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

Prohibited Transaction Exemptions and Grant of Individual Exemptions Involving D-11448, The PNC Financial Services Group, Inc., 2010-19; D-11514, Citigroup Inc. and its Affiliates (Citigroup or the Applicant), 2010-20; D-11527, Barclays California Corporation (Barcal), 2010-21; D-11533 and D-11534, Respectively, CUNA Mutual Pension Plan for Represented Employees and CUNA Mutual Pension Plan for Non-Represented Employees (Together, the Plans), 2010-22   [7/2/2010]
[PDF]
FR Doc 2010-16097
[Federal Register: July 2, 2010 (Volume 75, Number 127)]
[Notices]               
[Page 38551-38557]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jy10-105]                         

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Prohibited Transaction Exemptions and Grant of Individual 
Exemptions Involving D-11448, The PNC Financial Services Group, Inc., 
2010-19; D-11514, Citigroup Inc. and its Affiliates (Citigroup or the 
Applicant), 2010-20; D-11527, Barclays California Corporation (Barcal), 
2010-21; D-11533 and D-11534, Respectively, CUNA Mutual Pension Plan 
for Represented Employees and CUNA Mutual Pension Plan for Non-
Represented Employees (Together, the Plans), 2010-22

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.

Exemption

Section I--Exemption for In-Kind Redemption of Assets

    The restrictions in sections 406(a)(1)(A) through (D) and 406(b)(1) 
and (b)(2) of the Act, and the sanctions resulting from the application 
of section 4975 of the Code, by reason of section 4975(c)(1)(A) through 
(E) of the Code,

[[Page 38552]]

shall not apply \1\ to certain in-kind redemptions (the Redemption(s)) 
by The Employees' Thrift Plan of Mercantile Bankshares Corporation and 
Participating Affiliates (the Mercantile Plan) that occurred overnight 
on October 31, 2007, of shares (the Shares) of proprietary mutual funds 
(the Funds) for which The PNC Financial Services Group, Inc. (PNC) or 
an affiliate thereof provides investment advisory and other services, 
provided that the following conditions were satisfied:
---------------------------------------------------------------------------

    \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) No sales commissions, redemption fees, or other similar fees 
were paid in connection with the Redemptions (other than customary 
transfer charges paid to parties other than PNC and any affiliates of 
PNC (PNC Affiliates));
    (B) The assets transferred to the Mercantile Plan pursuant to the 
Redemptions consisted entirely of cash and Transferable Securities, as 
such term is defined in Section II, below;
    (C) In each Redemption, the Mercantile Plan received its pro rata 
portion of the securities with respect to the Capital Opportunities 
Fund, and certain securities, selected pursuant to a verifiable 
methodology, that were approved by an independent fiduciary 
(Independent Fiduciary, as such term is defined in Section II) with 
respect to the other four Funds covered by this exemption, such that 
the securities received were equal in value to that of the number of 
Shares redeemed, as determined in a single valuation (using sources 
independent of PNC and PNC Affiliates) performed in the same manner and 
as of the close of business on the same day, in accordance with Rule 
2a-4 under the Investment Company Act of 1940, as amended (the 1940 
Act) and the then-existing procedures adopted by the Board of Directors 
of PNC Funds, Inc., which were in compliance with all applicable 
securities laws;
    (D) Neither PNC nor any PNC Affiliate received any direct or 
indirect compensation or any fees, including any fees payable pursuant 
to Rule 12b-1 under the 1940 Act, in connection with any Redemption of 
the Shares;
    (E) Prior to a Redemption, the Independent Fiduciary received a 
full written disclosure of information regarding the Redemption;
    (F) Prior to a Redemption, the Independent Fiduciary communicated 
its approval for such Redemption to PNC;
    (G) Prior to a Redemption, based on the disclosures provided to the 
Independent Fiduciary, the Independent Fiduciary determined that the 
terms of the Redemption were fair to the Mercantile Plan, and 
comparable to and no less favorable than terms obtainable at arm's 
length between unaffiliated parties, and that the Redemption was in the 
best interests of the Mercantile Plan and its participants and 
beneficiaries;
    (H) Not later than thirty (30) business days after the completion 
of a Redemption, the Independent Fiduciary received a written 
confirmation regarding such Redemption containing:
    (i) The number of Shares held by the Mercantile Plan immediately 
before the Redemption (and the related per Share net asset value and 
the total dollar value of the Shares held) for each Fund;
    (ii) The identity (and related aggregate dollar value) of each 
security provided to the Mercantile Plan pursuant to the Redemption, 
including each security valued in accordance with Rule 2a-4 under the 
1940 Act and procedures adopted by the Board of Directors of PNC Funds, 
Inc. (using sources independent of PNC and PNC Affiliates);
    (iii) The current market price of each security received by the 
Mercantile Plan pursuant to the Redemption; and
    (iv) If applicable, the identity of each pricing service or market 
maker consulted in determining the value of such securities;
    (I) The value of the securities received by the Mercantile Plan for 
each redeemed Share equaled the net asset value of such Share at the 
time of the transaction, and such value equaled the value that would 
have been received by any other investor for shares of the same class 
of the Fund at that time;
    (J) Subsequent to the Redemptions, the Independent Fiduciary 
performed a post-transaction review that included, among other things, 
a random sampling of the pricing information it received;
    (K) Each of the Mercantile Plan's dealings with the Funds, the 
investment advisors to the Funds, the principal underwriter for the 
Funds, or any affiliated person thereof, were on a basis no less 
favorable to the Mercantile Plan than dealings between the Funds and 
other shareholders holding shares of the same class as the Shares;
    (L) ) Prior to the publication of this final exemption in the 
Federal Register regarding the subject transactions, PNC: (i) 
Reimbursed The PNC Financial Services Group, Inc. Incentive Savings 
Plan (the PNC Plan), into which the Mercantile Plan was merged on 
November 1, 2007, for all brokerage costs incurred by the Mercantile 
Plan on November 1, 2007 to liquidate the securities that the 
Mercantile Plan received in kind pursuant to a Redemption; and (ii) 
provided the Department with written documentation indicating 
reimbursement to the PNC Plan for such brokerage costs;
    (M) PNC maintains, or causes to be maintained, for a period of six 
years from the date of any covered transaction such records as are 
necessary to enable the persons described in paragraph (N) below to 
determine whether the conditions of this exemption have been met, 
except that (i) a separate prohibited transaction will not be 
considered to have occurred if, due to circumstances beyond the control 
of PNC, the records are lost or destroyed prior to the end of the six-
year period and (ii) no party in interest with respect to the 
Mercantile Plan other than PNC shall be subject to the civil penalty 
that may be assessed under section 502(i) of the Act or to the taxes 
imposed by section 4975(a) and (b) of the Code if such records are not 
maintained or are not available for examination as required by 
paragraph (N) below;
    (N)(1) Except as provided in subparagraph (2) of this paragraph 
(N), and notwithstanding any provisions of section 504(a)(2) and (b) of 
the Act, the records referred to in paragraph (M) above are 
unconditionally available at their customary locations for examination 
during normal business hours by (i) any duly authorized employee or 
representative of the Department, the Internal Revenue Service, or the 
Securities and Exchange Commission (SEC), (ii) any fiduciary of the PNC 
Plan as the successor to the Mercantile Plan or any duly authorized 
representative of such fiduciary, (iii) any participant or beneficiary 
of the PNC Plan as the successor to the Mercantile Plan or duly 
authorized representative of such participant or beneficiary, and (iv) 
any employer whose employees are covered by the PNC Plan as the 
successor to the Mercantile Plan and any employee organization whose 
members are covered by such plan;
    (2) None of the persons described in paragraphs (N)(1)(ii), (iii) 
and (iv) shall be authorized to examine trade secrets of PNC or the 
Funds, or commercial or financial information which is privileged or 
confidential;
    (3) Should PNC or the Funds refuse to disclose information on the 
basis that such information is exempt from disclosure pursuant to 
paragraph (N)(2) above, PNC or the Funds shall, by the close of the 
thirtieth (30th) day following the request, provide a written notice 
advising that person of the

[[Page 38553]]

reasons for the refusal and that the Department may request such 
information.

Section II--Definitions

    For purposes of this exemption--
    (A) The term ``affiliate'' means:
    (1) Any person (including corporation or partnership) directly or 
indirectly through one or more intermediaries, controlling, controlled 
by, or under common control with the person;
    (2) Any officer, director, employee, relative, or partner in any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (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 ``net asset value'' means the amount for purposes of 
pricing all purchases and sales calculated by dividing the value of all 
securities, determined by a method as set forth in the Fund's 
prospectus and statement of additional information, and other assets 
belonging to the Fund, less the liabilities charged to each such Fund, 
by the number of outstanding shares.
    (D) The term ``Independent Fiduciary'' means a fiduciary who is: 
(i) independent of and unrelated to PNC and its affiliates, and (ii) 
appointed to act on behalf of the Mercantile Plan with respect to the 
in-kind transfer of assets from one or more Funds to, or for the 
benefit of, the Mercantile Plan. For purposes of this exemption, a 
fiduciary will not be deemed to be independent of and unrelated to PNC 
if: (i) Such fiduciary directly or indirectly controls, is controlled 
by, or is under common control with, PNC; (ii) such fiduciary directly 
or indirectly receives any compensation or other consideration in 
connection with any transaction described in this exemption (except 
that an independent fiduciary may receive compensation from PNC in 
connection with the transactions contemplated herein if the amount or 
payment of such compensation is not contingent upon, or in any way 
affected by, the independent fiduciary's decision); and (iii) an amount 
equal to more than one percent (1%) of such fiduciary's gross income 
(for federal income tax purposes, in its prior tax year), is paid by 
PNC and its affiliates to the fiduciary in 2007, the year at issue.
    (E) The term ``Transferable Securities'' means securities (1) for 
which market quotations are readily available (as determined under Rule 
2a-4 of the 1940 Act) from persons independent of PNC and (2) which are 
not:
    (i) Securities that, if publicly offered or sold, would require 
registration under the Securities Act of 1933;
    (ii) Securities issued by entities in countries which (a) restrict 
or prohibit the holding of securities by non-nationals other than 
through qualified investment vehicles, such as the Funds, or (b) permit 
transfers of ownership of securities to be effected only by 
transactions conducted on a local stock exchange;
    (iii) Certain portfolio positions (such as forward foreign currency 
contracts, futures and options contracts, swap transactions, 
certificates of deposit, and repurchase agreements) that, although 
liquid and marketable, involve the assumption of contractual 
obligations, require special trading facilities, or can only be traded 
with the counter-party to the transaction to effect a change in 
beneficial ownership;
    (iv) Cash equivalents (such as certificates of deposit, commercial 
paper, and repurchase agreements);
    (v) Other assets that are not readily distributable (including 
receivables and prepaid expenses), net of all liabilities (including 
accounts payable); and
    (vi) Securities subject to ``stop transfer'' instructions or 
similar contractual restrictions on transfer.
    (F) The term ``relative'' means a ``relative'' as that term is 
defined in section 3(15) of the Act (or a ``member of the family'' as 
that term is defined in section 4975(e)(6) of the Code), or a brother, 
sister, or a spouse of a brother or a sister.
    Effective Date: The exemption is effective as of October 31, 
2007.\2\
---------------------------------------------------------------------------

    \2\ As a general matter, it is the Department's view that the 
model practice to effect an in-kind redemption by a mutual fund to a 
shareholder-pension plan, subject to Title I of ERISA, is through a 
pro rata distribution because the adoption of such a method ensures 
that the individual stocks selected for the in-kind redemption are 
objectively determined. The Department recognizes that the in-kind 
redemption for which exemptive relief is provided involves unique 
circumstances because, among other things, it facilitated the 
transfer of plan assets and the merger of The Employees' Thrift Plan 
of Mercantile Bankshares Corporation and Participating Affiliates 
(the Mercantile Plan) with The PNC Financial Services Group, Inc. 
Incentive Savings Plan (the PNC Plan). See also Facts and 
Representations 12 contained in the notice of proposed 
exemption, which summarizes the basis for satisfying the section 
408(a) statutory criteria for providing exemptive relief. In this 
regard, an important condition of this exemption is that PNC paid 
all brokerage commissions associated with the Mercantile Plan's sale 
of the securities received in the Redemptions. See Section I(L) of 
the exemption. Further, the Department encourages applicants, their 
advisers and counsel to confer, in advance, with EBSA's Office of 
Exemption Determinations as to whether a contemplated non-pro rata 
in-kind redemption involving plan assets may qualify for prohibited 
transaction exemptive relief. Although the applicant requested both 
retroactive and prospective exemptive relief, the Department is 
granting only retroactive exemptive relief relating to the October 
31, 2007 Redemptions.
---------------------------------------------------------------------------

    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 19, 2010 at 75 FR 
3060.

Written Comments

    No substantive comments were received by the Department with 
respect to the notice of proposed exemption.
    For Further Information Contact: Ms. Karin Weng of the Department, 
telephone (202) 693-8557. (This is not a toll-free number.)

Exemption

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

    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, effective 
February 1, 2008, to the sale by a Plan (as defined in Section V(e)) of 
an Auction Rate Security (as defined in Section V(c)) to Citigroup, 
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.\3\
---------------------------------------------------------------------------

    \3\ For purposes of this exemption, references to section 406 of 
the Act should be read to refer as well to the corresponding 
provisions of section 4975 of the Code.
---------------------------------------------------------------------------

Section II. Conditions Applicable to Transactions Described in Section 
I

    (a) The Plan acquired the Auction Rate Security in connection with 
brokerage or advisory services provided by Citigroup to the Plan;
    (b) The last auction for the Auction Rate Security was 
unsuccessful;
    (c) Except in the case of a Plan sponsored by Citigroup for its own 
employees (a Citigroup Plan), the Unrelated Sale is made pursuant to a 
written offer by Citigroup (the Offer) containing all of the material 
terms of the Unrelated Sale. Either the Offer or other materials 
available to the Plan provide: (1) The identity and par value of the 
Auction Rate Security; (2) the interest or dividend amounts that are 
due and unpaid with respect to the Auction Rate Security; and (3) the 
most recent rate information for the Auction

[[Page 38554]]

Rate Security (if reliable information is available). Notwithstanding 
the foregoing, in the case of a pooled fund maintained or advised by 
Citigroup, this condition shall be deemed met to the extent each Plan 
invested in the pooled fund (other than a Citigroup Plan) receives 
advance written notice regarding the Unrelated Sale, where such notice 
contains all of the material terms of the Unrelated Sale;
    (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 Citigroup. 
Notwithstanding the foregoing: (1) In the case of an IRA (as defined in 
Section V(e)) which is beneficially owned by an employee, officer, 
director or partner of Citigroup, 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 Citigroup Plan or a pooled 
fund maintained or advised by Citigroup, the decision to accept the 
Offer may be made by Citigroup after Citigroup has determined that such 
purchase is in the best interest of the Citigroup Plan or pooled fund; 
\4\
---------------------------------------------------------------------------

    \4\ The Department notes that the Act's general standards of 
fiduciary conduct also would apply to the transactions described 
herein. In this regard, section 404 of the Act 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 Citigroup for the par value of the 
Auction Rate Security, plus unpaid interest and dividends. The 
Department further emphasizes that it expects plan fiduciaries, 
prior to entering into any of the proposed transactions, to fully 
understand the risks associated with this type of transaction 
following disclosure by Citigroup of all relevant information.
---------------------------------------------------------------------------

    (h) Except in the case of a Citigroup Plan or a pooled fund 
maintained or advised by Citigroup, neither Citigroup 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) Citigroup 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 Citigroup 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 Citigroup 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;
    (B) Any fiduciary of any Plan, including any IRA owner, that 
engages in an Unrelated Sale, or any duly authorized employee or 
representative of such fiduciary; and
    (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 paragraphs (l)(1)(B)-(C) 
shall be authorized to examine trade secrets of Citigroup, or 
commercial or financial information which is privileged or 
confidential; and
    (3) Should Citigroup refuse to disclose information on the basis 
that such information is exempt from disclosure, Citigroup 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 Citigroup: 
Related to a Settlement Agreement

    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, effective 
February 1, 2008, to the sale by a Plan of an Auction Rate Security to 
Citigroup, 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

    (a) The terms and delivery of the Offer are consistent with the 
requirements set forth in the Settlement Agreement and acceptance of 
the Offer does not constitute a waiver of any claim of the tendering 
Plan;
    (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 Citigroup; the number of shares or par value of the 
Auction Rate Securities; the interest or dividend amounts that are due 
and unpaid with respect to the Auction Rate Securities; and (if 
reliable information is available) the most recent rate information for 
the Auction Rate Securities;
    (2) The background of the Offer;
    (3) That neither the tender of Auction Rate Securities nor the 
purchase of any Auction Rate Securities pursuant to the Offer will 
constitute a waiver of any claim of the tendering Plan;
    (4) The methods and timing by which Plans may accept the Offer;
    (5) The purchase dates, or the manner of determining the purchase 
dates, for Auction Rate Securities tendered pursuant to the Offer;
    (6) The timing for acceptance by Citigroup of tendered Auction Rate 
Securities;
    (7) The timing of payment for Auction Rate Securities accepted by 
Citigroup for payment;
    (8) The methods and timing by which a Plan may elect to withdraw 
tendered Auction Rate Securities from the Offer;
    (9) The expiration date of the Offer;
    (10) The fact that Citigroup may make purchases of Auction Rate 
Securities outside of the Offer and may otherwise buy, sell, hold or 
seek to restructure,

[[Page 38555]]

redeem or otherwise dispose of the Auction Rate Securities;
    (11) A description of the risk factors relating to the Offer as 
Citigroup deems appropriate;
    (12) How to obtain additional information concerning the Offer; and
    (13) The manner in which information concerning material amendments 
or changes to the Offer will be communicated to the Plan;
    (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'' or ``ARS'' means a security: 
(1) That is either a debt instrument (generally with a long-term 
nominal maturity) or preferred stock; and (2) with an interest rate or 
dividend that is reset at specific intervals through a Dutch auction 
process;
    (d) A person is ``independent'' of Citigroup if the person is: (1) 
not Citigroup or an affiliate; and (2) not a relative (as defined in 
section 3(15) of the Act) 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 
the Act; or an entity holding plan assets within the meaning of 29 CFR 
2510.3-101, as modified by section 3(42) of the Act; and
    (f) The term ``Settlement Agreement'' means a legal settlement 
involving Citigroup and a U.S. state or federal authority that provides 
for the purchase of an ARS by Citigroup from a Plan.
    Effective Date: This exemption is effective as of February 1, 2008.
    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 23, 2010 at 75 
FR 8128.
    For Further Information Contact: Brian Shiker of the Department, 
telephone (202) 693-8552. (This is not a toll-free number.)

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act, section 8477(c)(2) of the Federal Employees' Retirement System Act 
of 1986, as amended (FERSA), 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, effective 
September 4, 2008, to the cash sales (the Sales) by the Barclays Global 
Investors ``Money Market Fund'' and ``Cash Equivalent Fund II,'' which 
are short-term collective investment funds (STIFs) managed or 
maintained by Barclays Global Investors, N.A. (BGI, or together with 
Barcal and any of their affiliates, collectively, ``the Applicant''), 
of certain short-term debt instruments (the Notes) to Barcal, provided 
that the following conditions are met:
    (a) The Sales were one-time transactions for cash payment made on a 
delivery versus payment (i.e., same day) basis in the amount described 
in paragraph (b);
    (b) The STIFs received an amount equal to the greater of:
    (1) The amortized cost (including accrued and unpaid interest) of 
the Notes, determined as of the dates of the Sales, or
    (2) the fair market value (including accrued and unpaid interest) 
of the Notes, determined by an independent third party source;
    (c) The STIFs did not bear any commissions, transaction costs or 
other expenses in connection with the Sales;
    (d) The terms and conditions of the Sales were at least as 
favorable to the STIFs as those available in an arm's-length 
transaction with an unrelated party.
    (e) BGI, as fiduciary of the STIFs, determined that the Sales were 
in the best interest of the STIFs and any employee benefit plans (the 
Plans) invested in the STIFs as of the dates of the Sales.
    (f) BGI took all appropriate actions necessary to safeguard the 
interests of the STIFs and any Plans invested in the STIFs in 
connection with the Sales.
    (g) If the exercise of any of Barcal's rights, claims, or causes of 
action in connection with its ownership of the Notes results in Barcal 
recovering from the issuer of the Notes, or from any third party, an 
aggregate amount that is more than the sum of:
    (1) The purchase price paid for such Notes by Barcal; and
    (2) the interest due on the notes from and after the date Barcal 
purchased the Notes from the STIFs, Barcal will refund such excess 
amount promptly to the STIFs (after deducting all reasonable expenses 
incurred in connection with the recovery);
    (h) BGI maintains, or causes to be maintained, for a period of six 
(6) years from the date of any covered transaction such records as are 
necessary to enable the persons described below in paragraph (i)(1), to 
determine whether the conditions of this exemption have been met, 
except that--
    (1) No party in interest with respect to a Plan which engages in 
the covered transactions, other than BGI and its affiliates, 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 (i)(1);
    (2) A separate prohibited transaction shall not be considered to 
have occurred solely because due to circumstances beyond the control of 
BGI, such records are lost or destroyed prior to the end of the six-
year period. (i)(1) Except as provided, below, in paragraph (i)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to, above, in paragraph (h) are 
unconditionally available at their customary location for examination 
during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department or of the Internal Revenue Service; or
    (B) Any fiduciary of any Plan that engages in the covered 
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 that engages in the 
covered transactions, or any authorized employee or representative of 
these entities; or
    (D) Any participant or beneficiary of a Plan that engages in a 
covered transaction, or duly authorized employee or representative of 
such participant or beneficiary;
    (2) None of the persons described, above, in paragraph (i)(1)(B)-
(D) shall be authorized to examine trade secrets of BGI, or commercial 
or financial information which is privileged or confidential; and
    (3) Should BGI refuse to disclose information on the basis that 
such information is exempt from disclosure, BGI 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.

[[Page 38556]]

    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 (the Notice) published on March 15, 
2010 at 75 FR 12308.
    Effective Date: This exemption is effective September 4, 2008.

Written Comments

    The only written comment received by the Department was submitted 
by the Applicant. The Applicant requested changes with respect to 
condition (i) of the Notice concerning the entities to whom the records 
maintained pursuant to condition (h) of the Notice are required to be 
made available by BGI. First, the Applicant requested that the records 
need not be made unconditionally available to duly authorized employees 
or representatives of the Securities and Exchange Commission (the SEC) 
because, unlike the cases involving Auction Rate Securities, the 
subject Sales were not required by an SEC settlement; nor are the STIFs 
within the jurisdiction of the SEC. The Department accepts these 
representations by the Applicant and has amended the grant accordingly. 
Second, the Applicant requested that the records need not be made 
unconditionally available to any participant or beneficiary of a Plan 
that engages in a covered transaction, or duly authorized employee or 
representative of such participant or beneficiary. The Applicant noted 
that there are nearly 1,000 Plans whose fiduciaries will have access to 
these records. There are millions of participants in these Plans, none 
of whom have a relationship with the Applicant. In order to protect the 
confidentiality of Plan arrangements, every time a Plan participant 
sought to review these records, the Applicant would be required to 
contact a Plan fiduciary to verify that the participant was in fact a 
participant in the Plan on the date of the transaction and is still a 
participant in the Plan. This would cause the Applicant to spend 
countless hours just so that a participant or his or her representative 
could review material that the Plan fiduciary already had in its 
possession. The Applicant stated that this would impose a considerable 
and unwarranted burden. However, because participants and beneficiaries 
of the Plans are affected by the subject Sales and have an interest in 
the fiduciary management of their Plan assets, it is the Department's 
view that they also should have access to the records maintained by 
BGI, which are otherwise required to be maintained and made available 
pursuant to the grant of exemptive relief. Accordingly, the Department 
has not made this requested change to the condition contained in 
section (i) of the Notice.
    The Department has given full consideration to the entire record, 
including the comment letter received. The Department has determined to 
grant the exemption, with the one change as noted above.
    For Further Information Contact: Gary H. Lefkowitz of the 
Department, telephone (202) 693-8546. (This is not a toll-free number.)

Exemption

    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).

Written Comments

    The Notice of Proposed Exemption (The Notice), Published in the 
Federal Register on April 2, 2010 beginning on page 16849, invited all 
interested persons to submit written comments and requests for a 
hearing to the Department within forty-five (45) days of the date of 
its publication. At the close of the comment period, the Department 
received a single written comment from two current beneficiaries of the 
CUNA Mutual Pension Plan for Non-Represented Employees. While 
expressing concern about the Plan's initial decision to invest in the 
Funds, the comment letter was supportive of the proposed exemption for 
the sale of the Plan's interests in the Funds as described in the 
Notice. The Department did not receive any other written comments from 
interested persons with respect to the Notice during the aforementioned 
45-day comment period, nor did it receive any requests for a hearing.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the text of the Notice at 75 FR 16849.
    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

[[Page 38557]]

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 28th day of June, 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2010-16097 Filed 7-1-10; 8:45 am]
BILLING CODE 4510-29-P