skip to page content
Secretary of Labor Hilda L. Solis
     DOL Home > Federal Register > Notices > EBSA
EBSA Notices

Proposed Exemptions From Certain Prohibited Transaction Restrictions   [7/22/2013]
[PDF]
Federal Register, Volume 78 Issue 140 (Monday, July 22, 2013)
[Federal Register Volume 78, Number 140 (Monday, July 22, 2013)]
[Notices]
[Pages 43930-43941]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-17498]


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

DEPARTMENT OF LABOR

Employee Benefits Security Administration


Proposed Exemptions From Certain Prohibited Transaction 
Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of Proposed Exemptions.

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

SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions from 
certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (ERISA or the Act) and/or the 
Internal Revenue Code of 1986 (the Code). This notice includes the 
following proposed exemptions: D-11506, UBS AG and Its Current and 
Future Affiliates and Subsidiaries (collectively, UBS or the 
Applicant); D-11742 thru D-11746, The ABB Inc. Cash Balance Pension 
Plan (the Cash Balance Plan); the Cash Balance Pension Plan for Certain 
Represented Employees of ABB Inc. (the Union Cash Balance Plan); the 
Pension Plan for Employees of the Process Analytics Division of ABB 
Inc. Represented by the Laborer's International Union of North America 
(AFL-CIO), Local No. 1304 (the Process Analytics Plan); the Pension 
Plan of Fischer & Porter Company (the Fisher & Porter Plan); and the 
ABB Inc. Pension Plan (UE 625 & 626) (the UE 625 & 626 Plan) (each a 
Plan, and collectively, the Plans); and D-11767, D-11768 and D-11769, 
American International Group, Inc. Incentive Savings Plan (the Savings 
Plan), American General Agents' & Managers' Thrift Plan (the Thrift 
Plan), and Chartis Insurance Company--Puerto Rico Capital Growth Plan 
(the Chartis Plan)(collectively, the Plans).

DATES: All interested persons are invited to submit written comments or 
requests for a hearing on the pending exemptions, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice.

ADDRESSES: Comments and requests for a hearing should state: (1) The 
name, address, and telephone number of the person making the comment or 
request, and (2) the nature of the person's interest in the exemption 
and the manner in which the person would be adversely affected by the 
exemption. A request for a hearing must also state the issues to be 
addressed and include a general description of the evidence to be 
presented at the hearing.
    All written comments and requests for a hearing (at least three 
copies) should be sent to the Employee Benefits Security Administration 
(EBSA), Office of Exemption Determinations, Room N-5700, U.S. 
Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210. 
Attention: Application No., stated in each Notice of Proposed 
Exemption. Interested persons are also invited to submit comments and/
or hearing requests to EBSA via email or FAX. Any such comments or 
requests should be sent either by email to: moffitt.betty@dol.gov, or 
by FAX to (202) 219-0204 by the end of the scheduled comment period. 
The applications for exemption and the comments received will be 
available for public inspection in the Public Documents Room of the 
Employee Benefits Security Administration, U.S. Department of Labor, 
Room N-1513, 200 Constitution Avenue NW., Washington, DC 20210.

    Warning: All comments will be made available to the public. Do 
not include any personally identifiable information (such as Social 
Security number, name, address, or other contact information) or 
confidential business information that you do not want publicly 
disclosed. All comments may be posted on the Internet and can be 
retrieved by most Internet search engines.


SUPPLEMENTARY INFORMATION: 

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).
    The proposed exemptions were requested in applications filed 
pursuant to section 408(a) of the Act and/or section 4975(c)(2) of the 
Code, and in accordance with procedures set forth in 29 CFR Part 2570, 
Subpart B (76 FR 66637, 66644, October 27, 2011).\1\ 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 requested to the Secretary of 
Labor. Therefore, these notices of proposed exemption are issued solely 
by the Department.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

UBS AG and Its Current and Future Affiliates and Subsidiaries 
(Collectively, UBS or the Applicant) Located in New York, New York

[Application No. D-11506]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974, as amended (ERISA or the Act) and section 4975(c)(2) of 
the Internal Revenue Code of 1986, as amended (the Code), and in 
accordance with the procedures set forth in 29 CFR Part 2570, Subpart B 
(76 FR 66637, 66644, October 27, 2011).\2\
---------------------------------------------------------------------------

    \2\ For purposes of this proposed exemption, references to 
section 406 of ERISA should be read, unless otherwise specified, to 
refer to the corresponding provisions of section 4975 of the Code.

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

[[Page 43931]]

Section I. Sales of Auction Rate Securities From Plans to UBS: 
Unrelated to a Settlement Agreement
    If the proposed exemption is granted, the restrictions of section 
406(a)(1)(A) and (D) and section 406(b)(1) and (2) of the Act and the 
taxes imposed by section 4975 of the Code, by reason of section 
4975(c)(1)(A), (D), and (E) of the Code, shall not apply, effective 
February 1, 2008, to the sale by a Plan (as defined in section V(e)) of 
an Auction Rate Security (as defined in section V(c)) to UBS, 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.
Section II. Conditions Applicable to Transactions Described in Section 
I
    (a) The Plan acquired the Auction Rate Security in connection with 
brokerage or advisory services provided by UBS;
    (b) The last auction for the Auction Rate Security was 
unsuccessful;
    (c) Except in the case of a Plan sponsored by UBS for its own 
employees (a UBS Plan), the Unrelated Sale is made pursuant to a 
written offer by UBS (the Unrelated Offer) containing all of the 
material terms of the Unrelated Sale, including, but not limited to, 
the most recent rate information for the Auction Rate Security (if 
reliable information is available). Either the Unrelated Offer or other 
materials available to the Plan provide the identity and par value of 
the Auction Rate Security. Notwithstanding the foregoing, in the case 
of a pooled fund maintained or advised by UBS, this condition shall be 
deemed met to the extent each Plan invested in the pooled fund (other 
than a UBS Plan) receives written notice regarding the Unrelated Sale, 
where such notice contains the material terms of the Unrelated Sale 
(including, but not limited to, the material terms described in the 
preceding sentence);
    (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; \3\
---------------------------------------------------------------------------

    \3\ This proposed exemption does not address tax issues. The 
Department has been informed by the Internal Revenue Service and the 
Department of the Treasury that they are considering providing 
limited relief from the requirements of sections 72(t)(4), 
401(a)(9), and 4974 of the Code with respect to retirement plans 
that hold Auction Rate Securities. The Department has also been 
informed by the Internal Revenue Service that if Auction Rate 
Securities are purchased from a Plan in a transaction described in 
sections I and III at a price that exceeds the fair market value of 
those securities, then the excess value would be treated as a 
contribution for purposes of applying applicable contribution and 
deduction limits under sections 219, 404, 408, and 415 of the Code.
---------------------------------------------------------------------------

    (f) The Plan does not waive any rights or claims in connection with 
the Unrelated Sale;
    (g) The decision to accept the Unrelated Offer or retain the 
Auction Rate Security is made by a Plan fiduciary or Plan participant 
or beneficial owner of an individual retirement account (an IRA, as 
described in section V(e) below) who is independent (as defined in 
section V(d)) of UBS. Notwithstanding the foregoing: (1) In the case of 
an IRA, which is beneficially owned by an employee, officer, director 
or partner of UBS, or a relative of any such persons, the decision to 
accept the Unrelated Offer or retain the Auction Rate Security may be 
made by such employee, officer, director or partner; or (2) in the case 
of a UBS Plan or a pooled fund maintained or advised by UBS, the 
decision to accept the Unrelated Offer may be made by UBS after UBS has 
determined that such purchase is in the best interest of the UBS Plan 
or pooled fund; \4\
---------------------------------------------------------------------------

    \4\ The Department notes that the Act's general standards of 
fiduciary conduct also would apply to the transactions described 
herein. In this regard, section 404 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 UBS for the par value of the Auction Rate 
Security, plus any accrued but unpaid interest or 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 UBS of all relevant information.
---------------------------------------------------------------------------

    (h) Except in the case of a UBS Plan or a pooled fund maintained or 
advised by UBS, neither UBS 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) UBS 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 UBS 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 UBS 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; or
    (B) Any fiduciary of any Plan, including any IRA owner, that 
engages in a 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 paragraph (l)(1)(B)-(C) 
shall be authorized to examine trade secrets of UBS, or commercial or 
financial information which is privileged or confidential; and
    (3) Should UBS refuse to disclose information on the basis that 
such information is exempt from disclosure, UBS shall, by the close of 
the thirtieth (30th) day following the request, provide a written 
notice advising that person of the reasons for the refusal and that the 
Department may request such information.

[[Page 43932]]

Section III. Sales of Auction Rate Securities From Plans to UBS: 
Related to a Settlement Agreement
    If the proposed exemption is granted, the restrictions of section 
406(a)(1)(A) and (D) and section 406(b)(1) and (2) of ERISA and the 
taxes imposed by section 4975 of the Code, by reason of section 
4975(c)(1)(A), (D) and (E) of the Code, shall not apply, effective 
February 1, 2008, to the following transactions: (a) The acquisition by 
a Plan, as described in section V(e), of certain rights issued to 
owners of Auction Rate Securities by UBS AG (ARS Rights) in connection 
with a Settlement Agreement, (b) the sale of an Auction Rate Security 
to UBS pursuant to such ARS Rights, where such sale (a Settlement Sale) 
is related to, and made in connection with, a Settlement Agreement, and 
(c) the sale of an Auction Rate Security to UBS where such sale is made 
pursuant to Section 15 of the Texas Settlement Agreement (the Section 
15 Texas Settlement Sale), provided that the conditions set forth in 
Section IV below are met.
Section IV. Conditions Applicable to Transactions Described in Section 
III
    (a) The terms and delivery of the offer of ARS Rights (the ARS 
Rights Offer) are consistent with the requirements set forth in the 
Settlement Agreement;
    (b) UBS sends notice of the ARS Rights Offer to the Plans, 
including an explanatory cover letter and prospectus for the ARS Rights 
under the Securities Act of 1933 (the Securities Act), as amended. 
Notwithstanding the above, notice is not required to be sent to the 
underlying investors in pooled funds maintained or advised by UBS (but 
shall be provided to the pooled funds);
    (c) Under the terms of the ARS Rights Offer, over certain periods 
of time described below (the Exercise Periods), Eligible Customers who 
accept the ARS Rights Offer are entitled to put (i.e., sell), for par 
value (plus accrued but unpaid interest or dividends), any of their 
Auction Rate Securities to UBS at a time of their choosing, and UBS is 
entitled to call any of those Auction Rate Securities at any time, for 
par value (plus accrued but unpaid interest or dividends).
    (d) Eligible Customers holding ARS Rights who validly accept the 
ARS Rights Offer will grant to UBS the sole discretion and right to 
sell or otherwise dispose of, and/or enter orders in the auction 
process with respect to, the Eligible Customers' eligible Auction Rate 
Securities on their behalf until the expiration date of the related ARS 
Right, without prior notification, so long as the Eligible Customers 
receive a payment of par plus accrued but unpaid interest or dividends 
upon any sale or disposition;
    (e) Plans pay no commissions or transaction costs in connection 
with the acquisition of ARS Rights;
    (f) In the case of a UBS Plan or pooled fund advised by UBS, the 
decision to accept the ARS Rights Offer and any subsequent decision to 
put Auction Rate Securities to UBS or, under the Texas Settlement, sell 
the Auction Rate Securities to UBS, may be made by UBS after UBS has 
determined that such transaction is in the best interest of the UBS 
Plan or pooled fund.
    (g) In the case of an IRA owned by an employee, officer, director 
or partner of UBS or a relative of any such persons, the IRA owner 
makes an independent determination whether to accept the ARS Rights 
Offer and any subsequent decision to put Auction Rate Securities to UBS 
or, under the Texas Settlement, sell the Auction Rate Securities to 
UBS;
    (h) In the case of Plans not described in paragraph IV(f) or IV(g) 
above, a person independent of UBS makes the determination whether to 
accept the ARS Rights Offer and any subsequent decision to put Auction 
Rate Securities to UBS during the applicable Exercise Period or, under 
the Texas Settlement, sell the Auction Rate Securities to UBS, except 
with respect to permitted calls under the ARS Rights, consistent with a 
registration statement under the Securities Act, as amended (the 
Registration Statement);
    (i) The ARS Rights 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 UBS, the 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 number of shares and par value of the Auction Rate 
Securities available for purchase under the ARS Rights Offer;
    (3) The background of the ARS Rights Offer;
    (4) That participating in the ARS Rights Offer will not result in 
or constitute a waiver of any claim of the tendering Plan;
    (5) The methods and timing by which Plans may accept the ARS Rights 
Offer;
    (6) The purchase dates, or the manner of determining the purchase 
dates, for Auction Rate Securities tendered pursuant to the ARS Rights 
Offer;
    (7) The timing for acceptance by UBS of tendered Auction Rate 
Securities;
    (8) The timing of payment for Auction Rate Securities accepted by 
UBS for payment;
    (9) The expiration date of the ARS Rights Offer;
    (10) The fact that UBS may make purchases of Auction Rate 
Securities outside of the ARS Rights 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 ARS Rights 
Offer as UBS deems appropriate;
    (12) How to obtain additional information concerning the ARS Rights 
Offer; and
    (13) The manner in which information concerning material amendments 
or changes to the ARS Rights Offer will be communicated to affected 
Plans;
    (j) The terms of any Settlement Sale or Section 15 Texas Settlement 
Sale are consistent with the requirements set forth in the applicable 
Settlement Agreement and, where applicable, the terms set forth in the 
ARS Rights prospectus.
    (k) All of the conditions in Section II have been met with respect 
to the ARS Rights Offer; and
    (l) All of the conditions in Section 15 of the Texas Settlement 
Agreement have been met with respect to any Section 15 Texas Settlement 
Sale.
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 that:
    (1) Is either a debt instrument (generally with a long-term nominal 
maturity) or preferred stock; and
    (2) Has an interest rate or dividend that is reset at specific 
intervals through a Dutch Auction process;
    (d) A person is independent of UBS if the person is:
    (1) Not UBS or an affiliate; and (2) not a relative (as defined in 
ERISA section 3(15)) 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

[[Page 43933]]

defined in section 3(3) of ERISA; or an entity holding plan assets 
within the meaning of 29 CFR 2510.3-101, as modified by ERISA section 
3(42); and
    (f) The term Settlement Agreement means: A written legal settlement 
agreement involving UBS and a U.S. state or federal authority (a 
Settlement) that provides for the purchase of an Auction Rate Security 
by UBS from a Plan and/or the issuance of ARS Rights.

DATES: Effective Date: If granted, this proposed exemption will be 
effective as of February 1, 2008.

Summary of Facts and Representations

    1. UBS AG (UBS or the Applicant) is a financial services 
corporation with headquarters located in Zurich, Switzerland. UBS has 
banking divisions and subsidiaries around the world, including in the 
United States, with its United States headquarters located in New York, 
New York and Stamford, Connecticut.
    2. The Applicant describes Auction Rate Securities (or ARS) and the 
arrangement by which ARS are bought and sold as follows. ARS are 
securities (issued as debt or preferred stock) with an interest rate or 
dividend that is reset at periodic intervals pursuant to a process 
called a Dutch Auction. Investors submit orders to buy, hold, or sell a 
specific ARS to a broker-dealer selected by the entity that issued the 
ARS. The broker-dealers, in turn, submit all of these orders to an 
auction agent. The auction agent's functions include collecting orders 
from all participating broker-dealers by the auction deadline, 
determining the amount of securities available for sale, and organizing 
the bids to determine the winning bid. If there are any buy orders 
placed into the auction at a specific rate, the auction agent accepts 
bids with the lowest rate above any applicable minimum rate and then 
successively higher rates up to the maximum applicable rate, until all 
sell orders and orders that are treated as sell orders are filled. Bids 
below any applicable minimum rate or above the applicable maximum rate 
are rejected. After determining the clearing rate for all of the 
securities at auction, the auction agent allocates the ARS available 
for sale to the participating broker-dealers based on the orders they 
submitted. If there are multiple bids at the clearing rate, the auction 
agent will allocate securities among the bidders at such rate on a pro-
rata basis.
    3. The Applicant states that, under a typical Dutch Auction 
process, UBS is permitted, but not obligated, to submit orders in 
auctions for its own account either as a bidder or a seller and 
routinely does so in the auction rate securities market in its sole 
discretion. UBS may place one or more bids in an auction for its own 
account to acquire ARS for its inventory, to prevent: (a) A failed 
auction (i.e., an event where there are insufficient clearing bids 
which would result in the auction rate being set at a specified rate, 
resulting in no ARS being sold through the auction process); or (b) an 
auction from clearing at a rate that UBS believes does not reflect the 
market for the particular ARS being auctioned.
    4. The Applicant states that for many ARS, UBS has been appointed 
by the issuer of the securities to serve as a dealer in the auction and 
is paid by the issuer for its services. That agreement provides that 
UBS will receive from the issuer auction dealer fees based on the 
principal amount of the securities placed through UBS.
    5. The Applicant states further that UBS may share a portion of the 
auction rate dealer fees it receives from the issuer with other broker-
dealers that submit orders through UBS, for those orders that UBS 
successfully places in the auctions. Similarly, with respect to ARS for 
which broker-dealers other than UBS act as dealer, such other broker-
dealers may share auction dealer fees with UBS for orders submitted by 
UBS.
    6. Since February 2008, the Applicant represents that the 
significant majority of auctions have been unsuccessful. According to 
the Applicant, the current state of the ARS market remains illiquid. As 
a result, Plans holding ARS may not have sufficient liquidity to make 
benefit payments, mandatory payments and withdrawals and expense 
payments when due.\5\
---------------------------------------------------------------------------

    \5\ The Department notes that Prohibited Transaction Exemption 
80-26 (45 FR 28545 (April 29, 1980), as most recently amended at 71 
FR 17917 (April 7, 2006)) permits interest-free loans or other 
extensions of credit from a party in interest to a plan if, among 
other things, the proceeds of the loan or extension of credit are 
used only: (1) For the payment of ordinary operating expenses of the 
plan, including the payment of benefits in accordance with the terms 
of the plan and periodic premiums under an insurance or annuity 
contract, or (2) for a purpose incidental to the ordinary operation 
of the plan.
---------------------------------------------------------------------------

    7. The Applicant represents that, in certain instances, UBS may 
have previously advised or otherwise caused a Plan to acquire and hold 
an Auction Rate Security.\6\ In connection with UBS's role in the 
acquisition and holding of ARS by various UBS clients, including the 
Plans, UBS entered into Settlement Agreements with certain U.S. states 
and federal authorities (as described below), and UBS requests 
exemptive relief for three categories of ARS transactions: (a) Where 
UBS is required under a Settlement Agreement to send to Plans a written 
offer to acquire the ARS (i.e., a Settlement Sale); (b) where, under 
Section 15 of the Texas Settlement, UBS is required to purchase Auction 
Rate Securities from certain specified categories of holders who 
contact UBS (i.e., a Section 15 Texas Settlement Sale); and (c) where 
UBS initiates an ARS sale by sending to a Plan a written offer to 
acquire the ARS, notwithstanding that such offer is not required under 
a Settlement Agreement (i.e., an Unrelated Sale).
---------------------------------------------------------------------------

    \6\ The relief contained in this proposed exemption does not 
extend to the fiduciary provisions of section 404 of the Act.
---------------------------------------------------------------------------

    8. The Applicant states that, pursuant to the Settlements, UBS 
offered the ARS Rights to designated customers who bought certain ARS 
from UBS (i.e., the Eligible Customers).\7\ The ARS Rights were issued 
by UBS AG pursuant to the Registration Statement, and notice \8\ of the 
ARS Rights Offer, consisting of an explanatory cover letter and a 
prospectus, was sent to such Eligible Customers. However, notice was 
not required to be sent to the underlying investors of pooled funds 
maintained or advised by UBS (but was required to be provided to the 
pooled funds).\9\
---------------------------------------------------------------------------

    \7\ Individual or charitable account holders with less than $1 
million in total in their UBS accounts on a marketing household 
basis as of August 8, 2008, received Series A-1 and/or A-2 ARS 
Rights. The Exercise Period for Series A-1 and A-2 began October 31, 
2008, and ended January 4, 2011.
    Individual or charitable holders with $1 million or more in 
total for their UBS accounts on a marketing household basis as of 
August 8, 2008; all government entity holders; and small business 
holders with less than $10 million in total in their UBS accounts on 
a marketing household basis and total balance sheet assets of less 
than $50 million as of August 8, 2008, received Series B-1 and/or B-
2 ARS Rights. The Exercise Period for Series B-1 and B-2 ARS Rights 
began January 2, 2009, and ended January 4, 2011.
    Eligible Customers not eligible for Series A-1 and/or A-2 or 
Series B-1 and/or B-2 ARS Rights received Series C-1 and/or C-2 ARS 
Rights. The Exercise Period for Series C-1 and C-2 ARS Rights began 
June 30, 2010, and ended July 2, 2012.
    \8\ The Applicant confirms that with respect to the SEC, New 
York and Massachusetts Settlements, notices were sent during the 
weeks of October 8 and 13, 2008. The Applicant notes that the Texas 
Settlement has varying notification requirements, which were 
complied with.
    \9\ The Applicant states that, as of this date, no pooled funds 
subject to ERISA and maintained by UBS have been involved in a 
Settlement.
---------------------------------------------------------------------------

    9. The Applicant states that the Registration Statement described 
above complies with applicable securities laws, and the Registration 
Statement, including the Prospectus and the accompanying cover letter, 
included disclosure of, or a fair and adequate summary of, the ARS 
Rights. In addition, the Registration Statement and accompanying 
documents explained what Eligible Customers had to do to participate in 
the ARS Rights Offer and

[[Page 43934]]

it informed them of the relevant terms of the Settlement Agreement and 
other material terms regarding their rights.
    10. The Applicant states that information concerning material 
amendments or changes to the ARS Rights or Registration Statement was 
promptly disseminated to Eligible Customers, and such information was 
also made available by means of a toll-free telephone number. In 
connection with determining whether an Eligible Customer wished to 
accept the ARS Rights during the Offer Period or put the ARS to UBS 
during the Exercise Period, there may have been communications from 
time to time between such customer and UBS in that regard. The 
Applicant states that in addition to the purchase of ARS pursuant to 
the ARS Rights Offer, UBS may have purchased ARS from its customers 
outside the ARS Rights Offer at times and on terms other than those 
provided in such offer.
    11. The Applicant represents that Eligible Customers had from 
October 7, 2008 to November 14, 2008 (the Offer Period) to decide 
whether to accept the ARS Rights, unless the Offer Period was extended 
at the discretion of UBS.\10\ In the case of the Texas Settlement, 
eligible holders were entitled to sell their Auction Rate Securities to 
UBS until the agreed upon dollar amount in that settlement had been 
spent. In the case of any Eligible Customer that is a pooled fund 
advised by UBS or a Plan sponsored by UBS for its own employees, the 
decision to accept the ARS Rights Offer and any subsequent decision to 
put ARS to UBS during the Offer Period (or, under the Texas Settlement, 
sell the Auction Rate Securities to UBS) may have been made by UBS 
after UBS determined that such purchase was in the best interest of the 
UBS Plan or pooled fund. In the case of an IRA owned by an employee, 
officer, director or partner of UBS, or a relative of any such persons, 
the IRA owner was required to make an independent determination whether 
to accept the ARS Rights Offer and any subsequent decision to put ARS 
to UBS during the Offer Period (or, under the Texas Settlement, sell 
the Auction Rate Securities to UBS). Other than with respect to such 
IRAs, a pooled fund advised by UBS, or a Plan sponsored by UBS for its 
own employees, a person independent of UBS was required to make the 
determination whether to accept the ARS Rights Offer and any subsequent 
decision to put ARS to UBS during the applicable Exercise Period (or, 
under the Texas Settlement, sell the Auction Rate Securities to UBS), 
except with respect to permitted calls under the ARS Rights, consistent 
with the Registration Statement.
---------------------------------------------------------------------------

    \10\ The Applicant represents that UBS extended the Offer Period 
to December 19, 2008.
---------------------------------------------------------------------------

    12. The Applicant states that all Eligible Customers who accepted 
the ARS Rights Offer must have custodied their ARS with UBS. To the 
extent that an Eligible Customer had moved its accounts from UBS, the 
Eligible Customer was required to transfer its ARS to an account with 
UBS but such account did not bear a custody fee.
    13. Under the terms of the ARS Rights, during the appropriate 
Exercise Period (as defined above), Eligible Customers who accepted the 
ARS Rights Offer were entitled to put, for par value (plus accrued but 
unpaid interest or dividends), any of their ARS to UBS, and UBS was 
entitled to call any of those ARS, for par value (plus accrued but 
unpaid interest or dividends).
    14. Under Section 15 of the Texas Settlement, UBS was also required 
to purchase Auction Rate Securities from certain additional categories 
of Auction Rate Securities holders, if they contacted UBS. The 
Applicant represents that no written offer was required under that 
Settlement, although the Settlement offer was publicized by Texas.
    15. The Applicant states that there were Settlements involving UBS 
and the following federal and state authorities: The SEC, New York, 
Massachusetts and Texas. The Applicant states that since August 2008, 
UBS has purchased ARS in the amount of $18,047,380,000 pursuant to the 
SEC Settlement (and the New York and Massachusetts Settlements, which 
tracked the SEC Settlement) and $161,550,000 pursuant to the Texas 
Settlement.\11\ The Applicant explains that while there should be no 
future purchases under the SEC settlement, UBS expects there will be 
such purchases under the Texas Settlement because it requires UBS to 
continue to buy from Eligible Customers under the Settlement until it 
has spent $200 million, which it has not done yet. Accordingly, the 
Applicant is requesting prospective relief for such future Settlement 
Sales and Section 15 Settlement Sales and retroactive relief for 
Settlement Sales and Section 15 Settlement Sales that have already 
occurred.
---------------------------------------------------------------------------

    \11\ The Applicant notes that not every ARS holder who was 
eligible for the ARS Rights Offer accepted such offer. Additional 
ARS positions with a par value of approximately $57 million were 
eligible for the ARS Rights Offer but the holders of the rights did 
not accept such offer. The Applicant states that UBS has no way of 
knowing how much of the foregoing $57 million in ARS remains 
outstanding because the positions are not held at UBS. The Applicant 
believes that a majority of those positions were repurchased by 
other firms and/or redeemed by the issuer. Similarly, the Applicant 
states that it does not know the dollar value of outstanding ARS 
that are eligible for repurchase under the Texas Settlement. UBS is 
not obligated to repurchase any further ARS relating to the ARS 
Rights Offering. However, UBS is obligated to repurchase eligible 
ARS under the Texas Settlement up to a total of $200 million of 
which $161,550,000 has been spent to date.
---------------------------------------------------------------------------

    16. With respect to Unrelated Sales, the Applicant states that to 
the best of its knowledge, as of December 10, 2012, no Unrelated Sale 
to a Plan has occurred.\12\ However, the Applicant states that 
retroactive relief (and prospective relief) is necessary in the event 
that a sale of ARS by a Plan to UBS has occurred, or will occur, 
outside the Settlement process.
---------------------------------------------------------------------------

    \12\ The Applicant explains that a handful of unrelated sales 
have occurred with written offers to buy at par value and pursuant 
to a settlement agreement; however, none of these sales involved a 
Plan or an IRA. In addition, the Applicant states that UBS may 
facilitate sales of ARS in the market as agent for clients at their 
request.
---------------------------------------------------------------------------

    17. The Applicant states that the Settlement Sales, Section 15 
Texas Settlement Sales and Unrelated Sales (hereinafter, each, a 
Covered Sale) are in the interests of Plans. In this regard, the 
Applicant states that the Covered Sales permit Plans to normalize Plan 
investments. The Applicant represents that each Covered Sale has been 
and will be for no consideration other than cash payment against prompt 
delivery of the ARS, and such cash has equaled, and will equal, the par 
value of the ARS, plus any accrued but unpaid interest or dividends. 
The Applicant represents further that Plans have not paid, and will not 
pay, any commissions or transaction costs with respect to any Covered 
Sale.
    18. The Applicant represents that the proposed exemption is 
protective of the Plans. The Applicant states that, except in the case 
of a Plan sponsored by UBS for its own employees (i.e., a UBS Plan), 
each Covered Sale has been made, and will be made, pursuant to a 
written offer (i.e., pursuant to an Unrelated Offer, an ARS Rights 
Offer, or a Settlement offer made under Section 15 of the Texas 
Settlement Agreement; together, an Offer). The Applicant states further 
that, with limited exceptions, the decision to accept the Offer or 
retain the ARS has been made, and will be made, by a Plan fiduciary or 
Plan participant or IRA owner who is independent of UBS. Additionally, 
each Offer has been delivered, and will be delivered, in a manner 
designed to alert a Plan fiduciary that UBS intends to purchase ARS 
from the Plan. Offers made in connection with an Unrelated Sale have 
described, and will describe, the material terms of the Unrelated Sale,

[[Page 43935]]

including the most recent rate information for the ARS (if reliable 
information is available). Either the Offer or other materials 
available to the Plan have provided, and will provide, the identity and 
par value of the ARS. Offers made in connection with a Settlement 
Agreement specifically include, among other things: The background of 
the Offer; the method and timing by which a Plan may accept the Offer; 
the expiration date of the Offer; a description of certain risk factors 
relating to the Offer; how to obtain additional information concerning 
the Offer; and the manner in which information concerning material 
amendments or changes to the Offer will be communicated to affected 
Plans. The Applicant states that, except in the case of a UBS Plan or a 
pooled fund advised by UBS, neither UBS nor any affiliate has 
exercised, or will exercise, investment discretion, or has rendered, or 
will render, investment advice with respect to a Plan's decision to 
accept the Offer or retain the ARS. In the case of a UBS Plan or a 
pooled fund maintained or advised by UBS, the decision to engage in a 
Covered Sale has been made, and may be made, by UBS after UBS has 
determined that such purchase is in the best interest of the UBS Plan 
or pooled fund. The Applicant represents further that Plans have not 
waived, and will not waive, any rights or claims in connection with any 
Covered Sale except where permitted under a Section 15 Texas Settlement 
Sale.\13\
---------------------------------------------------------------------------

    \13\ The Applicant states that while there may have been, or may 
be, communication between a Plan and UBS subsequent to an Offer, 
such communication has not involved, and will not involve, advice 
regarding whether the Plan should accept the Offer.
---------------------------------------------------------------------------

    19. The Applicant represents that the proposed exemption, if 
granted, would be administratively feasible. In this regard, the 
Applicant notes that each Covered Sale has occurred, and will occur, at 
the par value of the affected ARS, plus any accrued but unpaid interest 
or dividends, and such value is readily ascertainable. The Applicant 
represents further that UBS has maintained, and will maintain, the 
records necessary to enable the Department and Plan fiduciaries, among 
others, to determine whether the conditions of this exemption, if 
granted, have been met.
    20. In summary, the Applicant represents that the transactions 
described herein satisfy the statutory criteria of section 408(a) of 
the Act because, among other things:
    (a) Except in the case of a UBS Plan or a Section 15 Texas 
Settlement Sale, each Covered Sale has been made and shall be made 
pursuant to a written Offer;
    (b) Each Covered Sale has been and shall be for no consideration 
other than cash payment against prompt delivery of the ARS;
    (c) The amount of each Covered Sale has equaled and shall equal the 
par value of the ARS, plus any accrued but unpaid interest or 
dividends;
    (d) No Plan has waived nor shall waive any rights or claims in 
connection with any Covered Sale except as permitted under a Section 15 
Texas Settlement Sale;
    (e) Except in the case of a UBS Plan or a pooled fund maintained or 
advised by UBS:
    (1) The decision to accept an Offer or retain the ARS has been made 
and shall be made by a Plan fiduciary or Plan participant or IRA owner 
who is independent of UBS; and
    (2) neither UBS nor any affiliate has exercised or shall exercise 
investment discretion or render investment advice within the meaning of 
29 CFR 2510.3-21(c) with respect to the decision to accept the Offer or 
retain the ARS except with respect to permitted calls under the ARS 
Rights, consistent with the Registration Statement;
    (f) Plans have not paid and shall not pay any commissions or 
transaction costs with respect to any Covered Sale;
    (g) A Covered Sale has not been and shall not be part of an 
arrangement, agreement or understanding designed to benefit a party in 
interest to the affected Plan; and
    (h) UBS has made available and shall make available in connection 
with an Unrelated Sale the material terms of the Unrelated Sale, 
including the most recent rate information for the ARS (if reliable 
information is available), and the identity and par value of the ARS.

Notice to Interested Persons

    The Applicant represents that the potentially interested 
participants and beneficiaries cannot all be identified and therefore 
the only practical means of notifying such participants and 
beneficiaries of this proposed exemption is by the publication of this 
notice in the Federal Register. Comments and requests for a hearing 
must be received by the Department no later than 30 days from the date 
of publication of this notice of proposed exemption in the Federal 
Register.
    All comments will be made available to the public. Warning: Do not 
include any personally identifiable information (such as name, address, 
or other contact information) or confidential business information that 
you do not want publicly disclosed. All comments may be posted on the 
Internet and can be retrieved by most Internet search engines.

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

The ABB Inc. Cash Balance Pension Plan (the Cash Balance Plan); the 
Cash Balance Pension Plan for Certain Represented Employees of ABB Inc. 
(the Union Cash Balance Plan); the Pension Plan for Employees of the 
Process Analytics Division of ABB Inc. Represented by the Laborer's 
International Union of North America (AFL-CIO), Local No. 1304 (the 
Process Analytics Plan); the Pension Plan of Fischer & Porter Company 
(the Fisher & Porter Plan); and the ABB Inc. Pension Plan (UE 625 & 
626) (the UE 625 & 626 Plan) (each a Plan, and collectively, the Plans) 
Located in Cary, NC.

[Application Nos. D-11742 thru D-11746 respectively]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974, as amended (ERISA or the Act), and section 4975(c)(2) of 
the Internal Revenue Code of 1986, as amended (the Code), and in 
accordance with the procedures set forth in 29 CFR Part 2570, Subpart B 
(76 FR 66637, 66644, October 27, 2011).\14\ If the exemption is 
granted, 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, to the in-
kind contribution (the Contribution) of certain U.S. Treasury Bills 
(the Securities) to the Plans by ABB Inc., a party in interest with 
respect to the Plans, on September 14, 2012, provided that the 
following conditions are satisfied:
---------------------------------------------------------------------------

    \14\ For purposes of this proposed exemption, references to the 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (a) The fair market value of the Securities was determined by ABB 
Inc. based on the closing price of the Securities on the date of 
Contribution (the Contribution Date) as quoted by Bloomberg L.P., an 
independent third party in the business of providing financial data;
    (b) The Securities represented less than 12% of the assets of any 
Plan;
    (c) The terms of the Contribution were no less favorable to the 
Plans than those

[[Page 43936]]

negotiated at arm's length under similar circumstances between 
unrelated parties;
    (d) The Plans paid no commissions, costs or fees with respect to 
the Contribution; and
    (e) ABB Inc. reviewed the methodology used to value the Securities 
and ensured that the Plans received the fair market value of the 
Securities.

DATES: Effective Date: If granted, this proposed exemption will be 
effective as of September 14, 2012.

Summary of Facts and Representations

Parties to the Covered Transaction

    1. ABB Inc. is the U.S. subsidiary of Asea Brown Boveri Ltd. (ABB), 
a multinational corporation operating primarily in robotics, power, and 
automation technologies, headquartered in Zurich, Switzerland.\15\ ABB 
Inc. is headquartered in Cary, North Carolina and employs approximately 
20,000 individuals in the U.S. ABB Inc.'s five main divisions include: 
power products, power systems, discrete automation and motion, low 
voltage products, and process automation. ABB Inc. provides or has 
provided a retirement benefit to its employees through the following 
defined benefit plans:
---------------------------------------------------------------------------

    \15\ The ABB group of related companies operates in 
approximately 100 countries and employs 145,000 worldwide.
---------------------------------------------------------------------------

    A. The Cash Balance Plan, which is ABB Inc.'s largest Plan, is a 
cash balance plan that was established on January 1, 1992. The Cash 
Balance Plan covers eligible employees of ABB Inc., ABB Treasury Center 
USA, and Kuhlman Electric Corporation. As of December 31, 2011, the 
Cash Balance Plan was frozen to new participants and benefit accruals. 
ABB Inc. states that, for the plan year beginning January 1, 2012, the 
Cash Balance Plan had an Adjusted Funding Target Attainment Percentage 
(AFTAP) of 112.29%. Further, as of April 30, 2012, the Cash Balance 
Plan had assets of $820,244,694, and, as of June 16, 2012, the Plan had 
16,263 participants and beneficiaries.
    B. The Union Cash Balance Plan, established on July 1, 1999, is a 
single-employer cash balance plan providing pension benefits for 
eligible collectively-bargained employees of ABB Jefferson City. ABB 
Inc. states that, for the plan year beginning January 1, 2012, the 
Union Balance Cash Plan had an AFTAP of 113.72%. Further, as of April 
30, 2012, the Union Cash Balance Plan had assets of $40,040,132, and, 
as of June 26, 2012, the Union Cash Balance Plan had 697 participants 
and beneficiaries.
    C. The Process Analytics Plan is a defined benefit plan established 
on February 1, 1984. It covers eligible collectively-bargained 
employees who are employed at the ABB Inc. plant in Lewisburg, West 
Virginia. ABB Inc. states that, as of the plan year beginning January 
1, 2012, the Process Analytics Plan had an AFTAP of 120.39%. Further, 
as of April 30, 2012, the Plan had assets of $7,660,258 and, as of June 
26, 2012, the Plan had 161 participants and beneficiaries.
    D. The Fischer & Porter Plan is a defined benefit plan that was 
established on January 1, 1947. It covers certain collectively 
bargained employees working at the ABB Inc. location in Warminster, 
Pennsylvania. ABB Inc. states that, as of the plan year beginning 
January 1, 2012, the Fischer & Porter Plan had an AFTAP of 114.16%. 
Further, as of April 30, 2010, the Fischer & Porter Plan had assets of 
$57,762,579, and, as of June 26, 2012, the Plan had 1,466 participants 
and beneficiaries.
    E. The UE 625 & 626 Plan is a defined benefit plan that was 
established on September 15, 1984. It covers certain eligible employees 
represented under a collective bargaining agreement by the United 
Electrical, Radio and Machine Workers of America (UE). The UE 625 & 626 
Plan had an AFTAP of 121.70% as of January 1, 2012. Further, as of 
April 30, 2012, the UE 625 & 626 Plan had assets of $18,854,815, and, 
as of June 26, 2012, the Plan had 221 participants and beneficiaries.
    2. The assets of the Plans are held in the ABB Inc. Master Trust 
(the Master Trust) for which the Bank of NY Mellon serves as the 
trustee. The ABB Inc. Pension Review Committee (PRC) has investment 
discretion over the assets of the Plans including those additional 
assets that would be covered by the proposed exemption, if granted. ABB 
Inc. maintains a risk management committee (the Pension and Risk 
Management Committee), comprised of two to three employees, that 
advises the PRC regarding the investment of the assets in the Master 
Trust. However, the PRC is the entity responsible for implementing 
investment decisions on behalf of ABB Inc. Towers Watson (the Actuary), 
a Delaware corporation, serves as the actuary for each of the Plans.

Contribution of the Securities

    3. ABB Inc. represents that each of the Plans has had an AFTAP 
equal to or in excess of 100% each year since 2010. In addition, ABB 
Inc. states that on June 1, 2012, the PRC increased the Master Trust's 
cash target allocation from 10% to 20% for a period of 6 months due to 
recent volatility in the equity markets. ABB Inc. notes that the PRC 
determined that it was prudent to increase the cash target allocation 
to provide flexibility in the event that changes in the Master Trust's 
investments needed to be made. Furthermore, ABB Inc. desired to 
contribute additional cash and cash equivalents to the Master Trust, as 
described below, which would affect the amount of plan assets allocated 
to cash.
    4. ABB Inc. represents that it sought to make a contribution (the 
Contribution) of Treasury Bills (the Securities) to the Master Trust as 
part of its long-term approach to having well-funded pension plans. 
According to ABB Inc., no additional contributions were required to be 
made to the Plans in 2012. ABB Inc. states that the decision regarding 
which Plans would be funded by the Contribution was based on a number 
of factors, including the Plans' funded status and projected normal 
costs. Furthermore, the Contributions would be well in excess of the 
minimum contribution requirements of the Plans.
    5. ABB Inc. states that it determined to make the Contribution in 
the form of Treasury Bills, because a contribution of cash-equivalent 
securities will garner more favorable accounting treatment than cash 
when used to fund ABB Inc.'s pension liabilities. ABB Inc. explains 
that the contribution was reported on ABB Inc.'s financial statements 
under U.S. accounting standards as a use of cash from investing 
activities and was disclosed in the notes to the financial statements. 
According to ABB Inc., this will allow the company to avoid burdening 
current year gross cash flows that would occur if ABB Inc. contributed 
cash. ABB Inc. states that, consequentially, readers of their financial 
statements will be able to better distinguish between current 
operational performance of ABB Inc. from a significantly higher than 
normal Plan contribution event, and any potential negative impact of 
the Contribution on ABB Inc.'s cost of capital will be limited.
    6. ABB Inc. states that, in order to effect the Contribution, it 
purchased Treasury Bills in two separate acquisitions. On June 7, 2012, 
ABB Inc. acquired Treasury Bills in the maturity amount of $14,100,000 
with an effective yield of 0.086%. On June 19, 2012, ABB Inc. acquired 
additional Treasury Bills in the maturity amount of $4,025,000 with an 
effective yield of 0.089%. Both purchases occurred over-the-counter and 
from unrelated parties. The purchased Treasury Bills were placed in an 
ABB Inc. account at Credit Suisse Securities (Credit Suisse). The total

[[Page 43937]]

value of the Securities at their four-month maturity date on September 
27, 2012 was $18,125,000.
    7. On September 14, 2012, based on the recommendation of the 
Pension and Risk Management Committee, the PRC voted to contribute the 
Securities to the Plans, and the Securities were contributed on the 
same date. Credit Suisse notified ABB Inc. that the September 14, 2012 
closing price for Treasury Bills maturing as of September 27, 2012, as 
reported in Bloomberg L.P. pricing services, was 99.9978333. Based on 
this pricing information, ABB Inc. calculated the value of the 
Securities on the date of Contribution (the Contribution Date) as 
$18,124,607 ($18,125,000 maturity value x 99.9978333 closing 
price).\16\
---------------------------------------------------------------------------

    \16\ According to ABB Inc., on December 12, 2012, Credit Suisse 
provided ABB Inc. with a computer screenshot of the closing price of 
the Securities on September 14, 2012, as reported by Bloomberg L.P., 
which displayed a closing price of 99.997563: 0.00027 less than what 
Credit Suisse previously reported. The resulting revised 
Contribution Date value was $49 less than the amount originally 
calculated. To ensure that the Plans were adequately protected with 
respect to the Contribution, ABB Inc. contributed $49, plus interest 
calculated at 8% from the date of contribution up to the date such 
interest was paid to the Plans.
    The Department is not offering its view whether ABB Inc.'s use 
of the original closing price for the Securities in fulfillment of 
its funding, reporting and disclosure obligations comports with its 
duties under section 404(a) of the Act, which requires, among other 
things, that a fiduciary discharge its duties with respect to a plan 
solely in the interest of the Plans' participants and beneficiaries, 
and in a prudent fashion.
---------------------------------------------------------------------------

    8. Upon their receipt by the Master Trust, the Securities, valued 
at $18,124,607, were allocated as follows:

----------------------------------------------------------------------------------------------------------------
                                   Allocation of   Allocation of   Percentage of                   Contribution
              Plan                 face value of      FMV of           total        Total plan     as % of plan
                                    securities      securities     contribution     assets \17\       assets
----------------------------------------------------------------------------------------------------------------
Cash Balance Plan...............     $14,100,000      14,099,695           77.79     820,244,694            1.72
Process Analytics Plan..........         600,000         599,987            3.31       7,660,258            7.83
UE 625 & 626 Plan...............       2,200,000       2,199,952           12.14      18,854,815           11.67
Fisher & Porter Plan............         725,000         724,984            4.00      57,762,579            1.26
Union Cash Balance Plan.........         500,000         499,989            2.76      40,040,132            1.25
    Totals......................      18,125,000      18,124,607             100     944,562,478            1.92
----------------------------------------------------------------------------------------------------------------

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

    \17\ All asset values are based on fair market value data as of 
April 30, 2012.
---------------------------------------------------------------------------

ABB Inc. states that it allocated the face value of the Securities 
among the Plans based on preliminary 2012 funding valuation projections 
prepared by the Actuary. ABB Inc. states that the amounts allocated to 
the Union Cash Balance, the Process Analytics Plan, the UE 625 & 626 
Plan, and the Fischer & Porter Plan were the amounts needed to increase 
each Plan's projected 1/1/2012 AFTAP above 100%.\18\ The Securities 
matured two weeks later, on September 27, 2012, at $18,125,000.
---------------------------------------------------------------------------

    \18\ ABB Inc. notes that the projected funding valuation results 
prepared by the Actuary and ABB Inc.'s allocation decisions were 
made prior to the passage of the Moving Ahead for Progress in the 
21st Century Act (MAP-21), legislation enacted on July 6, 2012, 
that, among other things, changed the interest rate that pension 
plans use to measure their liabilities thereby impacting the Plans' 
2012 funding results. After the passage of MAP-21, the amounts 
allocated to the Plans were not needed to increase the AFTAP above 
100%.
---------------------------------------------------------------------------

    9. ABB Inc. represents that the Contribution did not produce a 
material change in the AFTAP for any Plan, as each Plan's AFTAP 
exceeded 100% irrespective of the Contribution. ABB Inc. states that 
following the Contribution the funding status of the Plans increased as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                          Estimated AFTAP
                                                              without           AFTAP with     Increase in AFTAP
                          Plan                               discounted         discounted     due to securities
                                                             securities         securities        contribution
                                                            contribution       contribution
----------------------------------------------------------------------------------------------------------------
Cash Balance Plan......................................             110.44             112.29               1.85
Process Analytics Plan.................................             112.35             113.72               1.37
UE 625 & 626 Plan......................................             111.74             120.39               8.65
Fisher & Porter Plan...................................             109.09             121.70              12.61
Union Cash Balance Plan................................             112.78             114.16               1.38
----------------------------------------------------------------------------------------------------------------

Request for Exemptive Relief

    10. ABB Inc. requests exemptive relief for the Contribution, which 
represents an in-kind contribution to the Plans from ABB Inc., a party 
in interest with respect to the Plans. In this regard, ABB Inc. states 
that the PRC, which is a fiduciary with respect to the Plans, caused a 
sale or exchange between a party in interest and the Plans prohibited 
by section 406(a)(1)(A) of the Act. Furthermore, ABB Inc. states that 
the Contribution violated sections 406(b)(1) and (2) of the Act. In 
this regard, ABB Inc. explains that the PRC, as a fiduciary with 
respect to the Plans, dealt with the assets of the Plans in its own 
interest or its own account in violation of 406(b)(1) of the Act and 
acted in a capacity where its interests were adverse to the interests 
of the Plans and the interests of the participants and beneficiaries of 
the Plans in violation of 406(b)(2) of the Act.

Statutory Findings

    11. ABB Inc. represents that the Contribution was administratively 
feasible because it was a one-time transaction that requires no further 
action by the Department.
    12. ABB Inc. represents that the Contribution was in the interests 
of the Plans and their participants and beneficiaries because the 
Contribution, as allocated amongst the Plans, was in excess of the 
minimum required contribution for each of the Plans. In this regard, 
ABB Inc. notes that it was not required to make any contributions to 
the Plans for the 2012 Plan Year. Furthermore, each of the Plans had 
higher AFTAPs as a result of the Contribution. As illustrated in the 
above table, the increases ranged from 1.37% for the Process Analytics 
Plan to 12.61% for the Fischer & Porter Plan. ABB Inc. emphasizes that, 
absent the

[[Page 43938]]

Contribution, these increases would not have occurred.
    13. ABB Inc. states that the Contribution was protective of the 
Plans and of their participants and beneficiaries because the 
Securities are cash equivalents with a readily ascertainable fair 
market value, which are guaranteed by the U.S. Treasury. According to 
ABB Inc., it determined the value of the Securities as of the date of 
the Contribution based on an independent, third party source in the 
business of providing financial data, and the PRC ensured that the 
Plans received the full fair market value of the Securities. 
Furthermore, ABB Inc. determined that the fair market value of the 
Securities was unlikely to fluctuate to any significant degree such 
that the Contribution posed little risk of abuse or loss that would 
affect the Plans' participants or beneficiaries.
    Moreover, ABB Inc. states that the Securities were purchased from 
unrelated third parties and matured within two weeks of the 
Contribution Date. ABB Inc. states further that the Plans paid no fees, 
commissions or costs in connection with the Contribution. Finally, ABB 
Inc. represents that, had the Plans needed to sell the Securities prior 
to their maturity, ABB Inc. would have covered all transaction costs 
associated with such sale.

Summary

    14. In summary, ABB Inc. represents that the Contribution satisfied 
the statutory requirements for an exemption under section 408(a) of the 
Act because:
    (a) The fair market value of the Securities was determined by ABB 
Inc. based on the closing price of the Securities on the Contribution 
Date as quoted by Bloomberg L.P., an independent third party in the 
business of providing financial data;
    (b) The Securities represented less than 12% of the assets of any 
Plan;
    (c) The terms of the Contribution were no less favorable to the 
Plans than those negotiated at arm's length under similar circumstances 
between unrelated parties;
    (d) The Plans paid no commissions, costs or fees with respect to 
the Contribution; and
    (e) The PRC reviewed the methodology used to value the Securities 
and ensured that the Plans received the fair market value of the 
Securities.

Notice to Interested Persons

    Notice of the proposed exemption will be provided to all interested 
persons in the manner agreed upon by ABB Inc. and the Department within 
15 days of the date of publication in the Federal Register. Such notice 
will contain a copy of the notice of proposed exemption, as published 
in the Federal Register, and a supplemental statement, as required 
pursuant to 29 CFR 2570.43(a)(2). The supplemental statement will 
inform interested persons of their right to comment on and to request a 
hearing with respect to the pending exemption. Written comments and 
hearing requests are due within 45 days of the publication of the 
notice of proposed exemption in the Federal Register. All comments will 
be made available to the public.

    Warning: Do not include any personally identifiable information 
(such as name, address, or other contact information) or 
confidential business information that you do not want publicly 
disclosed. All comments may be posted on the Internet and can be 
retrieved by most Internet search engines.


For Further Information Contact: Ms. Jennifer Erin Brown of the 
Department at (202) 693-8352. (This is not a toll-free number.)

American International Group, Inc. Incentive Savings Plan (the Savings 
Plan), American General Agents' & Managers' Thrift Plan (the Thrift 
Plan), and Chartis Insurance Company--Puerto Rico Capital Growth Plan 
(the Chartis Plan) (collectively, the Plans) Located in New York, NY 
and Puerto Rico

[Application Nos. D-11767, D-11768, and D-11769]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code, and in accordance with the procedures set forth in 29 CFR part 
2570, subpart B (76 FR 46637, 66644, October 27, 2011).
Section I. Transactions
    If the proposed exemption is granted:
    (a) The restrictions of sections 406(a)(1)(A), 406(a)(1)(E), 
406(a)(2), 406(b)(1), 406(b)(2) and 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) and (E) of the Code,\19\ shall not apply for 
the ten-year period, effective January 19, 2011 through January 19, 
2021, to:
---------------------------------------------------------------------------

    \19\ For purposes of this proposed exemption, references to 
specific provisions of Title I of the Act, unless otherwise 
specified, refer also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (1) The acquisition by the Savings Plan and the Thrift Plan of 
certain warrant rights (the Warrants) from American International 
Group, Inc. (AIG), a party in interest with respect to the Savings Plan 
and the Thrift Plan; and
    (2) The holding of the Warrants by the Savings Plan and the Thrift 
Plan.
    (b) The restrictions of sections 406(a)(1)(A), 406(a)(1)(E), 
406(a)(2), 406(b)(1), 406(b)(2) and 407(a) of the Act \20\ shall not 
apply to:
---------------------------------------------------------------------------

    \20\ It is represented that the fiduciaries of the Chartis Plan 
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 Code. Further, it is represented that jurisdiction 
under Title II of the Act does not apply to the Chartis Plan. 
Accordingly, the Department, herein, is not providing any relief 
from the prohibitions, as set forth in Title II of the Act, in 
connection with the acquisition and holding of the Warrants by the 
Chartis Plan.
---------------------------------------------------------------------------

    (1) The acquisition by the Chartis Plan of the Warrants from AIG, a 
party in interest with respect to the Chartis Plan; and
    (2) The holding of the Warrants by the Plans.
Section II. Conditions
    The relief provided in this proposed exemption is conditioned upon 
adherence to the material facts and representations set forth in the 
application file, and upon compliance with the conditions, as set forth 
herein.
    (a) All decisions regarding the holding and sale of the Warrants 
have been and will be made by the Plans' participants;
    (b) The Plans' acquisition of the Warrants resulted from an 
independent act of AIG as a corporate entity, and without any 
participation on the part of the Plans;
    (c) The acquisition of the Warrants by the Plans occurred in 
connection with a recapitalization plan approved by the Board of 
Directors of AIG, in which all holders of AIG common stock, including 
the Plans, were treated exactly the same;
    (d) All holders of AIG common stock, including the Plans, were 
issued the same proportionate number of Warrants based on the number of 
shares of AIG common stock held by such shareholder;
    (e) The acquisition of the Warrants by the Plans was made in a 
manner that was consistent with provisions of each such Plan for the 
individually-directed investment of participant accounts;
    (f) The Plans did not pay any fees or commissions in connection 
with the acquisition of the Warrants;
    (g) The Plans did not pay, nor will the Plans pay, any fees or 
commissions in connection with the holding of the Warrants;
    (h) The Plans did not pay, nor will the Plans pay, any brokerage 
fees or

[[Page 43939]]

commissions to any broker affiliated with AIG, Chartis, or the Trustees 
in connection with the sale of the Warrants; and
    (i) AIG will provide annual written notices to all participants in 
the Plans holding Warrants to remind them to sell their Warrants before 
such Warrants expire on January 19, 2021.

DATES: Effective Date: This proposed exemption, if granted, will be 
effective for the period commencing January 19, 2011 through January 
19, 2021.

Summary of Facts and Represenatations

    1. AIG, a Delaware corporation with its headquarters in New York, 
NY, operates in over 90 countries across the world, including Puerto 
Rico and the Virgin Islands. As a holding company with subsidiaries, 
AIG engages primarily in a broad range of insurance and insurance-
related activities. Among the wholly owned subsidiaries of AIG is 
Chartis Insurance Company (Chartis), which is headquartered in San 
Juan, Puerto Rico.
    2. AIG sponsors the Savings Plan and the Thrift Plan, which are 
individually-directed, defined contribution plans that are intended to 
satisfy the requirements of section 401(a) of the Code and section 
404(c) of the Act. As of December 31, 2011, the Savings Plan had 39,192 
participants and $2,783,237,363 in assets, of which $8,177,958.39 were 
invested in AIG common stock, representing 0.29% of such Plan's total 
assets. As of December 31, 2011, the Thrift Plan had 2,462 participants 
and $74,443,107 in assets, of which $483,035.01 were invested in AIG 
common stock, representing 0.65% of the assets of such Plan. The 
directed trustee of the Savings Plan and the Thrift Plan is Mercer 
Trust Company (Mercer), a New Hampshire limited purpose bank.
    3. The Chartis Plan, which is sponsored by Chartis, is an 
individually-directed, defined contribution plan that is intended to 
satisfy the requirements of Code section 401(a), although it has not 
elected to be subject to the qualification requirements of the Code and 
section 404(c) of the Act. The Chartis Plan is also intended to comply 
with the requirements of sections 1165(a) and (e) of the Puerto Rico 
Internal Revenue Code of 1994, as amended. As of December 31, 2011, the 
Chartis Plan had 234 participants and held $8,269,051 in total assets, 
of which $13,283.74 were invested in AIG common stock, representing 
0.16% of the assets of such Plan. The directed trustee of the Chartis 
Plan is Banco Popular De Puerto Rico \21\ (Banco Popular), which is 
organized and exists under the laws of the Commonwealth of Puerto Rico.
---------------------------------------------------------------------------

    \21\ Mercer and Banco Popular are together referred to herein as 
the ``Trustees.''
---------------------------------------------------------------------------

    4. In 2008, the U.S. Government provided significant financial 
assistance to AIG. In connection with this assistance, AIG issued 
preferred stock to a trust which held such stock for the sole benefit 
of the U.S. Department of the Treasury (Treasury). The preferred stock 
entitled Treasury to approximately 79.8% of the voting power in AIG.
    On September 30, 2010, a blueprint was announced for the eventual 
exit of the U.S. Government from its investment in AIG. In this regard, 
on December 8, 2010, AIG announced that it had entered into a 
recapitalization agreement with Treasury. On January 14, 2011, the 
recapitalization plan was completed. As part of the plan, the preferred 
stock previously held by Treasury in the trust was exchanged for 
approximately 1.655 billion shares of AIG common stock. This resulted 
in Treasury holding approximately 92% of AIG's common stock.
    5. In addition, AIG declared a ``warrant dividend'' on shares of 
AIG common stock outstanding on January 13, 2011 (the Record Date). 
Holders of AIG common stock on the Record Date received .533933 
Warrants for each share of common stock. Each Warrant entitles the 
holder to purchase one share of AIG common stock at a strike price of 
$45 per share. The Warrants, like AIG common stock, are tradable on the 
New York Stock Exchange (NYSE) under the ticker symbol ``AIGWS.'' The 
Warrants expire on January 21, 2021, if not sold or exercised.
    The AIG Warrants were distributed at the close of business on 
January 19, 2011 to AIG common shareholders of record, including the 
Plans, as of the Record Date. The participants in the Plans were 
notified by AIG of the Warrant distribution through several written 
communications. The Warrants were distributed to 12,384 participants in 
the Savings Plan, 902 participants in the Thrift Plan, and to 39 
participants in the Chartis Plan. The Plans did not incur any fees or 
commissions in connection with the acquisition of the Warrants, nor are 
the Plans incurring any fees or commissions in connection with the 
holding of such Warrants.
    6. Until May 4, 2009, the Plans permitted participants to invest in 
the AIG Stock Fund, which held primarily AIG common stock. The AIG 
Stock Fund was closed to new investors as of May 4, 2009, with existing 
investors able to transfer out at any time. In other words, 
participants of the Plans were no longer able to purchase shares of AIG 
common stock as part of their investment options. As of the Record 
Date, the AIG Stock Fund held 424,787 shares of AIG common stock or 
0.026% of shares of outstanding AIG common stock. As a result of such 
stock holdings, the AIG Stock Fund was issued approximately 226,808 
Warrants on January 19, 2011.
    7. Between January 19, 2011 and February 13, 2011, the Warrants 
were held on behalf of the Plans in the AIG Stock Fund. During this 
period, a unit in the AIG Stock Fund consisted of: (a) An interest in 
AIG common stock held by the AIG Stock Fund; (b) an interest in the 
Warrants held by such Fund; and (c) an interest in the cash vehicle 
held by such Fund. The AIG Stock Fund units were indivisible, 
therefore, any redemption by a participant in the Plans of an AIG Stock 
Fund unit during this period resulted in the receipt of cash by the 
participant representing the participant's interest in the Warrants and 
the cash vehicle, in addition to either AIG common stock or cash in 
lieu thereof, at the participant's election.
    8. On February 15, 2011, all the Warrants remaining in the AIG 
Stock Fund (222,226.901) were moved into a newly-created fund (the AIG 
Warrant Fund). The AIG Warrant Fund, like the AIG Stock Fund, is a 
frozen fund. As of March 6, 2013, the AIG Warrant Fund held Warrants on 
behalf of 9,179 Savings Plan participants, 689 Thrift Plan 
participants, and 25 Chartis Plan participants. While participants in 
the Plans may sell the Warrants held on their behalf in the AIG Warrant 
Fund, they may not exercise such Warrants, unlike other Warrant 
holders. According to AIG, the costs and administrative complexities 
required to allow participants to exercise the Warrants would be 
extraordinary. For instance, AIG represents that the exercise could 
have violated an amendment in each Plan preventing participants from 
investing their future contributions in AIG common stock. In addition, 
AIG states that such an exercise could be problematic to implement 
within a 401(k) account. In this regard, AIG explains that it would be 
required to receive cash in an exchange for AIG common stock. Because 
the Plans do not offer cash-only holding accounts, if such accounts 
were created, participants would need to be counseled and guided, as to 
how to generate sufficient fund balances to affect the Warrant 
exercise. Further, AIG explains that participants in the Plans would be 
paying cash to

[[Page 43940]]

their sponsors, which concerned AIG's counsel.
    Finally, AIG notes that a system would have to be established with 
the Plans in order for AIG to send shares of AIG common stock to the 
Plans' Trustees. This system, according to AIG and Mercer, would have 
cost ``several hundred thousand dollars'' over the life of the 
Warrants. Thus, in light of the fact that only approximately one-third 
of the participants would be affected and the cost and difficulty in 
making such a system work, AIG decided that it was not an appropriate 
use of the Plans' assets for participants in the Plans to have the 
ability to exercise the Warrants.
    10. To remind participants in the Plans to sell their Warrants 
before the ten year holding period which expires on January 19, 2021, 
AIG will provide annual written notices to all participants in the 
Plans who hold Warrants. Such sales are being conducted on the open 
market in blind transactions. In connection with the sales of the 
Warrants, no commissions or fees will be paid to brokers who are 
affiliated with AIG, Chartis or the Plans' Trustees.\22\
---------------------------------------------------------------------------

    \22\ The applicant represents that a $0.023 commission per 
Warrant traded is paid to State Street Global Markets (State 
Street). State Street is the executed broker for both of the 
Trustees, Mercer and Banco Popular.
---------------------------------------------------------------------------

    11. AIG notes that the Plans' acquisition and holding of the 
Warrants constitute prohibited transactions in violation of the Act. In 
this regard, section 406(a)(1)(A) of the Act prohibits the sale or 
exchange of property between a plan and a party in interest. AIG is a 
party in interest with respect to each of the Savings Plan and Thrift 
Plan as an employer any of whose employees are covered by such Plans, 
as described under section 3(14)(C) of the Act. AIG is also a party in 
interest with respect to the Chartis Plan as an owner of 50% or more of 
the voting stock of Chartis, as described under section 3(14)(E) of the 
Act. Therefore, the acquisition of the Warrants by the Plans resulted 
in a prohibited sale or an exchange of property between the Plans and 
AIG.
    The Warrants are also ``employer securities'' within the meaning of 
section 407(d)(1) of the Act because they are securities issued by an 
employer of employees covered by the Plans, or by an affiliate of such 
employer. Section 407(a)(1)(A) of the Act prohibits a plan from 
acquiring or holding ``any employer security'' which is not a 
``qualifying employer security.'' The Warrants are not qualifying 
employer securities, as defined under section 407(d)(5) of the Act, 
because they are not (a) stock, (b) marketable obligations, or (c) 
interests in a publicly traded partnership. Therefore, the Plans' 
acquisition and holding of the Warrants violate section 407(a)(1)(A) of 
the Act.
    Further, section 406(a)(2) of the Act prohibits a fiduciary with 
investment discretion from permitting a plan to hold employer 
securities in violation of section 407(a) of the Act. The Trustees, 
which are fiduciaries, accepted the Warrants on behalf of the Plans in 
violation of section 406(a)(2) of the Act.
    Section 406(b)(1) of the Act prohibits a plan fiduciary from 
dealing with the assets of a plan in his own interest or own account. 
Section 406(b)(2) of the Act prohibits a fiduciary from acting in any 
transaction involving the plan on behalf of a party whose interests are 
adverse to interests of the plan or the interests of the plan's 
participants or beneficiaries. Accordingly, the Trustees' decision to 
have the Plans acquire and hold the Warrants violated section 406(b)(1) 
and (b)(2) of the Act.
    12. Accordingly, AIG is requesting a retroactive individual 
exemption from the prohibited transaction provisions described above 
for the acquisition and holding of the Warrants by the Plans. AIG 
represents that such an exemption would be administratively feasible 
because participants in the Plans would be able to dispose of their 
Warrants at their discretion and as such, no oversight would be 
required by the Department. Additionally, AIG explains that the 
exemption would be protective of the participants in the Plans because 
the issuance of the Warrants was the result of an independent act of 
AIG acting as a corporate entity, without any participation on the part 
of the Plans. Moreover, the issuance of the Warrants was part of a 
recapitalization that was negotiated by AIG and Treasury. Finally, AIG 
represents that the proposed exemption would be in the interest of the 
Plans because it permits the acquisition and holding of the Warrants.
    13. In summary, AIG represents that the transactions satisfied or 
will satisfy the statutory criteria for an exemption under section 
408(a) of the Act, because: (a) All decisions regarding the holding and 
sale of the Warrants have been and will be made by the Plans' 
participants; (b) the Plan's acquisition of the Warrants resulted from 
an independent act of AIG as a corporate entity, and without any 
participation of the Plans; (c) the acquisition of the Warrants by the 
Plans occurred in connection with a recapitalization plan approved by 
the Board of Directors of AIG, in which all holders of AIG common 
stock, including the Plans, were treated exactly the same; (d) all 
holders of AIG common stock, including the Plans, were issued the same 
proportionate number of Warrants based on the number of shares of AIG 
common stock held by such shareholders; (e) the acquisition of the 
Warrants by the Plans was made in a manner that was consistent with the 
provisions of each such Plan for individually-directed investment of 
participant accounts; (f) the Plans did not pay any fees or commissions 
in connection with the acquisition of the Warrants; (g) the Plans did 
not pay, nor will the Plans pay, any fees or commissions in connection 
with the holding of the Warrants; (h) the Plans did not pay, nor will 
the Plans pay, any brokerage fees or commissions to any broker 
affiliated with AIG, Chartis or the Trustees in connection with the 
sale of the Warrants; and (i) AIG will provide annual written notices 
to all participants in the Plans holding Warrants to remind them to 
sell their Warrants before such Warrants expire on January 19, 2021.

Notice to Interested Persons

    The persons who may be interested in the publication in the Federal 
Register of the Notice of Proposed Exemption (the Notice) include all 
individuals who are participants in the Plans who received the 
Warrants. It is represented that all such interested persons will be 
notified of the publication of the Notice by first class mail, to each 
such interested person's last known address within fifteen (15) days of 
publication of the Notice in the Federal Register. Such mailing will 
contain a copy of the Notice, as it appears in the Federal Register on 
the date of publication, plus a copy of the Supplemental Statement, as 
required, pursuant to 29 CFR 2570.43(b)(2), which will advise all 
interested persons of their right to comment and to request a hearing. 
All written comments and/or requests for a hearing must be received by 
the Department from interested persons within 45 days of the 
publication of this proposed exemption in the Federal Register.
    All comments will be made available to the public. Warning: Do not 
include any personally identifiable information (such as name, address, 
or other contact information) or confidential business information that 
you do not want publicly disclosed. All comments may be posted on the 
Internet and can be retrieved by most Internet search engines.

FOR FURTHER INFORMATION CONTACT: Mr. Asrar Ahmed of the Department at 
(202)

[[Page 43941]]

693-8557. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
section 404 of the Act, which, among other things, require a fiduciary 
to discharge his duties respecting the plan solely in the interest of 
the participants and beneficiaries of the plan and in a prudent fashion 
in accordance with section 404(a)(1)(b) of the Act; nor does it affect 
the requirement of section 401(a) of the Code that the plan must 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
rules. Furthermore, the fact that a transaction is subject to an 
administrative or statutory exemption is not dispositive of whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemptions, if granted, will be subject to the 
express condition that the material facts and representations contained 
in each application are true and complete, and that each application 
accurately describes all material terms of the transaction which is the 
subject of the exemption.

    Signed at Washington, DC, this 12th day of July 2013.
Lyssa E. Hall,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2013-17498 Filed 7-19-13; 8:45 am]
BILLING CODE 4510-29-P