Exemptions From Certain Prohibited Transaction Restrictions
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Grant of Individual Exemptions.
Citation: "77 FR 19340"
"Notices"
SUMMARY: This document contains exemptions issued by the
SUPPLEMENTARY INFORMATION: A notice was published in the
The notice of proposed exemption was issued and the exemptions are being granted solely by the Department because, effective
Statutory Findings
In accordance with section 408(a) of the Act and/or section 4975(c)(2) of the Code and the procedures set forth in 29 CFR part 2570, subpart B (76 FR 66637, 66644,
FOOTNOTE 1 The Department has considered exemption applications received prior to
(a) The exemption is administratively feasible;
(b) The exemption is in the interests of the plan and
its participants and beneficiaries; and
(c) The exemption is protective of the rights of the participants and beneficiaries of the plan.
[Prohibited Transaction Exemption 2012-04; Exemption Application No. D-11628]
Exemption
Section I
The restrictions of sections 406(a)(1)(A), (C) and (D), 406(b)(1), and 406(b)(2) of the Act shall not apply to the payment by the Plan to
(a) An independent, qualified fiduciary (I/F), with expertise in plans providing health and welfare benefits under the Act and the fiduciary obligations thereunder, acting on behalf of the Plan, determines prior to entering into the transaction that the transaction is feasible, in the interest of, and protective of the Plan and the participants and beneficiaries of the Plan;
(b) Before the Plan enters into the proposed transaction, the I/F reviews the transaction, ensures that the terms of the transaction are at least as favorable to the Plan as an arm's length transaction with an unrelated party, and determines whether or not to approve the transaction, in accordance with the fiduciary provisions of the Act;
(c) The I/F monitors compliance with the terms and conditions of this exemption, as described herein, and ensures that such terms and conditions are at all times satisfied;
(d) The I/F monitors compliance with the terms of the written license agreement (the License) between the
(e) The subject transaction is, in fact, on terms and at all times remains on terms that are at least as favorable to the Plan as those that would have been negotiated under similar circumstances at arm's-length with an unrelated third party.
Section II
The restrictions of sections 406(a)(1)(A), (C) and (D), 406(b)(1), and 406(b)(2) of the Act shall not apply, effective
(a) The terms of the medical services provided by BOUC to Plan participants are at least as favorable to the participants as those they could obtain in similar transactions with an unrelated party;
(b) The Plan participants will have access to all of the providers in BCBSNM's network and will be free to choose whether or not to use BOUC's clinic;
(c) At least 99% of the providers participating in the BCBSNM are unrelated to the companies whose employees participate in the Plan, or any other party in interest with respect to the Plan;
(d) BOUC will be treated no more favorably than any other provider participating in the BCBSNM; and
(e) The transactions are not part of an agreement, arrangement or understanding designed to benefit BOUC or any other party in interest with respect to the Plan.
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption published on
DATES:
Effective Date: With respect to the transactions described in Section II, this exemption is effective
FOR FURTHER INFORMATION CONTACT:
[Exemption Application No. D-11637 Prohibited Transaction Exemption 2012-05]
Exemption
Effective
FOOTNOTE 2 For purposes of this exemption, references to specific provisions of Title I of the Act, unless otherwise specified, refer also to the corresponding provisions of the Code. END FOOTNOTE
(1) To the acquisition of certain rights (the ADS Rights) by the Plan in connection with an offering (the Offering) of shares of stock (the Stock) in
(2) To the holding of the ADS Rights received by the Plan during the subscription period of the Offering; provided that the conditions as set forth in Section II of this exemption were satisfied;
Section II: Conditions
The relief provided in this exemption is conditioned upon adherence to the material facts and representations described, herein, and as set forth in the application file and upon compliance with the conditions, as set forth in this exemption.
(1) The receipt by the Plan of the ADS Rights occurred in connection with the Offering made available by Holdings on the same terms to all shareholders, such as the Plan, of American Depository Shares /3/ (the HSBC ADS) which represent the Stock of Holdings;
FOOTNOTE 3 American Depository Shares permit investment in foreign securities to trade on markets in
(2) The acquisition of the ADS Rights by the Plan resulted from an independent act of Holdings, as a corporate entity, and all holders of the ADS Rights, including the Plan, were treated in the same manner with respect to the acquisition of such rights;
(3) All holders of the ADS Rights, such as the Plan, received the same proportionate number of such rights based on the number of HSBC ADS held; and
(4) All decisions regarding the ADS Rights made by the Plan were made by an independent, qualified fiduciary which:
(a) Conducted a due diligence review of the Offering;
(b) Determined whether or not to direct the Plan to vote in favor of the Offering; and
(c) Evaluated a prudent strategy for disposition of the ADS Rights under the Offering that were allocated to the Plan.
Effective Date: This exemption is effective, on
Written Comments
In the Notice of Proposed Exemption (the Notice), the Department invited all interested persons to submit written comments and requests for a hearing on the proposed exemption within 45 days of the date of the publication of the Notice in the
FOOTNOTE 4 76 FR 70495,
During the comment period the Department received no requests for hearing. However, the Department did receive a comment letter, dated
In addition the Applicants requested three (3) clarifications to the Summary of Facts and Representations (the SFR) of the Notice. The Applicants' requested clarifications to the SFR are discussed, below, in an order that corresponds to the appearance of the relevant language in the Notice.
1. In paragraph 4, as set forth in the SFR, on page 70497 of the Notice, the Applicants clarify that
2. In paragraph 16, as set forth in the SFR, on page 70499 and 70501 of the Notice, the Applicants clarify that further examination of the fees under each of the options available to the Plan has shown that a stamp tax (a United Kingdom Stamp Duty Reserve Tax) would not have been incurred under Option (C). The Plan would only have paid a stamp tax under Option (A). The Department concurs with the Applicants' requested clarification.
3. In paragraph 19, as set forth in the SFR, on page 70502 of the Notice, the Applicants represent that the Offering included a default procedure to protect the interests of ADS Rights holders who did not take action with respect to the ADS Rights they received in the Offering. The Department concurs with the Applicants' requested clarification.
After full consideration and review of the entire record, including the written comment letter filed by the Applicants, the Department has determined to grant the exemption, as amended and clarified above. Comments submitted by the Applicants to the Department in the comment letter have been included as part of the public record of the exemption application. The complete application file (D-11637), including all supplemental submissions received by the Department, is available for public inspection in the
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption refer to the Notice published on
FOR FURTHER INFORMATION CONTACT: Ms.
[Prohibited Transaction Exemption 2012-06; Exemption Application No. D-11662]
Exemption
The restrictions of sections 406(a)(1)(A) and 406(b)(1) and (b)(2) of the Act and the sanctions resulting from the application of section 4975(c)(1)(A) and (E) of the Code, shall not apply, effective
(a) A qualified, independent fiduciary (the Independent Fiduciary), acting on behalf of the Plan, determined whether the Contribution was in the interests of the Plan and protective of the Plan's participants and beneficiaries;
(b) The Independent Fiduciary reviewed, negotiated and approved the terms of the Contribution on behalf of the Plan in accordance with the fiduciary provisions of the Act;
(c) A qualified, independent appraiser determined the fair market value of the Annuity prior to the Contribution, and it updated such valuation on the date of the Contribution;
(d) The Annuity represented approximately 19% of the Plan's assets at the time of the Contribution;
(e) The Plan incurred no fees, commissions, or other charges or expenses in connection with the Contribution;
(f) The terms of the Contribution were no less favorable to the Plan than the terms negotiated at arm's length under similar circumstances between unrelated parties; and
(g)
Effective Date: This exemption is effective as of
Written Comment
In the Notice of Proposed Exemption (76 FR 77619,
During the comment period, the Department did not receive any requests for a public hearing. However, the Department did receive one written comment from a Plan participant, who sought to clarify whether the Plan had sufficient funds to cover Plan benefit obligations due before the Annuity matured on
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the Notice published on
FOR FURTHER INFORMATION CONTACT: Mr.
[Prohibited Transaction Exemption 2012-07; Exemption Application No. D-11669]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) and section 407(a) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, /5/ shall not apply, effective
FOOTNOTE 5 For purposes of this exemption, references to section 406 of the Act should be read to refer as well to the corresponding provisions of section 4975 of the Code. END FOOTNOTE
This exemption is subject to the following conditions:
(a) Plan participants holding Genzyme Common Stock received one CVR for each Share on the effective date of the tender or cancellation of their Shares, in connection with the Transactions.
(b) The acquisition of CVRs by the Plan occurred in connection with the Transactions on the same terms and in the same manner as the acquisition of CVRs by all other holders of Genzyme Common Stock, other than
(c) The Plan's acquisition of CVRs resulted either (1) from a decision by a participant or beneficiary to tender Shares allocated to his or her account or
(2) Following a decision by a participant or beneficiary not to tender Shares by reason of the Merger.
(d) The Plan did not pay any fees or commissions in connection with the acquisition of the CVRs, nor does it pay any fees or commissions in connection with the holding of CVRs or sale of CVRs to
(e) Credit Suisse Securities (
(f) The Plan does not acquire or hold CVRs other than those acquired in connection with the Transactions.
(g) Plan participants have the same rights with respect to CVRs allocated to their accounts under the Plan (including with respect to any repurchase of CVRs by
(h) For so long as CVRs remain a permissible Plan investment, the retention or disposition by the Plan of CVRs allocated to a participant's or beneficiary's account is administered in accordance with the provisions of the Plan that are in effect for individually-directed investment of participant accounts.
Effective Date: This exemption is effective as of
Extension of Comment Period
The notice of proposed exemption (the Notice) invited all current participants and beneficiaries of the Plan (Interested Persons) to submit comments or requests for a hearing to the Department by
Written Comments
During the comment period, the Department received three written comments with respect to the Notice, and no requests for a public hearing. The first two comments stated matters that were not germane to the exemption request. The third comment and a supplemental response (together, the Comment Letter) were submitted by
1. Successor Plans. On page 77618 of the Summary of Facts and Representations (the Summary), Representation 17 states that if the exemption is granted, "it would also apply to successor plans to the current Plan."
While the proposed extension of relief to successor plans is mentioned in the Summary,
In response to this comment, the Department has revised the title of the final exemption to include the "
2. Requested Changes to Conditions (d) and (g) of the Notice.
In response to this comment, the Department has revised Condition (d) of the final exemption slightly to clarify the meaning of this condition and its applicability to
In addition, Condition (g) of the Notice requires that participants have the ability to direct the Trustee "to sell CVRs allocated to their respective accounts at any time" (emphasis added).
In response to this comment, the Department has decided not to make the suggested revision to the Notice since it is inherently understood that the condition might be subject to limitations imposed by applicable law (e.g., federal securities laws). However, the Department notes
3. Minor Errors and Inconsistencies in the Notice.
In addition,
The Purchaser, a
Further,
Representation 5 of the Summary also states that the Merger Consideration /6/ in connection with the Exchange Offer and the Subsequent. Exchange Offer was paid on
FOOTNOTE 6 The Merger Consideration consisted of (a)
Finally,
In response to the foregoing comments, the Department notes the clarifications and updates to the Notice.
Accordingly, after giving full consideration to the entire record, including the Comment Letter, the Department has determined to grant the exemption as modified herein.
For further information regarding the comment and other matters discussed herein, Interested Persons are encouraged to obtain copies of the exemption application file (Exemption Application No. D-11669) the Department is maintaining in this case. The complete application file, as well as all supplemental submissions received by the Department, are made available for public inspection in the
FOR FURTHER INFORMATION CONTACT:
[Prohibited Transaction Exemption 2012-08; Exemption Application No. D-11680]
Exemption
FOOTNOTE 7 For purposes of this exemption, references to section 406 of ERISA should be read to refer to the corresponding provisions of section 4975 of the Code as well. END FOOTNOTE
(a) The affiliate convicted under
(b) ERISA-covered assets are not involved in the conduct that is the subject of the Belgian affiliate's conviction(s);
(c)
(d) This exemption is not applicable if
(e)
(f)
(g)
Effective Date: This exemption is effective as of
For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption (the Proposal) published on
Written Comments
The Department received one written comment letter with respect to the Proposal. The letter was submitted by the Applicant in order to make some minor corrections and clarifications with respect to the Proposal.
The Applicant provided updated information that CBB was only convicted on three counts of criminal activity in
FOOTNOTE 8 CBB and three of its employees as of
The Applicant requested that the Department make certain changes to Conditions (b) and (c) of the Proposal. The Applicant requested that, for sake of clarity, the word "Belgian" be inserted before "affiliate" in both Conditions (b) and (c). In addition, because the convictions are under appeal, the Applicant requested that the word "conduct" be substituted for "misconduct" in Condition (b), and the phrase "the conduct that is the subject of the convictions" be substituted for the word "misconduct" in Condition (c). The Department has made these requested changes. The Applicant also requested that the Department make corresponding changes to the Summary of Facts and Representations (the Summary) section of the Proposal. The Department notes these revisions to Representation 8 of the Summary.
Condition (e) of the Proposal requires
Condition (f) of the Proposal currently provides that "
In its comment letter, the Applicant had other requested changes to the Summary. The Applicant noted that the last sentence of Representation 2 indicates that CBB has no ERISA plan clients and is not expected to have any such clients in the future. According to the Applicant, although CBB does not act as a fiduciary to any ERISA plan,
The Applicant represents that after a further review of the facts and circumstances surrounding the criminal convictions of CBB, it has determined that: (a) prior to his termination of employment,
Representation 5 addresses the reasons that the Proposal would be protective of the rights of participants and beneficiaries of affected plans. For purposes of clarity, the Applicant requested in its comment letter that the Department revise subsection (d) of Representation 5 to read: "A consistent framework and requirements were developed through the policy for mandatory sales force training on products, as well as
Representation 7 addresses
The Department has considered the entire record, including the comment letter filed by the Applicant, and has determined to grant the exemption as proposed, subject to the revisions described herein.
FOR FURTHER INFORMATION CONTACT:
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption under section 408(a) of the Act and/or section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, which among other things require a fiduciary to discharge his duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it affect the requirement of section 401(a) of the Code that the plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries;
(2) This exemption is supplemental to and not in derogation of, any other provisions of the Act and/or the Code, including statutory or administrative exemptions and transactional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction; and
(3) The availability of this exemption is subject to the express condition that the material facts and representations contained in the application accurately describe all material terms of the transaction which is the subject of the exemption.
Signed at
Lyssa
Acting Director of Exemption Determinations,
[FR Doc. 2012-7705 Filed 3-29-12;
BILLING CODE 4510-29-P
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