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EBSA Notices

Application Nos. and Proposed Exemptions; D-11533 and D-11534; CUNA Mutual Pension Plan for Non-Represented Employees (Together, the Plans); and D-11565; Citizens Bank Wealth Management, N.A., et al.   [4/2/2010]
[PDF]
FR Doc 2010-7447
[Federal Register: April 2, 2010 (Volume 75, Number 63)]
[Notices]               
[Page 16848-16852]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap10-114]                         

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Application Nos. and Proposed Exemptions; D-11533 and D-11534; 
CUNA Mutual Pension Plan for Non-Represented Employees (Together, the 
Plans); and D-11565; Citizens Bank Wealth Management, N.A., et al.

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of Proposed Exemptions.

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SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions 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).

Written Comments and Hearing Requests

    All interested persons are invited to submit written comments or 
requests for a hearing on the pending exemptions, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice. Comments and 
requests for a hearing should state: (1) The name, address, and 
telephone number of the person making the comment or request, and (2) 
the nature of the person's interest in the exemption and the manner in 
which the person would be adversely affected by the exemption. A 
request for a hearing must also state the issues to be addressed and 
include a general description of the evidence to be presented at the 
hearing.

ADDRESSES: All written comments and requests for a hearing (at least 
three copies) should be sent to the Employee Benefits Security 
Administration (EBSA), Office of Exemption Determinations, Room N-5700, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. Attention: Application No.----, stated in each Notice of 
Proposed Exemption. Interested persons are also invited to submit 
comments and/or hearing requests to EBSA via e-mail or FAX. Any such 
comments or requests should be sent either by e-mail to: 
``moffitt.betty@dol.gov'', or by FAX to (202) 219-0204 by the end of 
the scheduled comment period. The applications for exemption and the 
comments received will be available for public inspection in the Public 
Documents Room of the Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC 20210.

    Warning: If you submit written comments or hearing requests, do 
not include any personally-identifiable or confidential business 
information that you do not want to be publicly-disclosed. All 
comments and hearing requests are posted on the Internet exactly as 
they are received, and they can be retrieved by most Internet search 
engines. The Department will make no deletions, modifications or 
redactions to the comments or hearing requests received, as they are 
public records.

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in 
applications filed pursuant to section 408(a) of the Act and/or section 
4975(c)(2) of the Code, and in accordance with procedures set forth in 
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 
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

[[Page 16849]]

requested to the Secretary of Labor. Therefore, these notices of 
proposed exemption are issued solely by the Department.
    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

    CUNA Mutual Pension Plan for Represented Employees and CUNA 
Mutual Pension Plan for Non-Represented Employees (together, the 
Plans), Located in Madison, Wisconsin.
    [Application Nos. D-11533 and 11534, Respectively]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption 
is granted, the restrictions of sections 406(a)(1)(A), 406(a)(1)(B), 
406(a)(1)(D), 406(b)(1), and (b)(2) of the Act, and the sanctions 
resulting from the application of section 4975 of the Code, by reason 
of section 4975(c)(1)(A) through (E) of the Code, shall not apply to: 
(i) The February 20, 2009 cash sale (the Sale), at aggregate cost basis 
plus interest, by each of the Plans of interests in certain private 
equity funds (the Funds) to the CUNA Mutual Insurance Society (the 
Applicant), the sponsor of the Plans and a party in interest with 
respect to the Plans, pursuant to a contract between the Applicant and 
the trustee of the Plans concluded on that same date; (ii) the 
September 14, 2009 payment by the Applicant of certain additional cash 
amounts, including interest (the Top-Up Payments); to the Plans 
pursuant to the terms of the foregoing contract; and (iii) the 
extension of credit between the Plans and the Applicant from the date 
of the Sale (February 20, 2009) to the date of the Top-Up Payments 
(September 14, 2009), provided that the following conditions were 
satisfied:
    (a) An independent fiduciary reviewed the terms and conditions of 
the Sale and of the Top-Up Payments prior to their execution, and 
determined that both were protective of the interests of the Plans;
    (b) The independent fiduciary determined that the terms and 
conditions of both the Sale and of the Top-Up Payments were at least as 
favorable to the Plans as those that would have been obtained in an 
arm's length transaction between unrelated parties;
    (c) The terms and conditions of both the Sale and of the Top-Up 
Payments were at least as favorable to the Plans as those that would 
have been obtained in an arm's length transaction between unrelated 
parties; and
    (d) The independent fiduciary provided its opinion in written 
reports on behalf of the Plans as to the fairness and reasonableness of 
the Sale of the Plans' interests in the Funds to the Applicant, and 
determined that the terms of the original Sale and subsequent Top-Up 
Payments were especially beneficial to each of the Plans because: (i) 
On February 20, 2009, the Plans received a return of their aggregate 
cost basis of their interests in the Funds (which cost basis was 
determined by the independent fiduciary to exceed the aggregate fair 
market value of the Plans' interests in the Funds as of October 31, 
2008), plus interest accrued on the Funds from their date of 
acquisition by each Plan through the date of the Sale; and (ii) On 
September 14, 2009, the independent fiduciary determined that, in 
instances where the fair market value of any Fund on December 31, 2008 
exceeded its original cost basis, each of the Plans received a Top-Up 
Payment on September 14, 2009 comprised of the increased value of such 
Fund, plus interest accrued on such increased value from December 31, 
2008 to the date of the Top-Up Payments (September 14, 2009).

Summary of Facts and Representations

    1. The Applicant is the parent of each of the companies forming the 
CUNA Mutual Group, which is a leading provider of financial services to 
cooperatives, credit unions, their members, and other customers. The 
Applicant represents that its primary products include group credit 
life and group credit disability products sold to credit unions; 
retirement plans and group life and disability products sold to credit 
union employees; and health, life, and annuity policies for credit 
union members.
    2. The Applicant sponsors the Plans, each of which is a defined 
benefit pension plan. The Applicant represents that, as of December 31, 
2008, the CUNA Mutual Pension Plan for Represented Employees had 1,271 
participants and assets of $90,282,987. The Applicant also represents 
that, as of December 31, 2008, the CUNA Mutual Pension Plan for Non-
Represented Employees had 5,749 participants and assets of 
$326,563,333. The trustee (Trustee) of each of the Plans is the State 
Street Bank and Trust Company of Boston, Massachusetts.
    3. The Applicant represents that, during the years 2006 and 2007, 
both it and the Plans co-invested their respective assets in ten 
private equity Funds.\1\ The Applicant further represents the decision 
of each Plan to invest in the Funds \2\ was made by the Employee 
Benefit Plan Administrative Committee (the Committee), the named 
fiduciary of both of the Plans, and that no additional interests in the 
Funds were acquired by the Plans after the year 2007.\3\ The Applicant 
also states that, as of November of 2008, the Plans' interest in the 
Funds represented a relatively small portion (i.e., less than 7%) of 
the Applicant's overall position in the Funds, and that the Applicant's 
overall interest in each Fund in turn represented only a small portion 
of the overall funding commitments to each Fund.
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    \1\ The ten private equity Funds in which each of the Plans 
acquired interests were: (1) AIG Highstar Capital III; (2) Audax 
Mezzanine Fund II LP; (3) Capital Partners Private Equity Fund; (4) 
Citigroup Capital Partners II; (5) CP Lone Star; (6) Crimson Capital 
Partners III; (7) EnerVest Energy Institutional Fund XI; (8) New 
Science Ventures Fund I; (9) Webster Capital II; and (10) Five 
Arrows Realty Securities V, LP.
    \2\ With respect to the co-investment arrangement of both the 
Applicant and the Plans in the Funds, the Department notes that if a 
plan fiduciary causes a plan to enter into a transaction where, by 
the terms or nature of the transaction, a conflict of interest 
between the plan and the fiduciary (or persons in which the 
fiduciary has an interest) exists or will arise in the future, that 
transaction would violate section 406(a)(1)(D) and 406(b)(1) of the 
Act (or the parallel provisions under the Code). In this connection, 
the fiduciary must not rely upon and cannot be otherwise dependent 
upon the participation of the plan in order for the fiduciary (or 
persons in which the fiduciary has an interest) to undertake or to 
continue his or her share of the investment. Furthermore, even if at 
its inception the transaction did not involve a violation, if a 
divergence of interests develops between the plan and the fiduciary 
(or persons in which the fiduciary has an interest), the fiduciary 
must take steps to eliminate the conflict of interest in order to 
avoid engaging in a prohibited transaction. See ERISA Advisory 
Opinion Letter 2000-10A (July 27, 2000).
    \3\ Section 404 of the Act requires, among other things, that a 
plan fiduciary act prudently, solely in the interest of the plan's 
participants and beneficiaries, and for the exclusive purpose of 
providing benefits to participants and beneficiaries when making 
decisions on behalf of a plan. Accordingly, the Department is not 
expressing an opinion herein as to whether any investment decisions 
or other actions taken by the Committee regarding the acquisition 
and subsequent holding of the interests in the Funds by the Plans 
were consistent with, or in violation of, its fiduciary obligations 
under Part 4 of Title I of the Act.
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    4. On November 25, 2008, the Committee contracted with U.S. Trust, 
Bank of America Private Wealth Management (U.S. Trust) to serve as an 
independent fiduciary (the Independent Fiduciary) on behalf of the 
Plans to determine whether the terms of the

[[Page 16850]]

proposed Sale of the Plans' interests in the Funds to the Applicant 
would be in the interest of the Plans.\4\ The Applicant represents that 
both U.S. Trust and its eventual successor as Independent Fiduciary, 
Evercore Trust Company N.A. (Evercore) are experienced and qualified 
fiduciaries with extensive trust and management capabilities such as 
discretionary asset management, asset allocation and diversification, 
investment advice, securities trading, and the performance of 
independent fiduciary assignments for plans covered by the Act. In 
addition, U.S. Trust and Evercore each represent that less than 1% of 
their annual revenues during their respective periods of service as 
Independent Fiduciary were derived from the Applicant and its 
affiliates.
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    \4\ It is represented that, in accordance with this contractual 
arrangement, Evercore Trust Company N.A. (a subsidiary of Evercore 
LP) assumed all of U.S. Trust's existing obligations as the 
Independent Fiduciary with respect to the Plans as a consequence of 
the May 1, 2009 sale of U.S. Trust's Special Fiduciary Services 
business to Evercore LP.
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    In its engagement letter dated December 5, 2008, the original 
Independent Fiduciary, U.S. Trust, agreed to: (1) Review and evaluate 
the consideration to be paid to the Plans in connection with the Sale 
to determine whether such consideration is fair and reasonable and in 
the interests of the Plans; (2) review and evaluate the terms of the 
Sale to determine whether they are at least as favorable to the Plans 
as terms that would have been agreed to between unrelated parties; (3) 
determine whether the Plans should enter into the Sale on such terms; 
(4) direct the trustee of the Plans whether or not to enter into the 
Sale; and (5) provide a written opinion on behalf of the Plans 
concerning the fairness and reasonableness of the Sale.
    5. In order to assist it in rendering its decision, the Independent 
Fiduciary engaged LCB Capital LLC (LCB) of Chicago, Illinois to perform 
an analysis of the Funds and to provide U.S. Trust with an initial 
report (the Initial LCB Report) detailing its conclusions. LCB 
represents that it receives less than 1% of its revenue directly from 
the Applicant and its affiliates. A supplement to the Initial LCB 
Report also states that the LCB managing director who conducted the 
valuation analysis of the Funds, Mr. Daniel Bayston, founded LCB in 
2008 after a 25-year career with the financial services and business 
valuation firm of Duff & Phelps. The Applicant represents that during 
his career, Mr. Bayston managed a wide range of corporate finance and 
business valuation assignments for publicly-traded and privately-held 
corporate clients and ERISA fiduciaries, and that such assignments have 
included merger and acquisition analyses, fairness opinions, 
shareholder liquidity analyses, private equity and debt placements, and 
corporate valuation matters. The Applicant also represents that Mr. 
Bayston is a member of the CFA Institute and the Business Valuation 
Association. In December of 2008, the Initial LCB Report was issued to 
the Independent Fiduciary. In the executive summary of this report, LCB 
stated that it had examined all relevant information that was provided 
by the Fund managers, including the amount and date of the original 
investment, current valuation information provided by the Fund 
managers, as well as business descriptions and relevant industry 
classifications.
    6. Subsequent to the issuance of the Initial LCB Report, the 
Independent Fiduciary issued a report on January 15, 2009 (the Initial 
I/F Report) detailing its analysis and opinion regarding the proposed 
Sale of the Plans' interests in the Funds. The Independent Fiduciary 
represented that the valuation analysis contained in the Initial LCB 
Report focused on specific industry and financial market trends which 
were likely to have had an impact on the value of the Funds. The 
Independent Fiduciary further represented in the Initial I/F Report 
that it had reviewed the content of the Initial LCB Report, and 
determined that the assumptions, methodology, and conclusions contained 
in the report were reasonable and reliable. The Initial I/F Report 
stated that the comparison by LCB of market conditions at the end of 
2008 relative to those prevailing in 2006 and 2007 when the interests 
in the Funds were acquired by the Plans provided compelling evidence 
that the value of the Funds had declined significantly from their 
original cost.
    7. Taking into account the foregoing contents of the Initial LCB 
Report, the Independent Fiduciary determined in its Initial I/F Report 
that a purchase by the Applicant of the Plans' interests in the Funds 
at their original cost was fair and reasonable to, and in the interest 
of, the Plans. The Independent Fiduciary represented in this report 
that it had concluded that there was no separate benefit to the 
Applicant in engaging in the Sale transaction, and that the only 
discernible benefit was enabling the Plans to liquidate, at original 
cost, a series of investments which had lost money. Pursuant to its 
determination that the proposed Sale was in the interest of the Plans, 
the Independent Fiduciary issued a letter to the Trustee of the Plans 
on February 18, 2009 directing the Trustee to sell the Plans' interests 
in the Funds to the Applicant.
    In connection with the Independent Fiduciary's direction, the 
Applicant and the Trustee of each of the Plans entered into agreements 
(the Transfer Agreements) on February 20, 2009, pursuant to which all 
of the interests in the Funds held by each Plan were sold on that same 
date to the Applicant. In addition to determining the price paid by the 
Applicant for the Plans' interests in the Funds, each of the Transfer 
Agreements contained a provision (the Top-Up Provision) stipulating 
that in the event that year-end (i.e., December 31, 2008) stated 
valuations of any of the Funds in which the Plans held an interest 
exceeded the Plans' original cost, the Trustee of each of the Plans 
would be entitled to receive on behalf of the Plans the difference 
between the December 31, 2008 valuation and the original cost. In 
accordance with the requirements of the Top-Up Provision, the 
Independent Fiduciary stated at the conclusion of the Initial I/F 
Report that it would update its analysis to reflect year-end December 
31, 2008 Fund data as soon as it became available from the Fund 
managers.
    The Applicant represents that, on February 20, 2009, the cash Sale 
of the Plans' interests in the Funds to the Applicant was consummated. 
The total cash payment to the Plans incident to the Sale was the higher 
of (i) the aggregate cost basis of the Plans' interests in the Funds as 
of October 31, 2008 or (ii) the aggregate stated fair market value of 
the interests in the Funds held by the Plans as of October 31, 2008. 
The Independent Fiduciary further represented that the total cash Sale 
price of $20,754,736.58 was comprised of the Plans' aggregate cost 
basis in the Funds ($19,168,999.58) plus interest ($1,585,737.00).\5\ 
The Applicant further represents that the total cash Sale price was 
allocated between the Plans, with $4,981,186.84 being paid to the CUNA 
Mutual Pension Plan for Represented Employees and $15,773,549.74 being 
paid to the CUNA Mutual Pension Plan for Non-Represented Employees.
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    \5\ The Applicant represents that the interest paid to the Plans 
incident to the February 20, 2009 Sale was calculated based upon the 
Plans' original cost basis in the Funds, plus interest accrued from 
the date of the Plans' capital contribution to each Fund through the 
date of the Sale. Specifically, the per annum interest rate utilized 
was 5.49% for capital contributions made by the Plans in 2006 and 
5.52% for capital contributions made in 2007. This interest rate 
reflects the credited interest rate paid by the Applicant's general 
account over the relevant time periods.

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[[Page 16851]]

    8. In September of 2009, immediately after the completion of the 
audits of the 2008 financial statements of the Funds (and in accordance 
with Top-Up Provisions of the Transfer Agreements), the Independent 
Fiduciary (which, as of July 1, 2009, was Evercore) issued an updated 
analysis of the Sale transaction (the Updated I/F Report) to determine, 
as of December 31, 2008, whether the fair market value of any of the 
Funds held by the Plans was greater than the Plans' cost basis in the 
Funds at the time of their acquisition. The Updated I/F Report relied 
upon an August 2009 written valuation analysis prepared by LCB (the 
Updated LCB Report) which, according to the Independent Fiduciary, 
utilized a valuation approach that was identical to that employed by 
LCB in its Initial Report. In the Updated LCB Report, LCB stated that 
it examined information such as the date and amount of the original 
investment by the Plans, relevant industry classification, and any 
available current valuation information provided by the Fund manager. 
LCB then determined the appropriate industry valuation multiple at or 
near the time of the investment and compared that with the same 
industry valuation multiple as of December 31, 2008. The Updated LCB 
Report also noted that industry valuation metrics and earnings 
multiples for virtually all industries had declined significantly from 
the time of the Plans' original investments in the Funds through 
December 31, 2008.
    Utilizing the updated information provided by the managers of the 
Funds and contained in the Updated LCB Report, the Independent 
Fiduciary noted in its Updated I/F Report that the December 31, 2008 
fair market value of eight of the ten Funds in which the Plans held an 
interest on that date remained below the Plans' original cost basis in 
those Funds. However, the Updated I/F Report also stated that the 
December 31, 2008 stated fair market value of two of the Funds (i.e., 
CP Lone Star and New Science Venture Fund I) exceeded the Plans' cost 
basis in these Funds. The aggregate valuation gains (and losses) 
experienced by the Plans' combined holdings in the Funds through 
December 31, 2008, as compiled in the Updated I/F Report, are 
summarized below in the following chart:

----------------------------------------------------------------------------------------------------------------
                                                                                                Aggregate gains
                                                                                                  (or losses)
                                           Date of        Aggregate amount    Value of each      experienced by
    Funds in which the plans held       acquisition of    invested in each  fund as stated by   the plans based
              interests               interests in each  fund by the plans  the fund managers  upon the 12/31/08
                                      fund by the plans     (cost basis)      as of 12/31/08    stated value of
                                                                                                   each fund
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AIG Highstar Capital III............            5/25/07         $2,490,691         $2,297,321         ($193,370)
Audax Mezzanine Fund II LP..........           11/30/06            914,682            873,787           (40,894)
Capital Partners Private Equity Fund             5/3/07          1,128,158          1,022,935          (105,223)
Citigroup Capital Partners II.......           11/15/06          8,709,246          5,532,666        (3,176,579)
CP Lone Star........................             5/3/07            666,667            722,280             55,613
Crimson Capital Partners III........            9/28/07            278,275            153,390          (124,885)
EnerVest Energy Institutional Fund              6/22/07          1,496,003          1,190,539          (305,464)
 XI.................................
Five Arrows Realty Securities V, LP.            8/23/07            358,123            342,081           (16,042)
New Science Ventures Fund I.........           10/31/06          2,452,255          2,489,795             37,495
Webster Capital II..................            5/11/07            675,000            587,378           (87,622)
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    9. The Independent Fiduciary's Updated I/F Report determined that a 
purchase price of the Plans' interests in the Funds at original cost 
plus interest (with additional Top-Up Payments plus interest to the 
Plans for those individual Funds whose December 31, 2008 fair market 
value exceeded their cost basis) was fair and reasonable to, and in the 
interest of, the Plans. Accordingly, the Independent Fiduciary further 
determined that, for those Funds whose stated fair market value was 
greater than cost, the Plans were entitled to receive Top-Up Payments 
totalling $96,583, comprised of $93,108 plus an interest payment of 
$3,475.\6\ On September 14, 2009, pursuant to the direction of the 
Independent Fiduciary and in accordance with the provisions of the 
February 20, 2009 Transfer Agreements between the Applicant and the 
Trustee of the Plans, the Top-Up Payments were made to the Plans.\7\ 
The Independent Fiduciary reaffirmed in its Updated I/F Report that 
there was no separate benefit to the Applicant of engaging in the Sale. 
Instead, the Independent Fiduciary represented that the only 
discernible benefit was to enable the Plans to liquidate a series of 
investments which had lost money at their original cost.
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    \6\ This Top-Up Payment figure was the sum of (1) an aggregate 
gain of $37,495 experienced by the Plans from their investment in 
New Science Ventures Fund I, (2) an aggregate gain of $55,613 
experienced by the Plans from their investment in the CP Lone Star 
Fund, plus (3) the $3,475 interest payment described above.
    \7\ In this connection, the Applicant represents that, on 
September 14, 2009, it made a Top-Up Payment of $23,180 (including 
$834 in interest accrued from December 31, 2008 to September 14, 
2009) to the CUNA Mutual Pension Plan for Represented Employees and 
a Top-Up Payment of $73,403 (including $2,641 in interest accrued 
from December 31, 2008 to September 14, 2009) to the CUNA Mutual 
Pension Plan for Non-Represented Employees. The Applicant represents 
that the interest component of the Top-Up Payments was calculated at 
the rate of 5.28%, which was the rate of interest credited to the 
Plans when the Applicant purchased the Plans' interests in the Funds 
on February 20, 2009.
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    10. The Applicant represents that the Sale of the Plans' interests 
in the Funds was beneficial to, and in the interest of, each of the 
Plans for several reasons. First, the Applicant represents that the 
Sale allowed the Plans to sell illiquid assets for a price that, in the 
aggregate, exceeded the fair market value of those assets. Second, the 
Applicant represents that the Sale allowed the Plans to reduce their 
exposure to a class of investments with an uncertain future. Third, the 
Applicant represents that the Sale allowed the Plans to obtain cash for 
their respective interests in the Funds, thereby permitting allocation 
of the assets of the Plans to more favorable investment vehicles. 
Fourth, in instances where the fair market value of any Fund on 
December 31, 2008 exceeded its original cost basis, each of the Plans 
received a Top-Up Payment on September 14, 2009 comprised of the 
increased value of such Fund, plus interest accrued on such increased 
value from December 31, 2008 to the date of the Top-Up Payments.
    11. In summary, the Applicant represents that the past transactions 
described herein for which exemptive relief is sought satisfied the 
statutory criteria of section 408(a) of the Act because: (a) The 
Independent Fiduciary

[[Page 16852]]

reviewed the terms and conditions of the Sale and of the Top-Up 
Payments and determined that both were protective of the interests of 
the Plans; (b) The Independent Fiduciary determined that the terms and 
conditions of both the Sale and the Top-Up Payments were at least as 
favorable to the Plans as those that would have been obtained in an 
arm's length transaction between unrelated parties; (c) The terms and 
conditions of both the Sale and of the Top-Up Payments were at least as 
favorable to the Plans as those that would have been obtained in an 
arm's length transaction between unrelated parties; and (d) The 
Independent Fiduciary provided its opinion in written reports on behalf 
of the Plans as to the fairness and reasonableness of the Sale of the 
Plans' interests in the Funds to the Applicant, and determined that the 
terms of the original Sale and subsequent Top-Up Payments were 
especially beneficial to each of the Plans because: (i) On February 20, 
2009, the Plans received a return of their aggregate cost basis of 
their interests in the Funds (which cost basis was determined by the 
Independent Fiduciary to exceed the aggregate fair market value of the 
Plans' interests in the Funds as of October 31, 2008), plus interest 
accrued on the Funds from their date of acquisition by each Plan 
through the date of the Sale; and (ii) On September 14, 2009, the 
Independent Fiduciary determined that, in instances where the fair 
market value of any Fund on December 31, 2008 exceeded its original 
cost basis, each of the Plans received a Top-Up Payment on September 
14, 2009 comprised of the increased value of such Fund, plus interest 
accrued on such increased value from December 31, 2008 to the date of 
the Top-Up Payments (September 14, 2009).
    Notice to Interested Persons: Notice of the proposed exemption 
shall be given to all interested persons in the manner agreed upon by 
the Applicant and the Department within 15 days of the date of 
publication in the Federal Register. Comments and requests for a 
hearing are due forty-five (45) days after publication of the notice in 
the Federal Register.

FOR FURTHER INFORMATION CONTACT: Mr. Mark Judge of the Department at 
(202) 693-8550. (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 of the Act and/or the Code, 
including any prohibited transaction 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) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
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
    (4) The proposed exemptions, if granted, will be subject to the 
express condition that the material facts and representations contained 
in each application are true and complete, and that each application 
accurately describes all material terms of the transaction which are 
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. 2010-7447 Filed 4-1-10; 8:45 am]
BILLING CODE 4510-29-P