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: 2010-23, D-11500, Carle Foundation Hospital &Affiliates Pension Plan; 2010-24, D-11565, Citizens Bank Wealth Management, N.A.; and 2010-25, D-11602, State Street Bank and Trust Company (State Street); et al.   [8/6/2010]
[PDF]
FR Doc 2010-19367
[Federal Register: August 6, 2010 (Volume 75, Number 151)]
[Notices]               
[Page 47637-47639]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au10-128]                         


[[Page 47637]]

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

DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Prohibited Transaction Exemptions and Grant of Individual 
Exemptions Involving: 2010-23, D-11500, Carle Foundation Hospital & 
Affiliates Pension Plan; 2010-24, D-11565, Citizens Bank Wealth 
Management, N.A.; and 2010-25, D-11602, State Street Bank and Trust 
Company (State Street); et al.

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.
Carle Foundation Hospital & Affiliates Pension Plan, Located in 
Urbana, Illinois. [Prohibited Transaction Exemption 2010-23; 
Exemption Application No. D-11500]

Exemption

    The restrictions in section 406(a)(1)(A) and (D) and section 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), (D), and (E) of the Code, shall not apply to the sale 
of a certain limited partnership interest (the LPI) by the Carle 
Foundation Hospital & Affiliates Pension Plan (the Plan) to Carle 
Foundation Hospital (the Employer), a party in interest with respect 
to the Plan, provided that the following conditions are satisfied:
    (a) The sale is a one-time transaction for cash;
    (b) The terms and conditions of the sale are at least as 
favorable to the Plan as those that the Plan could obtain in an 
arm's length transaction with an unrelated third party;
    (c) The sales price is the greater of: (1) The fair market value 
of the LPI as of the date of the sale, as determined by a qualified, 
independent appraiser, or (2) the Plan's total capital contributions 
as of the date of the sale, plus imputed earnings (calculated based 
upon the applicable one-month Treasury bill rates) from the date of 
the Plan's acquisition of the LPI to the date of the sale;
    (d) The Plan pays no commissions, fees, or other expenses in 
connection with the sale; and
    (e) The Plan fiduciaries review and approve the methodology used 
by the qualified, independent appraiser, ensure that such 
methodology is properly applied in determining the fair market value 
of the LPI, and also determine whether it is prudent to go forward 
with the proposed transaction.
    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 March 15, 2010 at 
75 FR 12305.

Written Comments

    The Department received two written comments from participants 
of the Plan with respect to the notice of proposed exemption. One 
participant, a former employee, inquired how much longer she must 
wait to obtain a distribution of her remaining account balance. 
Another participant, who is a retiree and requested a hearing, also 
inquired about the distribution of her remaining account balance and 
expressed concern about lost investment opportunities and earnings.
    The applicant responded that it intends to consummate the 
proposed sale of the LPI as soon as practicable following 
publication of a final exemption, if granted, in the Federal 
Register. Each affected participant will then receive his or her pro 
rata share of the cash proceeds from the sale of the LPI, as well as 
his or her pro rata share of the imputed earnings. Because the LPI 
is an illiquid investment (constituting less than one percent of 
total Plan assets) and the applicant was unable to identify an 
unrelated purchaser, it requested an administrative exemption from 
the Department to purchase the LPI from the Plan. The Department 
also notes that the grant of the exemption will facilitate the 
commenters' requested distribution, and the conditions, including 
the sales price formula described in condition (c), provide 
appropriate safeguards consistent with the requirements of section 
408(a).
    The Department has determined not to hold a public hearing. The 
Department's regulations provide that a hearing will be held where 
necessary to fully explore material factual issues identified by the 
person requesting the hearing. See 29 CFR 2570.46. In this case, the 
Department concludes that the commenter has not identified any 
material factual issues that would require a hearing.
    Based upon the information contained in the entire record, the 
Department has determined to grant the proposed exemption.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department, 
telephone (202) 693-8557. (This is not a toll-free number.)
Citizens Bank Wealth Management, N.A., Located in Flint, Michigan. 
[Prohibited Transaction Exemption 2010-24; Exemption Application No. 
D-11565]

Exemption

Section I. Transaction

    The restrictions of section 406(a)(1)(A) and (D) and section 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), (D), and (E) of the Code, shall not apply, effective 
December 16, 2008, to the past sale of certain Auction Rate 
Securities (ARS) by the Four-Way Tool & Die, Inc. Profit Sharing 
Plan and Trust (the Plan) to Citizens Republic Bancorp (Citizens 
Republic), a party in interest with respect to the Plan, provided 
that the following conditions were satisfied: \1\
---------------------------------------------------------------------------

    \1\ For purposes of this exemption, references to section 406 of 
the Act should be read to refer also to the corresponding provisions 
of section 4975 of the Code.
---------------------------------------------------------------------------

    (A) The subject ARS were acquired for the Plan by Citizens Bank 
Wealth Management, N.A. (the Trustee), acting in its capacity as 
trustee of the Plan, from an independent broker;
    (B) The last auction for each of the ARS was unsuccessful;
    (C) The sale of the ARS was directly between the Plan and 
Citizens Republic for solely cash consideration against prompt 
delivery of the ARS;
    (D) The sale price for each of the ARS was equal to the par 
value, plus any accrued but unpaid interest;

[[Page 47638]]

    (E) The Plan did not waive any rights or claims in connection 
with the sale;
    (F) The decision to sell the ARS to the Trustee was made by a 
Plan fiduciary independent of the Trustee;
    (G) The Plan did not pay any commissions or transaction costs in 
connection with the sale;
    (H) The sale was not part of an arrangement, agreement, or 
understanding designed to benefit a party in interest to the Plan;
    (I) Upon termination of the Plan, the Plan participants received 
100 percent of their account balances, and as a result of the pre-
termination sale of the ARS to Citizens Republic at face value, plus 
any accrued but unpaid interest, no participant was adversely 
affected by the absence of an auction market for the ARS or the 
resulting decline in their market value;
    (J) The Trustee and its affiliate, as applicable, maintain, or 
cause to be maintained, for a period of at least six (6) years from 
the date of the sale, such records as are necessary to enable the 
persons described in paragraph (K), below, to determine whether the 
conditions of this exemption have been met, except that--
    (i) No party in interest with respect to the Plan that engaged 
in the sale, other than the Trustee and its affiliate, 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 are not available for 
examination, as required, below, by paragraph (K); and
    (ii) A separate prohibited transaction shall not be considered 
to have occurred solely because, due to circumstances beyond the 
control of the Trustee or its affiliate, as applicable, such records 
are lost or destroyed prior to the end of the six-year period; and
    (K)(i) Except as provided in subparagraph (ii), below, and 
notwithstanding any provisions of subsections (a)(2) and (b) of 
section 504 of the Act, the records referred to in paragraph (J), 
above, 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 the Plan, or any duly authorized employee 
or representative of such fiduciary; or
    (c) The employer of participants of the Plan, and any employee 
organization whose members are covered by the Plan, or any 
authorized employee or representative of these entities;
    (ii) None of the persons described above in paragraph (K)(i)(b) 
or (c) of shall be authorized to examine trade secrets of the 
Trustee, or commercial or financial information which is privileged 
or confidential; and
    (iii) If the Trustee refuses to disclose information on the 
basis that such information is exempt from disclosure, the Trustee 
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 II. 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 (with 
respect to the Trustee, ``affiliate'' includes, but is not limited 
to, its parent corporation, Citizens Republic Bancorp)
    (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 Securities'' or ``ARS'' means 
securities that are debt instruments (generally with a long-term 
nominal maturity) with an interest rate that is reset at specific 
intervals through a Dutch Auction process;
    (D) A person is ``independent'' of the Trustee if the person is 
(1) not the Trustee or an affiliate, and (2) not a ``relative'' (as 
defined in section 3(15) of the Act) of the party engaging in the 
transaction; and
    (E) The term ``Plan'' means the Four-Way Tool & Die, Inc. Profit 
Sharing Plan and Trust, which is an employee benefit plan as defined 
in section 3(3) of the Act, and its related trust, which is an 
entity holding plan assets within the meaning of 29 CFR 2510.3-101, 
as modified by section 3(42) of the Act.

    Effective Date: This exemption is effective as of December 16, 
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 April 8, 2010 at 75 FR 
17966.

Written Comments

    No 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.)

State Street Bank and Trust Company (State Street), Located in 
Boston, MA. [Prohibited Transaction Exemption 2010-25; Exemption 
Application No. D-11602]

Exemption

    The restrictions of sections 406(a), 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,\2\ shall not apply as of December 22, 2009 to the cash 
sale of certain fixed income securities (the Securities) for an 
aggregate purchase price of $113,977,880.15 by the Quality D Short-
Term Investment Fund (the Fund) to State Street, a fiduciary with 
respect to the Fund and a party in interest with respect to employee 
benefit plans (the Plans) invested, directly or indirectly, in the 
Fund, provided that the following conditions are met:
---------------------------------------------------------------------------

    \2\ 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.
---------------------------------------------------------------------------

    (a) The sale was a one-time transaction for cash;
    (b) The Fund received an amount which was equal to the sum of 
(1) the aggregate current amortized cost of the Securities as of the 
date of the transaction plus (2) the aggregate accrued interest on 
the Securities through the date of the transaction, calculated at 
the applicable contract rate for each of the Securities;
    (c) The Fund did not bear any commissions, fees, transaction 
costs, or other expenses in connection with the sale;
    (d) The amount received by the Fund with respect to each of the 
Securities was no less than the fair market value of each such 
Security, based upon the closing price obtained from an independent 
pricing service, as of the close of business on the date prior to 
the date of the transaction;
    (e) State Street, as trustee of the Fund, determined that the 
sale of the Securities was appropriate for and in the best interests 
of the Fund, and the Plans invested, directly or indirectly, in the 
Fund, at the time of the transaction;
    (f) State Street took all appropriate actions necessary to 
safeguard the interests of the Fund and the Plans invested, directly 
or indirectly, in the Fund, in connection with the transaction;
    (g) State Street and its affiliates, as applicable, maintain, or 
cause 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 person described below in paragraph (h)(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 transaction, other than State Street and its affiliates, 
as applicable, shall be subject to a civil penalty under section 
502(i) of the Act or the taxes imposed by sections 4975(a) and (b) 
of the Code, if such records are not maintained, or not available 
for examination, as required, below, by paragraph (h)(1); and
    (2) A separate prohibited transaction shall not be considered to 
have occurred solely because, due to circumstances beyond the 
control of State Street or its affiliates, as applicable, such 
records are lost or destroyed prior to the end of the six-year 
period.
    (h)(1) Except as provided, in paragraph (h)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of 
section 504 of the Act, the records referred to in paragraph (g) 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;
    (B) Any fiduciary of any Plan that engages in the covered 
transaction, or any duly authorized employee or representative of 
such fiduciary;
    (C) Any employer of participants and beneficiaries and any 
employee organization whose members are covered by a Plan that 
engages in the covered transaction, or any

[[Page 47639]]

authorized employee or representative of these entities; or
    (D) Any participant or beneficiary of a Plan that engages in the 
covered transaction, or duly authorized employee or representative 
of such participant or beneficiary;
    (2) None of the persons described, above, in paragraphs 
(h)(1)(B)-(D) shall be authorized to examine trade secrets of State 
Street or its affiliates, or commercial or financial information 
which is privileged or confidential; and
    (3) Should State Street refuse to disclose information on the 
basis that such information is exempt from disclosure, State Street 
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.

    Effective Date: This exemption is effective as of December 22, 
2009.
    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 April 30, 2010 at 75 FR 
22860.

FOR FURTHER INFORMATION CONTACT: Brian Shiker of the Department, 
telephone (202) 693-8552. (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 29th day of July, 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2010-19367 Filed 8-5-10; 8:45 am]
BILLING CODE 4510-29-P