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Grant of Individual Exemptions; The FHP International Corporation 401(k) Savings Plan; and The FHP International Corporation PAYSOP (Together, the Plans) et al.   [11/6/2001]
[PDF]
[Federal Register: November 6, 2001 (Volume 66, Number 215)]
[Notices]               
[Page 56133-56137]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06no01-100]                         

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2001-43; [Exemption Application No. 
D-10916 and D-10917, et al.]

 
Grant of Individual Exemptions; The FHP International Corporation 
401(k) Savings Plan; and The FHP International Corporation PAYSOP 
(Together, the Plans) 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, 5 U.S.C. 
App. 1 (1996), 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.

The FHP International Corporation 401(k) Savings Plan; and The FHP 
International Corporation PAYSOP (together, the Plans)

Located in Santa Ana, California
[Prohibited Transaction Exemption 2001-43; Exemption Application 
Nos. D-10916 and D-10917]

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, from April 21, 1997 through May 20, 
1997, to: (1) The past receipt by the Plans of certain rights (the 
Talbert Rights) to purchase shares of common stock, par value $.01 per 
share, of Talbert Medical Management Holding Corporation (Talbert); (2) 
the past holding of the Talbert rights by the Plans; and (3) the 
disposition or exercise of the Talbert Rights by the Plans; provided 
that the following conditions are satisfied:
    (A) The Plans' acquisition and holding of the Talbert Rights 
resulted from independent acts of FHP International Corporation (FHP) 
and Talbert as corporate entities, and all holders of common stock of 
FHP (FHP Common Stock) were treated in a like manner, including the 
Plans;
    (B) With respect to Talbert Rights allocated to the Plans, the 
Talbert Rights were acquired solely for the accounts of participants 
who had directed investment of all or a portion of their account 
balances in FHP Common Stock pursuant to Plan provisions for 
individually-directed investment of participant accounts; and
    (C) With respect to Talbert Rights allocated to the Plan, all 
decisions regarding the holding, disposition or exercise of the Talbert 
Rights were made, in accordance with Plan provisions for individually-
directed investment of participant accounts, by the individual Plan 
participants whose accounts in the Plans received Talbert Rights, 
including all determinations regarding the exercise or sale of the 
Talbert Rights, except for those participants who failed to file timely 
and valid instructions concerning the exercise of the Talbert Rights 
(in which event the Talbert Rights were sold).

EFFECTIVE DATE: This exemption is effective from April 21, 1997 through 
May 20, 1997.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the notice of proposed exemption published on September 7, 2001 at 66 
FR 46840.
    Written Comments and Hearing Requests: The Department received one 
letter from a commentator which did not address any issues relating to 
the proposed exemption, but sought more information concerning the 
transaction. The Department provided the additional information to the 
person via telephone. In addition, the Department received a number of 
telephone calls from other Plan participants requesting further 
information. Each of these inquiries was responded to by telephone and 
no additional questions were raised. The Department received no 
requests for a hearing with respect to the proposed exemption.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
Telephone (202) 219-8881. (This is not a toll-free number.)

Anthem Insurance Companies, Inc. (Anthem)

Located in Indianapolis, IN
[Prohibited Transaction Exemption 2001-44; Exemption Application No. 
D-10979]

Exemption

Section I. Covered Transactions

    The restrictions of section 406(a) of the Act and the sanctions 
resulting from the application of section 4975 of the Code, by reason 
of section 4975(c)(1) (A) through (D) of the Code, shall not apply, 
effective October 24, 2001, to the receipt, by an employee benefit plan 
(the Plan) or by a Plan participant (the Plan Participant) that is an 
eligible

[[Page 56134]]

member (the Eligible Member), by reason of the ownership of an 
insurance policy or contract issued by Anthem, of common stock (Common 
Stock) issued by Anthem, Inc. (the Parent Company), a newly-formed 
holding company or cash (Cash), in exchange for such Plan's or Plan 
Participant's mutual membership interest in Anthem, in accordance with 
a plan of conversion (the Plan of Conversion) adopted by Anthem and 
implemented under Indiana law.
    This exemption is subject to the following conditions set forth 
below in Section II.

Section II. General Conditions

    (a) The Plan of Conversion is subject to approval, review and 
supervision by the Commissioner of Insurance of the Indiana Department 
of Insurance (the Commissioner) and is implemented in accordance with 
procedural and substantive safeguards imposed under Indiana law.
    (b) The Commissioner reviews the terms and options that are 
provided to Eligible Members as part of such Commissioner's review of 
the Plan of Conversion, and the Commissioner approves the Plan of 
Conversion following a determination that such Plan is fair, reasonable 
and equitable to Eligible Members.
    (c) Each Eligible Member has an opportunity to vote to approve the 
Plan of Conversion after full written disclosure is given to the 
Eligible Member by Anthem.
    (d) Any determination to receive Common Stock or Cash by an 
Eligible Member which is a Plan, pursuant to the terms of the Plan of 
Conversion, is made by one or more Plan fiduciaries which are 
independent of Anthem and its affiliates and neither Anthem nor any of 
its affiliates exercises any discretion or provides ``investment 
advice'' within the meaning of 29 CFR 2510.3-21(c), with respect to 
such decisions.
    (e) Any determination to receive Common Stock or Cash by an 
Eligible Member which is a Plan Participant, pursuant to the terms of 
the Plan of Conversion, is made by such participant and neither Anthem 
nor any of its affiliates exercises any discretion or provides 
``investment advice'' within the meaning of 29 CFR 2510.3-21(c), with 
respect to such decisions.
    (f) After each Eligible Member entitled to receive shares of Common 
Stock is allocated at least 21 shares, additional consideration may be 
allocated to Eligible Members based on actuarial formulas that take 
into account each Eligible Member's contribution to Anthem's statutory 
surplus, which formulas are subject to review and approval by the 
Commissioner.
    (g) All Eligible Members that are Plans or Plan Participants 
participate in the transactions on the same basis and within their 
class groupings as all Eligible Members that are not Plans or Plan 
Participants.
    (h) No Eligible Member pays any brokerage commissions or fees in 
connection with their receipt of Common Stock or in connection with the 
implementation of the commission-free purchase and sale program.
    (i) All of Anthem's policyholder obligations remain force and are 
not affected by the Plan of Conversion.

Section III. Definitions.

    For purposes of this exemption,
    (a) The term ``Anthem'' means Anthem Insurance Companies, Inc.
    (b) An ``affiliate'' of Anthem includes--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with Anthem; (For purposes of this paragraph, the term ``control'' 
means the power to exercise a controlling influence over the management 
or policies of a person other than an individual.) and
    (2) Any officer, director or partner in such person.
    (c) A ``policy'' is defined as (1) Any individual insurance policy 
or health care benefits contract that has been issued by Anthem and 
under which the holder thereof has membership interests in Anthem; (2) 
any certificate issued by Anthem under a group insurance policy or 
health care benefits contract under which certificate the holder 
thereof has membership interests in Anthem; or (3) certificates of 
membership issued by Anthem in or under guaranty policies under which 
certificate the holder thereof is a member of Anthem with membership 
interests.
    (d) The term ``membership interests'' means (1) voting rights of 
Anthem's members as provided by law and Anthem's Articles of 
Incorporation and Bylaws, and (2) the rights of members to receive 
cash, stock, or other consideration in the event of conversion to a 
stock insurance company under Indiana Demutualization Law or a 
dissolution of Anthem as provided by Indiana insurance law and Anthem;s 
Articles of Incorporation and Bylaws.
    (e) The term ``Eligible Member'' or ``Eligible Statutory Member'' 
means a person or entity (1) whose name appears on Anthem's records as 
the holder of one or more in force policies issued by Anthem as of both 
and the date the Board of Directors adopts the Plan of Conversion and 
the effective date of the Plan of Conversion, and (2) who has had 
continuous health care benefits coverage with the same insuring company 
during the period between those two dates under any policy without a 
break of more than one day.
    (f) The term ``Parent Company'' refers to a corporation organized 
and existing under the Indiana Business Corporation Law. Prior to the 
conversion, the Parent Company will be a wholly owned subsidiary of 
Anthem. Upon the conversion of Anthem to a stock company, the Parent 
Company will serve as the ``Indiana parent corporation'' of Anthem for 
purposes of Indiana law. Upon the effective date of the Plan of 
Conversion, the Parent Company will complete an initial public offering 
(the IPO) of shares of Parent Company Common Stock for cash.
    Effective Date: This exemption is effective as of October 24, 2001.
    For a more complete statement of the facts and representations 
supporting the Department;s decision to grant this exemption, refer to 
the notice of proposed exemption published on August 3, 2001 at 66 FR 
40743.

Written Comments

    The Department received two written comments with respect to the 
proposed exemption. The first comment, which was submitted on behalf of 
the UFCW Unions and Employers Health and Welfare Plan of Central Ohio, 
a Plan policyholder of Anthem, by legal representatives for the Plan's 
board of trustees (the Trustees), requests that the Department revise 
the final exemption and require that Anthem distribute the 
demutualization proceeds solely to the Plan, instead of to Plan 
Participants. Due to the substantive nature of the issue presented, the 
comment was forwarded to Anthem for response. The second comment, which 
was submitted by Anthem, clarifies and updates the proposed exemption 
in a number of areas.
    Following is a discussion of the comments received, including the 
responses made by Anthem and/or the Department.

Plan Policyholder Comment

    As noted above, the commenter states that it represents the 
Trustees of a multiemployer health and welfare plan which is funded 
exclusively through employer contributions. The Plan has offered 
participants the choice of either a self-insured option or a fully-
insured option through an Anthem affiliate.
    The commenter notes that Anthem's Plan of Conversion generally 
proposes to distribute the demutualization

[[Page 56135]]

consideration to individual certificate holders as opposed to group 
policyholders. The commenter asserts that group policyholders which 
contracted with certain companies prior to their merger with Anthem are 
deemed entitled to the proceeds of the demutualization. However, due to 
the timing of the Plan's contracting with the Anthem affiliate, the 
commenter explains that Anthem intends to distribute the 
demutualization proceeds to Plan Participants and not to the Plan. 
This, according to the commenter, creates an inequitable result because 
the premiums are paid entirely out of the Plan's assets and only those 
Plan Participants who have selected the fully insured option will be 
entitled to receive the proceeds from the demutualization.
    In addition, the commenter indicates that the Trustees believe that 
the proceeds of the demutualization should be distributed to the Plan 
to be held in trust and utilized for the benefit of all Plan 
Participants and beneficiaries because it would be consistent with the 
Department's position on whether a Plan policyholder is entitled to 
keep the proceeds of a demutualization. Assuming the proceeds are 
``plan assets,'' the commenter questions on what basis Anthem can 
distribute the proceeds to any party but the Plan.
    Finally, the commenter notes that neither Anthem's Plan of 
Conversion nor the proposed exemption appear to contemplate the Plan as 
a policyholder but instead focus on the terms ``employer'' or 
``association'' when describing a group policyholder or a plan sponsor. 
The unique nature of the Plan, according to the commenter, justifies 
different policyholder treatment and distribution of demutualization 
consideration to the Plan as opposed to a limited percentage of Plan 
Participants. Therefore, the commenter requests that the Department 
revise the final exemption and require Anthem to distribute the 
demutualization consideration to the Plan.
    In response to the commenter, Anthem states that it is an Indiana-
domiciled mutual insurance company owned by its Statutory Members, 
which are certain Anthem customers who have both voting and other 
ownership rights in the insurer. As an Indiana-domiciled mutual 
company, Anthem explains that Indiana Demutualization Law exclusively 
governs its conversion to a stock company and requires the fair market 
value its conversion to a stock company and requires the fair market 
value of the company to be paid to Eligible Statutory Members upon the 
demutualizaiton.\1\
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    \1\ Under its Plan of Conversion, Anthem indicates that 
``Eligible Statutory Members'' will be those persons (or entities) 
who were Statutory Members on June 18, 2001 (the date Anthem's Board 
of Directors adopted the Plan of Conversion), who continue to be 
Statutory Members on the effective date of the conversion and who 
have had continuous health care benefits coverage with the same 
company (either Anthem or its Blue Cross and Blue Shield 
subsidiaries in Kentucky, Ohio or Connecticut) during the period 
between those two dates without a break in coverage of more than one 
day. As used herein ``Eligible Statutory Members'' refer also to 
``Eligible Members.''
    In addition, Anthem's Plan of Conversion states that a Statutory 
Member is, as of any specified date, any person, who in accordance 
with the records, Articles of Incorporation or By-Laws of Anthem, is 
the holder of an ``in force'' policy.
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    In addition, Anthem explains that Indian Demutualization Law 
requires that the question of who qualifies as a Statutory Member be 
determined by reference to the mutual company's articles of 
incorporation, by-laws and records. Anthem points out that its 
membership rules are found primarily in its By-Laws. With respect to 
group health benefits contracts, Anthem notes that its By-Laws provide 
that Statutory Members are those persons who have been granted 
membership rights under insurance agreements between Anthem and the 
employer (or other person, including an employer association or 
employee organization) acting for and on the persons' behalf. Anthem 
further explains that is By-Laws have provided for deceased that a 
certificate holder with health benefits coverage from the insurer is 
granted membership rights rather than the holder of the group contract, 
regardless of who pays the premiums for health benefits coverage.
    With respect to the commenter, Anthem confirms that the Plan 
received its group health benefits contract from an Anthem affiliate 
and that the Plan Participants were issue certificates of membership 
from Anthem. In addition, Anthem indicates that the Plan was issued a 
``guaranty policy'' under which it would not be considered a Statutory 
Member. Instead, the certificate holders (i.e., the Plan Participants 
who elected the Plan's insured option) were granted membership rights. 
As Statutory Members, Anthem asserts that the Plan Participants were 
given the right to vote in the election of Anthem's Board of Directors 
and to vote on any proposition that the Board submits to a vote of the 
Statutory Members in accordance with Indiana law. Furthermore, Anthem 
explains that Indiana law requires that these Plan Participants (as 
Statutory Members) also have the right to receive consideration in the 
event of Anthem's demutualization.
    The Department has considered the comment and has determined not to 
adopt the commenter's recommendation that the exemption be revised to 
require that Anthem distribute the demutualization consideration to the 
Plan. In this regard, the Department notes that Indiana Demutualization 
Law mandates that Anthem's Articles of Incorporation and By-Laws govern 
who is accorded membership interests in the company and to whom the 
demutualization consideration is to be paid. The Department also notes 
that Anthem's By-Laws predate the Plan's contractual arrangement with 
the company. Lastly, the Trustees, as fiduciaries of the Plan, 
determined to enter into, and be subject to the terms of, a group 
health benefits contract with an Anthem affiliate which conferred 
certain ownership and voting rights on Plan Participants that are 
Eligible Members of Anthem. Although the demutualization may not have 
been contemplated at contract execution by the Trustees, nevertheless, 
one of these ownership rights is the right to receive consideration in 
the event of Anthem's demutualization.

Anthem's Comment

    1. Operative Language Changes and Effective Date. In Section I of 
the proposed exemption, in the operative language, the first sentence 
of the initial paragraph states, in part, that if the exemption is 
granted the restrictions and sanctions imposed under the Act and the 
Code will not apply to the receipt of certain demutalization 
consideration, by a Plan, or a Plan Participant, both of which are 
Eligible Members by reason of their ownership of an insurance policy or 
contract issued by Anthem. Anthem requests that this sentence be 
revised to delete the definition of ``Eligible Member'' because it 
believes the definition conflicts with the correct definition of 
Eligible Member, as set forth in Section III of the proposal.
    In addition, Anthem requests that the final exemption be made 
effective as of October 24, 2001, and that this effective date be 
referenced in the grant notice. On October 29, 2001, Anthem represents 
that it anticipates entering into binding agreements to sell the Common 
Stock to underwriters on November 2, 2001. Because the granting of the 
exemption is a condition to the closing of the sale, Anthem states that 
it will not be able to deliver the Common Stock on November 2, 2001, 
pursuant to the agreements unless the exemption is signed and 
effective.
    Therefore, Anthem suggests that the initial paragraph of the 
operative

[[Page 56136]]

language be revised to read as follows in the final exemption:

    The restrictions of section 406(a) of the Act and the sanctions 
resulting from the application of section 4975 of the Code, by 
reason of section 4975(a)(1)(A) through (D) of the Code, shall not 
apply, effective October 24, 2001, to the receipt, by an employee 
benefit plan (the Plan) or by a Plan participant (the Plan 
Participant) that is an eligible member (the Eligible Member), by 
reason of the ownership of an insurance policy or contract * * *

    In addition, Anthem requests that the final exemption reflect an 
effective date.
    In response to these comments, the Department has made the 
requested changes to the operative language and has also added a new 
section to the final exemption captioned ``Effective Date.''
    2. Allocation of Common Stock to Eligible Members. Section II(f) of 
the proposed exemption provides, in relevant part, that after each 
Eligible Member entitled to receive shares of Common Stock is allocated 
at least 21 shares, additional consideration will be allocated to 
Eligible Members who own participating policies based on actuarial 
formulas that take into account each participating policy's 
contribution to Anthem's statutory surplus and are subject to review 
and approval by the Commissioner. Anthem requests that Section II(f) be 
revised as follows to reflect more accurately how additional 
consideration will be allocated to Eligible Members:

    After each Eligible Member entitled to receive shares of Common 
Stock is allocated at least 21 shares, additional consideration may 
be allocated to Eligible Members based on actuarial formulas that 
take into account each Eligible Member's contribution to Anthem's 
statutory surplus, which formulas are subject to review and approval 
by the Commissioner.

    Anthem represents that its policies are generally issued and 
renewed for a term of one year. In order to compensate Eligible Members 
fairly for their membership interests, Anthem explains that the 
actuarial formulas used to allocate consideration take into account an 
Eligible Member's total contribution to the insurer's statutory surplus 
based on all of the policies and certificates under which the Eligible 
Member has had continuous coverage, rather than the actuarial 
contribution of a single policy or certificate held on the date used to 
calculate each Eligible Member's contribution to surplus. In addition, 
Anthem states that it decided to delete references to ``participating'' 
policies because it does not have any policies that require the payment 
of dividends or as to which any person has any reasonable expectation 
for the payment of dividends.
    In response to this comment, the Department has revised Section 
II(f) of the final exemption, accordingly.
    3. Definition of Anthem. Section III(a) of the proposed exemption 
defines the term ``Anthem'' to include any affiliate of Anthem, as 
defined in paragraph (b) of Section III. Anthem requests that the 
reference to the phrase ``any affiliate of Anthem, as defined in 
paragraph (b) of this Section III'' be deleted from the definition 
because Anthem and its affiliates are defined separately in the 
exemption application and many of the provisions from the exemption 
application have been incorporated into the proposal. Anthem notes that 
by treating it and its affiliates as the same entity changes the 
meaning of many of those provisions, as defined in the proposal. In 
this regard, Anthem points out that the clearest example of this is in 
the definition of ``Eligible Member'' in Section III(e). Without 
distinguishing between it and its affiliates, Anthem notes that the 
definition would incorrectly denote persons with policies issued by 
affiliates of Anthem as members of Anthem. Anthem further points out 
that policyholders of its affiliates are not Anthem members and, thus, 
will not have voting rights or receive compensation.
    4. Notice to Interested Persons. In the Section of the proposal 
captioned ``Notice to Interested Persons,'' the first sentence of the 
third paragraph states, at 40748, that Anthem will provide a copy of 
the proposed exemption to interested persons within 15 days of the 
publication of the proposal in the Federal Register. Anthem states that 
this paragraph should be revised to reflect that the comment period for 
the proposed exemption was extended because ``The Member Information 
Statement'' (the MIS), which contained the ``Notice of Application for 
Prohibited Transaction'' (the Notice) was mailed over a period of 
several days, rather than on a single date. Anthem states that it began 
mailing the MIS on August 17, which was within 15 days of the date that 
the proposed exemption was published in the Federal Register. However, 
Anthem explains that it recognized that the mailing would take several 
days to complete, so the comment period was extended from September 17, 
2001, to October 1, 2001, to allow members enough time from the date of 
the final mailing to file comments with the Department. Anthem further 
explains that its Notice informed members of the extended comment 
period.
    In response, the Department notes this revision to the proposal.
    5. Transaction Change. Finally, Anthem states that it wishes to 
update the Department concerning a change in the demutualization 
process. In this regard, Anthem notes that the six month lock-up period 
(referred to in Representation 12) during which all Eligible Members 
are prohibited from selling their shares of Common Stock has been 
eliminated for many Eligible Members. Anthem explains that Eligible 
Members will generally be free to sell their shares of Common Stock in 
the open market after they receive their notification of share 
ownership. However, Anthem indicates that a small number of Eligible 
Members (i.e., certain large group customers) who receive and continue 
to hold 30,000 or more shares of Common Stock in exchange for their 
membership interests will still be restricted from selling, 
transferring, pledging, hypothecating or otherwise assigning their 
shares for 180 days following the effective date of the Plan of 
Conversion, except where the transfer (a) Is in accordance with a Large 
Holder Sale program.\2\ (b) occurs by operation of law,\3\ or (c) 
occurs with the written consent of Anthem. After the expiration of the 
180 day period, Anthem states that the large group Eligible Members 
will be free to sell their Common Stock in the open market.
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    \2\ The Large Holder Sale Program is designed to help ensure 
that the public trading market for the Common Stock is not adversely 
affected by the sale of large blocks before the trading market has 
time to achieve mature trading characteristics. The program applies 
only during the first 180 days following the effective date of the 
Plan of Conversion, and it applies only to ``Large Holders,'' a 
relatively small number of large group customers who will receive 
30,000 or more shares of Common Stock in the demutualization. If 
Large Holders want to sell their shares of Common Stock during that 
180 day period, they have to follow special procedures designed to 
limit the total number of shares sold by Large holder in the open 
market on any one trading day during that period. The Large Sale 
Holder Program cannot be changed without the consent of the 
Commissioner.
    \3\ A ``transfer by operation of law'' refers to a transfer of 
stock that occurs, not because of a voluntary sale or contractual 
assignment of the stock, but as the legal consequence of some other 
event. For example, if one corporation merges into another 
corporation in a statutory merger transaction, the assets of the 
merging corporation are deemed by the state corporate law merger 
statute to be transferred to the surviving corporation.
---------------------------------------------------------------------------

    Accordingly, after giving full consideration to the entire record, 
including the written comments, the Department has decided to grant the 
exemption subject to the modifications and clarifications described 
above.
    For further information regarding the comments and other matters 
discussed herein, interested persons are

[[Page 56137]]

encouraged to obtain copies of the exemption application file 
(Exemption Application No. D-10979) the Department is maintaining in 
this case. The complete application file, as well as all supplemental 
submissions received by the Department, are made available for public 
inspection in the Public Disclosure Room of the Pension and Welfare 
Benefits Administration, Room N-1513, U.S. Department Labor, 200 
Constitution Avenue, NW., Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady 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, DC, this 31st day of October, 2001.
Ivan Strasfield,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 01-27753 Filed 11-5-01; 8:45 am]
BILLING CODE 4510-29-M