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EBSA Notices

Exemptions From Certain Prohibited Transaction Restrictions   [3/30/2012]
[PDF]
Federal Register, Volume 77 Issue 62 (Friday, March 30, 2012)
[Federal Register Volume 77, Number 62 (Friday, March 30, 2012)]
[Notices]
[Pages 19340-19345]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7705]


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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 Grants: D-11628, Aztec Well 
Servicing Company & Related Companies Medical Plan Trust Fund (the 
Plan), 2012-04; D-11637, HSBC-North America (U.S.) Tax Reduction 
Investment Plan (the Plan), 2012-05; D-11662, Retirement Program for 
Employees of EnPro Industries (the Plan), 2012-06; D-11669, Genzyme 
Corporation 401(k) Plan and Its Successor Plans (together, the Plan or 
the Applicant), 2012-07; and D-11680, Citigroup Inc. (Citigroup or the 
Applicant), 2012-08.

SUPPLEMENTARY INFORMATION: A notice was published in the Federal 
Register of the pendency before the Department of a proposal to grant 
such exemptions. The notice set forth summaries of facts and 
representations contained in the applications for exemption and 
referred interested persons to the applications for a complete 
statement of the facts and representations. The applications have been 
available for public inspection at the Department in Washington, DC The 
notice also invited interested persons to submit comments on the 
requested exemptions 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 applicants have represented 
that they have 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 exemptions.
    The notice of proposed exemption was issued and the exemptions are 
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 (76 FR 66637, 66644, October 27, 2011) \1\ and based 
upon the entire record, the Department makes the following findings:
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    \1\ The Department has considered exemption applications 
received prior to December 27, 2011 under the exemption procedures 
set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 
10, 1990).
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    (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.

Aztec Well Servicing Company & Related Companies Medical Plan Trust 
Fund (the Plan) Located in Aztec, New Mexico

[Prohibited Transaction Exemption 2012-04; Exemption Application No. D-
11628]

Exemption

Section I
    The restrictions of sections 406(a)(1)(A), (C) and (D), 406(b)(1), 
and 406(b)(2) of the Act shall not apply to the payment by the Plan to 
Basin Occupational & Urgent Care, LLC (BOUC), a party in interest with 
respect to the Plan, for the on-site provision to the Plan of urgent 
medical care and wellness services by a nurse-practitioner and a 
wellness coordinator employed by BOUC, provided that the following 
conditions are satisfied:
    (a) An independent, qualified fiduciary (I/F), with expertise in 
plans providing health and welfare benefits under the Act and the 
fiduciary obligations thereunder, acting on behalf of the Plan, 
determines prior to entering into the transaction that the transaction 
is feasible, in the interest of, and protective of the Plan and the 
participants and beneficiaries of the Plan;
    (b) Before the Plan enters into the proposed transaction, the I/F 
reviews the transaction, ensures that the terms of

[[Page 19341]]

the transaction are at least as favorable to the Plan as an arm's 
length transaction with an unrelated party, and determines whether or 
not to approve the transaction, in accordance with the fiduciary 
provisions of the Act;
    (c) The I/F monitors compliance with the terms and conditions of 
this exemption, as described herein, and ensures that such terms and 
conditions are at all times satisfied;
    (d) The I/F monitors compliance with the terms of the written 
license agreement (the License) between the Plan and Aztec Well 
Servicing Company, and takes any and all steps necessary to ensure that 
the Plan is protected, including, but not limited to, exercising its 
authority to terminate the License on 10 days' written notice; and
    (e) The subject transaction is, in fact, on terms and at all times 
remains on terms that are at least as favorable to the Plan as those 
that would have been negotiated under similar circumstances at arm's-
length with an unrelated third party.
Section II
    The restrictions of sections 406(a)(1)(A), (C) and (D), 406(b)(1), 
and 406(b)(2) of the Act shall not apply, effective July 1, 2010, to: 
(1) The payment by the Plan's participants to BOUC for medical services 
provided as a result of the inclusion of BOUC's clinic, located in 
Farmington, New Mexico, as a network provider in the BlueCross 
BlueShield of New Mexico (BCBSNM) Network of Health Care Providers; and 
(2) the payment by the Plan to BCBSNM of the difference between BOUC's 
fee and the participant's co-pay, which difference is then transmitted 
by BCBSNM to BOUC, provided that the following conditions are 
satisfied:
    (a) The terms of the medical services provided by BOUC to Plan 
participants are at least as favorable to the participants as those 
they could obtain in similar transactions with an unrelated party;
    (b) The Plan participants will have access to all of the providers 
in BCBSNM's network and will be free to choose whether or not to use 
BOUC's clinic;
    (c) At least 99% of the providers participating in the BCBSNM are 
unrelated to the companies whose employees participate in the Plan, or 
any other party in interest with respect to the Plan;
    (d) BOUC will be treated no more favorably than any other provider 
participating in the BCBSNM; and
    (e) The transactions are not part of an agreement, arrangement or 
understanding designed to benefit BOUC or any other party in interest 
with respect to the Plan.
    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 13, 2011 at 76 
FR 77610.

DATES: Effective Date: With respect to the transactions described in 
Section II, this exemption is effective July 1, 2010.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
telephone (202) 693-8546. (This is not a toll-free number.)

HSBC-North America (U.S.) Tax Reduction Investment Plan (the Plan) 
Located in Mettawa, Illinois

[Exemption Application No. D-11637 Prohibited Transaction Exemption 
2012-05]

Exemption

    Effective March 2, 2009, the restrictions of sections 406(a)(1)(A) 
and 406(a)(1)(E), 406(a)(2), 406(b)(1), 406(b)(2), and 407(a)(1)(A) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A) and 4975(c)(1)(E) 
of the Code,\2\ shall not apply:
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    \2\ 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.
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    (1) To the acquisition of certain rights (the ADS Rights) by the 
Plan in connection with an offering (the Offering) of shares of stock 
(the Stock) in HSBC Holdings plc (Holdings) by Holdings, a party in 
interest with respect to the Plan,
    (2) To the holding of the ADS Rights received by the Plan during 
the subscription period of the Offering; provided that the conditions 
as set forth in Section II of this exemption were satisfied;
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.
    (1) The receipt by the Plan of the ADS Rights occurred in 
connection with the Offering made available by Holdings on the same 
terms to all shareholders, such as the Plan, of American Depository 
Shares \3\ (the HSBC ADS) which represent the Stock of Holdings;
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    \3\ American Depository Shares permit investment in foreign 
securities to trade on markets in the United States without many of 
the complications that would otherwise arise from such cross-border 
and cross-currency transactions.
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    (2) The acquisition of the ADS Rights by the Plan resulted from an 
independent act of Holdings, as a corporate entity, and all holders of 
the ADS Rights, including the Plan, were treated in the same manner 
with respect to the acquisition of such rights;
    (3) All holders of the ADS Rights, such as the Plan, received the 
same proportionate number of such rights based on the number of HSBC 
ADS held; and
    (4) All decisions regarding the ADS Rights made by the Plan were 
made by an independent, qualified fiduciary which:
    (a) Conducted a due diligence review of the Offering;
    (b) Determined whether or not to direct the Plan to vote in favor 
of the Offering; and
    (c) Evaluated a prudent strategy for disposition of the ADS Rights 
under the Offering that were allocated to the Plan.
    Effective Date: This exemption is effective, on March 2, 2009, the 
date of the announcement of the Offering.

Written Comments

    In the Notice of Proposed Exemption (the Notice), the Department 
invited all interested persons to submit written comments and requests 
for a hearing on the proposed exemption within 45 days of the date of 
the publication of the Notice in the Federal Register on November 14, 
2011.\4\ All comments and requests for hearing were due by December 29, 
2011.
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    \4\ 76 FR 70495, November 14, 2011.
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    During the comment period the Department received no requests for 
hearing. However, the Department did receive a comment letter, dated 
December 29, 2011, from the applicants (the Applicants). In the comment 
letter the Applicants requested one (1) amendment to the language of 
Section I(1), as set forth on page 70496 in the Notice. In this regard, 
the reference to the name, ``HSBC Holding, plc,'' should be changed to 
``HSBC Holdings plc.'' The Department concurs with the Applicants' 
requested amendment to Section I(1).
    In addition the Applicants requested three (3) clarifications to 
the Summary of Facts and Representations (the SFR) of the Notice. The 
Applicants' requested clarifications to the SFR are discussed, below, 
in an order that corresponds to the appearance of the relevant language 
in the Notice.
    1. In paragraph 4, as set forth in the SFR, on page 70497 of the 
Notice, the Applicants clarify that HSBC North

[[Page 19342]]

America Holdings, Inc. and its subsidiaries comprise all of the 
business interests of HSBC Holdings plc in the United States. The 
Department concurs with the Applicants' requested clarification.
    2. In paragraph 16, as set forth in the SFR, on page 70499 and 
70501 of the Notice, the Applicants clarify that further examination of 
the fees under each of the options available to the Plan has shown that 
a stamp tax (a United Kingdom Stamp Duty Reserve Tax) would not have 
been incurred under Option (C). The Plan would only have paid a stamp 
tax under Option (A). The Department concurs with the Applicants' 
requested clarification.
    3. In paragraph 19, as set forth in the SFR, on page 70502 of the 
Notice, the Applicants represent that the Offering included a default 
procedure to protect the interests of ADS Rights holders who did not 
take action with respect to the ADS Rights they received in the 
Offering. The Department concurs with the Applicants' requested 
clarification.
    After full consideration and review of the entire record, including 
the written comment letter filed by the Applicants, the Department has 
determined to grant the exemption, as amended and clarified above. 
Comments submitted by the Applicants to the Department in the comment 
letter have been included as part of the public record of the exemption 
application. The complete application file (D-11637), including all 
supplemental submissions received by the Department, is available for 
public inspection in the Public Documents Room of the Employee Benefits 
Security Administration, Room N-1513, U.S. Department of Labor, 200 
Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice published on November 14, 2011, at 76 FR 70495.

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

Retirement Program for Employees of EnPro Industries (Plan) Located in 
Charlotte, NC

[Prohibited Transaction Exemption 2012-06; Exemption Application No. D-
11662]

Exemption

    The restrictions of sections 406(a)(1)(A) and 406(b)(1) and (b)(2) 
of the Act and the sanctions resulting from the application of section 
4975(c)(1)(A) and (E) of the Code, shall not apply, effective July 15, 
2011, to the in kind contribution (the Contribution) to the Plan of a 
guaranteed investment contract (the Annuity), issued by the 
Metropolitan Life Insurance Company, an unrelated party, by EnPro 
Industries, Inc. (EnPro); provided that the following conditions were 
satisfied:
    (a) A qualified, independent fiduciary (the Independent Fiduciary), 
acting on behalf of the Plan, determined whether the Contribution was 
in the interests of the Plan and protective of the Plan's participants 
and beneficiaries;
    (b) The Independent Fiduciary reviewed, negotiated and approved the 
terms of the Contribution on behalf of the Plan in accordance with the 
fiduciary provisions of the Act;
    (c) A qualified, independent appraiser determined the fair market 
value of the Annuity prior to the Contribution, and it updated such 
valuation on the date of the Contribution;
    (d) The Annuity represented approximately 19% of the Plan's assets 
at the time of the Contribution;
    (e) The Plan incurred no fees, commissions, or other charges or 
expenses in connection with the Contribution;
    (f) The terms of the Contribution were no less favorable to the 
Plan than the terms negotiated at arm's length under similar 
circumstances between unrelated parties; and
    (g) EnPro amended the Investment Policy Statement for the Plan in 
conformity with the recommendations of the Independent Fiduciary prior 
to the Contribution.
    Effective Date: This exemption is effective as of July 15, 2011.

Written Comment

    In the Notice of Proposed Exemption (76 FR 77619, December 13, 
2011) (the Notice), the Department invited all interested persons to 
submit written comments and requests for a hearing on the Notice within 
forty (40) days of the date of the publication of such Notice in the 
Federal Register. All comments and requests for a hearing from 
interested persons were due by January 23, 2012.
    During the comment period, the Department did not receive any 
requests for a public hearing. However, the Department did receive one 
written comment from a Plan participant, who sought to clarify whether 
the Plan had sufficient funds to cover Plan benefit obligations due 
before the Annuity matured on December 31, 2014. In a telephone call to 
the participant, a Department representative explained that Paragraph 
20 of the Notice included a representation from the Independent 
Fiduciary, which had confirmed with the Plan's actuary that the Plan 
would be in a position to meet its benefit obligations from the date of 
the Contribution until the maturity date of the Annuity.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice published on December 13, 2011 at 76 FR 77619.

FOR FURTHER INFORMATION CONTACT: Mr. Anh-Viet Ly of the Department at 
(202) 693-8648. (This is not a toll-free number.)

Genzyme Corporation 401(k) Plan and Its Successor Plans (Together, the 
Plan or the Applicant) Located in Cambridge, MA

[Prohibited Transaction Exemption 2012-07; Exemption Application No. D-
11669]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) and 
section 407(a) 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,\5\ shall not apply, effective 
April 4, 2011, to (1) the acquisition by the Plan of contingent value 
rights (CVRs) as a result of the Plan's ownership of certain common 
stock (Genzyme Common Stock) in Genzyme Corporation (Genzyme), the Plan 
sponsor, in connection with (a) the purchase of shares (Shares) of 
Genzyme Common Stock pursuant to an exchange offer (the Exchange Offer) 
and a subsequent offer to the Exchange Offer (the Subsequent Exchange 
Offer) by GC Merger Corp. (the Purchaser), a wholly-owned subsidiary of 
sanofi-aventis (Sanofi), a party in interest with respect to the Plan, 
and (b) the ``short-form'' merger (the Merger) of the Purchaser into 
Genzyme (together, the Transactions); (2) the continued holding of CVRs 
by the Plan; and (3) the resale of the CVRs by the Plan to Sanofi, 
pursuant to the exercise of repurchase rights available under certain 
circumstances specified in the Contingent Value Rights Agreement (the 
CVR Agreement).
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    \5\ 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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    This exemption is subject to the following conditions:
    (a) Plan participants holding Genzyme Common Stock received one CVR 
for each Share on the effective date of the tender or cancellation of 
their Shares, in connection with the Transactions.
    (b) The acquisition of CVRs by the Plan occurred in connection with 
the Transactions on the same terms and in the same manner as the 
acquisition of

[[Page 19343]]

CVRs by all other holders of Genzyme Common Stock, other than Sanofi, 
the Purchaser, Genzyme and dissenting shareholders.
    (c) The Plan's acquisition of CVRs resulted either (1) from a 
decision by a participant or beneficiary to tender Shares allocated to 
his or her account or
    (2) Following a decision by a participant or beneficiary not to 
tender Shares by reason of the Merger.
    (d) The Plan did not pay any fees or commissions in connection with 
the acquisition of the CVRs, nor does it pay any fees or commissions in 
connection with the holding of CVRs or sale of CVRs to Sanofi pursuant 
to an exercise of Sanofi's repurchase right under the CVR Agreement.
    (e) Credit Suisse Securities (USA) LLC and Goldman Sachs & Co 
advised Genzyme that the consideration received by Genzyme 
shareholders, including Plan participants, in exchange for their Shares 
was ``fair,'' from a financial point of view.
    (f) The Plan does not acquire or hold CVRs other than those 
acquired in connection with the Transactions.
    (g) Plan participants have the same rights with respect to CVRs 
allocated to their accounts under the Plan (including with respect to 
any repurchase of CVRs by Sanofi) as unrelated parties have with 
respect to CVRs not held under the Plan, and they may direct the Plan's 
trustee (the Trustee) to sell CVRs allocated to their respective 
accounts at any time.
    (h) For so long as CVRs remain a permissible Plan investment, the 
retention or disposition by the Plan of CVRs allocated to a 
participant's or beneficiary's account is administered in accordance 
with the provisions of the Plan that are in effect for individually-
directed investment of participant accounts.
    Effective Date: This exemption is effective as of April 4, 2011. 
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 13, 2011, at 76 
FR 77612.

Extension of Comment Period

    The notice of proposed exemption (the Notice) invited all current 
participants and beneficiaries of the Plan (Interested Persons) to 
submit comments or requests for a hearing to the Department by January 
27, 2012. The Applicant agreed to notify Interested Persons by first 
class mail within 15 days of the date that the Notice appeared in the 
Federal Register. The Applicant confirmed that Interested Persons were 
notified via first class mail on December 28, 2011, less than 30 days 
prior to the final day of the comment period. To ensure that Interested 
Persons would have at least 30 days to provide comments to the 
Department, the Applicant agreed to extend the comment period to 
January 31, 2012. Accordingly, the Applicant sent a supplementary 
letter announcing the extension of the comment period to Interested 
Persons via first class mail on January 19, 2012.

Written Comments

    During the comment period, the Department received three written 
comments with respect to the Notice, and no requests for a public 
hearing. The first two comments stated matters that were not germane to 
the exemption request. The third comment and a supplemental response 
(together, the Comment Letter) were submitted by Genzyme, and are 
intended to (1) clarify that the exemption would apply to successor 
plans to the current Plan; (2) request changes to Conditions (d) and 
(g) of the Notice; and (3) correct or clarify minor errors and 
inconsistencies in the Notice. Genzyme's Comment Letter and the 
Department's responses are described below.
    1. Successor Plans. On page 77618 of the Summary of Facts and 
Representations (the Summary), Representation 17 states that if the 
exemption is granted, ``it would also apply to successor plans to the 
current Plan.''
    While the proposed extension of relief to successor plans is 
mentioned in the Summary, Genzyme notes that the text of the exemption 
at the beginning of the Notice does not make reference to ``successor 
plans.'' In order to avoid uncertainty in the future, Genzyme requests 
that the final text of the exemption reflect that any plan into which 
the Plan is merged or to which substantially all assets of the Plan are 
transferred will be entitled to rely on the exemption, to the same 
extent as the Plan would be entitled to rely on the exemption if no 
such merger or transfer had occurred.
    In response to this comment, the Department has revised the title 
of the final exemption to include the ``Genzyme Corporation 401(k) Plan 
and Its Successor Plans,'' in order to clarify that relief extends to 
such successor plan(s).
    2. Requested Changes to Conditions (d) and (g) of the Notice. 
Genzyme suggests that the Department consider revising Condition (d) of 
the Notice (on page 77613) to refer to ``fees or commissions in 
connection with the holding of CVRs or a sale of CVRs to Sanofi,'' 
rather than to ``fees or commissions in connection with the holding or 
sale of CVRs to Sanofi,'' as the condition currently reads. Genzyme 
states that this suggestion is offered not for the purpose of making 
any substantive change, but solely to enhance clarity.
    In response to this comment, the Department has revised Condition 
(d) of the final exemption slightly to clarify the meaning of this 
condition and its applicability to Sanofi. The Department also notes a 
corresponding modification to Representation 23(d) of the Summary, on 
page 77618.
    In addition, Condition (g) of the Notice requires that participants 
have the ability to direct the Trustee ``to sell CVRs allocated to 
their respective accounts at any time'' (emphasis added). Genzyme notes 
that participants may, at certain times, be subject to limitations on 
their ability to direct the Trustee with regard to the investment of 
their accounts (e.g., during a ``blackout period'' within the meaning 
of section 101(i) of the Act, or when applicable insider trading 
policies would prevent a participant from selling securities). In order 
to avoid any implication that the language in Condition (g) would fail 
to be satisfied in such circumstances, Genzyme suggests that the 
wording be revised to require that participants have the ability to 
direct the Trustee ``to sell CVRs allocated to their respective 
accounts at any time, subject to any limitations that may be imposed by 
applicable law'' (emphasis added). Genzyme explains that this 
suggestion was made with the thought that there might be periods during 
which certain participants would be prohibited by federal securities 
laws from transacting in securities as to which they might have 
``insider'' knowledge. Genzyme also emphasizes that there is no 
intention of imposing restrictions on the ability of participants to 
give investment directions with respect to CVRs held in their accounts 
under the Plan, except as otherwise required by applicable law.
    In response to this comment, the Department has decided not to make 
the suggested revision to the Notice since it is inherently understood 
that the condition might be subject to limitations imposed by 
applicable law (e.g., federal securities laws). However, the Department 
notes Genzyme's clarification to Condition (g) of the Notice and to 
Representation 23(g) of the Summary.
    3. Minor Errors and Inconsistencies in the Notice. Genzyme requests 
that the two references to the merger of Sanofi into Genzyme (located 
in clause (1)(b) of

[[Page 19344]]

the operative language on page 77612 of the Notice and in 
Representation 17 of the Summary on page 77618) be revised to refer, 
instead, to the merger of the Purchaser into Genzyme.
    In addition, Genzyme states that when the Purchaser was merged into 
Genzyme, the Purchaser ceased to exist as a separate entity. Genzyme 
notes that the statements regarding the Purchaser in Representation 4 
of the Summary (on page 77613) were made in the present tense while the 
Purchaser continued to exist as a separate entity. Given the passage of 
time and the fact that the Purchaser has merged into Genzyme, Genzyme 
states that it would be appropriate to change this paragraph to the 
past tense, as follows:

    The Purchaser, a Massachusetts corporation, was incorporated on 
July 29, 2010, as a direct wholly-owned subsidiary of Sanofi. The 
Purchaser was organized by Sanofi to acquire Genzyme and did not 
conduct any unrelated activities between the time of its 
organization and the time of its merger into Genzyme. All of the 
outstanding shares of the capital stock of the Purchaser were owned 
by Sanofi.

    Further, Genzyme states that on page 77614 of the Summary, 
Representation 5 contains the following representation: ``All Shares 
not tendered were converted into the right to receive the same Merger 
Consideration.'' Consistent with the preceding sentence and other 
information set forth in Representation 5, Genzyme states that the 
representation should instead read: ``All Shares not tendered were 
converted into the right to receive the same Merger Consideration, 
except for Shares held by Sanofi, Genzyme and their subsidiaries, and 
Shares held by shareholders who properly perfected appraisal rights 
under Massachusetts law.''
    Representation 5 of the Summary also states that the Merger 
Consideration \6\ in connection with the Exchange Offer and the 
Subsequent. Exchange Offer was paid on April 4, 2011. However, Genzyme 
notes that, as is correctly stated in Representation 7 of the Summary 
(on page 77614), the Merger Consideration paid in connection with the 
Subsequent Exchange Offer was actually paid on April 7, 2011.
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    \6\ The Merger Consideration consisted of (a) $74 in cash, less 
any applicable withholding for taxes and without interest, per 
Share, and (b) one CVR per Share.
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    Finally, Genzyme states that on page 77615 of the Summary, 
Representation 11 contains a typographical error. Genzyme explains that 
the phrase ``subject to certain conditions and expectations'' should 
read, instead, ``subject to certain conditions and exceptions.''
    In response to the foregoing comments, the Department notes the 
clarifications and updates to the Notice.
    Accordingly, after giving full consideration to the entire record, 
including the Comment Letter, the Department has determined to grant 
the exemption as modified herein.
    For further information regarding the comment and other matters 
discussed herein, Interested Persons are encouraged to obtain copies of 
the exemption application file (Exemption Application No. D-11669) the 
Department is maintaining in this case. The complete application file, 
as well as all supplemental submissions received by the Department, are 
made available for public inspection in the Public Disclosure Room of 
the Employee Benefits Security Administration, Room N-1513, U.S. 
Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Anna Mpras Vaughan of the Department, 
telephone (202) 693-8565. (This is not a toll-free number.)

Citigroup Inc. (Citigroup or the Applicant) Located in New York, New 
York

[Prohibited Transaction Exemption 2012-08; Exemption Application No. D-
11680]

Exemption

    Citigroup Inc. and its current and future affiliates (collectively, 
Citigroup) shall not be precluded, as of December 1, 2010, from 
functioning as a ``qualified professional asset manager'' (QPAM), 
pursuant to Prohibited Transaction Exemption 84-14 (PTE 84-14) (49 FR 
9494, March 13, 1984, as amended on August 23, 2005 at 70 FR 49305), 
solely because of a failure to satisfy Section I(g) of PTE 84-14, as a 
result of Citigroup's affiliation with Citibank Belgium SA (CBB), an 
entity convicted of three (3) counts of criminal activity in Belgium, 
provided that the following conditions are met \7\:
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    \7\ For purposes of this exemption, references to section 406 of 
ERISA should be read to refer to the corresponding provisions of 
section 4975 of the Code as well.
---------------------------------------------------------------------------

    (a) The affiliate convicted under Belgium law does not provide 
fiduciary or QPAM services to employee benefit plans (plans) or 
otherwise exercise discretionary control over plan assets;
    (b) ERISA-covered assets are not involved in the conduct that is 
the subject of the Belgian affiliate's conviction(s);
    (c) Citigroup imposes its internal procedures, controls, and 
protocols on the Belgian affiliate to reduce the likelihood of any 
recurrence of the conduct that is the subject of the conviction(s), to 
the extent permitted by local law;
    (d) This exemption is not applicable if Citigroup, or any affiliate 
(other than branches or affiliates found liable for similar crimes in 
Belgium in connection with the sale of certain structured notes (the 
Lehman Notes) is convicted of any of the crimes described in Section 
I(g) of PTE 84-14;
    (e) Citigroup maintains records that demonstrate that the 
conditions of the exemption have been and continue to be met for at 
least six years following the conviction of an affiliate under Belgium 
law;
    (f) Citigroup has adopted procedures to afford protection of the 
interests of participants and beneficiaries of employee benefit plans; 
and
    (g) Citigroup complies with the other conditions of PTE 84-14, as 
amended.
    Effective Date: This exemption is effective as of December 1, 2010.
    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 Proposal) published on January 
20, 2012 at 77 FR 3061.

Written Comments

    The Department received one written comment letter with respect to 
the Proposal. The letter was submitted by the Applicant in order to 
make some minor corrections and clarifications with respect to the 
Proposal.
    The Applicant provided updated information that CBB was only 
convicted on three counts of criminal activity in Belgium.\8\ The 
Department has made a change in the first paragraph of this exemption 
in response to this comment.
---------------------------------------------------------------------------

    \8\ CBB and three of its employees as of August 14, 2009 had 
been criminally charged with six counts of criminal activity. The 
three employees were each convicted on one count of criminal 
activity in Belgium.
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    The Applicant requested that the Department make certain changes to 
Conditions (b) and (c) of the Proposal. The Applicant requested that, 
for sake of clarity, the word ``Belgian'' be inserted before 
``affiliate'' in both Conditions (b) and (c). In addition, because the 
convictions are under appeal, the Applicant requested that the word 
``conduct'' be substituted for ``misconduct'' in Condition (b), and the 
phrase ``the conduct that is the subject of the convictions'' be 
substituted for the word ``misconduct'' in Condition (c). The 
Department has made these requested changes. The Applicant also

[[Page 19345]]

requested that the Department make corresponding changes to the Summary 
of Facts and Representations (the Summary) section of the Proposal. The 
Department notes these revisions to Representation 8 of the Summary.
    Condition (e) of the Proposal requires Citigroup to comply with 
certain recordkeeping requirements. However, Citigroup stated in its 
comment letter that only Condition (c) of the Proposal would lend 
itself to the maintenance of records regarding compliance with the 
exemption. Accordingly, Citigroup has requested that Condition (e) be 
revised to limit the recordkeeping requirement to ``the conditions of 
subsection (c) of the exemption.'' The Department does not agree with 
the Applicant on this point because recordkeeping would apply to the 
continuing validity of the exemption as a whole. Accordingly, the 
Department has not changed the condition.
    Condition (f) of the Proposal currently provides that ``Citigroup 
has adopted procedures to afford ample protection of the interests of 
the participants and beneficiaries of employee benefit plans.'' The 
Applicant stated that it is unsure what the word ``ample'' is intended 
to mean and requested in its comment letter that the Department delete 
this word from Condition (f). The Department has done so. The Applicant 
also requested that the deletion of the word ``ample'' be made from 
Representation 8 of the Summary. The Department so notes.
    In its comment letter, the Applicant had other requested changes to 
the Summary. The Applicant noted that the last sentence of 
Representation 2 indicates that CBB has no ERISA plan clients and is 
not expected to have any such clients in the future. According to the 
Applicant, although CBB does not act as a fiduciary to any ERISA plan, 
Citigroup cannot guarantee that an ERISA plan will never be a 
counterparty to any transaction entered into by CBB. As a result, the 
Applicant requested that the Department revise the last sentence of 
Representation 2 of the Proposal to state that ``* * *CBB is not 
expected to have any ERISA plan clients for whom it will perform any 
fiduciary or QPAM services or otherwise exercise discretionary control 
over plan assets in the future.'' In response, the Department notes 
this revision.
    The Applicant represents that after a further review of the facts 
and circumstances surrounding the criminal convictions of CBB, it has 
determined that: (a) prior to his termination of employment, Jose de 
Penaranda de Franchimont was the Chief Country Officer and Chief 
Executive Officer of CBB, rather than its Chief Compliance Officer; and 
(b) the convictions were related to the use of fact sheets, in addition 
to marketing letters and leaflets, as well as a prospectus. The 
Applicant has therefore requested in its comment letter that Footnote 
57 to Representation 3 be revised to replace Mr. de Penaranda de 
Franchimont's title as ``Chief Country Officer and Chief Executive 
Officer.'' The Applicant also notes the correct spelling of Mr. de 
Penaranda de Franchimont's name. In addition, Citigroup has requested 
that the third sentence of Representation 3 be revised to refer to the 
``use of certain marketing letters, leaflets and fact sheets, as well 
as a prospectus.'' The Department notes these revisions.
    Representation 5 addresses the reasons that the Proposal would be 
protective of the rights of participants and beneficiaries of affected 
plans. For purposes of clarity, the Applicant requested in its comment 
letter that the Department revise subsection (d) of Representation 5 to 
read: ``A consistent framework and requirements were developed through 
the policy for mandatory sales force training on products, as well as 
Citigroup policies.'' The Department notes this revision.
    Representation 7 addresses Citigroup's compliance policies and 
procedures and notes that Mr. Staroukine, CBB's Belgium Country 
Counsel, has no involvement with ERISA plans and will not have any 
future dealings with ERISA plans while employed by Citigroup, CBB, or 
an affiliate. The Applicant stated in its comment letter that although 
it is correct that Mr. Staroukine does not act as a fiduciary to any 
ERISA plan, CBB cannot ensure that he will never have any involvement 
in any transaction in which an ERISA plan may be a counterparty. The 
Department so notes. In addition, Citigroup contended in its comment 
letter that Mr. Staroukine should not be prohibited from ever acting as 
a fiduciary to an ERISA plan in the event his conviction is overturned 
on appeal. Therefore the Applicant requested that the last sentence of 
Representation 7 of the Proposal be revised to read: ``The Applicant 
further represents that Mr. Staroukine, although currently serving as 
CBB's Belgium Country Counsel, does not act as a fiduciary to any ERISA 
plan, and will not act as a fiduciary to any ERISA plan while he is 
employed by the Applicant, CBB or an affiliate, unless the convictions 
are overturned on appeal. The Department notes this revision.
    The Department has considered the entire record, including the 
comment letter filed by the Applicant, and has determined to grant the 
exemption as proposed, subject to the revisions described herein.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
telephone (202) 693-8546. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemption does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) This exemption is supplemental to and not in derogation of, any 
other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describe all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 27th day of March 2012.
Lyssa E. Hall,
Acting Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2012-7705 Filed 3-29-12; 8:45 am]
BILLING CODE 4510-29-P