[Federal Register Volume 59, Number 242 (Monday, December 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31087]
[[Page Unknown]]
[Federal Register: December 19, 1994]
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DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 94-84; Exemption Application No. D-
9801, et al.]
Grant of Individual Exemptions; Alex. Brown & Sons, Incorporated,
et al.
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.
Alex. Brown & Sons, Incorporated (ABS) Located in Baltimore,
Maryland
[Prohibited Transaction Exemption 94-84; Exemption Application No. D-
9801]
Exemption
I. Transactions
A. Effective August 12, 1994, the restrictions of sections 406(a)
and 407(a) 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 following transactions involving trusts and
certificates evidencing interests therein:
(1) The direct or indirect sale, exchange or transfer of
certificates in the initial issuance of certificates between the
sponsor or underwriter and an employee benefit plan when the sponsor,
servicer, trustee or insurer of a trust, the underwriter of the
certificates representing an interest in the trust, or an obligor is a
party in interest with respect to such plan;
(2) The direct or indirect acquisition or disposition of
certificates by a plan in the secondary market for such certificates;
and
(3) The continued holding of certificates acquired by a plan
pursuant to subsection I.A.(1) or (2).
Notwithstanding the foregoing, section I.A. does not provide an
exemption from the restrictions of sections 406(a)(1)(E), 406(a)(2) and
407 for the acquisition or holding of a certificate on behalf of an
Excluded Plan by any person who has discretionary authority or renders
investment advice with respect to the assets of that Excluded
Plan.1
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\1\Section I.A. provides no relief from sections 406(a)(1)(E),
406(a)(2) and 407 for any person rendering investment advice to an
Excluded Plan within the meaning of section 3(21)(A)(ii) and
regulation 29 CFR 2510.3-21(c).
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B. Effective August 12, 1994, the restrictions of sections
406(b)(1) and 406(b)(2) of the Act and the taxes imposed by section
4975 (a) and (b) of the Code by reason of section 4975(c)(1)(E) of the
Code shall not apply to:
(1) The direct or indirect sale, exchange or transfer of
certificates in the initial issuance of certificates between the
sponsor or underwriter and a plan when the person who has discretionary
authority or renders investment advice with respect to the investment
of plan assets in the certificates is (a) an obligor with respect to 5
percent or less of the fair market value of obligations or receivables
contained in the trust, or (b) an affiliate of a person described in
(a); if:
(i) the plan is not an Excluded Plan;
(ii) solely in the case of an acquisition of certificates in
connection with the initial issuance of the certificates, at least 50
percent of each class of certificates in which plans have invested is
acquired by persons independent of the members of the Restricted Group
and at least 50 percent of the aggregate interest in the trust is
acquired by persons independent of the Restricted Group;
(iii) a plan's investment in each class of certificates does not
exceed 25 percent of all of the certificates of that class outstanding
at the time of the acquisition; and
(iv) immediately after the acquisition of the certificates, no more
than 25 percent of the assets of a plan with respect to which the
person has discretionary authority or renders investment advice are
invested in certificates representing an interest in a trust containing
assets sold or serviced by the same entity.2 For purposes of this
paragraph B.(1)(iv) only, an entity will not be considered to service
assets contained in a trust if it is merely a subservicer of that
trust;
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\2\For purposes of this exemption, each plan participating in a
commingled fund (such as a bank collective trust fund or insurance
company pooled separate account) shall be considered to own the same
proportionate undivided interest in each asset of the commingled
fund as its proportionate interest in the total assets of the
commingled fund as calculated on the most recent preceding valuation
date of the fund.
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(2) The direct or indirect acquisition or disposition of
certificates by a plan in the secondary market for such certificates,
provided that the conditions set forth in paragraphs B.(1) (i), (iii)
and (iv) are met; and
(3) The continued holding of certificates acquired by a plan
pursuant to subsection I.B. (1) or (2).
C. Effective August 12, 1994, the restrictions of sections 406(a),
406(b) and 407(a) of the Act, and the taxes imposed by section 4975 (a)
and (b) of the Code by reason of section 4975(c) of the Code, shall not
apply to transactions in connection with the servicing, management and
operation of a trust, provided:
(1) such transactions are carried out in accordance with the terms
of a binding pooling and servicing arrangement; and
(2) the pooling and servicing agreement is provided to, or
described in all material respects in the prospectus or private
placement memorandum provided to, investing plans before they purchase
certificates issued by the trust.3
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\3\In the case of a private placement memorandum, such
memorandum must contain substantially the same information that
would be disclosed in a prospectus if the offering of the
certificates were made in a registered public offering under the
Securities Act of 1933. In the Department's view, the private
placement memorandum must contain sufficient information to permit
plan fiduciaries to make informed investment decisions.
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Notwithstanding the foregoing, section I.C. does not provide an
exemption from the restrictions of section 406(b) of the Act or from
the taxes imposed by reason of section 4975(c) of the Code for the
receipt of a fee by a servicer of the trust from a person other than
the trustee or sponsor, unless such fee constitutes a ``qualified
administrative fee'' as defined in section III.S.
D. Effective August 12, 1994, the restrictions of sections 406(a)
and 407(a) of the Act, and the taxes imposed by sections 4975(a) and
(b) of the Code by reason of sections 4975(c)(1)(A) through (D) of the
Code, shall not apply to any transactions to which those restrictions
or taxes would otherwise apply merely because a person is deemed to be
a party in interest or disqualified person (including a fiduciary) with
respect to a plan by virtue of providing services to the plan (or by
virtue of having a relationship to such service provider described in
section 3(14)(F), (G), (H) or (I) of the Act or section 4975(e)(2)(F),
(G), (H) or (I) of the Code), solely because of the plan's ownership of
certificates.
II. General Conditions
A. The relief provided under Part I is available only if the
following conditions are met:
(1) The acquisition of certificates by a plan is on terms
(including the certificate price) that are at least as favorable to the
plan as they would be in an arm's-length transaction with an unrelated
party;
(2) The rights and interests evidenced by the certificates are not
subordinated to the rights and interests evidenced by other
certificates of the same trust;
(3) The certificates acquired by the plan have received a rating at
the time of such acquisition that is in one of the three highest
generic rating categories from either Standard & Poor's Corporation
(S&P's), Moody's Investors Service, Inc. (Moody's), Duff & Phelps Inc.
(D & P) or Fitch Investors Service, Inc. (Fitch);
(4) The trustee is not an affiliate of any member of the Restricted
Group. However, the trustee shall not be considered to be an affiliate
of a servicer solely because the trustee has succeeded to the rights
and responsibilities of the servicer pursuant to the terms of a pooling
and servicing agreement providing for such succession upon the
occurrence of one or more events of default by the servicer;
(5) The sum of all payments made to and retained by the
underwriters in connection with the distribution or placement of
certificates represents not more than reasonable compensation for
underwriting or placing the certificates; the sum of all payments made
to and retained by the sponsor pursuant to the assignment of
obligations (or interests therein) to the trust represents not more
than the fair market value of such obligations (or interests); and the
sum of all payments made to and retained by the servicer represents not
more than reasonable compensation for the servicer's services under the
pooling and servicing agreement and reimbursement of the servicer's
reasonable expenses in connection therewith; and
(6) The plan investing in such certificates is an ``accredited
investor'' as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933.
B. Neither any underwriter, sponsor, trustee, servicer, insurer, or
any obligor, unless it or any of its affiliates has discretionary
authority or renders investment advice with respect to the plan assets
used by a plan to acquire certificates, shall be denied the relief
provided under Part I, if the provision of subsection II.A.(6) above is
not satisfied with respect to acquisition or holding by a plan of such
certificates, provided that (1) such condition is disclosed in the
prospectus or private placement memorandum; and (2) in the case of a
private placement of certificates, the trustee obtains a representation
from each initial purchaser which is a plan that it is in compliance
with such condition, and obtains a covenant from each initial purchaser
to the effect that, so long as such initial purchaser (or any
transferee of such initial purchaser's certificates) is required to
obtain from its transferee a representation regarding compliance with
the Securities Act of 1933, any such transferees will be required to
make a written representation regarding compliance with the condition
set forth in subsection II.A.(6) above.
III. Definitions
For purposes of this exemption:
A. ``Certificate'' means:
(1) a certificate--
(a) that represents a beneficial ownership interest in the assets
of a trust; and
(b) that entitles the holder to pass-through payments of principal,
interest, and/or other payments made with respect to the assets of such
trust; or
(2) a certificate denominated as a debt instrument--
(a) that represents an interest in a Real Estate Mortgage
Investment Conduit (REMIC) within the meaning of section 860D(a) of the
Internal Revenue Code of 1986; and
(b) that is issued by and is an obligation of a trust;
with respect to certificates defined in (1) and (2) above for which ABS
or any of its affiliates is either (i) the sole underwriter or the
manager or co-manager of the underwriting syndicate, or (ii) a selling
or placement agent.
For purposes of this exemption, references to ``certificates
representing an interest in a trust'' include certificates denominated
as debt which are issued by a trust.
B. ``Trust'' means an investment pool, the corpus of which is held
in trust and consists solely of:
(1) either
(a) secured consumer receivables that bear interest or are
purchased at a discount (including, but not limited to, home equity
loans and obligations secured by shares issued by a cooperative housing
association);
(b) secured credit instruments that bear interest or are purchased
at a discount in transactions by or between business entities
(including, but not limited to, qualified equipment notes secured by
leases, as defined in section III.T);
(c) obligations that bear interest or are purchased at a discount
and which are secured by single-family residential, multi-family
residential and commercial real property (including obligations secured
by leasehold interests on commercial real property);
(d) obligations that bear interest or are purchased at a discount
and which are secured by motor vehicles or equipment, or qualified
motor vehicle leases (as defined in section III.U);
(e) ``guaranteed governmental mortgage pool certificates,'' as
defined in 29 CFR 2510.3-101(i)(2);
(f) fractional undivided interests in any of the obligations
described in clauses (a)-(e) of this section B.(1);
(2) property which had secured any of the obligations described in
subsection B.(1);
(3) undistributed cash or temporary investments made therewith
maturing no later than the next date on which distributions are to be
made to certificateholders; and
(4) rights of the trustee under the pooling and servicing
agreement, and rights under any insurance policies, third-party
guarantees, contracts of suretyship and other credit support
arrangements with respect to any obligations described in subsection
B.(1).
Notwithstanding the foregoing, the term ``trust'' does not include
any investment pool unless: (i) the investment pool consists only of
assets of the type which have been included in other investment pools,
(ii) certificates evidencing interests in such other investment pools
have been rated in one of the three highest generic rating categories
by S&P's, Moody's, D & P, or Fitch for at least one year prior to the
plan's acquisition of certificates pursuant to this exemption, and
(iii) certificates evidencing interests in such other investment pools
have been purchased by investors other than plans for at least one year
prior to the plan's acquisition of certificates pursuant to this
exemption.
C. ``Underwriter'' means:
(1) ABS;
(2) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with
ABS; or
(3) any member of an underwriting syndicate or selling group of
which ABS or a person described in (2) is a manager or co-manager with
respect to the certificates.
D. ``Sponsor'' means the entity that organizes a trust by
depositing obligations therein in exchange for certificates.
E. ``Master Servicer'' means the entity that is a party to the
pooling and servicing agreement relating to trust assets and is fully
responsible for servicing, directly or through subservicers, the assets
of the trust.
F. ``Subservicer'' means an entity which, under the supervision of
and on behalf of the master servicer, services loans contained in the
trust, but is not a party to the pooling and servicing agreement.
G. ``Servicer'' means any entity which services loans contained in
the trust, including the master servicer and any subservicer.
H. ``Trustee'' means the trustee of the trust, and in the case of
certificates which are denominated as debt instruments, also means the
trustee of the indenture trust.
I. ``Insurer'' means the insurer or guarantor of, or provider of
other credit support for, a trust. Notwithstanding the foregoing, a
person is not an insurer solely because it holds securities
representing an interest in a trust which are of a class subordinated
to certificates representing an interest in the same trust.
J. ``Obligor'' means any person, other than the insurer, that is
obligated to make payments with respect to any obligation or receivable
included in the trust. Where a trust contains qualified motor vehicle
leases or qualified equipment notes secured by leases, ``obligor''
shall also include any owner of property subject to any lease included
in the trust, or subject to any lease securing an obligation included
in the trust.
K. ``Excluded Plan'' means any plan with respect to which any
member of the Restricted Group is a ``plan sponsor'' within the meaning
of section 3(16)(B) of the Act.
L. ``Restricted Group'' with respect to a class of certificates
means:
(1) each underwriter;
(2) each insurer;
(3) the sponsor;
(4) the trustee;
(5) each servicer;
(6) any obligor with respect to obligations or receivables included
in the trust constituting more than 5 percent of the aggregate
unamortized principal balance of the assets in the trust, determined on
the date of the initial issuance of certificates by the trust; or
(7) any affiliate of a person described in (1)-(6) above.
M. ``Affiliate'' of another person includes:
(1) Any person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control
with such other person;
(2) Any officer, director, partner, employee, relative (as defined
in section 3(15) of the Act), a brother, a sister, or a spouse of a
brother or sister of such other person; and
(3) Any corporation or partnership of which such other person is an
officer, director or partner.
N. ``Control'' means the power to exercise a controlling influence
over the management or policies of a person other than an individual.
O. A person will be ``independent'' of another person only if:
(1) such person is not an affiliate of that other person; and
(2) the other person, or an affiliate thereof, is not a fiduciary
who has investment management authority or renders investment advice
with respect to any assets of such person.
P. ``Sale'' includes the entrance into a forward delivery
commitment (as defined in section Q below), provided:
(1) The terms of the forward delivery commitment (including any fee
paid to the investing plan) are no less favorable to the plan than they
would be in an arm's length transaction with an unrelated party;
(2) The prospectus or private placement memorandum is provided to
an investing plan prior to the time the plan enters into the forward
delivery commitment; and
(3) At the time of the delivery, all conditions of this exemption
applicable to sales are met.
Q. ``Forward delivery commitment'' means a contract for the
purchase or sale of one or more certificates to be delivered at an
agreed future settlement date. The term includes both mandatory
contracts (which contemplate obligatory delivery and acceptance of the
certificates) and optional contracts (which give one party the right
but not the obligation to deliver certificates to, or demand delivery
of certificates from, the other party).
R. ``Reasonable compensation'' has the same meaning as that term is
defined in 29 CFR 2550.408c-2.
S. ``Qualified Administrative Fee'' means a fee which meets the
following criteria:
(1) the fee is triggered by an act or failure to act by the obligor
other than the normal timely payment of amounts owing in respect of the
obligations;
(2) the servicer may not charge the fee absent the act or failure
to act referred to in (1);
(3) the ability to charge the fee, the circumstances in which the
fee may be charged, and an explanation of how the fee is calculated are
set forth in the pooling and servicing agreement; and
(4) the amount paid to investors in the trust will not be reduced
by the amount of any such fee waived by the servicer.
T. ``Qualified Equipment Note Secured By A Lease'' means an
equipment note:
(1) which is secured by equipment which is leased;
(2) which is secured by the obligation of the lessee to pay rent
under the equipment lease; and
(3) with respect to which the trust's security interest in the
equipment is at least as protective of the rights of the trust as the
trust would have if the equipment note were secured only by the
equipment and not the lease.
U. ``Qualified Motor Vehicle Lease'' means a lease of a motor
vehicle where:
(1) the trust holds a security interest in the lease;
(2) the trust holds a security interest in the leased motor
vehicle; and
(3) the trust's security interest in the leased motor vehicle is at
least as protective of the trust's rights as the trust would receive
under a motor vehicle installment loan contract.
V. ``Pooling and Servicing Agreement'' means the agreement or
agreements among a sponsor, a servicer and the trustee establishing a
trust. In the case of certificates which are denominated as debt
instruments, ``Pooling and Servicing Agreement'' also includes the
indenture entered into by the trustee of the trust issuing such
certificates and the indenture trustee.
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 October 25, 1994 at 59 FR
53674.
EFFECTIVE DATE: This exemption is effective for transactions occurring
on or after August 12, 1994.
FOR FURTHER INFORMATION CONTACT: Gary Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
The Masters, Mates and Pilots Pension Plan (The Pension Plan) and
Individual Retirement Account Plan (the IRAP; together, the Plans)
Located in Linthicum Heights, Maryland
[Prohibited Transaction Exemption 94-85; Exemption Application Nos. D-
9618 and D-9619]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) and
407(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
(E) of the Code, shall not apply to the continued holding by the Plans
of their shares of stock (the Stock) in American Heavy Lift Shipping
Company, provided that: (a) the Plans' independent fiduciary has
determined that the Plans' holding of the Stock is appropriate for the
Plans and in the best interests of the Plans' participants and
beneficiaries; and (b) the Plans' independent fiduciary continues to
monitor the Plans' holding of the Stock and determines at all times
that such transaction remains in the best interests of the Plans.
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 October 25, 1994 at 59 FR
53682.
TEMPORARY NATURE OF EXEMPTION: This exemption is effective until the
later of: (1) December 31, 1995, or (2) December 31, 1996 provided
another application for exemption is filed with the Department prior to
December 31, 1995.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
The Bank of California, N.A.; Located in San Francisco, California
[Prohibited Transaction Exemption 94-86; Exemption Application No. D-
9240]
Exemption
Section I--Exemption for In-Kind Transfer of Assets
The restrictions of section 406(a) and section 406(b) of the Act
and the sanctions resulting from the application of section 4975 of the
Code by reason of section 4975(c)(1) (A) through (F) shall not apply,
effective November 12, 1993, to the in-kind transfer to any diversified
open-end investment company (the Fund or Funds) registered under the
Investment Company Act of 1940 to which the Bank of California, N.A. or
any of its affiliates (collectively, the Bank) serves as investment
adviser and may provide other services of the assets of various
employee benefit plans (the Plan or Plans) that are either held in
certain collective investment funds (the CIF or CIFs) maintained by the
Bank or otherwise held by the Bank as trustee, investment manager, or
in any other capacity as fiduciary on behalf of the Plans, in exchange
for shares of such Funds; provided that the following conditions are
met:
(a) A fiduciary (the Second Fiduciary) who is acting on behalf of
each affected Plan and who is independent of and unrelated to the Bank,
as defined in paragraph (g) of section III below, receives advance
written notice of the in-kind transfer of assets of the Plans or the
CIFs in exchange for shares of the Fund and the disclosures described
in paragraph (g) of section II below;
(b) On the basis of the information described in paragraph (g) of
section II below, the Second Fiduciary authorizes in writing the in-
kind transfer of assets of the Plans in exchange for shares of the
Funds, the investment of such assets in corresponding portfolios of the
Funds, and the fees received by the Bank in connection with its
services to the Fund. Such authorization by the Second Fiduciary to be
consistent with the responsibilities, obligations, and duties imposed
on fiduciaries by Part 4 of Title I of the Act;
(c) No sales commissions are paid by the Plans in connection with
the in-kind transfers of asset of the Plans or the CIFs in exchange for
shares of the Funds;
(d) All or a pro rata portion of the assets of the Plans held in
the CIFs or all or a pro rata portion of the assets of the Plans held
by the Bank in any capacities as fiduciary on behalf of such Plans are
transferred in-kind to the Funds in exchange for shares of such Funds,
(e) The Plans or the CIFs receive shares of the Funds that have a
total net asset value equal in value to the assets of the Plans or the
CIFs exchanged for such shares on the date of transfer;
(f) The current market value of the assets of the Plans or the CIFs
to be transferred in-kind in exchange for shares is determined in a
single valuation performed in the same manner and at the close of
business on the same day, using independent sources in accordance with
the procedures set forth in Rule 17a-7(b) (Rule 17a-7) under the
Investment Company Act of 1940, as amended from time to time or any
successor rule, regulation, or similar pronouncement, and the
procedures established by the Funds pursuant to Rule 17a-7 for the
valuation of such assets. Such procedures must require that all
securities for which a current market price cannot be obtained by
reference to the last sale price for transactions reported on a
recognized securities exchange or NASDAQ be valued based on an average
of the highest current independent bid and lowest current independent
offer, as of the close of business on the Friday preceding the weekend
of the Plan or CIF transfers determined on the basis of reasonable
inquiry from at least three sources that are broker-dealers or pricing
services independent of the Bank;
(g) Not later than thirty (30) days after completion of each in-
kind transfer of assets of the Plans or the CIFs in exchange for shares
of the Funds, the Bank sends by regular mail to the Second Fiduciary,
who is acting on behalf of each affected Plan and who is independent of
and unrelated to the Bank, as defined in paragraph (g) of section III
below, a written confirmation that contains the following information:
(1) the identity of each of the assets that was valued for purposes
of the transaction in accordance with Rule 17a-7(b)(4) under the
Investment Company Act of 1940;
(2) the price of each of the assets involved in the transaction;
and
(3) the identity of each pricing service or market maker consulted
in determining the value of such assets; and
(h) For all conversion transactions that occur after the date of
this exemption, the Bank, no later than ninety (90) days after
completion of each in-kind transfer of assets of the Plans or the CIFs
in exchange for shares of the Funds, will send by regular mail to the
Second Fiduciary, who is acting on behalf of each affected Plan and who
is independent of and unrelated to the Bank, as defined in paragraph
(g) of section III below, a written confirmation that contains the
following information:
(1) the number of CIF units held by each affected Plan immediately
before the conversion (and the related per unit value or the aggregate
dollar value of the units transferred); and
(2) the number of shares in the Funds that are held by each
affected Plan following the conversion (and the related per share net
asset value or the aggregate dollar value of the shares received).
(i) The conditions set forth in paragraphs (d), (e), (f), (o), (p),
(q) and (r) of section II below are satisfied;
Section II--Exemption for Receipt of Fees From Funds
If the exemption is granted, effective November 12, 1993, the
restrictions of section 406(a) and section 406(b) of the Act and the
sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1) (A) through (F) of the Code shall not
apply to the receipt of fees by the Bank from the Funds for acting as
the investment adviser, custodian, sub-administrator, and other service
provider for the Funds in connection with the investment in the Funds
by the Plans for which the Bank acts as a fiduciary provided that:
(a) No sales commissions are paid by the Plans in connection with
purchases or sales of shares of the Funds and no redemption fees are
paid in connection with the sale of such shares by the Plans to the
Funds;
(b) The price paid or received by the Plans for shares in the Funds
is the net asset value per share, as defined in paragraph (e) of
section III, at the time of the transaction and is the same price which
would have been paid or received for the shares by any other investor
at that time;
(c) The Bank, its affiliates, and officers or directors have not
and will not purchase from or sell to any of the Plans shares of any of
the Funds;
(d) The combined total of all fees received by the Bank for the
provision of services to the Plans, and in connection with the
provision of services to any of the Funds in which the Plans may
invest, are not in excess of ``reasonable compensation'' within the
meaning of section 408(b)(2) of the Act;
(e) The Bank does not receive any fees payable, pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the 12b-1 Fees) in
connection with the transactions;
(f) The Plans are not sponsored by the Bank;
(g) A Second Fiduciary who is acting on behalf of a Plan and who is
independent of and unrelated to the Bank, as defined in paragraph (g)
of section III below, receives in advance of the investment by a Plan
in any of the Funds a full and detailed written disclosure of
information concerning such Fund including, but not limited to:
(1) a current prospectus for each portfolio of each of the Funds in
which such Plan is considering investing,
(2) a statement describing the fees for investment management,
investment advisory, or other similar services, any fees for secondary
services (Secondary Services), as defined in paragraph (h) of section
III below, and all other fees to be charged to or paid by the Plan and
by such Funds to the Bank, including the nature and extent of any
differential between the rates of such fees,
(3) the reasons why the Bank may consider such investment to be
appropriate for the Plan,
(4) a statement describing whether there are any limitations
applicable to the Bank with respect to which assets of a Plan may be
invested in the Funds, and, if so, the nature of such limitations; and
(5) upon request of the Second Fiduciary, a copy of the proposed
exemption and/or a copy of the final exemption.
(h) On the basis of the information described in paragraph (g) of
this section II, the Second Fiduciary authorizes in writing: (1) The
investment of assets of the Plans in shares of the Fund, in connection
with the transaction set forth in section II; (2) the investment
portfolios of the Funds in which the assets of the Plans may be
invested; and (3) the fees received by the Bank in connection with its
services to the Funds; such authorization by the Second Fiduciary to be
consistent with the responsibilities, obligations, and duties imposed
on fiduciaries by Part 4 of Title I of the Act;
(i) The authorization, described in paragraph (h) of this section
II, is terminable at will by the Second Fiduciary of a Plan, without
penalty to such Plan. Such termination will be effected by the Bank
selling the shares of the Fund held by the affected Plan within one
business day following receipt by the Bank, either by mail, hand
delivery, facsimile, or other available means at the option of the
Second Fiduciary, of the termination form (the Termination Form), as
defined in paragraph (i) of section III below, or any other written
notice of termination; provided that if, due to circumstances beyond
the control of the Bank, the sale cannot be executed within one
business day, the Bank shall have one additional business day to
complete such sale;
(j) Plans do not pay any plan-level investment management fees,
investment advisory fees, or similar fees to the Bank with respect to
any of the assets of such Plans which are invested in shares of any of
the Funds. This condition does not preclude the payment of investment
advisory fees or similar fees by the Funds to the Bank under the terms
of an investment advisory agreement adopted in accordance with section
15 of the Investment Company Act of 1940 or other agreement between the
Bank and the Funds;
(k) In the event of an increase in the rate of any fees paid by the
Funds to the Bank regarding any investment management services,
investment advisory services, or fees for similar services that the
Bank provides to the Funds over an existing rate for such services that
had been authorized by a Second Fiduciary, in accordance with paragraph
(h) of this section II, the Bank will, at least thirty (30) days in
advance of the implementation of such increase, provide a written
notice (which may take the form of a proxy statement, letter, or
similar communication that is separate from the prospectus of the Fund
and which explains the nature and amount of the increase in fees) to
the Second Fiduciary of each of the Plans invested in a Fund which is
increasing such fees. Such notice shall be accompanied by the
Termination Form, as defined in paragraph (i) of section III below;
(l) In the event of an addition of a Secondary Service, as defined
in paragraph (h) of section III below, provided by the Bank to the Fund
for which a fee is charged or an increase in the rate of any fee paid
by the Funds to the Bank for any Secondary Service, as defined in
paragraph (h) of section III below, that results either from an
increase in the rate of such fee or from the decrease in the number or
kind of services performed by the Bank for such fee over an existing
rate for such Secondary Service which had been authorized by the Second
Fiduciary of a Plan, in accordance with paragraph (h) of this section
II, the Bank will at least thirty (30) days in advance of the
implementation of such additional service for which a fee is charged or
fee increase, provide a written notice (which may take the form of a
proxy statement, letter, or similar communication that is separate from
the prospectus of the Fund and which explains the nature and amount of
the additional service for which a fee is charged or the nature and
amount of the increase in fees) to the Second Fiduciary of each of the
Plans invested in a Fund which is adding a service or increasing fees.
Such notice shall be accompanied by the Termination Form, as defined in
paragraph (i) of section III below.
(m) The Second Fiduciary is supplied with a Termination Form at the
times specified in paragraphs (k), (l), and (n) of this section II,
which expressly provides an election to terminate the authorization,
described above in paragraph (h) of this section II, with instructions
regarding the use of such Termination Form including statements that:
(1) the authorization is terminable at will by any of the Plans,
without penalty to such Plans. Such termination will be effected by the
Bank selling the shares of the Fund held by the Plans requesting
termination within one business day following receipt by the Bank,
either by mail, hand delivery, facsimile, or other available means at
the option of the Second Fiduciary, of the Termination Form or any
other written notice of termination; provided that if, due to
circumstances beyond the control of the Bank, the sale of shares of
such Plans cannot be executed within one business day, the Bank shall
have one additional business day to complete such sale; and
(2) failure by the Second Fiduciary to return the Termination Form
on behalf of a Plan will be deemed to be an approval of the additional
Secondary Service for which a fee is charged or increase in the rate of
any fees, if such Termination Form is supplied pursuant to paragraphs
(k) and (l) of this section II, and will result in the continuation of
the authorization, as described in paragraph (h) of this section II, of
the Bank to engage in the transactions on behalf of such Plan;
(n) The Second Fiduciary is supplied with a Termination Form,
annually during the first quarter of each calendar year, beginning with
the first quarter of the calendar year that begins after the date the
grant of this exemption is published in the Federal Register and
continuing for each calendar year thereafter; provided that the
Termination Form need not be supplied to the Second Fiduciary, pursuant
to paragraph (n) of this section II, sooner than six months after such
Termination Form is supplied pursuant to paragraphs (k) and (l) of this
section II, except to the extent required by said paragraphs (k) and
(l) of this section II to disclose an additional Secondary Service for
which a fee is charged or an increase in fees;
(o)(1) With respect to each of the Funds in which a Plan invests,
the Bank will provide the Second Fiduciary of such Plan:
(A) at least annually with a copy of an updated prospectus of such
Fund;
(B) upon the request of such Second Fiduciary, with a report or
statement (which may take the form of the most recent financial report,
the current statement of additional information, or some other written
statement) which contains a description of all fees paid by the Fund to
the Bank; and
(2) With respect to each of the Funds in which a Plan invests, in
the event such Fund places brokerage transactions with the Bank, the
Bank will provide the Second Fiduciary of such Plan at least annually
with a statement specifying:
(A) the total, expressed in dollars, brokerage commissions of each
Fund's investment portfolio that are paid to the Bank by such Fund;
(B) the total, expressed in dollars, of brokerage commissions of
each Fund's investment portfolio that are paid by such Fund to
brokerage firms unrelated to the Bank;
(C) the average brokerage commissions per share, expressed as cents
per share, paid to the Bank by each portfolio of a Fund; and
(D) the average brokerage commissions per share, expressed as cents
per share, paid by each portfolio of a Fund to brokerage firms
unrelated to the Bank;
(p) All dealings between the Plans and any of the Funds are on a
basis no less favorable to such Plans than dealings between the Funds
and other shareholders holding the same class of shares as the Plans;
(q) The Bank maintains for a period of six (6) years the records
necessary to enable the persons, as described in paragraph (r) of
section II below, to determine whether the conditions of this exemption
have been met, except that:
(1) a prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of the Bank, the
records are lost or destroyed prior to the end of the six (6) year
period, and
(2) no party in interest, other than the Bank, shall be subject to
the civil penalty that may be assessed under section 502(i) of the Act,
or to the taxes imposed by section 4975(a) and (b) of the Code, if the
records are not maintained, or are not available for examination as
required by paragraph (r) of section II below;
(r)(1) Except as provided in paragraph (r)(2) of this section II
and notwithstanding any provisions of subsection (a)(2) and (b) of
section 504 of the Act, the records referred to in paragraph (q) of
section II above are unconditionally available at their customary
location for examination during normal business hours by--
(i) Any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(ii) Any fiduciary of each of the Plans who has authority to
acquire or dispose of shares of any of the Funds owned by such a Plan,
or any duly authorized employee or representative of such fiduciary;
and
(iii) Any participant or beneficiary of the Plans or duly
authorized employee or representative of such participant or
beneficiary;
(2) None of the persons described in paragraph (r)(1)(ii) and
(r)(1)(iii) of section II shall be authorized to examine trade secrets
of the Bank, or commercial or financial information which is privileged
or confidential.
Section III--Definitions
For purposes of this exemption,
(a) The term ``Bank'' means The Bank of California, N.A. and any
affiliate of the Bank, as defined in paragraph (b) of this section III.
(b) An ``affiliate'' of a person includes:
(1) Any person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control
with the person;
(2) any officer, director, employee, relative, or partner in any
such person; and
(3) Any corporation or partnership of which such person is an
officer, director, partner, or employee.
(c) The term ``control'' means the power to exercise a controlling
influence over the management or policies of a person other than an
individual;
(d) The term ``Fund or Funds'' means any diversified open-end
investment company or companies registered under the Investment Company
Act of 1940 for which the Bank serves as investment adviser, and may
also provide custodial or other services as approved by such Funds;
(e) The term, ``net asset value'' means the amount for purposes of
pricing all purchases and sales calculated by dividing the value of all
securities, determined by a method as set forth in a Fund's prospectus
and statement of additional information, and other assets belonging to
each of the portfolios in such Fund, less the liabilities charged to
each portfolio, by the number of outstanding shares.
(f) The term, ``relative,'' means a ``relative'' as that term is
defined in section 3(15) of the Act (or a ``member of the family'' as
that term is defined in section 4975(e)(6) of the Code), or a brother,
a sister, or a spouse of a brother or a sister.
(g) The term, ``Second Fiduciary,'' means a fiduciary of a plan who
is independent of and unrelated to the Bank. For purposes of this
exemption, the Second Fiduciary will not be deemed to be independent of
and unrelated to the Bank if:
(1) Such Second Fiduciary directly or indirectly controls, is
controlled by, or is under common control with the Bank;
(2) Such Second Fiduciary, or any officer, director, partner,
employee, or relative of such Second Fiduciary is an officer, director,
partner, or employee of the Bank (or is a relative of such persons);
(3) Such Second Fiduciary directly or indirectly receives any
compensation or other consideration for his or her own personal account
in connection with any transaction described in this exemption.
If an officer, director, partner, or employee of the Bank (or a
relative of such persons), is a director of such Second Fiduciary, and
if he or she abstains from participation in (i) the choice of the
Plan's investment manager/advisor, (ii) the approval of any purchase or
sale by the Plan of shares of the Funds, and (iii) the approval of any
change of fees charged to or paid by the Plan, in connection with any
of the transactions described in sections I and II above, then
paragraph (g)(2) of section III above, shall not apply.
(h) The term, ``Secondary Service,'' means a service, other than an
investment management, investment advisory, or similar service, which
is provided by the Bank to the Funds, including but not limited to
custodial, accounting, brokerage, administrative, or any other service.
(i) The term, ``Termination Form,'' means the form supplied to the
Second Fiduciary, at the times specified in paragraphs (k), (l), and
(n) of section II above, which expressly provides an election to the
Second Fiduciary to terminate on behalf of the Plans the authorization,
described in paragraph (h) of section II. Such Termination Form may be
used at will by the Second Fiduciary to terminate such authorization
without penalty to the Plans and to notify the Bank in writing to
effect such termination by selling the shares of the Fund held by the
Plans requesting termination within one business day following receipt
by the Bank, either by mail, hand delivery, facsimile, or other
available means at the option of the Second Fiduciary, of written
notice of such request for termination; provided that if, due to
circumstances beyond the control of the Bank, the sale cannot be
executed within one business day, the Bank shall have one additional
business day to complete such sale.
EFFECTIVE DATE: The exemption is effective retroactively, as of
November 12, 1993.
Written Comments
In the Notice of Proposed Exemption (the Notice), the Department
invited all interested persons to submit written comments and requests
for a hearing on the proposed exemption within sixty (60) days of the
date of the publication of the Notice in the Federal Register on August
17, 1994. All comments and requests for hearing were due by October 17,
1994.
During the comment period, the Department received no requests for
a hearing. However, the Department did receive a comment letter from
the applicant, dated October 17, 1994. The comment from the applicant
requested certain modifications and clarifications of the conditions of
the exemption and certain corrections of the language of the Summary of
Facts and Representation in the Notice. The applicant's comments are as
follows:
First, the Bank requests modification of the language in Section
I(f). This section provides in relevant part that,
The value of the assets of the Plans or the CIFs to be transferred
in-kind and the net asset value of the Funds receiving those assets in
exchange for shares is determined in a single valuation performed in
the same manner and at the close of business on the same day, in
accordance with the procedures set forth in Rule 17a-7(b) (Rule 17a-7)
under the Investment Company Act of 1940, as amended from time to time
or any successor rule, regulation, or similar pronouncement.
(Emphasis added). In this regard, the Bank indicated that the valuation
procedures described in Rule 17a-7 were used to value the CIF
securities transferred to the Funds in the ``conversion'' transaction
that occurred on November 12, 1993, for which retroactive relief has
been requested. Further, in connection with the determination of the
net asset value of the Funds' shares to be transferred to the CIFs in
that transaction, the trustees of the HighMark Group (HighMark) decided
to use Rule 17a-7 procedures to value certain securities held in the
portfolios of the Funds in cases where those securities were the same
as the securities being transferred to the Funds by the CIFs. However,
it is represented that Rule 17a-7 procedures were not used to determine
the value of other securities held in the Fund portfolios where those
securities were not the same as those held by the CIFs. The values of
such other Fund securities were instead determined pursuant to
procedures permitted under the Investment Company Act and normally
followed by HighMark in determining net asset value. The Bank maintains
that it did not intend as a condition of the exemption that Rule 17a-7
valuation procedures be used to determine the value of all of the
Fund's assets for purposes of ascertaining the number of shares to be
issued in connection with a conversion. The Bank believes that the best
approach is to require both parties to a conversion (e.g., a CIF and a
Fund) to use the same procedures to value any securities that are held
by both parties, but that compliance with the valuation requirements of
Rule 17a-7 should be required only with respect to securities held by a
party (such as a CIF) that is not a registered investment company. In
the opinion of the Bank, this would provide assurance that assets
transferred in a conversion transaction are priced appropriately
without interfering with the procedures normally employed by a
registered investment company in determining its net asset value.
In this regard, the Department believes that the most important
consideration is that the value of the securities transferred by the
Plan or the CIF into the Fund equal the value of the units of the Fund
received in exchange for such securities by the Plan. Accordingly, we
believe that the securities transferred must be valued under the same
procedures by both the transferee and transferor entity (e.g. a CIF and
a Fund). In response to the comment, the Department has reviewed its
policies concerning valuation in these types of transactions and has
decided to implement the following changes. The word, ``are,'' before
the word, ``value,'' should be deleted and the language of Section I(e)
amended to read as follows: ``The Plans or the CIFs receive shares of
the Funds that have a total net asset value equal in value to the
assets of the Plans or the CIFs exchanged for such shares on the date
of transfer.'' (The New language is italicized).
The Department concurs with the applicant's request that Section
I(f) be amended by deleting the phrase, ``and the net asset value of
the Funds receiving those assets,'' from the language quoted above to
provide that Rule 17a-7 procedures are required to value only assets
being transferred to a Fund, and not the assets of the Fund itself. In
this connection, the Department has amended the language of Section
I(f) to read as follows: ``The current market value of the assets of
the Plans or the CIFs to be transferred in-kind in exchange for shares
is determined in a single valuation performed in the same manner and at
the close of business on the same day, using independent sources in
accordance with the procedures set forth in Rule 17a-7(b) (Rule 17a-7)
under the Investment Company Act of 1940, as amended from time to time
or any successor rule, regulation, or similar pronouncement, and the
procedures established by the Funds pursuant to Rule 17a-7 for the
valuation of such assets. Such procedures must require that all
securities for which a current market price cannot be obtained by
reference to the last sale price for transactions reported on a
recognized securities exchange or NASDAQ be valued based on an average
of the highest current independent bid and lowest current independent
offer, as of the close of business on the Friday preceding the weekend
of the Plan or CIF transfers determined on the basis of reasonable
inquiry from at least three sources that are broker-dealers or pricing
services independent of the Bank. (The new language is italicized).
The Bank in another comment requests a modification of the language
of Section II(i) and the parallel language in Section II(m)(1) and
Section III(i). The language in these sections requires the Bank to
sell Fund shares within one business day after receipt by the Bank,
either by mail, hand delivery, facsimile, or other available means of
the Termination Form or any other written notice from the Second
Fiduciary terminating its authorization of investments in the Fund. The
language of these sections provides that if due to circumstances beyond
the control of the Bank, the sale cannot be executed within one
business day, the Bank shall have one additional business day to
complete such sale. The Bank believes that the circumstances that may
prevent the Bank from completing a sale within one business day (e.g.,
natural disaster) may, as a practical matter, also prevent completion
of such sale by the second day. Accordingly, the Bank suggests that the
language be amended to make clear that a prohibited transaction will
not be considered to have occurred in such circumstances, if the Bank,
due to circumstances that could not be reasonably foreseen by the Bank,
is further prevented from completing the sale by the end of the
additional business day.
The Department believes that the two business day requirement
provides ample opportunity for the Bank to execute sales of shares in
the Funds, even in the event circumstances arise which could not
reasonably have been foreseen by the Bank. Accordingly, the Department
does not believe that the modification proposed by the Bank would be in
the interest of the Plans, and has determined not to revise the
exemption in this manner.
The Bank also requested a clarification of the scope of relief
provided by Section II of the proposed exemption. In this regard, the
language of Section II, as published in the Notice, provides relief
from ``the sanctions resulting from the application of section 4975 of
the Code by reason of section 4975(c)(1) (D) through (F) of the Code.''
The Bank believes that the reference to section 4975(c)(1)(D) is a
typographical error and requests that the exemption be corrected to
include relief from section 4975(c)(1) (A) through (F) of the Code in
order to conform with the scope of relief provided to other applicants
for substantially similar transactions. The Department concurs and has
amended the exemption accordingly.
The Bank also commented on section I wherein it is stated that the
Plans involved in the transaction are Plans for which the Bank serves
as trustee, investment manager, or in any other capacity as fiduciary
on behalf of the Plan, and on section II wherein it is stated that the
Plans involved in the transaction are Plans for which the Bank serves
as fiduciary. The Bank states that although its original application
referred to Plans for which it exercised investment discretion, it
wishes to note for the record that it also serves Plans in other
fiduciary capacities that do not involve the exercise of investment
responsibility. In this regard, in addition to the representations
contained in paragraph 2 of the Notice, as of the time of the
application, the Bank had custody of approximately $2.5 billion in
assets from approximately 1,500 plans for which the Bank does not
exercise investment responsibility.
In response to this comment, the Department acknowledges this
additional information. However, the Department wishes to reiterate
that it is not granting relief for transactions afforded relief by
Section 404(c) of the Act nor relief for transactions involving any
plan sponsored by the Bank or its affiliates.
The Bank in its comment letter also requests further modifications
and updates to the language of the Summary of Facts and
Representations, as published in the Federal Register. Specifically,
the Bank requests that representations at pages 42293 through 42294 in
Notice be changed to reflect the fact that HighMark now has eleven (11)
portfolios, having established in November 1993, four (4) new non-money
market portfolios, namely the Growth Fund, the Income & Growth Fund,
the Balanced Fund, and the Government Bond Fund, and having merged the
Special Growth Equity and Growth Funds in May 1994. It is further
represented that the Bank continues to serve as investment adviser,
sub-administrator, sub-transfer agent and custodian, but does not serve
as sub-accountant to HighMark. The Department notes that this
additional information will be included in the record of the exemption.
The Bank also requests clarification of the language of the fourth
sentence of paragraph 3 of the Summary of Facts and Representation, as
published in the Federal Register. In this regard, the Bank wishes to
confirm that the exemption does not preclude the Bank from relying on
any other available exemption (e.g., Prohibited Transaction Class
Exemption 84-24 or Prohibited Transaction Class Exemption 77-4), if the
terms and conditions of such exemptions are satisfied and if the Bank
deems it appropriate to do so in a given situation. The Department
concurs in this comment, but expresses no opinion regarding the
availability of those exemptions.
The Bank also comments that the first sentence of paragraph 5 of
the Summary of Facts and Representations in the Notice could be read to
suggest that the Bank believes that in-kind transfers of the type
covered by Section I of the exemption are not covered by Prohibited
Transaction Class Exemption 77-4. While the Bank represents that it
intends to follow the requirements of Section I of the exemption in
connection with such in-kind transfers, the Bank reiterates that its
position was and is that such transfers also are within the scope of
Prohibited Transaction Class Exemption 77-4. The Department notes that
it has formally expressed its view on this issue. Specifically, the
Department has concluded that the relief provided by Prohibited
Transaction Class Exemption 77-4 is unavailable for the purchase of
shares in mutual funds other than for cash. (See footnote 3 in Advisory
Opinion 94-35A, dated November 3, 1994).
Finally, the Bank wishes to update in three particulars the
description of the Bank's automated ``sweep'' service described in the
Summary of Facts and Representations, as published in the Federal
Register. In this regard, language in the first paragraph in paragraph
14 of the Notice indicates that purchases and sales of shares in any of
the Funds by the Plans may also occur in connection with daily
automated cash ``sweep'' arrangements, but that agreement to such an
arrangement is not a condition for the Plan otherwise choosing to
invest in shares of the Fund, nor will the reverse be required. The
Bank maintains that the meaning of the phrase, ``nor will the reverse
be required'' is unclear. It is the Bank's position that, in the
exercise of its business judgment regarding the structure and
characteristics of any sweep services it may wish to offer, it may
choose to limit investment vehicles made available under any sweep
program to shares of a designated Fund. The Department notes that the
sentence in which the phrase, ``nor will the reverse be required,''
appeared was intended to mean that Plans may participate in automated
cash ``sweep'' arrangements involving the Funds without being required
to invest other plan assets in shares of the Funds and that Plans may
invest in the Funds without being required also to participate in
automated cash ``sweep'' arrangements offered by the Bank.
Second, the Bank wishes to correct a representation in the second
paragraph of paragraph 14 of the Notice which states, in part, that
``all of the Plans served by the Bank had elected to participate in
automated cash ``sweep'' arrangements with HighMark.'' According to the
Bank, this representation should read that ``substantially all'' of the
Plans served by the Bank had elected to participate in automated cash
``sweep'' arrangements with HighMark. The Department concurs and
incorporates this information into the exemption.
Third, the Bank seeks clarification of the second sentence of the
third paragraph of paragraph 14 of the Notice. In the opinion of the
Bank, the sentence could be read to suggest that the ``sweep'' program
for a given Plan may involve investments in more than one of the
HighMark money market portfolios at the same time. The Bank represents
that while a Plan may choose from among several such portfolios of
HighMark, the ``sweep'' arrangement for a given Plan involves automatic
investments in shares of only one such portfolio at a time. The
Department concurs and incorporates the information on the ``sweep''
program into the exemption.
After giving full consideration to the entire record, including the
written comment from the Bank, the Department has decided to grant the
exemption, as described and concurred in above. In this regard, the
comment letter submitted by the Bank to the Department has been
included as part of the public record of the exemption application. The
complete application file, including all supplemental submissions
received by the Department, is made available for public inspection in
the Public Documents Room of the Pension Welfare Benefits
Administration, Room N-5638, U.S. Department of Labor, 200 Constitution
Avenue N.W., Washington, D.C. 20210.
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 Wednesday, August 17,
1994, at 59 FR 42289.
FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the
Department, telephone (202) 219-8883 (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 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 14th day of December, 1994.
Ivan Strasfeld,
Director of Exemption Determinations Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 94-31087 Filed 12-16-94; 8:45 am]
BILLING CODE 4510-29-P
