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

Grant of Amendment to Prohibited Transaction Exemption (PTE) 93-8 Involving the Fortunoff Pension Plans (the Plans) Located in Westbury, NY   [5/18/1998]
[PDF]
WAIS Document Retrieval
[Federal Register: May 18, 1998 (Volume 63, Number 95)]
[Notices]               
[Page 27329-27330]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18my98-99]

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

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 98-22; Exemption Application Nos. D-
10461, D-10462 and D-10463]

 
Grant of Amendment to Prohibited Transaction Exemption (PTE) 93-8 
Involving the Fortunoff Pension Plans (the Plans) Located in Westbury, 
NY

AGENCY: Pension and Welfare Benefits Administration, U.S. Department of 
Labor.

ACTION: Grant of Amendment to PTE 93-8.

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

SUMMARY: This document contains a final exemption which amends PTE 93-8 
(58 FR 7258, February 5, 1993), a purchase, leaseback and license 
exemption involving Plans sponsored by Fortunoff Fine Jewelry and 
Silverware, Inc. (FFJ) and M. Fortunoff of Westbury Corporation (M. 
Fortunoff) and parties in interest. These transactions are described in 
a notice of pendency that was published in the Federal Register on May 
8, 1992 at 57 FR 19951.

EFFECTIVE DATE: This exemption is effective as of May 18, 1998.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady, Office of Exemption 
Determinations, Pension and Welfare Benefits Administration, U.S. 
Department of Labor, Washington, D.C. 20210, telephone (202) 219-8881. 
(This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On December 19, 1997, the Department of 
Labor (the Department) published a notice of proposed exemption (the 
Notice) in the Federal Register (62 FR 66685) that would amend PTE 93-
8. PTE 93-8 provides an exemption from certain prohibited transaction 
restrictions of section 406 of the Employee Retirement Income Security 
Act of 1974 (the Act) and from the sanctions resulting from the 
application of section 4975 of the Internal Revenue Code of 1986 (the 
Code), as amended, by reason of section 4975(c)(1) of the Code. The 
Notice was requested in an application filed on behalf of M. Fortunoff 
and FFJ (collectively, the Applicants) pursuant to 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 (55 FR 32836, 
August 10, 1990) (the Procedures). Effective December 31, 1978, section 
102 of Reorganization Plan No. 4 of 1978 (43 FR 47713, October 17, 
1978) transferred the authority of the Secretary of the Treasury to 
issue exemptions of the type requested to the Secretary of Labor. 
Accordingly, this exemption is being issued solely by the Department.
    The Notice gave interested persons the opportunity to comment and 
to request a public hearing on the matters described therein. Although 
the Notice and supplemental statement were to be posted and distributed 
to interested persons during the month of December 1997, the Applicants 
stated that this action was not taken but inadvertently overlooked. 
Therefore, the Applicants represented that they posted copies of the 
Notice and supplemental statement on employee bulletin boards in 
company stores and executive offices and also mailed this documentation 
to all other participants in the Plans who were not current employees, 
on or about March 9, 1998. The Department received no comments or 
hearing requests from interested persons following the dissemination of 
the Notice and supplemental statement and, therefore, has determined to 
grant the amendment to PTE 93-8.

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 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 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 require, among other things, a fiduciary to 
discharge his or her 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 requirements of section 401(a) of the Code that the plan 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) The exemption will not extend to transactions prohibited under 
section 406(b)(3) of the Act and section 4975(c)(1)(F) of the Code;
    (3) Before an exemption can be granted under section 408(a) of the 
Act and section 4975(c)(2) of the Code, the Department must find that 
the exemption is administratively feasible, in the interest of the plan 
and of its participants and beneficiaries and protective of the rights 
of participants and beneficiaries of the plan;
    (4) This exemption will be supplemental to, and not in derogation 
of, any other provisions of the Act and the Code, including statutory 
or administrative exemptions. 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
    (5) This exemption is subject to the express condition that the 
Summary of Facts and Representations set forth in the proposed 
exemption relating to PTE 93-8, as amended by this grant notice, 
accurately describe, where relevant, the material terms of the 
transactions consummated pursuant to that exemption.

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 cited 
above, the Department hereby amends PTE 93-8. Accordingly, the 
restrictions of sections 406(a), 406(b)(1) and (b)(2) of the Act and 
the sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall 
not apply to the leasing by the Fortunoff Pension Plan--Employer Group 
A Plan, the Fortunoff Pension Plan--Employer Group B Plan and the 
Fortunoff Fine Jewelry and Silverware, Inc. Profit Sharing Plan 
(collectively, the Plans) to Fortunoff Fine Jewelry and Silverware, 
Inc. (FFJ), under the provisions of an amended lease (the Amended 
Lease) described in Prohibited Transaction Exemption (PTE) 93-8 (58 FR 
7258, February 5, 1993), of certain real property (the Substitute 
Property), acquired by the Plans through

[[Page 27330]]

a third party exchange (the Exchange Property), as well as all 
remaining real estate which constitutes the leased premises (the 
Property), provided the following conditions are met:
    (a) The terms of the Amended Lease remain at least as favorable to 
the Plans as those obtainable in an arm's length transaction with an 
unrelated party.
    (b) The independent fiduciary--
    (i) Determines that the acquisition and subsequent leasing of the 
Substitute Property by the Plans under the Amended Lease are in the 
best interest of the Plans and their participants and beneficiaries;
    (ii) Monitors and enforces compliance with the terms and conditions 
of the Amended Lease, the Escrow Agreement and the new exemption, at 
all times; and
    (iii) Appoints one or more independent fiduciaries to resolve any 
conflicts of interest which may develop among the Plans with respect to 
the Amended Lease, the Escrow Agreement, the Property, or the Plans' 
respective interests therein.
    (c) The fair market value of the proportionate interests held by 
each Plan in the Property as a whole following the exchange transaction 
does not exceed 25 percent of each Plan's assets.
    (d) The Property, the Exchange Property and the Substitute Property 
are all appraised by qualified, independent appraisers prior to the 
consummation of the exchange transaction.
    (e) The base rent for the Property is adjusted annually by the 
independent fiduciary based upon an independent appraisal of such 
Property.
    (f) FFJ incurs all real estate taxes and other costs which are 
incident to the Amended Lease.
    (g) The Escrow Agreement is maintained by M. Fortunoff of Westbury 
Corporation (M. Fortunoff), in favor of the Plans, as security for 
FFJ's rental obligations under the Amended Lease.
    The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application for exemption are true and complete and accurately describe 
all material terms of the transactions. In the case of continuing 
transactions, if any of the material facts or representations described 
in the application change, the exemption will cease to apply as of the 
date of such change. In the event of any such change, an application 
for a new exemption must be made to the Department.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant PTE 93-8, refer to the 
proposed exemption, grant notice and technical correction notice which 
are cited above.

    Signed at Washington, D.C., this 13th day of May, 1998.
Ivan L. Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 98-13144 Filed 5-15-98; 8:45 am]
BILLING CODE 4510-29-P