[Federal Register Volume 61, Number 167 (Tuesday, August 27, 1996)]
[Notices]
[Pages 44081-44085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21840]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 96-64; Exemption Application No. D-
10063, et al.]
Grant of Individual Exemptions; Society National Bank; KeyTrust
Company of Ohio; Society Asset Management, Inc; and KeyCorp, 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.
Society National Bank; KeyTrust Company of Ohio; Society Asset
Management, Inc; and KeyCorp Located in Cleveland, Ohio
[Prohibited Transaction Exemption 96-64; Application No. D-10063]
SECTION I--Exemption for In-Kind Transfer of CIF Assets
The restrictions of section 406(a) and 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 as of December 1, 1993, to the in-kind transfer of assets of
plans for which Society National Bank, KeyTrust Company of Ohio, N.A.,
Society Asset Management, Inc., and KeyCorp or an affiliate
(collectively, the Bank) serves as a fiduciary (the Client Plans),
other than plans established and maintained by the Bank, that are held
in certain collective investment funds maintained by the Bank (the
CIFs), in exchange for shares of The Victory Portfolios (collectively,
the Funds), an open-end investment company registered under the
Investment Company Act of 1940 (the 1940 Act), for which the Bank acts
as an investment adviser as well as a custodian, sub-administrator,
and/or shareholder servicing agent, or provides some other ``secondary
service'' as defined in Section IV(h), in connection with the
termination of such CIFs, provided that the following conditions and
the general conditions of Section III below are met:
(a) No sales commissions or other fees are paid by the Client Plans
in connection with the purchase of Fund shares through the in-kind
transfer of CIF assets and no redemption fees are paid in connection
with the sale of such shares by the Client Plans to the Funds.
(b) All or a pro rata portion of the assets of a CIF are
transferred to a Fund in exchange for shares of such Fund.
(c) Each Client Plan receives shares of a Fund which have a total
net asset value that is equal to the value of the Client Plan's pro
rata share of the assets of the CIF on the date of the transfer, based
on the current market value of the CIF's assets, as determined in a
single valuation performed in the same manner at the close of the same
business day, using independent sources in accordance with Rule 17a-
7(b) of the Securities and Exchange Commission (SEC) under the 1940 Act
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 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.
(d) A second fiduciary who is independent of and unrelated to the
Bank (the Second Fiduciary) receives advance written notice of the in-
kind transfer of assets of the CIFs and full written disclosure of
information concerning the Funds, including:
(1) A current prospectus for each Fund in which a Client Plan is
considering investing;
(2) A statement describing the fees for investment advisory or
similar services, any secondary services as defined in Section IV(h),
and all other fees to be charged to or paid by the Client Plan and by
the Funds, including the nature and extent of any differential between
the rates of such fees;
(3) The reasons why the Bank considers investing in the Fund is an
appropriate investment decision for the Client Plan;
[[Page 44082]]
(4) A statement describing whether there are any limitations
applicable to the Bank with respect to which assets of a Client Plan
may be invested in a Fund, 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, once such documents are
published in the Federal Register.
(e) After consideration of the foregoing information, the Second
Fiduciary authorizes in writing the in-kind transfer of the Client
Plan's CIF assets to a corresponding Fund in exchange for shares of the
Fund.
(f) For all in-kind transfers of CIF assets to a Fund following
March 5, 1996, the date of publication in the Federal Register for the
proposal of this exemption, the Bank sends by regular mail to each
affected Client Plan the following information:
(1) Within 30 days after completion of the transaction, a written
confirmation containing:
(i) The identity of each security that was valued for purposes of
the transaction in accordance with Rule 17a-7(b)(4);
(ii) The price of each such security involved in the transaction;
(iii) The identity of each pricing service or market-maker
consulted in determining the value of such securities; and
(2) Within 90 days after completion of each in-kind transfer, a
written confirmation containing:
(i) The number of CIF units held by the Client Plan immediately
before the transfer, the related per unit value, and the total dollar
amount of such CIF units; and
(ii) The number of shares in the Funds that are held by the Client
Plan following the transfer, the related per share net asset value, and
the total dollar amount of such shares.
(g) The conditions set forth in paragraphs (e), (f) and (n) of
Section II below are satisfied.
Section II--Exemption for Receipt of Fees
The restrictions of sections 406(a) and 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 as of October 1, 1995 to: (1) the receipt of fees by the Bank
from the Funds for acting as an investment adviser to the Funds in
connection with the investment by the Client Plans in shares of the
Funds; and (2) the receipt and retention of fees by the Bank from the
Funds for acting as custodian, sub-administrator and shareholder
servicing agent to the Funds, as well as for providing any other
services to the Funds which are not investment advisory services (i.e.
``secondary services''), in connection with the investment by the
Client Plans in shares of the Funds, provided that the following
conditions and the general conditions of Section III are met:
(a) No sales commissions are paid by the Client Plans in connection
with the purchase or sale of shares of the Funds and no redemption fees
are paid in connection with the sale of shares by the Client Plans to
the Funds.
(b) The price paid or received by a Client Plan for shares in a
Fund is the net asset value per share at the time of the transaction,
as defined in Section IV(e), 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, including any officer or director of the Bank, does
not purchase or sell shares of the Funds from or to any Client Plan.
(d) Each Client Plan receives a credit, either through cash or the
purchase of additional shares of the Funds pursuant to an annual
election made by the Client Plan, of such Plan's proportionate share of
all fees charged to the Funds by the Bank for investment advisory
services, including any investment advisory fees paid by the Bank to
third party sub-advisors, within no more than one business day of the
receipt of such fees by the Bank.
(e) For each Client Plan, the combined total of all fees received
by the Bank for the provision of services to the Client Plan, and in
connection with the provision of services to the Funds in which the
Client Plan may invest, is not in excess of ``reasonable compensation''
within the meaning of section 408(b)(2) of the Act.*
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\*\ In addition, the Department notes that Section 404(a) of the
Act requires, among other things, that a fiduciary of a plan act
prudently, solely in the interest of the plan's participants and
beneficiaries, and for the exclusive purpose of providing benefits
to participants and beneficiaries when making investment decisions
on behalf of a plan. Thus, the Department believes that the Bank
should ensure, prior to any investments made by a Client Plan for
which it acts as a trustee or investment manager, that all fees paid
by the Funds, including fees paid to parties unrelated to the Bank
and its affiliates, are reasonable. In this regard, the Department
is providing no opinion as to whether the total fees to be paid by a
Client Plan to the Bank, its affiliates, and third parties under the
arrangements described herein would be either reasonable or in the
best interests of the participants and beneficiaries of the Client
Plans.
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(f) The Bank does not receive any fees payable pursuant to Rule
12b-1 under the 1940 Act in connection with the transactions.
(g) The Client Plans are not employee benefit plans sponsored or
maintained by the Bank.
(h) The Second Fiduciary receives, in advance of any initial
investment by the Client Plan in a Fund, full and detailed written
disclosure of information concerning the Funds, including but not
limited to:
(1) A current prospectus for each Fund in which a Client Plan is
considering investing;
(2) A statement describing the fees for investment advisory or
similar services, any secondary services as defined in Section IV(h),
and all other fees to be charged to or paid by the Client Plan and by
the Funds, 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 Client Plan;
(4) A statement describing whether there are any limitations
applicable to the Bank with respect to which assets of a Client 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, once such documents are
published in the Federal Register.
(i) After consideration of the information described above in
paragraph (h), the Second Fiduciary authorizes in writing the
investment of assets of the Client Plan in each particular Fund, the
fees to be paid by such Funds to the Bank, and the purchase of
additional shares of a Fund by the Client Plan with the fees credited
to the Client Plan by the Bank.
(j) All authorizations made by a Second Fiduciary regarding
investments in a Fund and the fees paid to the Bank are subject to an
annual reauthorization wherein any such prior authorization referred to
in paragraph (i) shall be terminable at will by the Client Plan,
without penalty to the Client Plan, upon receipt by the Bank of written
notice of termination. A form expressly providing an election to
terminate the authorization described in paragraph (i) above (the
Termination Form) with instructions on the use of the form must be
supplied to the Second Fiduciary no less than annually; provided that
the Termination Form need not be supplied to the Second Fiduciary
pursuant to this paragraph sooner than six months after such
Termination Form is supplied pursuant to paragraph (l) below, except to
the extent required by such paragraph in order to disclose an
additional service or fee increase. The instructions
[[Page 44083]]
for the Termination Form must include the following information:
(1) The authorization is terminable at will by the Client Plan,
without penalty to the Client Plan, upon receipt by the Bank of written
notice from the Second Fiduciary; and
(2) Failure to return the Termination Form will result in continued
authorization of the Bank to engage in the transactions described in
paragraph (i) on behalf of the Client Plan.
(k) The Second Fiduciary of each Client Plan invested in a
particular Fund receives full written disclosure, in a statement
separate from the Fund prospectus, of any proposed increases in the
rates of fees charged by the Bank to the Funds for secondary services
(as defined in Section IV(h) below) at least 30 days prior to the
effective date of such increase, accompanied by a copy of the
Termination Form, and receives full written disclosure in a Fund
prospectus or otherwise of any increases in the rates of fees charged
by the Bank to the Funds for investment advisory services even though
such fees will be credited as required by paragraph (d) above.
(l) In the event that the Bank provides an additional secondary
service to a Fund for which a fee is charged or there is an increase in
the amount of fees paid by the Funds to the Bank for any secondary
services resulting from a decrease in the number or kind of services
performed by the Bank for such fees in connection with a previously
authorized secondary service, the Bank will, at least thirty days in
advance of the implementation of such additional service or fee
increase, provide written notice to the Second Fiduciary explaining the
nature and the amount of the additional service for which a fee will be
charged or the nature and amount of the increase in fees of the
affected Fund. Such notice shall be accompanied by the Termination
Form, as defined in Section IV(i) below.
(m) On an annual basis, the Bank provides the Second Fiduciary of a
Client Plan investing in the Funds with:
(1) A copy of the current prospectus for the Funds and, upon such
fiduciary's request, a copy of the Statement of Additional Information
for such Funds which contains a description of all fees paid by the
Funds to the Bank;
(2) A copy of the annual financial disclosure report of the Funds
in which such Client Plan is invested which includes information about
the Fund portfolios as well as audit findings of an independent auditor
within 60 days of the preparation of the report; and
(3) Oral or written responses to inquiries of the Second Fiduciary
as they arise.
(n) All dealings between the Client Plans and the Funds are on a
basis no less favorable to the Client Plans than dealings with other
shareholders of the Funds.
Section III--General Conditions
(a) The Bank maintains for a period of six years the records
necessary to enable the persons described below in paragraph (b) 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-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 (b) below.
(b) (1) Except as provided in paragraph (b)(2) and notwithstanding
any provisions of section 504(a)(2) and (b) of the Act, the records
referred to in paragraph (a) 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 the Client Plans who has authority to acquire
or dispose of shares of the Funds owned by the Client Plans, or any
duly authorized employee or representative of such fiduciary, and
(iii) Any participant or beneficiary of the Client Plans or duly
authorized employee or representative of such participant or
beneficiary;
(2) None of the persons described in paragraph (b)(1)(ii) and (iii)
shall be authorized to examine trade secrets of the Bank, or commercial
or financial information which is privileged or confidential.
Section IV--Definitions
For purposes of this exemption:
(a) The term ``Bank'' includes Society National Bank, KeyTrust
Company of Ohio, Society Asset Management, Inc., KeyCorp and any
affiliate thereof as defined below in paragraph (b)(1) of this section.
(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'' shall include the Victory
Portfolios, or any other diversified open-end investment company or
companies registered under the 1940 Act for which the Bank serves as an
investment adviser and may also serve as a custodian, shareholder
servicing agent, transfer agent or provide some other ``secondary
service'' (as defined below in paragraph (h) of this Section) which has
been 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 the Fund's
prospectus and statement of additional information, and other assets
belonging to the Fund or portfolio of the Fund, less the liabilities
charged to each such portfolio or Fund, 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 Client
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 fiduciary directly or indirectly controls, is controlled
by, or is under common control with the Bank;
(2) Such fiduciary, or any officer, director, partner, employee, or
relative of the fiduciary is an officer, director, partner or employee
of the Bank (or is a relative of such persons) or any affiliate
thereof;
(3) Such 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, employee of the Bank (or relative
of such persons), or affiliate thereof, is a director of such Second
Fiduciary, and
[[Page 44084]]
if he or she abstains from participation in (i) the choice of the
Client Plan's investment adviser, (ii) the approval of any such
purchase or sale between the Client Plan and the Funds, and (iii) the
approval of any change in fees charged to or paid by the Client Plan in
connection with any of the transactions described in Sections I and II
above, then paragraph (g)(2) of this section 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. For purposes of this exemption,
the term ``secondary service'' will include securities lending services
provided by the Bank to the Funds, but will not include any brokerage
services provided to the Funds by the Bank for the execution of
securities transactions engaged in by the Funds.
(i) The term ``Termination Form'' means the form supplied to the
Second Fiduciary which expressly provides an election to the Second
Fiduciary to terminate on behalf of a Client Plan the authorization
described in paragraph (j) of Section II. Such Termination Form may be
used at will by the Second Fiduciary to terminate an authorization
without penalty to the Client Plan and to notify the Bank in writing to
effect a termination by selling the shares of the Funds held by the
Client Plan requesting such termination within one business day
following receipt by the Bank of the form; 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: This exemption is effective as of December 1, 1993, for
the transactions described in Section I above, and October 1, 1995, for
the transactions described in Section II above.
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 March 5, 1996, at 61 FR
8674.
NOTICE TO INTERESTED PERSONS: The applicant represents that it was
unable to notify interested persons within the time period specified in
the Federal Register notice published on March 5, 1996. The applicant
states that interested persons were notified, in the manner agreed upon
between the applicant and the Department, by June 30, 1996. Interested
persons were advised that they had until July 31, 1996 to comment or
request a hearing on the proposed exemption. No written comments or
requests for a hearing were received by the Department.
FOR FURTHER INFORMATION CONTACT: Mr. E. F. Williams of the Department,
telephone (202) 219-8194. (This is not a toll-free number.)
Bill Ussery Motors, Inc. Fourth Amended and Restated Profit Sharing
Plan and Trust (the Plan) Located in Coral Gables, Florida
[Prohibited Transaction Exemption 96-65; Exemption Application No. D-
10146]
Exemption
The restrictions of sections 406(a) and 406(b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,
shall not apply to the cash sale (the Sale) of certain real property
(the Property) by the Plan to Mr. John C. Brockway, the sole
shareholder of the sponsoring employer and a party in interest with
respect to the Plan; provided that (1) the Sale is a one-time
transaction for cash; (2) the Plan does not experience any loss nor
incur any expenses from the transaction; and (3) the Plan receives as
consideration from the Sale the greater of either (a) the fair market
value of the property as determined by a qualified, independent
appraiser on the date of the Sale, or (b) an amount equal to the
appraised fair market value as determined on December 31, 1994.
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 June 21, 1996, at 61 FR
31954.
COMMENTS: The Department received one written comment requesting that
the purchaser of the Property be changed from Bill Ussery Motors, Inc.
(the Employer), the sponsoring employer and a party in interest to Mr.
John C. Brockway, the sole shareholder of the Employer and its Chief
Executive Officer, and a party in interest. Accordingly, after giving
full consideration to the request and the entire record, the Department
has determined to change the designation of the purchaser of the
Property as requested and to grant the exemption.
FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Hach Company 401(k) Profit Sharing Plan (the Plan) Located in
Loveland, CO
[Prohibited Transaction Exemption 96-66; Exemption Application No. D-
10203]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,
shall not apply to the proposed cash sale by the Plan of Group Annuity
Contract No. 5000008 (the GAC) issued by Anchor National Life Insurance
Company, located in Los Angeles, California, to Hach Company, a party
in interest with respect to the Plan.
This exemption is subject to the following conditions:
(a) The sale is a one-time transaction for cash.
(b) The Plan does not experience any losses or incur any expenses
in connection with the transaction.
(c) The Plan receives as consideration an amount that is equal to
the fair market value of the GAC as of the date of the sale.
(d) The trustees of the Plan have determined that the proposed
transaction is appropriate for the Plan and in the best interests of
the Plan's participants and beneficiaries.
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 June 21, 1996 at 61 FR
31955.
FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Cablevision Industries Corporation Profit Sharing Plan (the Plan)
Located in New York, New York
[Prohibited Transaction Exemption 96-67; Exemption Application No. D-
10233]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,
shall not apply to the purchase from the Plan by Cablevision Industries
Corporation (the Employer), the sponsor of the Plan, of the Plan's
entire remaining interest (the Surviving Claim) in guaranteed
investment contract number GCNG8690011A issued by the Executive Life
Insurance Company; provided that the following conditions are
satisfied:
[[Page 44085]]
(A) All terms and conditions of the transaction 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;
(B) The Plan receives a cash purchase price which is no less than
the greater of (1) the fair market value of the Surviving Claim as of
the sale date, or (2) the Plan's principal investment attributable to
the Surviving Claim plus interest through the purchase date at the
Contract Rate (as defined in the Notice of Proposed Exemption); and
(C) In the event the Employer subsequently receives payments with
respect to the Surviving Claim from any source in excess of the
purchase price paid to Plan, such excess will be paid to the Plan.
EFFECTIVE DATE: This exemption is effective as of June 17, 1996.
For a more complete statement of the facts and representations
supporting this exemption, refer to the notice of proposed exemption
published on June 4, 1996 at 61 FR 28242.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Hoechst Marion Roussel, Inc. Matching Contribution Plan (the Plan)
Located in Kansas City, Missouri
[Prohibited Transaction Exemption 96-68; Exemption Application No. D-
10242]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,
shall not apply to the continuing guarantee by Hoechst Marion Roussel,
Inc. (the Corporation) of a loan made to the Marion Merrell Dow Inc.
Associate Stock Ownership Plan (the Plan), provided the following
conditions are satisfied: a) the transaction is a continuation of a
guarantee that was statutorily exempt at the time it was entered into;
and b) the transaction requires an exemption because of an independent
transaction involving the Plan's sponsor as a corporate entity.
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 June 21, 1996 at 61 FR
31956.
EFFECTIVE DATE: This exemption is effective from July 18, 1995 to
August 2, 2005.
WRITTEN COMMENTS AND HEARING REQUESTS: The only written comment
received by the Department was submitted by the applicant to correct an
erroneous representation in the notice of proposed exemption. The
applicant had represented that German companies do not maintain stock
plans since, under German law, companies are not legally permitted to
purchase their own stock. The applicant states in its comment letter
that it has recently come to the applicant's attention that in certain
cases some German corporations have introduced stock plans to
compensate their German employees. The applicant also represents that
this does not change the fact that Hoechst AG, the German corporation
of which the Corporation is an indirect wholly owned subsidiary, does
not wish to have any of its equity securities owned by an employee
stock ownership plan for the benefit of United States employees.
The Department received no hearing requests with respect to the
proposed exemption. The Department has considered the entire record,
including the applicant's comment, and has determined to grant the
exemption as proposed.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz 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 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 22nd day of August, 1996.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 96-21840 Filed 8-26-96; 8:45 am]
BILLING CODE 4510-29-P
