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Secretary of Labor Hilda L. Solis
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EBSA Notices

[Prohibited Transaction Exemption 2002-22; Exemption Application No. D-10891, et al.] Grant of Individual Exemptions; Connecticut Plumbers and Pipefitters Pension Fund (the Pension Fund), Connecticut Pipe Trades Local No. 777 Annuity Fund (the Annuity Fund), Connecticut Pipe Trades Health Fund (the Health Fund) (Collectively the Funds) et al.   [4/26/2002]
[PDF]
[Federal Register: April 26, 2002 (Volume 67, Number 81)]
[Notices]               
[Page 20834-20837]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26ap02-119]                         

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2002-22; Exemption Application No. D-
10891, et al.]

 
Grant of Individual Exemptions; Connecticut Plumbers and 
Pipefitters Pension Fund (the Pension Fund), Connecticut Pipe Trades 
Local No. 777 Annuity Fund (the Annuity Fund), Connecticut Pipe Trades 
Health Fund (the Health Fund) (Collectively the Funds) et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

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SUMMARY: This document contains an exemption 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).
    A notice was published in the Federal Register of the pendency 
before the Department of a proposal to grant such exemption. The notice 
set forth a summary of facts and representations contained in the 
application for exemption and referred interested persons to the 
application for a complete statement of the facts and representations. 
The application has been available for public inspection at the 
Department in Washington, DC. The notice also invited interested 
persons to submit comments on the requested exemption to the 
Department. In addition the notice stated that any interested person 
might submit a written request that a public hearing be held (where 
appropriate). The applicant has represented that it has complied with 
the requirements of the notification to interested persons. No requests 
for a hearing were received by the Department. Public comments were 
received by the Department as described in the granted exemption.
    The notice of proposed exemption was issued and the exemption is 
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 exemption is administratively feasible;
    (b) The exemption is in the interests of the plan and its 
participants and beneficiaries; and
    (c) The exemption is protective of the rights of the participants 
and beneficiaries of the plan.

[[Page 20835]]

Connecticut Plumbers and Pipefitters Pension Fund (the Pension 
Fund); Connecticut Pipe Trades Local No. 777 Annuity Fund (the 
Annuity Fund); Connecticut Pipe Trades Health Fund (the Health 
Fund) (Collectively the Funds), Located in Manchester, 
Massachusetts

[Prohibited Transaction Exemption No. 2002-22; Exemption Application 
Nos. D-10891; D-10892 and L-10893]

Exemption

    The restrictions of sections 406(a), and 406(b)(2) of the Act and 
the sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (D) of the Code, shall 
not apply to the purchase on September 1, 1999 (the Purchase) by the 
Health Fund of the common stock of Employee Benefit Administrators, 
Inc. (EBPA Stock) from Michael W. Daly and Virginia S. Daly, parties in 
interest with respect to the Health Fund, and the subsequent 
reallocation of the purchase price (the Reallocation) among the Funds, 
including ``makewhole'' payments (Makewhole Payments) representing lost 
earnings in connection with the Purchase, provided that the following 
conditions are satisfied:
    (a) the Purchase was a one-time transaction for a lump sum cash 
payment;
    (b) the Purchase price was no more than the fair market value of 
EBPA Stock as of the date of the Purchase;
    (c) the fair market value of the EBPA Stock was determined by an 
independent, qualified, appraiser;
    (d) the Funds paid no commissions or other expenses relating to the 
Purchase;
    (e) the proposed Reallocation will be made in connection with the 
original payment by the Pension Fund and the Annuity Fund for EBPA 
Stock resulting from the original allocation (the Original Allocation);
    (f) the Makewhole Payments to be made by the Health Fund to the 
Pension Fund and the Annuity Fund represent an amount to provide the 
Pension Fund and the Annuity Fund with a rate of return equal to the 
total accrued but unpaid interest due as of the date of grant of this 
exemption as a result of the Original Allocation on September 1, 1999; 
and
    (g) an independent fiduciary has negotiated, reviewed, and approved 
the terms of the Reallocation and will ensure the current and future 
payments by the Funds in connection with services provided by the 
administrative affiliate will reflect actual expenditures by the Funds.
    Effective Date of Exemption: The effective date of this exemption 
is September 1, 1999.
    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 February 5, 2002 at 67 FR 
5305.
    For Further Information Contact: Khalif Ford of the Department, 
telephone (202) 693-8540 (this is not a toll-free number).

Cargill, Incorporated and Associated Companies Salaried Employees' 
Pension Plan, et al., (the Original Plans), Located in Minneapolis, 
Minnesota

[Prohibited Transaction Exemption 2002-23; Exemption Application Nos. 
D-11017 through D-11023]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2), and 
407(a) of the Act, and the sanctions resulting from section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall 
not apply, effective October 18, 1996, to: (1) The acquisition (the 
Stock Acquisition) and holding of certain shares of Cargill, 
Incorporated common stock (the Common Stock) by the Cargill, 
Incorporated and Associated Companies Master Pension Trust (the Master 
Trust); and (2) the acquisition, holding and, where relevant, exercise 
by the Master Trust of a certain irrevocable put option associated with 
the Common Stock (the Put Option); provided that the following 
conditions are satisfied:
    (A) Prior to the Stock Acquisition, a qualified, independent 
fiduciary acting on behalf of the Master Trust (the Independent 
Fiduciary) determined that the Stock Acquisition was appropriate for, 
and in the best interests of, the Original Plans and the Master Trust.
    (B) The $178.75 per share purchase price the Master Trust paid for 
each share of Common Stock pursuant to the Stock Acquisition equaled 
the August 31, 1996 fair market value of each such share as determined 
by a qualified, independent appraiser selected by the Independent 
Fiduciary.
    (C) Subsequent to the Stock Acquisition, the Independent Fiduciary 
represented the interests of the Master Trust with respect to the 
Master Trust's holding of the Common Stock and the Master Trust's 
holding of the Put Option, and will continue to represent such 
interests as long as the Master Trust holds such stock and Put Option.
    (D) Subsequent to the Stock Acquisition, the Independent Fiduciary 
took and will take whatever action is necessary to protect the rights 
of the Master Trust with respect to the Master Trust's holding of the 
Common Stock and the Master Trust's holding of the Put Option.
    (E) Upon request by the Independent Fiduciary, Cargill, 
Incorporated (Cargill) purchased, or will purchase, all or a portion of 
the Common Stock held by the Trust, in accordance with the terms of the 
Put Option, for the greater of: (1) The price of the Common Stock as of 
the date of the Stock Acquisition; or (2) the fair market value of the 
Common Stock as of the date the Put Option is exercised.
    (F) Subsequent to the Stock Acquisition, the Common Stock did not, 
at any time, represent more than ten percent (10%) of the total fair 
market value of the assets held by: (1) Any Original Plan; or (2) after 
the Original Plans were merged into each other on January 1, 1997, any 
remaining Original Plan that continued to have an undivided interest in 
the assets of the Master Trust (a Remaining Plan).
    (G) For purposes of securing its obligations with respect to the 
Put Option, Cargill established, and will continue to maintain, an 
escrow account containing cash and/or U.S. government securities 
amounting to at least 25 percent (25%) of the total current fair market 
value of the Common Stock held by the Master Trust.
    (H) All transactions between Cargill and the Master Trust, or 
between Cargill and any Original Plan or Remaining Plan (collectively, 
the Plans), arising in connection with the Stock Acquisition, were no 
less favorable to the Master Trust or Plan than arm's-length 
transactions involving unrelated parties.
    (I) Cargill reimbursed the Master Trust, with interest (the 
Reimbursement), for the Master Trust's payment of certain legal 
expenses associated with the Master Trust's holding of the Common Stock 
(the Legal Fees).
    (J) Cargill paid, and will continue to pay, the fees of the 
Independent Fiduciary and its financial advisor to the extent such fees 
relate to either the Stock Acquisition or the continued holding of the 
Common Stock and the Put Option by the Master Trust.
    (K) At no time subsequent to the Stock Acquisition has the Master 
Trust held more than 25% of the aggregate amount of Common Stock issued 
and outstanding.
    (L) Cargill adopts written procedures which require that a 
Remaining Plan fiduciary: (1) Review all expenses submitted for payment 
by the Master Trust; and (2) approve the payment of only those expenses 
that are reasonable

[[Page 20836]]

and necessary for the administration of a Remaining Plan.
    (M) Cargill adopts written procedures which require that 
independent legal counsel provide Cargill with a written opinion 
regarding the payment by the Master Trust or a Remaining Plan of 
expenses associated with a transaction between Cargill and a Remaining 
Plan.
    (N) Cargill, within 60 days of the date of this grant, will file 
Form 5330 with the Internal Revenue Service and will pay the applicable 
excise taxes with respect to the Master Trust's payment of the Legal 
Fees.
    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 January 3, 2002 at 67 FR 
359.
    For Further Information Contact: Christopher Motta of the 
Department, telephone (202) 693-8544. (This is not a toll-free number.)

Carl Mundy, Jr. Defined Benefit Plan (the Plan), Located in 
Alexandria, Virginia

[Prohibited Transaction Exemption No. 2002-24; Application No. D-11043]

Exemption

    The sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall 
not apply to the proposed contribution(s) (the Contribution(s)) to the 
Plan of shares (the Shares) of Schering-Plough Corporation (Schering-
Plough) to be received annually by Carl Mundy, Jr. (Mr. Mundy), a 
disqualified person with respect to the Plan \1\ as compensation in the 
form of Shares in lieu of cash, provided that the following conditions 
are met:
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    \1\ Since Mr. Mundy is a sole proprietor and the only 
participant in the Plan, there is no jurisdiction under Title I of 
the Act pursuant to 29 CFR 2510.3-3(b). However, there is 
jurisdiction under Title II of the Act pursuant to section 4975 of 
the Code.
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    (a) The Shares are valued at its fair market value at the time of 
each Contribution;
    (b) The Shares represent no more than 20% of the total assets of 
the Plan following each Contribution;
    (c) The Plan will not pay any commissions, costs or other expenses 
in connection with the Contributions; and
    (d) Mr. Mundy, who is the only person affected by the transactions, 
believes that the transactions are appropriate for the Plan and desires 
that the transactions be consummated.
    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 February 27, 2002 at 67 
FR 9092.
    For Further Information Contact: Mr. Khalif Ford of the Department, 
telephone (202) 693-8560. (This is not a toll-free number.)

HSBC Holdings plc, Located in London, England

[Prohibited Transaction No. 2002-25; Exemption Application No.: D-
11057]

Exemption

    HSBC Asset Management Americas, Inc.(AMUS), HSBC Asset Management 
Hong Kong, Ltd.(AMHK), HSBC Bank USA (Bank USA), and any current 
affiliate of HSBC Holdings plc (HSBC) that is eligible to serve or 
becomes eligible to serve as a qualified professional asset manager (a 
QPAM), as defined in Prohibited Transaction Class Exemption 84-14 (PTCE 
84-14),\2\ HSBC, itself, if in the future it becomes a QPAM, and any 
newly acquired or newly established affiliate of HSBC that is a QPAM or 
in the future becomes a QPAM, other than Republic New York Securities 
Corporation (RNYSC), shall not be precluded from functioning as a QPAM, 
pursuant to the terms and conditions of PTCE 84-14, for the period 
beginning on December 17, 2001, and ending ten (10) years from the date 
of the publication of this final exemption in the Federal Register, 
solely because of a failure to satisfy Section I(g) of PTCE 84-14, as a 
result of an affiliation with RNYSC; provided that:
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    \2\ 49 FR 9494 (March 13, 1984), as amended, 50 FR 41430 
(October 10, 1985).
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    (a) RNYSC has not in the past acted, nor does it now act, nor will 
it act as a fiduciary with respect to any employee benefit plans 
subject to the Act;
    (b) This exemption is not applicable if HSBC and/or any successor 
or affiliate is affiliated with or becomes affiliated with any person 
or entity convicted of any of the crimes described in Section I(g) of 
PTCE 84-14, other than RNYSC; and
    (c) This exemption is not applicable if HSBC and/or any successor 
or affiliate is convicted of any of the crimes described in Section 
I(g) of PTCE 84-14, including any such crimes subsequently committed by 
RNYSC.
    Effective Date: This exemption is effective for the period 
beginning on December 17, 2001, the date on which the U.S. Attorney for 
the Southern District of New York filed an Information and Government's 
Memorandum (the Information) outlining the charges against RNYSC and on 
which RNYSC entered a plea of guilty to the criminal charges set forth 
in the Information, and ending ten (10) years from date of the 
publication of the final exemption in the Federal Register.

Written Comments

    In the Notice of Proposed Exemption (the Notice), the Department of 
Labor (the Department) invited all interested persons to submit written 
comments and requests for a hearing on the proposed exemption. As set 
forth in the Notice, interested persons consisted of the investment 
fiduciary or trustee for each of the current Plan clients for which one 
or more of the applicants might potentially act as a QPAM. The deadline 
for submission of comments and requests for a hearing was within forty-
five (45) days of the date of the publication of the Notice in the 
Federal Register on February 27, 2002. Accordingly, all comments and 
requests for a hearing were due on April 15, 2002.
    As required by 29 CFR section 2570.43(d) of the Department's 
regulations, the applicants confirmed in a letter dated, April 5, 2002, 
that notification of the pendency of the proposed exemption was 
furnished to the primary contact for each of the individual Plan 
clients identified in the application file. In addition, the applicants 
informed the Department that the primary contact for fifteen (15) other 
Plan clients that were not listed in the application file also received 
notification. These fifteen (15) Plan clients included six (6) clients 
to which HSBC Bank provides certain asset allocation services and one 
(1) former client. All of the notifications included a copy of the 
Notice along with a copy of the supplemental statement (the 
Supplemental Statement), described at 29 CFR Sec. 2570.43(b)(2) of the 
Department's regulations. All of the notifications were sent by first 
class mail or overnight Federal Express delivery. The deadline for 
providing notification to interested persons was March 14, 2002.
    In their letter of April 5, the applicants confirmed that 
notification to all but seven (7) interested persons were sent either 
on March 8 or March 14, 2002. Of the seven (7) remaining interested 
persons, six (6) were sent notification on March 15, 2002, and one was 
sent notification on March 18, 2002. It is represented that the delay 
in sending notification to these seven (7) interested persons was due 
either to the nature of HSBC Bank's coding system, which grouped asset 
allocation clients separately from individual Plan client

[[Page 20837]]

accounts or due to the fact that the former client's identity as an 
interested person was not immediately determined.
    In light of the fact that notification to interested persons was 
delayed, and in order to allow such interested persons the benefit of 
the full thirty (30) day comment period, the Department required, and 
the applicants agreed to, an extension of the deadline within which to 
comment and request a hearing on the proposed exemption until April 16, 
2002.
    During the comment period, the Department received no comments and 
no requests for a hearing from interested persons. Accordingly, after 
giving full consideration to the entire record, the Department has 
decided to grant the exemption. The complete application file, 
including all submissions received by the Department, is available for 
public inspection in the Public Documents Room of the Pension Welfare 
Benefits Administration, Room N-1513, U.S. Department of Labor, 200 
Constitution Avenue, NW, Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice published on February 27, 2002, at 67 FR 9093.
    For Further Information Contact: Ms. Angelena C. Le Blanc of the 
Department of Labor, telephone (202) 693-8551 (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 exemption does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) This exemption is 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 this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 19th day of April, 2002.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 02-10320 Filed 4-25-02; 8:45 am]
BILLING CODE 4510-29-P