skip to page content
Secretary of Labor Thomas E. Perez
     DOL Home > Federal Register > Notices > EBSA
EBSA Notices

Prohibited Transaction Exemptions Grant of Individual Exemptions Involving: 2010-09, Ivy Asset Management Corporation, D-11492; 2010-10, Deutsche Bank AG and Its Affiliates, D-11518; 2010-11, The Coca-Cola Company (TCCC), D-11555   [4/2/2010]
[PDF]
FR Doc 2010-7446
[Federal Register: April 2, 2010 (Volume 75, Number 63)]
[Notices]               
[Page 16843-16848]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap10-113]                         

-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Prohibited Transaction Exemptions Grant of Individual Exemptions 
Involving: 2010-09, Ivy Asset Management Corporation, D-11492; 2010-10, 
Deutsche Bank AG and Its Affiliates, D-11518; 2010-11, The Coca-Cola 
Company (TCCC), D-11555

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of individual exemptions.

-----------------------------------------------------------------------

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 
(ERISA or 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.

Ivy Asset Management Corporation
Located in Jericho, NY
[Prohibited Transaction Exemption No. 2010-09; Exemption Application 
No: D-11492]

Exemption

Section I: Transactions

    The restrictions of sections 406(a)(1)(A) through (D), 406(b)(1) 
and 406(b)(2) of the Act and the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) through (E) of the Code,\1\ shall not apply, effective 
December 31, 2008, to:
---------------------------------------------------------------------------

    \1\ For purposes of this exemption, references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (a) The sale for cash of certain equity interests (the Shares) in 
hedge funds organized outside the United States,\2\ which Shares are 
held in the Ivy Enhanced Income Fund (the Fund), a sub-fund established 
under the Alternative Investment-Master Group Trust (the Group Trust), 
to Ivy Asset Management Corporation (Ivy), a party in interest with 
respect to certain employee benefit plans, including a defined benefit 
plan (the Retirement Plan) sponsored by Ivy's parent corporation, The 
Bank of New York Mellon Corporation,\3\ (collectively, the Plan(s)), 
and certain individual retirement accounts (the IRA(s)), where such 
Plans and IRAs have interests in the Fund; provided that at the time 
the Shares were sold, the conditions set forth, below, in section 
I(b)(1)-(6) of this exemption, and the general conditions, set forth 
below, in section II, of this exemption, were satisfied;
---------------------------------------------------------------------------

    \2\ It is represented that to the extent that, prior to the 
effective date of the final exemption, the Fund had received 
distributions from the hedge funds in connection with interests in 
such hedge funds held by the Fund, those proceeds would have been 
distributed by the Fund to each holder of units in the Fund in 
proportion to each such holder's interest in the Fund; and 
accordingly, would not have been purchased by Ivy or by any 
affiliate of Ivy, pursuant to this exemption.
    \3\ The Bank of New York Mellon Corporation is hereinafter 
referred to as BNYMC.
---------------------------------------------------------------------------

    (b) The sale for cash of certain restricted shares (the Restricted 
Shares) of the D. E. Shaw Composite International Fund, Ltd. (the DE 
Shaw Fund), a hedge fund organized outside the United States, to Ivy 
Holding

[[Page 16844]]

Cayman, LTS, an affiliate of Ivy (the Affiliate) which is also 
organized outside of the United States, and which is a party in 
interest with respect to the Plans and the IRAs, where such Plans and 
IRAs have interests in the Fund; provided that at the time the 
Restricted Shares were sold to the Affiliate, the conditions set forth 
below, in section I(b)(1)-(6) of this exemption, and the general 
conditions, set forth below, in section II of this exemption, were 
satisfied:
    (1) The sale of the Shares to Ivy and the sale of the Restricted 
Shares to the Affiliate were each one-time transactions for cash;
    (2) The purchase price paid by Ivy for the Shares and the purchase 
price paid by the Affiliate for the Restricted Shares was equal to the 
value of such shares, as reported to the Fund by investment managers of 
the hedge funds (the Manager(s)), who are independent of and unrelated 
to Ivy and any of its affiliates, as set forth on the most recent 
statement issued to the Fund immediately prior to the effective date of 
this exemption;
    (3) The Fund did not incur any commissions or transaction costs 
with respect to the sale of the Shares to Ivy and with respect to the 
sale of the Restricted Shares to the Affiliate;
    (4) On January 29, 2008, Ivy solicited and received from each of 
the Plans and IRAs which have an interest in the Fund (the Unit 
Holder(s)) an affirmative consent to the sale by the Fund of the Shares 
and of the Restricted Shares;
    (5) On January 29, 2008, Ivy solicited and received from each Unit 
Holder in the Fund an affirmative consent to the entry into a 
promissory note (the Promissory Note(s)), and as of the effective date 
of this exemption Ivy entered into such Promissory Notes; and
    (6) Pursuant to the terms of each of the Promissory Notes entered 
into between Ivy and each Unit Holder, in the event that Ivy receives 
redemption proceeds in excess of the purchase price paid by Ivy to the 
Fund for the Shares, and/or in the event the Affiliate receives 
redemption proceeds in excess of the purchase price paid by the 
Affiliate to the Fund for the Restricted Shares, Ivy will pay, as soon 
as practicable after receipt of such amounts by Ivy and/or by the 
Affiliate, the entirety of such excess in cash to each Unit Holder in 
proportion to each such Unit Holder's investment in the Fund; and Ivy 
will absorb the loss, if the aggregate redemption proceeds are less 
than the aggregate purchase price from the sale of the Shares and the 
sale of the Restricted Shares.

Section II: General Conditions

    (a) Ivy, as investment manager of the Fund, represents that the 
subject transactions are appropriate for and in the interest of the 
Fund, and each of the Unit Holders which have an interest in the Fund.
    (b) Ivy takes all appropriate actions necessary to safeguard the 
interests of the Fund, and the interests of the Unit Holders in the 
Fund, in connection with the subject transactions;
    (c) The decision by a Unit Holder as to whether to engage in the 
subject transactions was made, in the case of a Plan by the trustee of 
each such Plan, in the case of an IRA, by the IRA holder, and in the 
case of the Retirement Plan by the Benefits Investment Committee (the 
Committee), which serves as the named fiduciary of the Retirement Plan.
    (d) Notwithstanding affirmative consent given by each of the Unit 
Holders to the sale by the Fund of the Shares and of the Restricted 
Shares, and notwithstanding the entry into the Promissory Notes between 
Ivy and each Unit Holder:
    (i) The Plans and IRAs have not waived or released and do not waive 
or release any claims, demands, and/or causes of action which such 
Plans and IRAs may have against BNYMC and/or Ivy in connection with the 
acquisition and retention of the Shares and the acquisition and 
retention of the Restricted Shares; and
    (ii) The Plans and IRAs have not waived or released and do not 
waive or release any claims, demands, and/or causes of action which 
such Plans and IRAs may have against BNYMC and/or Ivy in connection 
with the sale of the Shares to Ivy and the sale of the Restricted 
Shares to the Affiliate;
    (e) Ivy will maintain, or cause to be maintained, for a period of 
six (6) years from the date of any of the subject transactions such 
records as are necessary to enable the persons described, below, in 
section II(f)(1) of this exemption, to determine whether the conditions 
of this exemption have been met, except that--
    (1) No party in interest with respect to a Plan or to an IRA which 
engaged in the subject transactions, other than Ivy and the Affiliate, 
shall be subject to a civil penalty under section 502(i) of the Act or 
the taxes imposed by section 4975(a) and (b) of the Code, if such 
records are not maintained, or not available for examination, as 
required, below, by section II(f)(1) of this exemption; and
    (2) A separate prohibited transaction shall not be considered to 
have occurred solely because, due to circumstances beyond the control 
of Ivy, such records are lost or destroyed prior to the end of the six-
year period.
    (f)(1) Except as provided, below, in section II(f)(2) of this 
exemption, and notwithstanding any provisions of subsections (a)(2) and 
(b) of section 504 of the Act, the records referred to, above, in 
section II(e) of this exemption, are unconditionally available at their 
customary location for examination during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or the Securities and 
Exchange Commission; or
    (B) Any fiduciary of any Plan or any IRA that engaged in the 
subject transactions, or any duly authorized employee or representative 
of such fiduciary; or
    (C) Any employer of participants and beneficiaries and any employee 
organization whose members are covered by a Plan or an IRA that engaged 
in the subject transactions, or any authorized employee or 
representative of these entities; or
    (D) Any participant or beneficiary of a Plan or an IRA that engaged 
in the subject transactions, or duly authorized employee or 
representative of such participant or beneficiary;
    (2) None of the persons described, above, in section II(f)(1)(B)-
(D) of this exemption, shall be authorized to examine trade secrets of 
Ivy, or commercial or financial information which is privileged or 
confidential; and
    (3) Should Ivy refuse to disclose information on the basis that 
such information is exempt from disclosure, Ivy shall, by the close of 
the thirtieth (30th) day following the request, provide a written 
notice advising that person of the reasons for the refusal and that the 
Department may request such information.

DATES: Effective Date: This exemption is effective, December 31, 2008.

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 45 days of the date of 
the publication of the Notice in the Federal Register on November 16, 
2009.\4\ All comments and requests for hearing were due by December 31, 
2009.
---------------------------------------------------------------------------

    \4\ 74 FR 58996, November 16, 2009.
---------------------------------------------------------------------------

    The applicant informed the Department by letter dated December 18, 
2009, that the Notice, along with a

[[Page 16845]]

cover letter from the applicant, the supplemental statement (the 
Supplemental Statement), described at 29 CFR 2570.43(b)(2) of the 
Department's regulations, and a copy of the January 29, 2008, Notice to 
all Unit holders was sent on December 1, 2009, to all interested 
persons. However, in a telephone call on February 3, 2010, the 
applicant informed the Department that page 58997 was inadvertently 
omitted from the copy of the Notice that was sent to all interested 
persons. In light of the fact that notification to these interested 
persons was defective and in order to allow all such interested persons 
the benefit of the full thirty (30) day comment period, the Department 
required, and the applicant agreed to, an extension of the deadline 
within which all interested persons could comment and/or request a 
hearing on the proposed exemption. In this regard, in accordance with 
the Department's instructions, the applicant sent a cover letter on 
February 4, 2009, to all interested persons informing such interested 
persons of the omission of page 58997 from the Notice, and of the 
extension of the comment period until March 5, 2010. Accompanying the 
February 4, cover letter, was a copy of the Notice, including page 
58997, a copy of the Supplemental Statement, and a copy of the January 
29, 2008, Notice to all Unit holders.
    During the comment period, the Department received no requests for 
hearing. However, the Department did receive a comment letter on March 
11, 2010, from the applicant, Ivy. In the comment letter, the applicant 
requested two changes/clarifications to the Summary of Facts and 
Representations (SFR), as published in the Notice in the Federal 
Register. The applicant's requested changes/clarifications to the SFR 
are discussed, below, in an order that corresponds to the appearance of 
the relevant language in the Notice.
    1. The applicant has requested a change in representation 1, as set 
forth in the SFR on page 58997, column 2, lines 26-27 in the Notice. In 
this regard, the sentence in the Notice which indicates that the 
applicant's principal place of business is located in Garden City, New 
York should be changed to reflect the fact that the applicant's 
principal place of business has moved to Jericho, New York.
    The Department concurs with the applicant's requested change.
    2. The applicant has requested a clarification of the language in 
the third paragraph of representation 3, as set forth in the SFR on 
page 58997, column 3, lines 7-13 in the Notice. In this regard, the 
third paragraph of representation 3 in the Notice reads, as follows:

    The Retirement Fund is the only holder of Class E units. The 
Retirement Fund invested $25 million in Class E units in the Fund in 
1996 and over time has received in excess of $33,503,000 in 
distributions. Ivy does not receive any fees with respect to the 
Class E units.

    In this regard, the applicant wishes to clarify that the 
distributions in excess of $33,503,000 received by the Retirement Fund 
includes approximately $8.5 million profit on such Retirement Fund's 
original investment of $25 million.
    The Department concurs with the applicant's requested 
clarification.
    After full consideration and review of the entire record, including 
the written comment filed by the applicant, the Department has 
determined to grant the exemption, as corrected, and clarified above. 
Comments submitted by the applicant to the Department have been 
included as part of the public record of the exemption application. The 
complete application file (D-11492), including all supplemental 
submissions received by the Department, is available for public 
inspection in the Public Documents Room of the Employee Benefits 
Security 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 of Exemption published on November 16, 2009, at 74 FR 58996.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena C. Le Blanc of the 
Department, telephone (202) 693-8540. (This is not a toll-free number.)

Deutsche Bank AG and Its Affiliates (together, Deutsche Bank or the 
Applicant)
Located in New York, New York
[Prohibited Transaction Exemption 2010-10; Exemption Application No. D-
11518]

Exemption

Section I. Sales of Auction Rate Securities From Plans to Deutsche 
Bank: Unrelated to a Settlement Agreement

    Effective February 1, 2008, the restrictions of section 
406(a)(1)(A) and (D) and section 406(b)(1) and (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), (D), and (E) of the Code, shall not 
apply, to the sale by a Plan (as defined in Section V(e)) of an Auction 
Rate Security (as defined in Section V(c)) to Deutsche Bank, where such 
sale (an Unrelated Sale) is unrelated to, and not made in connection 
with, a Settlement Agreement (as defined in Section V(f)), provided 
that the conditions set forth in Section II have been met.\5\
---------------------------------------------------------------------------

    \5\ For purposes of this exemption, references to section 406 of 
ERISA should be read, unless otherwise specified, to refer to the 
corresponding provisions of section 4975 of the Code.
---------------------------------------------------------------------------

Section II. Conditions Applicable to Transactions Described in Section 
I

    The transactions described in Section I of this exemption are 
subject to the following conditions:
    (a) The Plan acquired the Auction Rate Security in connection with 
brokerage or advisory services provided by Deutsche Bank;
    (b) The last auction for the Auction Rate Security was 
unsuccessful;
    (c) Except in the case of a Plan sponsored by Deutsche Bank for its 
own employees (a Deutsche Bank Plan), the Unrelated Sale is made 
pursuant to a written offer by Deutsche Bank (the Offer) containing all 
of the material terms of the Unrelated Sale, including, but not limited 
to the most recent rate information for the Auction Rate Security (if 
reliable information is available). Either the Offer or other materials 
available to the Plan provide the identity and par value of the Auction 
Rate Security. Notwithstanding the foregoing, in the case of a pooled 
fund maintained or advised by Deutsche Bank, this condition shall be 
deemed met to the extent each Plan invested in the pooled fund (other 
than a Deutsche Bank Plan) receives written notice regarding the 
Unrelated Sale, where such notice contains the material terms of the 
Unrelated Sale (including, but not limited to, the material terms 
described in the preceding sentence);
    (d) The Unrelated Sale is for no consideration other than cash 
payment against prompt delivery of the Auction Rate Security;
    (e) The sales price for the Auction Rate Security is equal to the 
par value of the Auction Rate Security, plus any accrued but unpaid 
interest or dividends;
    (f) The Plan does not waive any rights or claims in connection with 
the Unrelated Sale;
    (g) The decision to accept the Offer or retain the Auction Rate 
Security is made by a Plan fiduciary or Plan participant or IRA owner 
who is independent (as defined in Section V(d)) of Deutsche Bank. 
Notwithstanding the foregoing: (1) In the case of an individual 
retirement account (an IRA, as described in Section V(e) below) which 
is beneficially owned

[[Page 16846]]

by an employee, officer, director or partner of Deutsche Bank, the 
decision to accept the Offer or retain the Auction Rate Security may be 
made by such employee, officer, director or partner; or (2) in the case 
of a Deutsche Bank Plan or a pooled fund maintained or advised by 
Deutsche Bank, the decision to accept the Offer may be made by Deutsche 
Bank after Deutsche Bank has determined that such purchase is in the 
best interest of the Deutsche Bank Plan or pooled fund; \6\
---------------------------------------------------------------------------

    \6\ The Department notes that the Act's general standards of 
fiduciary conduct also apply to the transactions described herein. 
In this regard, section 404 requires, among other things, that a 
fiduciary discharge his duties respecting a plan solely in the 
interest of the plan's participants and beneficiaries and in a 
prudent manner. Accordingly, a plan fiduciary must act prudently 
with respect to, among other things, the decision to sell the 
Auction Rate Security to Deutsche Bank for the par value of the 
Auction Rate Security, plus any accrued but unpaid interest or 
dividends. The Department further emphasizes that it expects Plan 
fiduciaries, prior to entering into any of the transactions, to 
fully understand the risks associated with this type of transaction 
following disclosure by Deutsche Bank of all relevant information.
---------------------------------------------------------------------------

    (h) Except in the case of a Deutsche Bank Plan or a pooled fund 
maintained or advised by Deutsche Bank, neither Deutsche Bank nor any 
affiliate exercises investment discretion or renders investment advice 
within the meaning of 29 CFR 2510.3-21(c) with respect to the decision 
to accept the Offer or retain the Auction Rate Security;
    (i) The Plan does not pay any commissions or transaction costs with 
respect to the Unrelated Sale;
    (j) The Unrelated Sale is not part of an arrangement, agreement or 
understanding designed to benefit a party in interest to the Plan;
    (k) Deutsche Bank and its affiliates, as applicable, maintain, or 
cause to be maintained, for a period of six (6) years from the date of 
the Unrelated Sale, such records as are necessary to enable the persons 
described below in paragraph (l)(1), to determine whether the 
conditions of this exemption, if granted, have been met, except that--
    (1) No party in interest with respect to a Plan which engages in an 
Unrelated Sale, other than Deutsche Bank and its affiliates, as 
applicable, shall be subject to a civil penalty under section 502(i) of 
the Act or the taxes imposed by section 4975(a) and (b) of the Code, if 
such records are not maintained, or not available for examination, as 
required, below, by paragraph (l)(1); and
    (2) A separate prohibited transaction shall not be considered to 
have occurred solely because, due to circumstances beyond the control 
of Deutsche Bank or its affiliates, as applicable, such records are 
lost or destroyed prior to the end of the six-year period;
    (l)(1) Except as provided below in paragraph (l)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to above in paragraph (k) are 
unconditionally available at their customary location for examination 
during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or the U.S. Securities and 
Exchange Commission; or
    (B) Any fiduciary of any Plan, including any IRA owner, that 
engages in a Sale, or any duly authorized employee or representative of 
such fiduciary; or
    (C) Any employer of participants and beneficiaries and any employee 
organization whose members are covered by a Plan that engages in the 
Unrelated Sale, or any authorized employee or representative of these 
entities;
    (2) None of the persons described above in paragraph (l)(1)(B)-(C) 
shall be authorized to examine trade secrets of Deutsche Bank, or 
commercial or financial information which is privileged or 
confidential; and
    (3) Should Deutsche Bank refuse to disclose information on the 
basis that such information is exempt from disclosure, Deutsche Bank 
shall, by the close of the thirtieth (30th) day following the request, 
provide a written notice advising that person of the reasons for the 
refusal and that the Department may request such information.

Section III. Sales of Auction Rate Securities From Plans to Deutsche 
Bank: Related to a Settlement Agreement

    Effective February 1, 2008, the restrictions of section 
406(a)(1)(A) and (D) and section 406(b)(1) and (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), (D), and (E) of the Code, shall not 
apply, to the sale by a Plan of an Auction Rate Security to Deutsche 
Bank, where such sale (a Settlement Sale) is related to, and made in 
connection with, a Settlement Agreement, provided that the conditions 
set forth in Section IV have been met.

Section IV. Conditions Applicable to Transactions Described in Section 
III

    The transactions described in Section III of this exemption are 
subject to the following conditions:
    (a) The terms and delivery of the Offer are consistent with the 
requirements set forth in the Settlement Agreement;
    (b) The Offer or other documents available to the Plan specifically 
describe, among other things:
    (1) How a Plan may determine: the Auction Rate Securities held by 
the Plan with Deutsche Bank, the purchase dates for the Auction Rate 
Securities, and (if reliable information is available) the most recent 
rate information for the Auction Rate Securities;
    (2) The number of shares and par value of the Auction Rate 
Securities available for purchase under the Offer;
    (3) The background of the Offer;
    (4) That participating in the Offer will not result in or 
constitute a waiver of any claim of the tendering Plan;
    (5) The methods and timing by which Plans may accept the Offer;
    (6) The purchase dates, or the manner of determining the purchase 
dates, for Auction Rate Securities tendered pursuant to the Offer;
    (7) The timing for acceptance by Deutsche Bank of tendered Auction 
Rate Securities;
    (8) The timing of payment for Auction Rate Securities accepted by 
Deutsche Bank for payment;
    (9) The methods and timing by which a Plan may elect to withdraw 
tendered Auction Rate Securities from the Offer;
    (10) The expiration date of the Offer;
    (11) The fact that Deutsche Bank may make purchases of Auction Rate 
Securities outside of the Offer and may otherwise buy, sell, hold or 
seek to restructure, redeem or otherwise dispose of the Auction Rate 
Securities;
    (12) A description of the risk factors relating to the Offer as 
Deutsche Bank deems appropriate;
    (13) How to obtain additional information concerning the Offer; and
    (14) The manner in which information concerning material amendments 
or changes to the Offer will be communicated to affected Plans.
    (c) The terms of the Settlement Sale are consistent with the 
requirements set forth in the Settlement Agreement; and
    (d) All of the conditions in Section II have been met.

Section V. Definitions

    For purposes of this exemption:
    (a) The term ``affiliate'' means: Any person directly or 
indirectly, through one or more intermediaries, controlling, controlled 
by, or under common control with such other person;
    (b) The term ``control'' means: The power to exercise a controlling 
influence over the management or policies of a person other than an 
individual;
    (c) The term ``Auction Rate Security'' means a security that:

[[Page 16847]]

    (1) Is either a debt instrument (generally with a long-term nominal 
maturity) or preferred stock; and
    (2) Has an interest rate or dividend that is reset at specific 
intervals through a Dutch auction process;
    (d) A person is ``independent'' of Deutsche Bank if the person is: 
(1) Not Deutsche Bank or an affiliate; and (2) not a relative (as 
defined in ERISA section 3(15)) of the party engaging in the 
transaction;
    (e) The term ``Plan'' means: An individual retirement account or 
similar account described in section 4975(e)(1)(B) through (F) of the 
Code (an IRA); an employee benefit plan as defined in section 3(3) of 
ERISA; or an entity holding plan assets within the meaning of 29 CFR 
2510.3-101, as modified by ERISA section 3(42); and
    (f) The term ``Settlement Agreement'' means: A legal settlement 
involving Deutsche Bank and a U.S. state or federal authority that 
provides for the purchase of an Auction Rate Security by Deutsche Bank 
from a Plan.

DATES: Effective Date: This exemption is effective as of February 1, 
2008.
    After giving full consideration to the entire record, the 
Department has decided to grant the exemption, as described above. The 
complete application file is made available for public inspection in 
the Public Documents Room of the Employee Benefits Security 
Administration, Room N-1513, US 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 January 19, 2010, at 75 FR 3074.

FOR FURTHER INFORMATION CONTACT: Warren Blinder of the Department, 
telephone (202) 693-8553. (This is not a toll-free number.)

The Coca-Cola Company (TCCC)
Located in Atlanta, Georgia
[Prohibited Transaction Exemption 2010-11; Exemption Application No. D-
11555]

Exemption

    The restrictions of section 406(a) and (b) of the Act shall not 
apply to the reinsurance of risks and the receipt of premiums therefrom 
by Red Re Inc. (Red Re), in connection with a medical stop-loss 
insurance policy sold by the Prudential Insurance Company of America 
(Prudential), or any successor insurance company to Prudential which is 
unrelated to TCCC, which would pay for certain benefits under the TCCC 
Retiree Health Plan (the Plan), provided the following conditions are 
met:
    (a) Red Re--
    (1) Is a party in interest with respect to the Plan by reason of a 
stock or partnership affiliation with TCCC that is described in section 
3(14)(E) or (G) of the Act;
    (2) Is licensed to sell insurance or conduct reinsurance operations 
in at least one State as defined in section 3(10) of the Act;
    (3) Has obtained a Certificate of Authority from the Insurance 
Commissioner of its domiciliary state that has not been revoked or 
suspended;
    (4)(A) Has undergone an examination by an independent certified 
public accountant for its last completed taxable year immediately prior 
to the taxable year of the reinsurance transaction; or
    (B) Has undergone a financial examination (within the meaning of 
the law of its domiciliary State) by the Insurance Commissioner of the 
State within 5 years prior to the end of the year preceding the year in 
which the reinsurance transaction occurred; and
    (5) Is licensed to conduct reinsurance transactions by a State 
whose law requires that an actuarial review of reserves be conducted 
annually by an independent firm of actuaries and reported to the 
appropriate regulatory authority; and
    (b) The Plan pays no more than adequate consideration for the 
insurance contracts;
    (c) No commissions are paid by the Plan with respect to the direct 
sale of such contracts or the reinsurance thereof;
    (d) In the initial year of any contract involving Red Re, there 
will be an immediate and objectively determined benefit to the Plan's 
participants and beneficiaries in the form of increased benefits;
    (e) In subsequent years, should the relationship with Prudential be 
terminated, the formula used to calculate premiums by any successor 
insurer will be similar to formulae used by other insurers providing 
comparable stop-loss coverage under similar programs. Furthermore, the 
premium charge calculated in accordance with the formula will be 
reasonable and will be comparable to the premium charged by the insurer 
and its competitors with the same or a better rating providing the same 
coverage under comparable programs;
    (f) To the extent Red Re earns any profit due to favorable claims 
experience, such profit will be promptly returned to the Plan.
    (g) The Plan only contracts with insurers with a rating of A or 
better from A.M. Best Company. The reinsurance arrangement between the 
insurer and Red Re will be indemnity insurance only, i.e., the insurer 
will not be relieved of liability to the Plan should Red Re be unable 
or unwilling to cover any liability arising from the reinsurance 
arrangement;
    (h) The Plan retains an independent fiduciary (the Independent 
Fiduciary), at TCCC's expense, to analyze the transactions and render 
an opinion that the requirements of sections (a) thorough (g) have been 
complied with. For purposes of this exemption, the Independent 
Fiduciary is a person who:
    (1) Is not directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with TCCC or Red Re (this relationship hereinafter referred to as an 
``Affiliate'');
    (2) Is not an officer, director, employee of, or partner in TCCC or 
Red Re (or any Affiliate of either);
    (3) Is not a corporation or partnership in which TCCC or Red Re has 
an ownership interest or is a partner;
    (4) Does not have an ownership interest in TCCC or Red Re, or any 
of either's Affiliates;
    (5) Is not a fiduciary with respect to the Plan prior to the 
appointment; and
    (6) Has acknowledged in writing acceptance of fiduciary 
responsibility and has agreed not to participate in any decision with 
respect to any transaction in which the Independent Fiduciary has an 
interest that might affect its best judgment as a fiduciary.
    For purposes of this definition of an ``Independent Fiduciary,'' no 
organization or individual may serve as an Independent Fiduciary for 
any fiscal year if the gross income received by such organization or 
individual (or partnership or corporation of which such individual is 
an officer, director, or 10 percent or more partner or shareholder) 
from TCCC, Red Re, or their Affiliates (including amounts received for 
services as Independent Fiduciary under any prohibited transaction 
exemption granted by the Department) for that fiscal year exceeds 3 
percent of that organization or individual's annual gross income from 
all sources for the prior fiscal year.
    In addition, no organization or individual who is an Independent 
Fiduciary, and no partnership or corporation of which such organization 
or individual is an officer, director, or 10 percent or more partner or 
shareholder, may acquire any property from, sell any property to, or 
borrow funds from TCCC, Red Re, or their Affiliates during the period 
that such organization or individual serves as Independent Fiduciary, 
and continuing for a period of six months after such

[[Page 16848]]

organization or individual ceases to be an Independent Fiduciary, or 
negotiates any such transaction during the period that such 
organization or individual serves as Independent Fiduciary.
    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 December 22, 2009 at 74 
FR 68106.

Written Comments and Hearing Requests

    During the comment period, the Department received approximately 30 
telephone calls and three written comments in response to the notice of 
proposed exemption, one of which also requested a hearing. The request 
for a hearing was subsequently withdrawn. The telephone calls and 
written comments raised no substantive issues, but rather reflected the 
commenters' failure to fully understand the notice of proposed 
exemption or the effect of the proposed exemption on the commenters' 
health care benefits. The Department provided explanations to each of 
the commentators by telephone, and each was satisfied with the 
responses provided by the Department.
    The Department has given full consideration to the entire record, 
including the comment letters received. Because the comments were not 
germane to the subject matter of the proposed exemption, the Department 
has determined to grant the exemption as it was proposed.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
telephone (202) 693-8546. (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 30th day of March, 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2010-7446 Filed 4-1-10; 8:45 am]
BILLING CODE 4510-29-P