal decides to buy-out the co-venturer on its own.
(d) Buy-Sell Options--(1) In the case of the exercise of a buy-sell
option set forth in the joint venture agreement, the restrictions of
sections 406(a), 406(b)(1) and 406(b)(2) of the Act and the sanctions
resulting from the application of section 4975 of the Code by reason of
section 4975(c)(1)(A) through (E) of the Code shall not apply to the
acquisition by one or more of the Accounts on either a proportionate or
Disproportionate basis of a co-venturer's interest in the joint venture
in connection with the exercise of such a buy-sell option, provided
that each ERISA-Covered Account is first given the opportunity to
participate on a proportionate basis; and
(2) The restrictions of section 406(b)(2) of the Act shall not
apply to any decision by UNUM on behalf of two or more Accounts,
including one or more ERISA-Covered Account[s], to sell the interest of
such Accounts in the joint venture to a co-venturer even though the
independent fiduciary for one (but not all) of such ERISA-Covered
Account[s] has not approved such sale, provided that such disapproving
ERISA-Covered Account is first afforded the opportunity to purchase the
entire interest of the co-venturer.
Section III--Exemption for Transactions Involving a Joint Venture or
Persons Related to a Joint Venture
The restrictions of section 406(a) 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 (D) of the Code shall not apply, if the
conditions in Section IV are met, to any additional equity capital
contributions to a joint venture by an ERISA-Covered Account that is
participating in an interest in the joint venture, where the joint
venture is a party in interest solely by reason of the ownership on
behalf of the General Account of a 50 percent or more interest in such
joint venture.
Section IV--General Conditions
(a) Each contractholder or prospective contractholder in an ERISA-
Covered Account which shares or proposes to share real estate
investments is provided with a written description of potential
conflicts of interest that may result from the sharing, a copy of the
notice of pendency, and a copy of this exemption.
(b) An independent fiduciary must be appointed on behalf of each
ERISA-Covered Account participating in the sharing of investments. The
independent fiduciary shall be either
[[Page 56203]]
(1) A business organization which has at least five years of
experience with respect to commercial real estate investments, or
(2) A committee composed of three to five individuals who each have
at least five years of experience with respect to commercial real
estate investments.
(c) The independent fiduciary or independent fiduciary committee
member shall not be or consist of UNUM or any of its affiliates.
(d) No organization or individual may serve as an independent
fiduciary for an ERISA-Covered Account for any fiscal year if the gross
income (other than fixed, non-discretionary retirement income) received
by such organization or individual (or any partnership or corporation
of which such organization or individual is an officer, director, or
ten percent or more partner or shareholder) from UNUM, its affiliates
and the ERISA-Covered Accounts for that fiscal year exceeds five
percent of its or his or her annual gross income from all sources for
the prior fiscal year. If such organization or individual had no income
for the prior fiscal year, the five percent limitation shall be applied
with reference to the fiscal year in which such organization or
individual serves as an independent fiduciary.
The income limitation will include income for services rendered to
the Accounts as independent fiduciary under any prohibited transaction
exemption(s) granted by the Department.
In addition, no organization or individual who is an independent
fiduciary, and no partnership or corporation of which such organization
or individual is an officer, director or ten percent or more partner or
shareholder, may acquire any property from, sell any property to, or
borrow any funds from, UNUM, its affiliates, or any Account maintained
by UNUM or its affiliates, during the period that such organization or
individual serves as an independent fiduciary and continuing for a
period of six months after such organization or individual ceases to be
an independent fiduciary, or negotiate any such transaction during the
period that such organization or individual serves as independent
fiduciary.
(e) The independent fiduciary will approve the initial allocation
of a shared investment to an ERISA-Covered Account. In addition, the
independent fiduciary acting on behalf of an ERISA-Covered Account
shall have the responsibility and authority to approve or reject
recommendations made by UNUM or its affiliates for each of the
transactions in this exemption. In the case of a possible transfer or
exchange of any interest in a shared investment between the General
Account and an ERISA-Covered Account, the independent fiduciary shall
also have full authority to negotiate the terms of the transfer. UNUM
shall involve the independent fiduciary in the consideration of
contemplated transactions prior to the making of any decisions, and
shall provide the independent fiduciary with whatever information may
be necessary in making its determinations.
In addition, the independent fiduciary shall review on an as-needed
basis, but not less than twice annually, the shared real estate
investments in the ERISA-Covered Account to determine whether the
shared real estate investments are held in the best interest of the
ERISA-Covered Account.
(f) UNUM maintains for a period of six years from the date of the
transaction the records necessary to enable the persons described in
paragraph (g) of this Section to determine whether the conditions of
this exemption have been met, except that a prohibited transaction will
not be considered to have occurred if, due to circumstances beyond the
control of UNUM or its affiliates, the records are lost or destroyed
prior to the end of the six-year period.
(g)(1) Except as provided in paragraph (2) of this subsection (g)
and notwithstanding any provisions of subsection (a)(2) and (b) of
section 504 of the Act, the records referred to in subsection (f) of
this Section are unconditionally available at their customary location
for examination during normal business hours by--
(A) Any duly authorized employee or representative of the
Department or the Internal Revenue Service,
(B) Any fiduciary of a plan participating in an ERISA-Covered
Account who has authority to acquire or dispose of the interests of the
plan, or any duly authorized employee or representative of such
fiduciary,
(C) Any contributing employer to any plan participating in an
ERISA-Covered Account or any duly authorized employee or representative
of such employer, and
(D) Any participant or beneficiary of any plan participating in an
ERISA-Covered Account, or any duly authorized employee or
representative of such participant or beneficiary.
(2) None of the persons described in subparagraphs (B) through (D)
of this subsection (g) shall be authorized to examine trade secrets of
UNUM, any of its affiliates, or commercial or financial information
which is privileged or confidential.
Section V--Definitions
For the purposes of this exemption:
(a) An ``affiliate'' of UNUM includes--
(1) Any person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control
with UNUM,
(2) Any officer, director or employee of UNUM or person described
in section V(a)(1), and
(3) Any partnership in which UNUM is a partner.
(b) An ``Account'' means the General Account (including the general
accounts of UNUM affiliates), any separate account of UNUM or its
affiliate, or any investment advisory account, trust, limited
partnership or other investment account or fund managed by UNUM.
(c) The ``General Account'' means the general asset account of UNUM
and any of its affiliates which are insurance companies licensed to do
business in at least one State as defined in section 3(10) of the Act.
(d) An ``ERISA-Covered Account'' means any Account (other than the
General Account) which consists solely of the UNUM Plan or other plans
maintained by UNUM or its affiliates.
(e) ``Disproportionate'' means not in proportion to an Account's
existing equity ownership interest in an investment, joint venture or
joint venture interest.
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 August 1, 1997 at 62 FR
41441.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
NatWest Securities Corporation, NatWest Securities Limited, Located in
New York, New York
[Prohibited Transaction Exemption 97-57; Exemption Application Nos. D-
10464, D-10465]
Exemption
Section I--Transactions
A. Effective May 22, 1997, the restrictions of section 406(a)(1)
(A) through (D) of the Employee Retirement Income Security Act of 1974
(the Act) and the taxes imposed by section 4975 (a) and (b) of the
Internal Revenue Code of 1986 (the Code), by reason of section 4975
(c)(1) (A) through (D) of the Code, shall not apply to any purchase or
sale of a security between an employee benefit plan and a broker-dealer
affiliated with NatWest Securities Corporation and subject to British
law
[[Page 56204]]
(NatWest/UK Affiliate), if the following conditions, and the conditions
of Section II, are satisfied:
(1) The NatWest/UK Affiliate customarily purchases and sells
securities for its own account in the ordinary course of its business
as a broker-dealer.
(2) Such transaction is on terms at least as favorable to the plan
as those which the plan could obtain in an arm's length transaction
with an unrelated party.
(3) Neither the NatWest/UK Affiliate nor an affiliate thereof has
discretionary authority or control with respect to the investment of
the plan assets involved in the transaction, or renders investment
advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to
those assets, and the NatWest/UK Affiliate is a party in interest or
disqualified person with respect to the plan assets involved in the
transaction solely by reason of section 3(14)(B) of the Act or section
4975(e)(2)(B) of the Code, or by reason of a relationship to a person
described in such sections. For purposes of this paragraph, the
NatWest/UK Affiliate shall not be deemed to be a fiduciary with respect
to a plan solely by reason of providing securities custodial services
for a plan.
B. Effective May 22, 1997, the restrictions of section 406(a)(1)
(A) through (D) of the Act and the taxes imposed by section 4975 (a)
and (b) of the Code, by reason of section 4975(c)(1) (A) through (D) of
the Code, shall not apply to the lending of securities that are assets
of an employee benefit plan to an NatWest/UK Affiliate if the following
conditions, and the conditions of Section II, are satisfied:
(1) Neither the NatWest/UK Affiliate (the Borrower) nor an
affiliate of the Borrower has discretionary authority or control with
respect to the investment of the plan assets involved in the
transaction, or renders investment advice (within the meaning of 29 CFR
2510.3-21(c)) with respect to those assets;
(2) The plan receives from the Borrower, either by physical
delivery or by book entry in a securities depository located in the
United States, by the close of business on the day on which the
securities lent are delivered to the Borrower, collateral consisting of
U.S. currency, securities issued or guaranteed by the United States
Government or its agencies or instrumentalities, or irrevocable United
States bank letters of credit issued by a person other than the
Borrower or an affiliate thereof, or any combination thereof, having,
as of the close of business on the preceding business day, a market
value (or, in the case of letters of credit, a stated amount) equal to
not less than 100 percent of the then market value of the securities
lent. The collateral referred to in this Section I(B)(2) must be held
in the United States;
(3) Prior to the making of any such loan, the Borrower shall have
furnished the following items to the fiduciary for the plan who is
making decisions on behalf of the plan with respect to the lending of
securities (the Lending Fiduciary): (1) the most recent available
audited statement of the Borrower's financial condition, (2) the most
recent available unaudited statement of the Borrower's financial
condition (if more recent than such audited stated), and (3) a
representation that, at the time the loan is negotiated, there has been
no material adverse change in the Borrower's financial condition since
the date of the most recent financial statement furnished to the plan
that has not been disclosed to the Lending Fiduciary. Such
representation may be made by the Borrower's agreement that each such
loan shall constitute a representation by the Borrower that there has
been no such material adverse change;
(4) The loan is made pursuant to a written loan agreement, the
terms of which are at least as favorable to the plan as those which the
plan could obtain in an arm's-length transaction with an unrelated
party. Such agreement may be in the form of a master agreement covering
a series of securities-lending transactions;
(5) The plan (1) receives a reasonable fee that is related to the
value of the borrowed securities and the duration of the loan, or (2)
has the opportunity to derive compensation through the investment of
cash collateral. Where the plan has that opportunity, the plan may pay
a loan rebate or similar fee to the Borrower, if such fee is not
greater than the plan would pay an unrelated party in an arm's-length
transaction;
(6) The plan receives the equivalent of all distributions made to
holders of the borrowed securities during the term of the loan,
including, but not limited to, cash dividends, interest payments,
shares of stock as a result of stock splits and rights to purchase
additional securities;
(7) If the market value of the collateral on the close of trading
on a business day is less than 100 percent of the market value of the
borrowed securities at the close of trading on that day, the Borrower
shall deliver, by the close of business on the following business day,
an additional amount of collateral (as described in paragraph (2)) the
market value of which, together with the market value of all previously
delivered collateral, equals at least 100 percent of the market value
of all the borrowed securities as of such preceding day.
Notwithstanding the foregoing, part of the collateral may be returned
to the Borrower if the market value of the collateral exceeds 100
percent of the market value of the borrowed securities, as long as the
market value of the remaining collateral equals at least 100 percent of
the market value of the borrowed securities;
(8) The loan may be terminated by the plan at any time, whereupon
the Borrower shall deliver certificates for securities identical to the
borrowed securities (or the equivalent thereof in the event of
reorganization, recapitalization or merger of the issuer of the
borrowed securities) to the plan within (1) the customary delivery
period for such securities, (2) three business days, or (3) the time
negotiated for such delivery by the plan and the Borrower, whichever is
lesser; and
(9) In the event the loan is terminated and the Borrower fails to
return the borrowed securities or the equivalent thereof within the
time described in paragraph (8) above, then (i) the plan may, under the
terms of the loan agreement, purchase securities identical to the
borrowed securities (or their equivalent as described above) and may
apply the collateral to the payment of the purchase price, any other
obligations of the Borrower under the agreement, and any expenses
associated with the sale and/or purchase, and (ii) the Borrower is
obligated, under the terms of the loan agreement, to pay, and does pay
to the plan, the amount of any remaining obligations and expenses not
covered by the collateral plus interest at a reasonable rate.
Notwithstanding the foregoing, the Borrower may, in the event the
Borrower fails to return borrowed securities as described above,
replace non-cash collateral with an amount of cash not less than the
then current market value of the collateral, provided such replacement
is approved by the Lending Fiduciary.
(10) If the Borrower fails to comply with any condition of this
exemption, in the course of engaging in a securities-lending
transactions, the plan fiduciary who caused the plan to engage in such
transaction shall not be deemed to have caused the plan to engage in a
transaction prohibited by section 406(a)(1) (A) through (D) of the Act
solely by reason of the Borrower's failure to comply with the
conditions of the exemption.
C. Effective May 22, 1997, the restrictions of sections 406(a)(1)
(A)
[[Page 56205]]
through (D) and 406(b)(2) of the Act and the taxes imposed by section
4975 (a) and (b) of the Code shall not apply to any extension of credit
to an employee benefit plan by an NatWest/UK Affiliate to permit the
settlement of securities transactions or in connection with the writing
of options contracts provided that the following conditions are met:
(a) The NatWest/UK Affiliate is not a fiduciary with respect to any
assets of such plan, unless no interest or other consideration is
received by such fiduciary or any affiliate thereof in connection with
such extension of credit; and
(b) Such extension of credit would be lawful under the Securities
Exchange Act of 1934 and any rules or regulations thereunder if such
act, rules or regulations were applicable.
Section II--General Conditions
A. The NatWest/UK Affiliate is registered as a broker-dealer with
the Securities and Futures Authority of the United Kingdom (the
S.F.A.);
B. The NatWest/UK Affiliate is in compliance with all requirements
of Rule 15a-6 (17 CFR 240.15a-6) under the Securities and Exchange Act
of 1934, which provides for foreign broker-dealers a limited exemption
from U.S. registration requirements;
C. Prior to the transaction, the NatWest/UK Affiliate enters into a
written agreement with the plan in which the NatWest/UK Affiliate
consents to the jurisdiction of the courts of the United States with
respect to the transactions covered by this exemption;
D. (1) The NatWest/UK Affiliate maintains or causes to be
maintained within the United States for a period of six years from the
date of such transaction such records as are necessary to enable the
persons described in this section to determine whether the conditions
of this exemption have been met; except that a party in interest with
respect to an employee benefit plan, other than the NatWest/UK
Affiliate, shall not be subject to a civil penalty under section 502(i)
of the Act or the taxes imposed by section 4975 (a) or (b) of the Code,
if such records are not maintained, or are not available for
examination as required by this section, and a prohibited transaction
will not be deemed to have occurred if, due to circumstances beyond the
control of the NatWest/UK Affiliate, such records are lost or destroyed
prior to the end of such six year period;
(2) The records referred to in subsection (1) above are
unconditionally available for examination during normal business hours
by duly authorized employees of (a) the Department of Labor, (b) the
Internal Revenue Service, (c) plan participants and beneficiaries, (d)
any employer of plan participants and beneficiaries, and (e) any
employee organization any of whose members are covered by such plan;
except that none of the persons described in (c) through (e) of this
subsection shall be authorized to examine trade secrets of NatWest
Securities Corporation or the NatWest/UK Affiliate or any commercial or
financial information which is privileged or confidential.
Section III--Definitions
``Affiliate'' of a person shall include: (i) Any person directly or
indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with such other person; (ii) any officer,
director, or partner, employee or relative (as defined in section 3(15)
of the Act) of such other person; and (iii) any corporation or
partnership of which such other person is an officer, director or
partner. 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.
``Security'' shall include equities, fixed income securities,
options on equity and on fixed income securities, government
obligations, and any other instrument that constitutes a security under
U.S. securities laws. The term ``security'' does not include swap
agreements or other notional principal contracts.
EFFECTIVE DATE: This exemption is effective as of May 22, 1997.
For a more complete statement of the summary of facts and
representations supporting the Department's decision to grant this
exemption refer to the Notice of Proposed Exemption published on
September 5, 1997 at 62 FR 47060.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Carl M. Callaway Individual Retirement Account (IRA), Located in
Huntington, West Virginia; [Prohibited Transaction Exemption No. 97-58;
Application No. D-10469]
Exemption
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 transaction involving a sale or exchange of certain
securities (the Sale) by the IRA to Carl M. Callaway and his wife,
Marianna F. Callaway, both disqualified persons with respect to the
IRA; provided the following conditions are satisfied: (a) the sale or
exchange is a one-time transaction constituting an exchange of
securities approximately equal in value and any difference in value
occurring is immediately eradicated with cash payments by either the
Callaways or the IRA, in order to equalize the value of the exchanged
assets, (b) the IRA incurs no commissions or other expenses in
connection with the transaction, (c) the transaction involves only
securities that have a fair market value on the date of the exchange
which is objectively determinable through independently and regularly
published market prices and quotations, and (d) the IRA tenders as
consideration stock valued at an amount equal to the reported closing
price of the stock on the date of the Sale and the IRA receives U. S.
Treasury notes valued at the reported closing bid on the date of the
Sale, plus the accrued interest the notes earned to the date of the
Sale.
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 September 5, 1997 at 62
FR 47604.
FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver of the Department,
telephone (202) 219-8881. (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 exemptions 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) These exemptions are 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
[[Page 56206]]
administrative or statutory exemption is not dispositive of whether the
transaction is in fact a prohibited transaction; and
(3) The availability of these exemptions is subject to the express
condition that the material facts and representations contained in each
application accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, D.C., this 23rd day of October, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 97-28593 Filed 10-28-97; 8:45 am]
BILLING CODE 4510-29-P
