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Secretary of Labor Hilda L. Solis
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EBSA Notices

Exemptions From Certain Prohibited Transaction Restrictions   [2/17/2011]
[PDF]
FR Doc 2011-3589
[Federal Register: February 17, 2011 (Volume 76, Number 33)]
[Notices]               
[Page 9361-9366]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17fe11-79]                         

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Exemptions From Certain Prohibited Transaction Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of individual exemptions.

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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). 
This notice includes the following: D-11591, Citigroup Inc. and its 
affiliates (Citigroup), the Citigroup 401(k) Plan, the Citibuilder 
401(k) Plan for Puerto Rico (the Citibuilder Plan and collectively with 
the Citigroup 401(k) Plan, the Participant Directed Plans), the 
Citigroup Pension Plan (and collectively with the Participant Directed 
Plans, the Plans) (the Applicants), PTE 2011-04; and D-11592, TD 
Ameritrade, Inc. (TD Ameritrade), 2011-05.

SUPPLEMENTARY INFORMATION: 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.

[[Page 9362]]

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.

Citigroup Inc. and Its Affiliates (Citigroup), the Citigroup 401(k) 
Plan, the Citibuilder 401(k) Plan for Puerto Rico (the Citibuilder Plan 
and Collectively With the Citigroup 401(k) Plan, the Participant 
Directed Plans), the Citigroup Pension Plan (and Collectively With the 
Participant Directed Plans, the Plans) (the Applicants), Located in 
Greenwich, CT

[Prohibited Transaction Exemption 2011-04; Exemption Application No. D-
11591]

Exemption

Section I: Transactions

    (a) The restrictions of sections 406(a), 406(b)(1), 406(b)(2), and 
407(a) of the Act \1\ shall not apply, effective June 22, 2009 (the 
Record Date) and until June 10, 2012, to:
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    \1\ For purposes of this exemption, references to provisions of 
Title I of the Act, unless otherwise specified, refer also to the 
corresponding provisions of the Code.
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    (1) The acquisition of stock rights (the Rights) by certain plans, 
described below in Section I(a)(1)(A) through (C) of this exemption, in 
connection with holding shares of common stock of Citigroup Inc. 
(Citigroup Stock) on the Record Date established pursuant to an 
offering of such Rights (the Offering) in accordance with the Tax 
Benefits Preservation Plan (the Rights Plan) by Citigroup Inc. 
(Citigroup), a party in interest with respect to the following plans, 
and/or the acquisition of Citigroup Stock and the attached Rights by 
the plans in the future pursuant to the Offering:
    (A) The Citigroup 401(k) Plan (the Citigroup 401(k) Plan);
    (B) The Citibuilder 401(k) Plan for Puerto Rico (the Citibuilder 
Plan and collectively with the Citigroup 401(k) Plan, the Participant 
Directed Plans); and
    (C) The Citigroup Pension Plan (the Citigroup Pension Plan and 
collectively with the Participant Directed Plans, the Plans);
    (2) The holding of the Rights by the Plans until the date the Plans 
exercise or otherwise dispose of the Rights or the expiration of such 
Rights in accordance with the terms and conditions of the Rights Plan, 
whichever is earlier; and
    (3) The exercise or other disposition of the Rights by the Plans; 
provided that the conditions in Section II of this exemption, as set 
forth below, are satisfied.\2\
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    \2\ The Department's determination to grant relief for these 
transactions should not be viewed as an endorsement of the Rights 
Plan, nor is it offering any views as to whether such transactions 
satisfy any other requirements of ERISA, the Code or other relevant 
statutory provisions. Rather, this exemption is designed to place 
the Plans and their participants and beneficiaries in the same 
position as other holders of Citigroup Stock with respect to the 
acquisition of the Rights and to prevent the possible dilution of 
the Plans' investment in the Citigroup Stock.
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    (b) The sanctions resulting from the application of section 4975 of 
the Internal Revenue Code of 1986 (the Code), by reason of section 
4975(c)(1)(A) through (E) shall not apply, effective June 22, 2009, to 
the acquisition of the Rights by the Plans, described above in Section 
I(a)(1)(A), and Section I(a)(1)(C) of this exemption; \3\ provided that 
the conditions in Section II of this exemption, as set forth below, are 
satisfied.
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    \3\ The Applicants represent that, because the fiduciaries for 
the Citibuilder 401(k) Plan for Puerto Rico have not made an 
election under section 1022(i)(2) of the Act, whereby such plan 
would be treated as a trust created and organized in the United 
States for purposes of tax qualification under section 401(a) of the 
U.S. Code, jurisdiction under Title II of the Act does not apply. 
Accordingly, the Applicant is not seeking any relief for the 
prohibitions, as set forth in Title II of the Act, for the 
acquisition of the Rights by the Citibuilder Plan.
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Section II: Conditions

    The relief provided in this exemption is conditioned upon adherence 
to the material facts and representations described herein and as set 
forth in the application file and upon compliance with the conditions, 
as set forth in this exemption.
    (a) The acquisition by each of the Plans of the Rights occurred or 
will occur in connection with the June 22, 2009 Offering made available 
by Citigroup on the same terms to all shareholders of the common stock 
of Citigroup (the Citigroup Stock), including the acquisition of the 
Rights at no cost to the Plans;
    (b) The acquisition of the Rights by the Participant Directed Plans 
on the Record Date resulted from an independent act of Citigroup as a 
corporate entity. The acquisition of the Citigroup Stock and the 
attached Rights by the Plans in the future will occur either at the 
direction of individual participants (in the case of the Participant 
Directed Plans), at the direction of an Independent Fiduciary (in the 
case of the Citigroup Pension Plan), or in connection with in-kind 
contributions to the Citigroup Pension Plan by Citigroup of Citigroup 
Stock and the attached Rights (a Stock/Right Contribution), in each 
case incidental to, and as a direct consequence of, the purchase or 
other acquisition of Citigroup Stock. All holders of Citigroup Stock, 
which include the Rights (other than an Acquiring Person, as defined in 
the Rights Plan), including the Plans, were, and will continue to be, 
treated in the same manner with respect to the acquisition of the 
Rights;
    (c) All shareholders of Citigroup Stock, including the Plans 
acquired, or will acquire, the same proportionate number of Rights 
based on the number of shares of Citigroup Stock held by such 
shareholders, including the Plans;
    (d) The acquisition of the Rights by the Participant Directed Plans 
was made, or will be made, pursuant to provisions of each such plan for 
individually-directed investment of participant accounts;
    (e) All decisions regarding the Rights that will be made by the 
Participant Directed Plans will be made in accordance with the 
provisions of such Participant Directed Plans for individually-directed 
investment of participant accounts by the individual participants whose 
accounts in each such Participant Directed Plan acquired the Rights in 
connection with the Offering, and if no instructions are received, the 
Rights will expire in accordance with the terms and conditions of the 
Rights Plan;
    (f) All decisions regarding the Citigroup Stock and the attached 
Rights will be made on behalf of the Citigroup Pension Plan by an 
Independent Fiduciary acting as an investment manager. Such Independent 
Fiduciary will have sole discretionary responsibility relating to the 
acquisition, holding, ongoing management and disposition of the 
Citigroup Stock and the attached Rights. The Independent Fiduciary will 
determine, before taking any action regarding the Citigroup Stock and 
the attached Rights, that each such action is in the interest of the 
Citigroup Pension Plan.
    (g) To the extent the Citigroup board of directors exercises its 
rights under the Offering to redeem the Rights at the redemption price 
set forth in the Offering, all shareholders of Citigroup

[[Page 9363]]

Stock will be treated the same, including the Plans; and
    (h) The acquisition of the Rights as a result of a Stock/Right 
Contribution by Citigroup to the Citigroup Pension Plan shall result 
from a determination by Citigroup as a corporate entity.
    (i) Neither the Participant Directed Plan participants nor the 
Citigroup Pension Plan will pay any fees or commissions in connection 
with the exercise of the Rights other than the aggregate Purchase Price 
with respect to the Rights then being exercised and an amount equal to 
any applicable transfer tax or other governmental charge.

Section III: Definition

    The term ``Independent Fiduciary'' means an investment manager, as 
described in section 3(38) of the Act, that is:
    (a) Independent of, and unrelated to, Citigroup Inc. and its 
affiliates (Citigroup), and
    (b) Appointed to act on behalf of the Citigroup Pension Plan for 
the purposes described in Section II.(f) above.
    For purposes of this exemption, a fiduciary will not be deemed to 
be independent of, and unrelated to, Citigroup if: (i) Such fiduciary 
directly or indirectly, controls, is controlled by, or is under common 
control with Citigroup; (ii) such fiduciary directly or indirectly 
receives any compensation or other consideration in connection with any 
transaction described in this exemption, except that it may receive 
compensation for acting as an independent fiduciary from Citigroup in 
connection with the transactions described herein, if the amount or 
payment of such compensation is not contingent upon, or in any way 
affected by such fiduciary's decision; and (iii) more than 5 percent of 
such fiduciary's annual gross revenue in its prior tax year will be 
paid by Citigroup in the fiduciary's current tax year.

DATES: Effective Date: This exemption is effective as of June 22, 2009, 
the date of the announcement of the Offering and will expire on June 
10, 2012.

Written Comments

    The Notice of Proposed Exemption, published in the October 6, 2010 
issue of the Federal Register (75 FR 61947), invited all interested 
persons to submit comments on the Proposed Exemption and/or to request 
that a public hearing be held. In response to the solicitation of 
comments from interested persons, the Department received a December 6, 
2010 comment letter on behalf of Citigroup (the Citigroup Comment) and 
comments from several other interested persons. None of the comments 
requested that a public hearing be held on the Proposed Exemption. The 
Citigroup Comment responded to the comments received from the other 
interested persons, provided further information on the exemption 
transactions and requested modification of the definition of 
Independent Fiduciary in the Proposed Exemption.
    The Citigroup Comment notes that several participants in the Plans 
provided comments to the Department and that two of these participants 
simply voiced a general objection to the Proposed Exemption, one 
without providing any rationale and the other appearing to question 
Citigroup's treatment of its employees generally. The Applicants stated 
that these comments are not relevant to whether the proposed exemption 
is in the interests of the Plans and their participants and 
beneficiaries and whether it should be granted. The Applicants believe 
that granting the proposed exemption is in the interests of the Plans 
and their participants and beneficiaries. The Applicants note that 
another participant objected on the basis that the participant believed 
that the Proposed Exemption was unclear as to its scope and purpose and 
that Citigroup Stock was an inappropriate investment for a pension 
fund. Two participants shared the sentiment that granting the exemption 
would represent a further loosening of regulatory restrictions. The 
last participant objected on the grounds that the Proposed Exemption 
would permit Citigroup to make future contributions to the Citigroup 
Pension Plan in Citigroup Stock rather than cash and believed that the 
Independent Fiduciaries should have the right to sell the shares of 
Citigroup Stock.
    The Applicants assert that the Proposed Exemption permits the Plans 
to acquire the Rights as opposed to the underlying Citigroup Stock and 
that the purpose of the Proposed Exemption is not to determine whether 
acquisition of Citigroup Stock (including an acquisition as a result of 
a contribution in-kind to one or more of the Plans by Citigroup) is in 
the interests of the Plans, nor is the purpose to authorize or approve 
any such acquisition of Citigroup Stock. The Applicants, in the 
Citigroup Comment state:

    While the Plans would not be permitted to acquire, hold or 
dispose of Citigroup Stock if the requested exemption were not 
granted, this is merely because the Rights, while they technically 
may be a separate `security' under Section 3(20) of ERISA, are not 
severable from Citigroup Stock until they become exercisable. The 
analysis as to whether the acquisition, holding or disposition of 
Citigroup Stock, as opposed to the Rights, is appropriate in any 
given circumstance would necessarily involve a separate analysis 
under ERISA and is not the subject of the proposed exemption. 
Rather, the purpose of the proposed exemption is to allow the Plans 
to acquire, hold and, if applicable, dispose of the Rights that are 
attached to the Citigroup Stock once the decision has already been 
made to acquire Citigroup Stock.

    The Department notes that, to the extent that the Citigroup Stock 
is not a qualifying employer security as defined in section 407(d)(5) 
of ERISA, an administrative exemption would be necessary for the 
acquisition and holding of such stock. Accordingly, the final exemption 
has been clarified to provide that the Independent Fiduciary of the 
Citigroup Pension Plan will have sole discretionary responsibility to 
determine whether the Citigroup Pension Plan should acquire Citigroup 
Stock and the attached Rights whether by purchase or contribution by 
Citigroup. As a result, the Department believes that the condition 
requiring the appointment of an independent fiduciary to represent the 
interests of the Citigroup Pension Plan with respect to the 
acquisition, holding and the exercise or other disposition of the 
Rights that are the subject of the exemption request should be 
clarified.
    The Department, however, is not making a determination as to 
whether the Citigroup Stock combined with the attached Rights is a 
qualifying employer security, as defined in section 407(d)(5) of ERISA. 
Since the Citigroup Stock, without the attached Rights, would be a 
qualifying employer security, the percentage limitations for qualifying 
employer securities, as set forth in sections 407(a) and 407(f) of 
ERISA (the Percentage Limitations), may still be applicable. In light 
of this uncertainty, the Applicants have agreed to abide by the 
Percentage Limitations.
    The Citigroup Comment asserts that the Proposed Exemption is in the 
interests of the Plans and their participants and beneficiaries because 
allowing the Plans to acquire the Rights will place the Plans and their 
participants and beneficiaries in the same position as other holders of 
Citigroup Stock with respect to the acquisition of the Rights and to 
prevent the possible dilution of the Plans' investments in Citigroup 
Stock. The Applicants note that Citigroup Stock itself is a qualifying 
employer security and that the acquisition, holding and disposition of 
Citigroup Stock in appropriate instances is contemplated by the 
statutory scheme of ERISA. The requirement to dispose of the Citigroup 
Stock on a retroactive basis would conflict with participants' rights 
under

[[Page 9364]]

the terms of the Participant Directed Plans during this period to hold 
Citigroup Stock. Additionally, if the Plans held Citigroup Stock but 
were not able to exercise the Rights in the event they became 
exercisable, the value of their shares would be diluted significantly, 
resulting in harm to the Plans.
    With respect to the participant's statement that the scope and 
purpose of the Proposed Exemption was unclear, the Applicants note that 
the Proposed Exemption relates to a complicated tax preservation 
vehicle and a technical provision of ERISA. The Applicants, however, 
believe that the Proposed Exemption published by the Department, as 
well as the Citigroup Comment, provide a clear explanation of why the 
Proposed Exemption is in the interests of the Plans and their 
participants and beneficiaries.
    The Citigroup Comment notes that, under the definition of an 
``Independent Fiduciary'' in the Proposed Exemption, the Independent 
Fiduciary's compensation cannot be affected in any way by any decision 
it makes in connection with the Rights. The Applicants state that 
typically an Independent Fiduciary's compensation is a fixed percentage 
(or otherwise a function) of the value of the Citigroup Pension Plan's 
assets under its management. In the unlikely event that the Rights Plan 
is triggered and the Rights become exercisable, the Applicants believe 
that the Independent Fiduciary's compensation would be affected by the 
Independent Fiduciary's decision in connection with the exercise of the 
Rights. By way of example, if the Independent Fiduciary decided not to 
exercise the Rights and other stockholders (as would be expected to 
avoid dilution of their own stock) did, the value of the Citigroup 
Stock that the Citigroup Pension Plan holds would be significantly 
diluted and, thus, the value of the assets managed by the Independent 
Fiduciary would decrease, resulting in a lower management fee than if 
it elected to exercise the Rights.
    Although the Independent Fiduciary's compensation would be affected 
by its decision regarding the Rights, the Applicants note that the 
Independent Fiduciary's discretion is quite limited in these 
circumstances. First, any trigger of the Rights Plan would be a result 
of the actions of a party unrelated to the Independent Fiduciary. 
Second, given that any holder of Citigroup Stock that does not exercise 
the Rights would suffer significant dilution, it is difficult for the 
Applicant to imagine a situation in which an Independent Fiduciary, 
which is bound by fiduciary obligations to the Citigroup Pension Plan, 
would elect not to exercise the Rights and allow the Citigroup Pension 
Plan to suffer harm in the form of significant dilution of its interest 
in Citigroup Stock and, therefore, a significant reduction in the value 
of that interest. Thus, the Applicants believe that the fact that the 
Independent Fiduciary's compensation may be affected by its decision to 
exercise the Rights does not create a conflict of interest and is fully 
consistent with the interests of the Citigroup Pension Plan and its 
participants and beneficiaries. The Independent Fiduciary's options 
would be extremely limited and, in any case, its interests would be 
fully aligned with those of the Citigroup Pension Plan. The Applicants 
request the Department to modify the definition of Independent 
Fiduciary accordingly.
    The Department does not believe that any modification to this 
definition is necessary since the language of the definition does not 
preclude an Independent Fiduciary from receiving compensation that is a 
fixed percentage (or otherwise a function) of the value of the 
Citigroup Pension Plan's assets under its management. The language in 
section III that concerns compensation of the Independent Fiduciary was 
designed to preclude third party contingency payments to the 
Independent Fiduciary that are dependent on the Independent Fiduciary's 
decisions during the management of the plan assets. The language does 
not preclude the Independent Fiduciary from receiving ongoing 
management fees which are determined as a percentage of the value of 
the Citigroup Pension Plan's assets under its management. Rather, the 
provision expresses the Department's concern with additional payments 
that could influence or have an impact on the decisions of the 
Independent Fiduciary. Accordingly, the Department has not made the 
Applicant's requested change to the definition of Independent Fiduciary 
contained in section III of the Notice.
    The Department has given full consideration to the entire record, 
including the comments received in response to the Proposed Exemption, 
and has determined to grant the exemption.
    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 that was published on October 6, 2010 
in the Federal Register at 75 FR 61947.
    For Further Information Contact: Brian Shiker of the Department, 
telephone (202) 693-8540. (This is not a toll-free number.)

TD Ameritrade, Inc. (TD Ameritrade), Located in Omaha, NE

[Prohibited Transaction Exemption 2011-05; Exemption Application No. D-
11592]

Exemption

Section I. Sales of Auction Rate Securities From Plans to TD 
Ameritrade: 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 
July 20, 2009, to the sale by a Plan (as defined in Section V(e)) of an 
Auction Rate Security (as defined in Section V(c)) to TD Ameritrade, 
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.\4\
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    \4\ 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.
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Section II. Conditions Applicable to Transactions Described in Section 
I

    (a) The Plan acquired the Auction Rate Security in connection with 
brokerage services provided by TD Ameritrade to the Plan;
    (b) The last auction for the Auction Rate Security was 
unsuccessful;
    (c) The Unrelated Sale is made pursuant to a written offer by TD 
Ameritrade (the Unrelated Offer) containing all of the material terms 
of the Unrelated Sale, including, but not limited to: (1) The identity 
and par value of the Auction Rate Security; (2) the interest or 
dividend amounts that are due with respect to the Auction Rate 
Security; and (3) the most recent information for the Auction Rate 
Security (if reliable information is available).
    (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;

[[Page 9365]]

    (g) The decision to accept the Unrelated 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 TD 
Ameritrade.\5\
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    \5\ 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 TD Ameritrade 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 TD Ameritrade of all relevant information.
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    (h) Neither TD Ameritrade 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 Unrelated 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) TD Ameritrade 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 TD Ameritrade 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 TD Ameritrade 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; or
    (C) Any employer of participants and beneficiaries and any employee 
organization whose members are covered by a Plan that engages in the 
Unrelated Sale, or any authorized employee or representative of these 
entities;
    (2) None of the persons described above in paragraphs (l)(1)(B)-(C) 
shall be authorized to examine trade secrets of TD Ameritrade, or 
commercial or financial information which is privileged or 
confidential; and
    (3) Should TD Ameritrade refuse to disclose information on the 
basis that such information is exempt from disclosure, TD Ameritrade 
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 TD 
Ameritrade: 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 July 
20, 2009, to the sale by a Plan of an Auction Rate Security to TD 
Ameritrade, 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 (the Purchase Offer) are 
consistent with the requirements set forth in the Settlement Agreement;
    (b) The Purchase 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 TD Ameritrade; the number of shares and par value of the 
Auction Rate Securities; the interest or dividend amounts that are due 
with respect to the Auction Rate Securities; purchase dates for the 
Auction Rate Securities; and (if reliable information is available) the 
most recent rate information for the Auction Rate Securities;
    (2) The background of the Purchase Offer;
    (3) That neither the tender of Auction Rate Securities nor the 
purchase of any Auction Rate Securities pursuant to the Purchase Offer 
will constitute a waiver of any claim of the tendering Plan;
    (4) The methods and timing by which Plans may accept the Purchase 
Offer;
    (5) The purchase dates, or the manner of determining the purchase 
dates, for Auction Rate Securities tendered pursuant to the Purchase 
Offer;
    (6) The timing for acceptance by TD Ameritrade of tendered Auction 
Rate Securities;
    (7) The timing of payment for Auction Rate Securities accepted by 
TD Ameritrade for payment;
    (8) The methods and timing by which a Plan may elect to withdraw 
tendered Auction Rate Securities from the Purchase Offer;
    (9) The expiration date of the Purchase Offer;
    (10) The fact that TD Ameritrade may make purchases of Auction Rate 
Securities outside of the Purchase Offer following the termination or 
expiration of the Purchase Offer and may otherwise buy, sell, hold or 
seek to restructure, redeem or otherwise dispose of the Auction Rate 
Securities;
    (11) A description of the risk factors relating to the Purchase 
Offer as TD Ameritrade deems appropriate;
    (12) How to obtain additional information concerning the Purchase 
Offer; and
    (13) The manner in which information concerning material amendments 
or changes to the Purchase 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 the conditions of Section II have been met.

Section V. Definitions

    For purposes of this proposed exemption:
    (a) The term ``affiliate'' means any person directly or indirectly, 
through one or more intermediaries, controlling, controlled by, or 
under common control with such other person;
    (b) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual;
    (c) The term ``Auction Rate Security'' means a security: (1) That 
is either a debt instrument (generally with a long-term nominal 
maturity) or preferred

[[Page 9366]]

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 TD Ameritrade if the person is 
(1) not TD Ameritrade 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 TD Ameritrade and a U.S. state or federal authority that 
provides for the purchase of an Auction Rate Security by TD Ameritrade 
from a Plan.
    Effective Date: This exemption is effective as of July 20, 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 December 16, 2009 at 75 
FR 78768.
    For Further Information Contact: Ms. Anna Mpras Vaughan of the 
Department, telephone (202) 693-8565. (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 14th day of February, 2011.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2011-3589 Filed 2-16-11; 8:45 am]
BILLING CODE 4510-29-P