Application Nos. and Proposed Exemptions; D-11500, Carle Foundation Hospital & Affiliates Pension Plan; and Barclays California Corporation (Barcal); et al., 12305-12310 [2010-5536]
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Federal Register / Vol. 75, No. 49 / Monday, March 15, 2010 / Notices
exemption, a fiduciary of a plan will be
deemed to be unrelated to, and
independent of the Asset Manager and
the Affiliated Broker-Dealer, if such
fiduciary represents in writing that
neither such fiduciary, nor any
individual responsible for the decision
to authorize or terminate authorization
for the transactions described above, in
Section I of this exemption, is an officer,
director, or highly compensated
employee (within the meaning of Code
section 4975(e)(2)(H)) of the Asset
Manager and the Affiliated BrokerDealer, and represents that such
fiduciary shall advise the Asset Manager
within a reasonable period of time after
any change in such facts occur.
(2) Notwithstanding anything to the
contrary in this Section III(h), a
fiduciary of a plan is not independent:
(i) If such fiduciary directly or
indirectly controls, is controlled by, or
is under common control with the Asset
Manager or the Affiliated Broker Dealer;
(ii) If such fiduciary directly or
indirectly receives any compensation or
other consideration from the Asset
Manager, or the Affiliated Broker-Dealer
for his or her own personal account in
connection with any transaction
described in this exemption;
(iii) If any officer, director, or highly
compensated employee (within the
meaning of Code section 4975(e)(2)(H))
of the Asset Manager responsible for the
transactions described above, in Section
I of this exemption, is an officer,
director, or highly compensated
employee (within the meaning of Code
section 4975(e)(2)(H)) of the sponsor of
the plan or of the fiduciary responsible
for the decision to authorize or
terminate authorization for the
transactions described above, in Section
I. However, if such individual is a
director of the sponsor of the plan or of
the responsible fiduciary, and if he or
she abstains from participation in: (A)
The choice of the plan’s investment
manager/adviser; and (B) the decision to
authorize or terminate authorization for
transactions described above, in Section
I, then this Section III(h)(2)(iii) shall not
apply.
(3) The term, ‘‘officer,’’ means a
president, any vice president in charge
of a principal business unit, division, or
function (such as sales, administration,
or finance), or any other officer who
performs a policy-making function for
Columbia or any affiliate thereof.
(i) The term, ‘‘Securities,’’ shall have
the same meaning as defined in section
2(36) of the Investment Company Act of
1940 (the 1940 Act), as amended (15
U.S.C. 80a–2(36)(2001)). For purposes of
this exemption, mortgage-backed or
other asset-backed securities rated by
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one of the Rating Organizations, as
defined, below, in Section III(l), will be
treated as debt securities.
(j) The term, ‘‘Eligible Rule 144A
Offering,’’ shall have the same meaning
as defined in SEC Rule 10f–3(a)(4) (17
CFR 270.10f–3(a)(4)) under the 1940
Act).
(k) The term, ‘‘qualified institutional
buyer,’’ or the term, ‘‘QIB,’’ shall have
the same meaning as defined in SEC
Rule 144A (17 CFR 230.144A(a)(1))
under the 1933 Act.
(l) The term, ‘‘Rating Organizations,’’
means Standard & Poor’s Rating
Services, Moody’s Investors Service,
Inc., Fitch Ratings, Inc., Dominion Bond
Rating Service Limited, and Dominion
Bond Rating Service, Inc., or any
successors thereto.
(m) The term, ‘‘In-House Plan(s),’’
means an employee benefit plan(s) that
is subject to the Act and/or the Code,
and that is sponsored by the Applicant
as defined, above, in Section III(a), or its
affiliate, as defined in Section III(c), for
its own employees.
For a more complete statement of the
facts and representations supporting the
Department’s decision to grant this
exemption, refer to the notice of
proposed exemption published on
December 22, 2009 at 74 FR 68110.
FOR FURTHER INFORMATION CONTACT: Mr.
Gary H. Lefkowitz of the Department,
telephone (202) 693–8546. (This is not
a toll-free number.)
General Information
The attention of interested persons is
directed to the following:
(1) The fact that a transaction is the
subject of an exemption under section
408(a) of the Act and/or section
4975(c)(2) of the Code does not relieve
a fiduciary or other party in interest or
disqualified person from certain other
provisions to which the exemption does
not apply and the general fiduciary
responsibility provisions of section 404
of the Act, which among other things
require a fiduciary to discharge his
duties respecting the plan solely in the
interest of the participants and
beneficiaries of the plan and in a
prudent fashion in accordance with
section 404(a)(1)(B) of the Act; nor does
it affect the requirement of section
401(a) of the Code that the plan must
operate for the exclusive benefit of the
employees of the employer maintaining
the plan and their beneficiaries;
(2) This exemption is supplemental to
and not in derogation of, any other
provisions of the Act and/or the Code,
including statutory or administrative
exemptions and transactional rules.
Furthermore, the fact that a transaction
is subject to an administrative or
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statutory exemption is not dispositive of
whether the transaction is in fact a
prohibited transaction; and
(3) The availability of this exemption
is subject to the express condition that
the material facts and representations
contained in the application accurately
describes all material terms of the
transaction which is the subject of the
exemption.
Signed at Washington, DC, this 9th day of
March 2010.
Ivan Strasfel,
Director of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2010–5535 Filed 3–12–10; 8:45 am]
BILLING CODE 4510–29–P
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
Application Nos. and Proposed
Exemptions; D–11500, Carle
Foundation Hospital & Affiliates
Pension Plan; and Barclays California
Corporation (Barcal); et al.
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).
Written Comments and Hearing
Requests
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. 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.
ADDRESSES: All written comments and
requests for a hearing (at least three
copies) should be sent to the Employee
Benefits Security Administration
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Federal Register / Vol. 75, No. 49 / Monday, March 15, 2010 / Notices
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(EBSA), Office of Exemption
Determinations, Room N–5700, U.S.
Department of Labor, 200 Constitution
Avenue, NW., Washington, DC 20210.
Attention: Application No. llll,
stated in each Notice of Proposed
Exemption. Interested persons are also
invited to submit comments and/or
hearing requests to EBSA via e-mail or
FAX. Any such comments or requests
should be sent either by e-mail 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: If you submit written
comments or hearing requests, do not
include any personally-identifiable or
confidential business information that
you do not want to be publiclydisclosed. All comments and hearing
requests are posted on the Internet
exactly as they are received, and they
can be retrieved by most Internet search
engines. The Department will make no
deletions, modifications or redactions to
the comments or hearing requests
received, as they are public records.
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).
SUPPLEMENTARY INFORMATION: 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 (55 FR
32836, 32847, August 10, 1990).
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.
The applications contain
representations with regard to the
proposed exemptions which are
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summarized below. Interested persons
are referred to the applications on file
with the Department for a complete
statement of the facts and
representations.
Carle Foundation Hospital & Affiliates
Pension Plan; Located in Urbana,
Illinois
[Application No. D–11500]
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 (55
FR 32836, 32847, August 10, 1990).
If the proposed exemption is granted,
the restrictions in section 406(a)(1)(A)
and (D) and section 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), (D), and (E) of the Code,
shall not apply to the sale of a certain
limited partnership interest (the LPI) by
the Carle Foundation Hospital &
Affiliates Pension Plan (the Plan) to
Carle Foundation Hospital (the
Employer), a party in interest with
respect to the Plan, provided that the
following conditions are satisfied:
(a) The sale is a one-time transaction
for cash;
(b) The terms and conditions of the
sale are at least as favorable to the Plan
as those that the Plan could obtain in an
arm’s length transaction with an
unrelated third party;
(c) The sales price is the greater of: (1)
The fair market value of the LPI as of the
date of the sale, as determined by a
qualified, independent appraiser, or (2)
the Plan’s total capital contributions as
of the date of the sale, plus imputed
earnings (calculated based upon the
applicable one-month Treasury bill
rates) from the date of the Plan’s
acquisition of the LPI to the date of the
sale;
(d) The Plan pays no commissions,
fees, or other expenses in connection
with the sale; and
(e) The Plan fiduciaries review and
approve the methodology used by the
qualified, independent appraiser, ensure
that such methodology is properly
applied in determining the fair market
value of the LPI, and also determine
whether it is prudent to go forward with
the proposed transaction.
Summary of Facts and Representations
1. The Carle Foundation Hospital &
Affiliates Pension Plan (the Plan) is a
money purchase pension plan
sponsored by Carle Foundation Hospital
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(the Employer), who is located in
Urbana, Illinois. The Plan had
approximately 2,361 participants and
beneficiaries, as of November 13, 2009,
and total net assets of approximately
$54,499,485, as of the same date. First
Busey Trust & Investment Co. is the
Plan’s directed trustee.
The Plan historically did not allow
participant-directed investments. Since
the Plan’s initial investment in the
subject limited partnership interest
(LPI), the Employer determined that it
would be appropriate and in the best
interests of the participants and
beneficiaries to make the Plan a
participant-directed plan under section
404(c) of the Act. Thus, the Plan was
restructured to permit participant
direction, effective March 1, 2008. In
order to finalize this conversion to a
participant-directed plan, the Plan must
liquidate the LPI.
2. The LPI is an interest in the
Pantheon USA Fund VII, L.P. (the
Fund). The Fund is a limited
partnership that invests in private
equity funds (i.e., a ‘‘fund of funds’’).
The Fund’s objective is to generate
superior, risk-adjusted returns for its
investors through a diversified portfolio
of leveraged buyout, venture capital,
and special situation funds. According
to the applicant, the Plan made a
$1,500,000 commitment to the Fund in
December 2006.1 As of September 14,
2009, the Plan’s capital contributions to
the Fund totaled $457,500.2
Pantheon Ventures, Inc. (Pantheon) is
the Fund’s investment adviser. It is
represented that the fees charged by the
Fund are based on a percentage of the
capital commitment made by investors
to the Fund; the Plan is currently paying
a fee of 0.75%. The terms of the Fund
provide that the Fund will continue for
thirteen years from the date of its first
investment, which was made in May
2006, and may be extended for up to
three additional years. Furthermore, the
Plan may not sell or otherwise transfer
its LPI to another investor without the
written consent of Pantheon (acting as
1 The Department expresses no opinion herein as
to whether the acquisition and holding of the LPI
by the Plan meets the requirements of Part 4 in Title
I of the Act.
2 According to the applicant, the Employer has
made a $15,000,000 commitment to the Fund, with
capital contributions to the Fund totaling
$4,575,000, as of September 14, 2009. It is
represented that the decision to purchase an
interest in the Fund on behalf of the Plan was a
decision made independently of the Employer’s
decision to purchase its own interest in the Fund;
thus, according to the applicant, there was no
agreement, arrangement, or understanding that the
Plan’s investment would be a means of enabling the
Employer or any other Plan fiduciary to invest in
the Fund or otherwise use the Plan’s assets in a
manner designed to benefit such fiduciary.
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manager of the Fund’s General Partner,
PUSA VII GP, LLC).
The Plan’s investment adviser,
Summit Strategies Group (Summit),
consulted with Pantheon, and
communicated information regarding
the limited secondary market for the LPI
to the Employer. Therefore, the
Employer proposes to purchase the LPI
from the Plan.3 However, the Carle
Pension Plan Administrative Committee
(the Plan Committee) will make the
ultimate determination whether or not
to sell the Plan’s LPI to the Employer;
the Plan Committee is a named
fiduciary of the Plan, along with the
Employer’s Board of Directors, which
monitors the Plan Committee.
3. The LPI was appraised for the Plan
Committee by Andrew S. Ward,
Managing Director, and Mark F.
Fournier, Director, of Stout Risius Ross,
Inc. (SRR), consistent with the standards
of Financial Accounting Standard (FAS)
157, Fair Value Measurements, which is
effective for financial statements issued
for fiscal years beginning after
November 15, 2007.4 The applicant
represents that SRR is a qualified,
independent appraiser located in
Chicago, Illinois. SRR is a financial
advisory firm that specializes in
investment banking, valuation and
financial opinions, and dispute advisory
and forensic services. SRR represents
that it has considerable experience
providing valuation opinions of private
equity funds, hedge funds, and similar
private companies. It is represented that
SRR is not related to, and has no interest
in, the Employer or an affiliate thereof
and that less than 1% of SRR’s gross
annual income is derived from the
Employer or an affiliate thereof.
SRR’s valuation report of September
11, 2009 states that the principal
sources of information used to estimate
the fair market value of the LPI
included, but were not limited to:
• The Fund’s Limited Partnership
Agreement, dated April 28, 2006;
3 Because the Fund was closed to new investors
as of June 29, 2007, Pantheon would need to grant
a special waiver of the required $10 million
commitment to any unrelated purchaser who is not
already invested in the Fund. Pantheon has
expressed a strong preference that the purchaser of
the Plan’s LPI be an investor already invested in the
Fund. Summit has not identified any investors,
other than the Employer, whose stated investment
goals would be consistent with purchasing the
Plan’s LPI without a discount. The Department
notes that no relief is being provided in this
proposed exemption beyond the Plan’s sale of the
LPI to the Employer for any additional prohibited
transactions, if any, that may have occurred as a
result of co-investing in the same Fund by the Plan
and the Employer.
4 FAS 157 provides guidance for measuring the
fair value of assets and liabilities, including hardto-value alternative investments.
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• The Fund’s financial statements for
the year ended December 31, 2008,
audited by PriceWaterhouseCoopers;
• The Fund’s Investment Adviser’s
Report for the quarter ending March 31,
2009;
• The Fund’s Private Placement
Memorandum, dated March 2006;
• Discussions with Pantheon
representatives concerning the assets
and liabilities held by the Partnership;
and
• Public information regarding
market evidence of lack of control and
lack of marketability discounts.
Regarding SRR’s valuation
methodology, the report states that
several valuation approaches were
considered, including a Market
Approach, an Income Approach, and an
Asset Approach. SRR relied primarily
on a Market Approach, a valuation
technique whereby the value of the
subject company is calculated based on
the prices of actual transactions for
similar companies. These observations
make it possible to determine the value
of shares that have no active market.
This can be accomplished via either the
Guideline Public Company Method or
the Merger and Acquisition Method.
SRR used the Guideline Public
Company Method, a valuation
technique whereby the value of a
company is estimated by comparing it to
similar public companies. SRR states
that if the Fund were publicly traded, a
Marketable, Non-controlling Interest
Value of Equity in the Fund as a whole
was estimated to be $440,000,000. They
then calculated the Plan’s 0.07%
interest in the Fund ($440,000,000 ×
0.0007 = $308,000) and subtracted a
20% discount for lack of marketability
($308,000 × 0.20 = $62,000) to arrive at
a fair market value of $246,000 for the
LPI ($308,000 ¥ $62,000 = $246,000), as
of August 31, 2009.
4. The Employer proposes to pay the
Plan the greater of: (1) The fair market
value of the LPI as of the date of the
sale, as determined by SRR, or (2) the
Plan’s total capital contributions, as of
the date of the sale, plus imputed
earnings (based upon the applicable
one-month Treasury bill rates) from the
date of the Plan’s acquisition of the LPI
to the date of the sale. As of September
14, 2009, the Plan’s capital
contributions totaled $457,500 and
imputed earnings were calculated to be
$9,241. These amounts will be updated
to reflect any additional capital
contributions made to the Fund and
earnings through the date of the actual
sale.
The applicant represents that the sale
of the Plan’s LPI to the Employer is in
the best interests of the Plan because it
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will enable the Plan to recoup its
investment in the LPI, as well as realize
a reasonable gain on investment. In
addition, the continued holding of the
LPI by the Plan following its conversion
to a participant-directed Plan imposes a
significant recordkeeping burden on the
Plan.
The sale of the LPI will be a one-time
transaction for cash, and the Plan will
incur no fees, commissions, or other
expenses in connection with the sale.
The Plan Committee will review and
approve the methodology used by SRR
and ensure that such methodology is
properly applied in determining the fair
market value of the LPI. The Plan
Committee will also make the decision
whether or not to proceed with the
proposed sale of the LPI to the
Employer; if the Plan Committee
decides to proceed, it will have SRR
update its valuation of the LPI as of the
date of the sale.
The Employer is bearing the costs of
the exemption application, the appraisal
of the LPI, and notification of interested
persons.
5. In summary, the applicant
represents that the proposed transaction
satisfies the statutory criteria for an
exemption under section 408(a) of the
Act for the following reasons: (a) The
sale will be a one-time transaction for
cash; (b) the terms and conditions of the
sale will be at least as favorable to the
Plan as those that the Plan could obtain
in an arm’s length transaction with an
unrelated third party; (c) the sales price
will be the greater of: (1) The fair market
value of the LPI as of the date of the
sale, as determined by a qualified,
independent appraiser, or (2) the Plan’s
total capital contributions as of the date
of the sale, plus imputed earnings
(calculated based upon the applicable
one-month Treasury bill rates) from the
date of the Plan’s acquisition of the LPI
to the date of the sale; (d) the Plan will
pay no commissions, fees, or other
expenses in connection with the sale;
and (e) the Plan Committee will review
and approve the methodology used by
SRR, ensure that such methodology is
properly applied in determining the fair
market value of the LPI, and also
determine whether it is prudent to go
forward with the proposed transaction.
FOR FURTHER INFORMATION CONTACT: Ms.
Karin Weng of the Department,
telephone (202) 693–8557. (This is not
a toll-free number.)
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Barclays California Corporation
(Barcal); Located in San Francisco,
California
emcdonald on DSK2BSOYB1PROD with NOTICES
Exemption Application Number D–
11527
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 (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 (55 FR 32836, 32847,
August 10, 1990).5
If the proposed exemption is granted,
the restrictions of sections 406(a),
406(b)(1) and (b)(2) of the Act, section
8477(c)(2) of the Federal Employees’
Retirement System Act of 1986, as
amended (FERSA), 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, effective September 4,
2008, to the cash sales (the Sales) by the
Barclays Global Investors ‘‘Money
Market Fund’’ and ‘‘Cash Equivalent
Fund II,’’ which are short-term collective
investment funds (STIFs) managed or
maintained by Barclays Global
Investors, N.A. (BGI), of certain shortterm debt instruments (the Notes) to
Barcal, provided that the following
conditions are met:
(a) The Sales were one-time
transactions for cash payment made on
a delivery versus payment (i.e., same
day) basis in the amount described in
paragraph (b);
(b) The STIFs received an amount
equal to the greater of:
(1) The amortized cost (including
accrued and unpaid interest) of the
Notes, determined as of the dates of the
Sales, or
(2) The fair market value (including
accrued and unpaid interest) of the
Notes, determined by an independent
third party source;
(c) The STIFs did not bear any
commissions, transaction costs or other
expenses in connection with the Sales;
(d) The terms and conditions of the
Sales were at least as favorable to the
STIFs as those available in an arm’slength transaction with an unrelated
party.
(e) BGI, as fiduciary of the STIFs,
determined that the Sales were in the
best interest of the STIFs and any
5 For purposes of this proposed exemption,
references to section 406 of ERISA should be read
to refer as well to the corresponding provisions of
section 4975 of the Code.
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employee benefit plans (the Plans)
invested in the STIFs as of the dates of
the Sales.
(f) BGI took all appropriate actions
necessary to safeguard the interests of
the STIFs and any Plans invested in the
STIFs in connection with the Sales.
(g) If the exercise of any of Barcal’s
rights, claims, or causes of action in
connection with its ownership of the
Notes results in Barcal recovering from
the issuer of the Notes, or from any third
party, an aggregate amount that is more
than the sum of:
(1) The purchase price paid for such
Notes by Barcal; and
(2) The interest due on the notes from
and after the date Barcal purchased the
Notes from the STIFs,
Barcal will refund such excess
amount promptly to the STIFs (after
deducting all reasonable expenses
incurred in connection with the
recovery).
(h) BGI maintains, or causes to be
maintained, for a period of six (6) years
from the date of any covered transaction
such records as are necessary to enable
the persons described below in
paragraph (i)(1), to determine whether
the conditions of this exemption have
been met, except that—
(1) No party in interest with respect
to a Plan which engages in the covered
transactions, other than BGI and its
affiliates, 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 (i)(1);
(2) A separate prohibited transaction
shall not be considered to have occurred
solely because due to circumstances
beyond the control of BGI, such records
are lost or destroyed prior to the end of
the six-year period.
(i)(1) Except as provided, below, in
paragraph (i)(2), and notwithstanding
any provisions of subsections (a)(2) and
(b) of section 504 of the Act, the records
referred to, above, in paragraph (h) 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
Securities and Exchange Commission;
or
(B) Any fiduciary of any Plan that
engages in the covered transactions, 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
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covered transactions, or any authorized
employee or representative of these
entities; or
(D) Any participant or beneficiary of
a Plan that engages in a covered
transaction, or duly authorized
employee or representative of such
participant or beneficiary;
(2) None of the persons described,
above, in paragraph (i)(1)(B)–(D) shall be
authorized to examine trade secrets of
BGI, or commercial or financial
information which is privileged or
confidential; and
(3) Should BGI refuse to disclose
information on the basis that such
information is exempt from disclosure,
BGI 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.
Effective Date: This proposed
exemption, if granted, will be effective
September 4, 2008.
Summary of Facts and Representations
1. BGI is a national banking
association headquartered in San
Francisco, California. BGI serves as
fiduciary investment manager for
employee benefit plans invested in
separately managed accounts and
pooled funds. BGI also manages certain
assets for the Federal Thrift Savings
Plan established pursuant to the
provisions of FERSA. As of June 2008,
BGI and its worldwide investment
advisory affiliates had over $1.9 trillion
in assets under management. BGI is a
wholly owned subsidiary of Barcal, and
an indirect majority-owned subsidiary
of Barclays Bank PLC, a British bank.6
2. The pooled funds managed or
maintained by BGI include short-term
collective investment funds (STIFs). The
STIFs generally invest in short-term
investments of high quality and low
risk, with the goal of protecting capital
while securing a return better than a
relevant benchmark, such as threemonth LIBOR. STIF investments
include cash, as well as bank notes,
corporate notes, government bills and
other relatively safe short-term debt
instruments. Employee benefit plans,
including the Federal Thrift Savings
Plan (collectively, the Plans), may invest
in the STIFs.
3. STIFs managed or maintained by
BGI purchased notes issued by a
structured investment vehicle (SIV)
called Whistlejacket Capital Ltd.
(Whistlejacket).7 SIVs are off-balance6 As of December 1, 2009, BGI became a whollyowned subsidiary of BlackRock, Inc.
7 In June 2007, Whistlejacket Capital, LLC, White
Pine Corp. Ltd., and White Pine Finance, LLC
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sheet vehicles that issue short and
medium-term debt to finance their
purchase of longer-term assets,
including collateralized debt
obligations. Many SIVs, including
Whistlejacket, have lost significant
value in the current credit crisis because
the value of their underlying assets has
dropped and investors who have bought
their short-term debt have left the
market. Whistlejacket is not managed or
sponsored by or affiliated with Barcal or
BGI or any of their affiliates
(collectively, the Applicant).
4. In February 2008, the market value
of Whistlejacket’s assets less its senior
liabilities fell to less than half the
amount of its capital, which triggered
the appointment of a receiver on
February 11, 2008. On February 12,
2008, two nationally-recognized
statistical rating organizations
downgraded short-term senior debt
instruments issued by Whistlejacket (the
Notes). On February 21, 2008,
Whistlejacket began defaulting on the
Notes. The Notes have dropped
significantly in value.
5. In September 2008, Barcal
purchased the Notes from the STIFs to
eliminate the negative impact of the
Notes on the STIFs’ net asset value. As
consideration for the Notes, Barcal paid
the greater of: (a) The amortized cost
(including accrued and unpaid interest)
of the Notes, as of the dates of the Sales,
or (b) the fair market value (including
accrued and unpaid interest) of the
Notes, as of the dates of the Sales,
determined by an independent third
party source. The Sales were on a
‘‘delivery versus payment’’ (i.e., same
day) basis in immediately available
United States dollars. The STIFs
incurred no commission or transaction
costs in connection with the Sales. BGI
represents that it determined that the
Sales were in the best interest of the
STIFs and any employee benefit plans
(the Plans) invested in the STIFs, and
that it took all appropriate actions
necessary to safeguard the interests of
the STIFs and the Plans. BGI represents
that it will maintain all the records
necessary to explain the transactions
described herein for at least six years,
and will make those records available to
the Department and to the named
fiduciary of each affected Plan.
6. The Applicant represents that there
were three Notes purchased by Barcal
from two different STIFs. On September
19, 2008, Barcal purchased $15,000,000
of White Pine Finance LLC debt, CUSIP
merged into Whistlejacket. The applicant requests
that the exemption proposed herein apply to the
purchase by Barcal of securities issued by
Whistlejacket or any of the merged entities or their
predecessors.
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15:34 Mar 12, 2010
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96432XKD4 from the Money Market
Fund, with an acquisition price of
99.99961824. The maturity date on the
Note was September 26, 2008. There
were no bids in the market for these
securities, and the Applicant’s internal
committee which prices those assets
which cannot otherwise be priced
estimated a fair market value for the
Note of 93.0539. The Receiver for the
Issuer of the Note, which is unrelated to
Barcal, valued the Note at 95.1225.
The second STIF that was involved
was Cash Equivalent Fund II (CEFII). On
September 4, 2008, Barcal purchased
$40,000,000 of Whistlejacket Capital,
LLC debt, CUSIP 96335WFT5, from
CEFII, with an acquisition price of
99.9997822. The maturity date on the
Note was September 8, 2008. There
were no bids in the market for these
securities, and the Applicant’s internal
committee which prices those assets
which cannot otherwise be priced
estimated a fair market value for the
Note of 93.5312. The Receiver for the
Issuer of the Note, which is unrelated to
Barcal, valued the Note at 96.2597.
On September 19, 2008, Barcal
purchased $135,000,000 of White Pine
Finance LLC debt, CUSIP 96432XKD4,
from CEFII, with an acquisition price of
99.99961824. The maturity date on the
Note was September 26, 2008. There
were no bids in the market for these
securities, and the Applicant’s internal
committee which prices those assets
which cannot otherwise be priced
estimated a fair market value for the
Note of 93.0539. The Receiver for the
Issuer of the Note, which is unrelated to
Barcal, valued the Note at 95.1225.
With respect to all three purchases,
the Applicant represents that the price
paid by Barcal was the amortized cost
of the Note plus accrued interest. The
Applicant represents that all three Sales
took place within a week of the maturity
date of the Notes because, within the
judgment of BGI, the timing of the Sales
maximized the value for the STIFs and
did not result in the STIFs holding a
defaulted Note.
7. The Applicant represents that if the
exercise of any of Barcal’s rights, claims,
or causes of action in connection with
its ownership of the Notes results in
Barcal recovering from the issuer of the
Notes, or from any third party, an
aggregate amount that is more than the
sum of:
(1) The purchase price paid for such
Notes by Barcal; and
(2) The interest due on the Notes from
and after the date Barcal purchased the
Notes from the STIFs,
Barcal will refund such excess amount
promptly to the STIFs (after deducting
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Fmt 4703
Sfmt 4703
12309
all reasonable expenses incurred in
connection with the recovery).
8. In summary, the Applicant
represents that the transactions satisfied
the statutory criteria of section 408(a) of
the Act, section 4975(c)(2) of the Code
and section 8477(c)(3) of FERSA
because: (a) Each Sale was a one-time
transaction for cash; (b) with respect to
all three Sales, the price paid by Barcal
was the amortized cost of the Note plus
accrued interest, which was greater than
the fair market value of the Note as
determined by the Receiver for the
issuer of the Note; (c) no STIF paid any
commissions or other transaction
expenses with respect to the Sales; (d)
BGI took all appropriate actions
necessary to safeguard the interests of
the STIFs and any Plans invested in the
STIFs in connection with the Sales; (e)
the terms and conditions of the Sales
were at least as favorable to the STIFs
as those available in an arm’s-length
transaction with an unrelated party; (f)
BGI determined that the Sales were in
the best interest of the STIFs and any
Plans invested in the STIFs as of the
dates of the Sales; (g) BGI will maintain
all the records necessary to explain the
transactions described herein for at least
six years, and will make those records
available to the Department and to the
named fiduciary of each affected Plan;
and (h) Barcal will promptly refund to
the STIFs any amount recovered from
the issuer of the Notes or any third party
in connection with the exercise of any
rights, claims or causes of action
resulting from its ownership of the
Notes, if such amounts are in excess of:
(1) The purchase price paid for such
Notes by Barcal; and
(2) The interest due on the Notes from
and after the date Barcal purchased the
Notes from the STIFs.
Notice to Interested Persons
The Applicant represents that because
one of the STIFs was a sweep vehicle in
which investing Plans changed over
time, hundreds of Plans would need to
be notified, at great additional expense
to the Applicant, despite the fact that all
the details of the Sales were disclosed
in the STIFs’ financial statements which
were made available to all Plan clients
at the end of the year of the transactions.
Therefore, the only practical means of
notifying participants and beneficiaries
of such Plans 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 not
later than 30 days from the date of
publication of this notice of proposed
exemption in the Federal Register.
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Federal Register / Vol. 75, No. 49 / Monday, March 15, 2010 / Notices
FOR FURTHER INFORMATION CONTACT: Gary
H. Lefkowitz of the Department,
telephone (202) 693–8546. (This is not
a toll-free number.)
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
General Information
NASA Advisory Council; Science
Committee; Planetary Science
Subcommittee; Meeting
emcdonald on DSK2BSOYB1PROD with NOTICES
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 9th day of
March 2010.
Ivan Strasfeld,
Director of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2010–5536 Filed 3–12–10; 8:45 am]
BILLING CODE 4510–29–P
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[Notice (10–026)]
AGENCY: National Aeronautics and
Space Administration.
ACTION: Notice of meeting.
SUMMARY: The National Aeronautics and
Space Administration (NASA)
announces a meeting of the Planetary
Science Subcommittee of the NASA
Advisory Council (NAC). This
Subcommittee reports to the Science
Committee of the NAC. The meeting
will be held for the purpose of soliciting
from the scientific community and other
persons scientific and technical
information relevant to program
planning.
DATES: Thursday, April 8, 2010, 8 a.m.
to 5 p.m., and Friday, April 9, 2010,
8 a.m. to 3 p.m. EDT.
ADDRESSES: NASA Headquarters, 300 E
Street, SW., Room 9H40, Washington,
DC 20546.
FOR FURTHER INFORMATION CONTACT: Ms.
Marian Norris, Science Mission
Directorate, NASA Headquarters,
Washington, DC 20546, (202) 358–4452,
fax (202) 358–4118, or
mnorris@nasa.gov.
The
meeting will be open to the public up
to the capacity of the room. The agenda
for the meeting includes the following
topics:
—Planetary Science Division Update
—Mars Exploration Program Update
—Reports From Program Analysis
Groups
—Assessment of the Planetary Science
Division Research and Analysis/
Supporting Research and Technology
Activities
—Update on NRC Decadal Survey in
Planetary Science
—Science Mission Directorate Science
Plan
SUPPLEMENTARY INFORMATION:
It is imperative that the meeting be
held on these dates to accommodate the
scheduling priorities of the key
participants. Attendees will be
requested to sign a register and to
comply with NASA security
requirements, including the
presentation of a valid picture ID, before
receiving an access badge. Foreign
nationals attending this meeting will be
required to provide a copy of their
passport, visa, or green card in addition
to providing the following information
no less than 10 working days prior to
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Sfmt 4703
the meeting: Full name; gender; date/
place of birth; citizenship; visa/green
card information (number, type,
expiration date); passport information
(number, country, expiration date);
employer/affiliation information (name
of institution, address, country,
telephone); title/position of attendee. To
expedite admittance, attendees with
U.S. citizenship can provide identifying
information 3 working days in advance
by contacting Marian Norris via e-mail
at mnorris@nasa.gov or by telephone at
(202) 358–4452.
Dated: March 8, 2010.
P. Diane Rausch,
Advisory Committee Management Officer,
National Aeronautics and Space
Administration.
[FR Doc. 2010–5502 Filed 3–12–10; 8:45 am]
BILLING CODE P
NATIONAL CREDIT UNION
ADMINISTRATION
Sunshine Act; Notice of Agency
Meeting
TIME AND DATE: 10 a.m., Thursday,
March 18, 2010.
PLACE: Board Room, 7th Floor, Room
7047, 1775 Duke Street, Alexandria, VA
22314–3428.
STATUS:
Open.
MATTERS TO BE CONSIDERED:
1. Proposed Rule—Parts 701, 723 and
742 of NCUA’s Rules and Regulations,
Regulatory Flexibility Program.
2. Proposed Rule—Parts 701, 708a
and 708b of NCUA’s Rules and
Regulations, Fiduciary Duties at Federal
Credit Unions; Mergers and Conversions
of Insured Credit Unions.
3. NCUA Strategic Plan 2010–2015 for
60-day Public Comment.
4. Insurance Fund Report.
RECESS:
11 a.m.
TIME AND DATE: 11:15 a.m., Thursday,
March 18, 2010.
PLACE: Board Room, 7th Floor, Room
7047, 1775 Duke Street, Alexandria, VA
22314–3428.
STATUS:
Closed.
MATTERS TO BE CONSIDERED:
1. Creditor Claim Appeal. Closed
pursuant to Exemption (6).
2. Consideration of Supervisory
Activities (2). Closed pursuant to
Exemptions (8), (9)(A)(ii) and 9(B).
3. Personnel. Closed pursuant to
Exemption (6).
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]]>Agencies
[Federal Register Volume 75, Number 49 (Monday, March 15, 2010)]
[Notices]
[Pages 12305-12310]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5536]
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employee Benefits Security Administration
Application Nos. and Proposed Exemptions; D-11500, Carle
Foundation Hospital & Affiliates Pension Plan; and Barclays California
Corporation (Barcal); et al.
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).
Written Comments and Hearing Requests
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. 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.
ADDRESSES: All written comments and requests for a hearing (at least
three copies) should be sent to the Employee Benefits Security
Administration
[[Page 12306]]
(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 e-mail or FAX. Any such
comments or requests should be sent either by e-mail 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: If you submit written comments or hearing requests, do not
include any personally-identifiable or confidential business
information that you do not want to be publicly-disclosed. All comments
and hearing requests are posted on the Internet exactly as they are
received, and they can be retrieved by most Internet search engines.
The Department will make no deletions, modifications or redactions to
the comments or hearing requests received, as they are public records.
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).
SUPPLEMENTARY INFORMATION: 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 (55 FR 32836, 32847, August 10, 1990).
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.
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.
Carle Foundation Hospital & Affiliates Pension Plan; Located in Urbana,
Illinois
[Application No. D-11500]
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 (55 FR 32836, 32847, August 10, 1990).
If the proposed exemption is granted, the restrictions in section
406(a)(1)(A) and (D) and section 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), (D), and (E) of the Code,
shall not apply to the sale of a certain limited partnership interest
(the LPI) by the Carle Foundation Hospital & Affiliates Pension Plan
(the Plan) to Carle Foundation Hospital (the Employer), a party in
interest with respect to the Plan, provided that the following
conditions are satisfied:
(a) The sale is a one-time transaction for cash;
(b) The terms and conditions of the sale are at least as favorable
to the Plan as those that the Plan could obtain in an arm's length
transaction with an unrelated third party;
(c) The sales price is the greater of: (1) The fair market value of
the LPI as of the date of the sale, as determined by a qualified,
independent appraiser, or (2) the Plan's total capital contributions as
of the date of the sale, plus imputed earnings (calculated based upon
the applicable one-month Treasury bill rates) from the date of the
Plan's acquisition of the LPI to the date of the sale;
(d) The Plan pays no commissions, fees, or other expenses in
connection with the sale; and
(e) The Plan fiduciaries review and approve the methodology used by
the qualified, independent appraiser, ensure that such methodology is
properly applied in determining the fair market value of the LPI, and
also determine whether it is prudent to go forward with the proposed
transaction.
Summary of Facts and Representations
1. The Carle Foundation Hospital & Affiliates Pension Plan (the
Plan) is a money purchase pension plan sponsored by Carle Foundation
Hospital (the Employer), who is located in Urbana, Illinois. The Plan
had approximately 2,361 participants and beneficiaries, as of November
13, 2009, and total net assets of approximately $54,499,485, as of the
same date. First Busey Trust & Investment Co. is the Plan's directed
trustee.
The Plan historically did not allow participant-directed
investments. Since the Plan's initial investment in the subject limited
partnership interest (LPI), the Employer determined that it would be
appropriate and in the best interests of the participants and
beneficiaries to make the Plan a participant-directed plan under
section 404(c) of the Act. Thus, the Plan was restructured to permit
participant direction, effective March 1, 2008. In order to finalize
this conversion to a participant-directed plan, the Plan must liquidate
the LPI.
2. The LPI is an interest in the Pantheon USA Fund VII, L.P. (the
Fund). The Fund is a limited partnership that invests in private equity
funds (i.e., a ``fund of funds''). The Fund's objective is to generate
superior, risk-adjusted returns for its investors through a diversified
portfolio of leveraged buyout, venture capital, and special situation
funds. According to the applicant, the Plan made a $1,500,000
commitment to the Fund in December 2006.\1\ As of September 14, 2009,
the Plan's capital contributions to the Fund totaled $457,500.\2\
---------------------------------------------------------------------------
\1\ The Department expresses no opinion herein as to whether the
acquisition and holding of the LPI by the Plan meets the
requirements of Part 4 in Title I of the Act.
\2\ According to the applicant, the Employer has made a
$15,000,000 commitment to the Fund, with capital contributions to
the Fund totaling $4,575,000, as of September 14, 2009. It is
represented that the decision to purchase an interest in the Fund on
behalf of the Plan was a decision made independently of the
Employer's decision to purchase its own interest in the Fund; thus,
according to the applicant, there was no agreement, arrangement, or
understanding that the Plan's investment would be a means of
enabling the Employer or any other Plan fiduciary to invest in the
Fund or otherwise use the Plan's assets in a manner designed to
benefit such fiduciary.
---------------------------------------------------------------------------
Pantheon Ventures, Inc. (Pantheon) is the Fund's investment
adviser. It is represented that the fees charged by the Fund are based
on a percentage of the capital commitment made by investors to the
Fund; the Plan is currently paying a fee of 0.75%. The terms of the
Fund provide that the Fund will continue for thirteen years from the
date of its first investment, which was made in May 2006, and may be
extended for up to three additional years. Furthermore, the Plan may
not sell or otherwise transfer its LPI to another investor without the
written consent of Pantheon (acting as
[[Page 12307]]
manager of the Fund's General Partner, PUSA VII GP, LLC).
The Plan's investment adviser, Summit Strategies Group (Summit),
consulted with Pantheon, and communicated information regarding the
limited secondary market for the LPI to the Employer. Therefore, the
Employer proposes to purchase the LPI from the Plan.\3\ However, the
Carle Pension Plan Administrative Committee (the Plan Committee) will
make the ultimate determination whether or not to sell the Plan's LPI
to the Employer; the Plan Committee is a named fiduciary of the Plan,
along with the Employer's Board of Directors, which monitors the Plan
Committee.
---------------------------------------------------------------------------
\3\ Because the Fund was closed to new investors as of June 29,
2007, Pantheon would need to grant a special waiver of the required
$10 million commitment to any unrelated purchaser who is not already
invested in the Fund. Pantheon has expressed a strong preference
that the purchaser of the Plan's LPI be an investor already invested
in the Fund. Summit has not identified any investors, other than the
Employer, whose stated investment goals would be consistent with
purchasing the Plan's LPI without a discount. The Department notes
that no relief is being provided in this proposed exemption beyond
the Plan's sale of the LPI to the Employer for any additional
prohibited transactions, if any, that may have occurred as a result
of co-investing in the same Fund by the Plan and the Employer.
---------------------------------------------------------------------------
3. The LPI was appraised for the Plan Committee by Andrew S. Ward,
Managing Director, and Mark F. Fournier, Director, of Stout Risius
Ross, Inc. (SRR), consistent with the standards of Financial Accounting
Standard (FAS) 157, Fair Value Measurements, which is effective for
financial statements issued for fiscal years beginning after November
15, 2007.\4\ The applicant represents that SRR is a qualified,
independent appraiser located in Chicago, Illinois. SRR is a financial
advisory firm that specializes in investment banking, valuation and
financial opinions, and dispute advisory and forensic services. SRR
represents that it has considerable experience providing valuation
opinions of private equity funds, hedge funds, and similar private
companies. It is represented that SRR is not related to, and has no
interest in, the Employer or an affiliate thereof and that less than 1%
of SRR's gross annual income is derived from the Employer or an
affiliate thereof.
---------------------------------------------------------------------------
\4\ FAS 157 provides guidance for measuring the fair value of
assets and liabilities, including hard-to-value alternative
investments.
---------------------------------------------------------------------------
SRR's valuation report of September 11, 2009 states that the
principal sources of information used to estimate the fair market value
of the LPI included, but were not limited to:
The Fund's Limited Partnership Agreement, dated April 28,
2006;
The Fund's financial statements for the year ended
December 31, 2008, audited by PriceWaterhouseCoopers;
The Fund's Investment Adviser's Report for the quarter
ending March 31, 2009;
The Fund's Private Placement Memorandum, dated March 2006;
Discussions with Pantheon representatives concerning the
assets and liabilities held by the Partnership; and
Public information regarding market evidence of lack of
control and lack of marketability discounts.
Regarding SRR's valuation methodology, the report states that
several valuation approaches were considered, including a Market
Approach, an Income Approach, and an Asset Approach. SRR relied
primarily on a Market Approach, a valuation technique whereby the value
of the subject company is calculated based on the prices of actual
transactions for similar companies. These observations make it possible
to determine the value of shares that have no active market. This can
be accomplished via either the Guideline Public Company Method or the
Merger and Acquisition Method. SRR used the Guideline Public Company
Method, a valuation technique whereby the value of a company is
estimated by comparing it to similar public companies. SRR states that
if the Fund were publicly traded, a Marketable, Non-controlling
Interest Value of Equity in the Fund as a whole was estimated to be
$440,000,000. They then calculated the Plan's 0.07% interest in the
Fund ($440,000,000 x 0.0007 = $308,000) and subtracted a 20% discount
for lack of marketability ($308,000 x 0.20 = $62,000) to arrive at a
fair market value of $246,000 for the LPI ($308,000 - $62,000 =
$246,000), as of August 31, 2009.
4. The Employer proposes to pay the Plan the greater of: (1) The
fair market value of the LPI as of the date of the sale, as determined
by SRR, or (2) the Plan's total capital contributions, as of the date
of the sale, plus imputed earnings (based upon the applicable one-month
Treasury bill rates) from the date of the Plan's acquisition of the LPI
to the date of the sale. As of September 14, 2009, the Plan's capital
contributions totaled $457,500 and imputed earnings were calculated to
be $9,241. These amounts will be updated to reflect any additional
capital contributions made to the Fund and earnings through the date of
the actual sale.
The applicant represents that the sale of the Plan's LPI to the
Employer is in the best interests of the Plan because it will enable
the Plan to recoup its investment in the LPI, as well as realize a
reasonable gain on investment. In addition, the continued holding of
the LPI by the Plan following its conversion to a participant-directed
Plan imposes a significant recordkeeping burden on the Plan.
The sale of the LPI will be a one-time transaction for cash, and
the Plan will incur no fees, commissions, or other expenses in
connection with the sale. The Plan Committee will review and approve
the methodology used by SRR and ensure that such methodology is
properly applied in determining the fair market value of the LPI. The
Plan Committee will also make the decision whether or not to proceed
with the proposed sale of the LPI to the Employer; if the Plan
Committee decides to proceed, it will have SRR update its valuation of
the LPI as of the date of the sale.
The Employer is bearing the costs of the exemption application, the
appraisal of the LPI, and notification of interested persons.
5. In summary, the applicant represents that the proposed
transaction satisfies the statutory criteria for an exemption under
section 408(a) of the Act for the following reasons: (a) The sale will
be a one-time transaction for cash; (b) the terms and conditions of the
sale will be at least as favorable to the Plan as those that the Plan
could obtain in an arm's length transaction with an unrelated third
party; (c) the sales price will be the greater of: (1) The fair market
value of the LPI as of the date of the sale, as determined by a
qualified, independent appraiser, or (2) the Plan's total capital
contributions as of the date of the sale, plus imputed earnings
(calculated based upon the applicable one-month Treasury bill rates)
from the date of the Plan's acquisition of the LPI to the date of the
sale; (d) the Plan will pay no commissions, fees, or other expenses in
connection with the sale; and (e) the Plan Committee will review and
approve the methodology used by SRR, ensure that such methodology is
properly applied in determining the fair market value of the LPI, and
also determine whether it is prudent to go forward with the proposed
transaction.
FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,
telephone (202) 693-8557. (This is not a toll-free number.)
[[Page 12308]]
Barclays California Corporation (Barcal); Located in San Francisco,
California
Exemption Application Number D-11527
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 (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 (55 FR 32836,
32847, August 10, 1990).\5\
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\5\ For purposes of this proposed exemption, references to
section 406 of ERISA should be read to refer as well to the
corresponding provisions of section 4975 of the Code.
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If the proposed exemption is granted, the restrictions of sections
406(a), 406(b)(1) and (b)(2) of the Act, section 8477(c)(2) of the
Federal Employees' Retirement System Act of 1986, as amended (FERSA),
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, effective September 4, 2008, to the cash sales (the Sales)
by the Barclays Global Investors ``Money Market Fund'' and ``Cash
Equivalent Fund II,'' which are short-term collective investment funds
(STIFs) managed or maintained by Barclays Global Investors, N.A. (BGI),
of certain short-term debt instruments (the Notes) to Barcal, provided
that the following conditions are met:
(a) The Sales were one-time transactions for cash payment made on a
delivery versus payment (i.e., same day) basis in the amount described
in paragraph (b);
(b) The STIFs received an amount equal to the greater of:
(1) The amortized cost (including accrued and unpaid interest) of
the Notes, determined as of the dates of the Sales, or
(2) The fair market value (including accrued and unpaid interest)
of the Notes, determined by an independent third party source;
(c) The STIFs did not bear any commissions, transaction costs or
other expenses in connection with the Sales;
(d) The terms and conditions of the Sales were at least as
favorable to the STIFs as those available in an arm's-length
transaction with an unrelated party.
(e) BGI, as fiduciary of the STIFs, determined that the Sales were
in the best interest of the STIFs and any employee benefit plans (the
Plans) invested in the STIFs as of the dates of the Sales.
(f) BGI took all appropriate actions necessary to safeguard the
interests of the STIFs and any Plans invested in the STIFs in
connection with the Sales.
(g) If the exercise of any of Barcal's rights, claims, or causes of
action in connection with its ownership of the Notes results in Barcal
recovering from the issuer of the Notes, or from any third party, an
aggregate amount that is more than the sum of:
(1) The purchase price paid for such Notes by Barcal; and
(2) The interest due on the notes from and after the date Barcal
purchased the Notes from the STIFs,
Barcal will refund such excess amount promptly to the STIFs (after
deducting all reasonable expenses incurred in connection with the
recovery).
(h) BGI maintains, or causes to be maintained, for a period of six
(6) years from the date of any covered transaction such records as are
necessary to enable the persons described below in paragraph (i)(1), to
determine whether the conditions of this exemption have been met,
except that--
(1) No party in interest with respect to a Plan which engages in
the covered transactions, other than BGI and its affiliates, 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 (i)(1);
(2) A separate prohibited transaction shall not be considered to
have occurred solely because due to circumstances beyond the control of
BGI, such records are lost or destroyed prior to the end of the six-
year period.
(i)(1) Except as provided, below, in paragraph (i)(2), and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to, above, in paragraph (h) 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 Securities and
Exchange Commission; or
(B) Any fiduciary of any Plan that engages in the covered
transactions, 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
covered transactions, or any authorized employee or representative of
these entities; or
(D) Any participant or beneficiary of a Plan that engages in a
covered transaction, or duly authorized employee or representative of
such participant or beneficiary;
(2) None of the persons described, above, in paragraph (i)(1)(B)-
(D) shall be authorized to examine trade secrets of BGI, or commercial
or financial information which is privileged or confidential; and
(3) Should BGI refuse to disclose information on the basis that
such information is exempt from disclosure, BGI 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.
Effective Date: This proposed exemption, if granted, will be
effective September 4, 2008.
Summary of Facts and Representations
1. BGI is a national banking association headquartered in San
Francisco, California. BGI serves as fiduciary investment manager for
employee benefit plans invested in separately managed accounts and
pooled funds. BGI also manages certain assets for the Federal Thrift
Savings Plan established pursuant to the provisions of FERSA. As of
June 2008, BGI and its worldwide investment advisory affiliates had
over $1.9 trillion in assets under management. BGI is a wholly owned
subsidiary of Barcal, and an indirect majority-owned subsidiary of
Barclays Bank PLC, a British bank.\6\
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\6\ As of December 1, 2009, BGI became a wholly-owned subsidiary
of BlackRock, Inc.
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2. The pooled funds managed or maintained by BGI include short-term
collective investment funds (STIFs). The STIFs generally invest in
short-term investments of high quality and low risk, with the goal of
protecting capital while securing a return better than a relevant
benchmark, such as three-month LIBOR. STIF investments include cash, as
well as bank notes, corporate notes, government bills and other
relatively safe short-term debt instruments. Employee benefit plans,
including the Federal Thrift Savings Plan (collectively, the Plans),
may invest in the STIFs.
3. STIFs managed or maintained by BGI purchased notes issued by a
structured investment vehicle (SIV) called Whistlejacket Capital Ltd.
(Whistlejacket).\7\ SIVs are off-balance-
[[Page 12309]]
sheet vehicles that issue short and medium-term debt to finance their
purchase of longer-term assets, including collateralized debt
obligations. Many SIVs, including Whistlejacket, have lost significant
value in the current credit crisis because the value of their
underlying assets has dropped and investors who have bought their
short-term debt have left the market. Whistlejacket is not managed or
sponsored by or affiliated with Barcal or BGI or any of their
affiliates (collectively, the Applicant).
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\7\ In June 2007, Whistlejacket Capital, LLC, White Pine Corp.
Ltd., and White Pine Finance, LLC merged into Whistlejacket. The
applicant requests that the exemption proposed herein apply to the
purchase by Barcal of securities issued by Whistlejacket or any of
the merged entities or their predecessors.
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4. In February 2008, the market value of Whistlejacket's assets
less its senior liabilities fell to less than half the amount of its
capital, which triggered the appointment of a receiver on February 11,
2008. On February 12, 2008, two nationally-recognized statistical
rating organizations downgraded short-term senior debt instruments
issued by Whistlejacket (the Notes). On February 21, 2008,
Whistlejacket began defaulting on the Notes. The Notes have dropped
significantly in value.
5. In September 2008, Barcal purchased the Notes from the STIFs to
eliminate the negative impact of the Notes on the STIFs' net asset
value. As consideration for the Notes, Barcal paid the greater of: (a)
The amortized cost (including accrued and unpaid interest) of the
Notes, as of the dates of the Sales, or (b) the fair market value
(including accrued and unpaid interest) of the Notes, as of the dates
of the Sales, determined by an independent third party source. The
Sales were on a ``delivery versus payment'' (i.e., same day) basis in
immediately available United States dollars. The STIFs incurred no
commission or transaction costs in connection with the Sales. BGI
represents that it determined that the Sales were in the best interest
of the STIFs and any employee benefit plans (the Plans) invested in the
STIFs, and that it took all appropriate actions necessary to safeguard
the interests of the STIFs and the Plans. BGI represents that it will
maintain all the records necessary to explain the transactions
described herein for at least six years, and will make those records
available to the Department and to the named fiduciary of each affected
Plan.
6. The Applicant represents that there were three Notes purchased
by Barcal from two different STIFs. On September 19, 2008, Barcal
purchased $15,000,000 of White Pine Finance LLC debt, CUSIP 96432XKD4
from the Money Market Fund, with an acquisition price of 99.99961824.
The maturity date on the Note was September 26, 2008. There were no
bids in the market for these securities, and the Applicant's internal
committee which prices those assets which cannot otherwise be priced
estimated a fair market value for the Note of 93.0539. The Receiver for
the Issuer of the Note, which is unrelated to Barcal, valued the Note
at 95.1225.
The second STIF that was involved was Cash Equivalent Fund II
(CEFII). On September 4, 2008, Barcal purchased $40,000,000 of
Whistlejacket Capital, LLC debt, CUSIP 96335WFT5, from CEFII, with an
acquisition price of 99.9997822. The maturity date on the Note was
September 8, 2008. There were no bids in the market for these
securities, and the Applicant's internal committee which prices those
assets which cannot otherwise be priced estimated a fair market value
for the Note of 93.5312. The Receiver for the Issuer of the Note, which
is unrelated to Barcal, valued the Note at 96.2597.
On September 19, 2008, Barcal purchased $135,000,000 of White Pine
Finance LLC debt, CUSIP 96432XKD4, from CEFII, with an acquisition
price of 99.99961824. The maturity date on the Note was September 26,
2008. There were no bids in the market for these securities, and the
Applicant's internal committee which prices those assets which cannot
otherwise be priced estimated a fair market value for the Note of
93.0539. The Receiver for the Issuer of the Note, which is unrelated to
Barcal, valued the Note at 95.1225.
With respect to all three purchases, the Applicant represents that
the price paid by Barcal was the amortized cost of the Note plus
accrued interest. The Applicant represents that all three Sales took
place within a week of the maturity date of the Notes because, within
the judgment of BGI, the timing of the Sales maximized the value for
the STIFs and did not result in the STIFs holding a defaulted Note.
7. The Applicant represents that if the exercise of any of Barcal's
rights, claims, or causes of action in connection with its ownership of
the Notes results in Barcal recovering from the issuer of the Notes, or
from any third party, an aggregate amount that is more than the sum of:
(1) The purchase price paid for such Notes by Barcal; and
(2) The interest due on the Notes from and after the date Barcal
purchased the Notes from the STIFs,
Barcal will refund such excess amount promptly to the STIFs (after
deducting all reasonable expenses incurred in connection with the
recovery).
8. In summary, the Applicant represents that the transactions
satisfied the statutory criteria of section 408(a) of the Act, section
4975(c)(2) of the Code and section 8477(c)(3) of FERSA because: (a)
Each Sale was a one-time transaction for cash; (b) with respect to all
three Sales, the price paid by Barcal was the amortized cost of the
Note plus accrued interest, which was greater than the fair market
value of the Note as determined by the Receiver for the issuer of the
Note; (c) no STIF paid any commissions or other transaction expenses
with respect to the Sales; (d) BGI took all appropriate actions
necessary to safeguard the interests of the STIFs and any Plans
invested in the STIFs in connection with the Sales; (e) the terms and
conditions of the Sales were at least as favorable to the STIFs as
those available in an arm's-length transaction with an unrelated party;
(f) BGI determined that the Sales were in the best interest of the
STIFs and any Plans invested in the STIFs as of the dates of the Sales;
(g) BGI will maintain all the records necessary to explain the
transactions described herein for at least six years, and will make
those records available to the Department and to the named fiduciary of
each affected Plan; and (h) Barcal will promptly refund to the STIFs
any amount recovered from the issuer of the Notes or any third party in
connection with the exercise of any rights, claims or causes of action
resulting from its ownership of the Notes, if such amounts are in
excess of:
(1) The purchase price paid for such Notes by Barcal; and
(2) The interest due on the Notes from and after the date Barcal
purchased the Notes from the STIFs.
Notice to Interested Persons
The Applicant represents that because one of the STIFs was a sweep
vehicle in which investing Plans changed over time, hundreds of Plans
would need to be notified, at great additional expense to the
Applicant, despite the fact that all the details of the Sales were
disclosed in the STIFs' financial statements which were made available
to all Plan clients at the end of the year of the transactions.
Therefore, the only practical means of notifying participants and
beneficiaries of such Plans 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 not later
than 30 days from the date of publication of this notice of proposed
exemption in the Federal Register.
[[Page 12310]]
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 693-8546. (This is not a toll-free number.)
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under section 408(a) of the Act and/or section 4975(c)(2) of the Code
does not relieve a fiduciary or other party in interest or disqualified
person from certain other provisions 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 9th day of March 2010.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 2010-5536 Filed 3-12-10; 8:45 am]
BILLING CODE 4510-29-P
