Exemptions From Certain Prohibited Transaction Restrictions, 66409-66419 [2014-26432]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 79, Number 216 (Friday, November 7, 2014)]
[Notices]
[Pages 66409-66419]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26432]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Exemptions From Certain Prohibited Transaction Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code). 
This notice includes the following: 2014-09, Renaissance Technologies, 
LLC, D-11730; and 2014-10, Family Dynamics Inc., Pension Plan, D-11777.

SUPPLEMENTARY INFORMATION: Notices were previously published in the 
Federal Register of the pendency before the Department of proposals to 
grant the above-referenced exemptions. Each notice set forth a summary 
of facts and representations contained in an application for exemption, 
and referred interested persons to the application for a complete 
statement of the facts and representations. Each application has been 
available for public inspection at the Department in Washington, DC. 
Each notice also invited interested persons to submit comments on the 
requested exemption to the Department. In addition, each notice stated 
that any interested person might submit a written request that a public 
hearing be held (where appropriate). The applicants have represented 
that they have complied with the requirements of notifying interested 
persons. No request for a hearing was received by the Department. 
Public comments were received by the Department as described in each 
granted exemption.
    The notices of proposed exemption were issued, and the exemptions 
are being granted, solely by the Department because, effective December 
31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. 
App. 1 (1996), transferred the authority of the Secretary of the 
Treasury to issue exemptions of the type proposed to the Secretary of 
Labor.

Statutory Findings

    In accordance with section 408(a) of the Act and/or section 
4975(c)(2) of the Code and the procedures set forth in 29 CFR Part 
2570, Subpart B (76 FR 66637, 66644, October 27, 2011) \1\ and based 
upon the entire record, the Department makes the following findings:
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    \1\ The Department has considered exemption applications 
received prior to December 27, 2011 under the exemption procedures 
set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 
10, 1990).
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    (a) The exemptions are administratively feasible; (b) The 
exemptions are in the interests of the affected plans and their 
participants and beneficiaries; and (c) The exemptions are protective 
of the rights of affected participants and beneficiaries.

Renaissance Technologies, LLC (Renaissance or the Applicant) Located in 
New York, New York

[Prohibited Transaction Exemption 2014-09; Application No. D-11730]

Amendment to Exemption

Section I. Covered Transactions Involving Certain IRAs Subject to Title 
I and Title II of ERISA

    The restrictions of section 406(a)(1)(A) and (D) of the Act and the 
sanctions resulting from the application of section 4975 of the Code, 
by reason of section 4975(c)(1)(A) and (D) of the Code, shall not apply 
to:
    (a) The direct or indirect acquisition by a Participant's IRA of an 
interest in a Medallion Fund through such IRA's acquisition of an 
interest in a New Medallion Vehicle;
    (b) The acquisition of an additional interest by a Participant's 
IRA in a New Medallion Vehicle; and
    (c) The redemption of all or a portion of a Participant's IRA's 
interest in a New Medallion Vehicle.
    This amendment is subject to the general conditions set forth below 
in Section IV.

Section II. Covered Transactions Involving Certain IRAs Subject to 
Title II of Erisa Only

    The sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) and (D) of the Code, shall not 
apply to:
    (a) The direct or indirect acquisition by a Spouse's IRA of an 
interest in a Medallion Fund through such IRA's acquisition of an 
interest in a New Medallion Vehicle; \2\
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    \2\ Pursuant to 29 CFR 2510.3-2(d), the Spouses' IRAs are not 
within the jurisdiction of Title I of the Act. However, there is 
jurisdiction under Title II of the Act pursuant to section 4975 of 
the Code.
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    (b) The acquisition of an additional interest by a Spouse's IRA in 
a New Medallion Vehicle; and
    (c) The redemption of all or a portion of a Spouse's IRA's interest 
in a New Medallion Vehicle.
    This amendment is subject to the general conditions set forth below 
in Section IV.

Section III. Covered Transactions Involving Certain 401(k) Accounts

    The restrictions of section 406(a)(1)(A) and (D) of the Act and the 
sanctions resulting from the application of section 4975 of the Code, 
by reason of section 4975(c)(1)(A) and (D) of the Code, shall not apply 
to:
    (a) The direct or indirect acquisition by a 401(k) Account of an 
interest in a Medallion Fund through such 401(k) Account's acquisition 
of an interest in a New Medallion Vehicle; and
    (b) The redemption of all or a portion of a 401(k) Account's 
interest in a New Medallion Vehicle.
    This amendment is subject to the general conditions set forth below 
in Section IV.

Section IV. General Conditions

    (a) An IRA's acquisition of an interest in a New Medallion Vehicle 
is made at the specific direction of its IRA Holder, and a 401(k) 
Account's acquisition of an interest in a New Medallion Vehicle is made 
at the specific direction of its 401(k) Account Holder.
    (b) Renaissance renders no investment advice (within the meaning of 
29 CFR 2510.3-21(c)) to IRA Holders or 401(k) Account Holders 
concerning a potential acquisition or redemption of an interest in a 
New Medallion Vehicle and does not engage in marketing activities or 
offer employment-related incentives of any kind intended to cause IRA 
Holders or 401(k) Account Holders to consider such acquisition or 
redemption.
    (c) An interest in a New Medallion Vehicle is only available to IRA 
Holders or 401(k) Account Holders who satisfy the securities-based 
laws, and other regulatory-based investor qualifications, applicable to 
all investors in such New Medallion Vehicle.
    (d) No commissions, sales charges, or other fees (including 
management fees) or profit participations in the form of performance 
allocations or otherwise, direct or indirect, are assessed against an 
IRA or 401(k) Account in connection with its acquisition and holding of 
an interest in a New Medallion Vehicle.
    (e) An IRA or 401(k) Account pays no more and receives no less for 
its particular interest in any of the New Medallion Vehicles than it 
would in an

[[Page 66410]]

arm's length transaction with an unrelated party.
    (f) An IRA's or 401(k) Account's interest in a New Medallion 
Vehicle is redeemable, in whole or in part, without the payment of any 
redemption fee or penalty, no less frequently than on a quarterly basis 
upon no less than 10 days advance written notice by the IRA or 401(k) 
Account, except in the case of New Kaleidoscope, for which 45 days' 
notice is required.
    (g) An acquisition or redemption of an IRA's or 401(k) Account's 
interest in a New Medallion Vehicle is made for fair market value, 
determined as follows:
    (1) Equity securities are valued at the consolidated or composite 
closing price, or, in the case of over-the-counter equity securities, 
the last sale price provided by unaffiliated, third-party market data 
providers. If no price of such equity security was reported on that 
date, the market value will be the last reported price on the most 
recent date for which a price is available, and will reflect a discount 
if such date occurred more than thirty days before;
    (2) Fixed income securities are valued at the ``bid'' price of such 
securities at the close of business on the relevant valuation date. 
These prices are determined (i) where available, on the basis of prices 
provided by independent pricing services that determine valuations 
based on market transactions for comparable securities; and (ii) in 
certain cases where independent pricing services are not available, on 
the basis of quotes obtained from multiple independent providers that 
are either U.S.-registered or foreign broker-dealers, which are 
registered and subject to the laws of their respective jurisdiction, or 
banks;
    (3) Options are valued at the mean between the current independent 
best ``bid'' price and the current independent best ``asked'' price 
from the exchanges on which they are listed or, where such prices are 
not available, are valued on the basis of pricing data obtained from 
unaffiliated, third-party market data providers at their fair value in 
accordance with Fair Value Pricing Practices by the Renaissance 
Valuation Committee, which utilizes a set of defined rules and an 
independent review process; and
    (4) If current market quotations are not readily available for any 
investments, such investments are valued at their fair value by the 
Renaissance Valuation Committee in accordance with Fair Value Pricing 
Practices.
    (h) Redemption of an IRA's or 401(k) Account's interest in a New 
Medallion Vehicle, in whole or in part, is made for cash.
    (i) In the event that a redemption of any portion of an interest in 
a New Medallion Vehicle held by an IRA or 401(k) Account becomes 
necessary as the result of a reduction of the Investment Allocation 
applicable to a Participant, then, at such IRA Holder's or 401(k) 
Account Holder's election, the redemption may first be made of such 
individual's taxable investments in the Medallion Funds (if any) prior 
to his or her IRA's or 401(k) Account's interest in a New Medallion 
Vehicle.
    (j) With respect to the investment by Participants in the New 
Medallion Vehicles through IRAs, Renaissance acknowledges that such 
investments may constitute investments by a ``pension plan'' within the 
meaning of section 3(2) of the Act, and the Applicant represents that, 
with respect to such investments, it will comply with all applicable 
requirements of Title I of the Act.
    (k) Renaissance does not use the IRAs' or 401(k) Accounts' 
investments in the Funds in any of their marketing activities or 
publicity materials for the Funds.
    (l) In advance of the initial investment by an IRA or 401(k) 
Account in a New Medallion Vehicle, the IRA Holder or 401(k) Account 
Holder receives:
    (1) A copy of the notice of proposed exemption published in the 
Federal Register at 77 FR 3038 (January 20, 2012) and notice of final 
grant of Prohibited Transaction Exemption (PTE) 2012-10 published in 
the Federal Register at 77 FR 23756 (April 20, 2012), the proposed 
amendment published in the Federal Register at 79 FR 47674 (August 14, 
2014), and this final amendment, once published in the Federal 
Register;
    (2) A private offering memorandum (with all related exhibits) 
describing the relevant investment vehicles, including its investment 
objectives, risks, conflicts, operating expenses and redemption and 
valuation policies, and any IRA Holder or 401(k) Account Holder whose 
IRA or 401(k) Account owns an interest in a New Medallion Vehicle 
receives the same disclosures and information provided to other 
investors with respect to the Fund in which he or she invests; and
    (3) Following receipt of the information described in (1) and (2), 
above, an IRA Holder or 401(k) Account Holder will receive, in a timely 
manner, all reasonably available relevant information as such IRA 
Holder or 401(k) Account Holder may request.
    (m) On an on-going basis, Renaissance provides each IRA Holder or 
401(k) Account Holder whose IRA or 401(k) Account owns an interest in a 
New Medallion Vehicle with the following information:
    (1) Unaudited performance reports at the end of each month; and
    (2) Audited annual financial statements following the end of each 
calendar year.
    (n) Prior to the acquisition by an IRA or 401(k) Account of an 
interest in a New Medallion Vehicle, and the corresponding indirect 
acquisition of an interest in a Medallion Master Fund, Other 
Renaissance Managed RF Fund, or any other Fund made through such 
acquisition of an interest in a New Medallion Vehicle, Renaissance or 
the applicable New Medallion Vehicle manager (the New Medallion Vehicle 
Manager) with respect to any such acquisition:
    (1) Agrees to submit to the jurisdiction of the federal and state 
courts located in the State of New York;
    (2) Agrees to appoint an agent for service of process for the New 
Medallion Vehicle, the Other Renaissance Managed RF Fund, and any other 
Funds described in this Section IV(n), in the United States (the 
Process Agent);
    (3) Consents to service of process on the Process Agent; and
    (4) Agrees that any enforcement by an IRA Holder or 401(k) Account 
Holder of his or her rights pursuant to this amendment will at the 
option of such IRA Holder or 401(k) Account Holder, occur exclusively 
in the United States courts.
    (o) Renaissance maintains, or causes to be maintained, for a period 
of six years from the date of any covered transaction, such records as 
are necessary to enable the persons described in paragraph (p)(1) below 
to determine whether the conditions of this amendment have been met, 
provided that (1) a separate prohibited transaction will not be 
considered to have occurred if, due to circumstances beyond the control 
of Renaissance, the records are lost or destroyed prior to the end of 
the six-year period, and (2) no party in interest or disqualified 
person other than Renaissance 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 are not 
available for examination as required by paragraph (p)(1) below.
    (p)(1) Except as provided below in paragraph (p)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to above in paragraph (o) are 
unconditionally available at their

[[Page 66411]]

customary location for examination during normal business hours by:
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, the Commodity Futures Trading 
Commission (CFTC), or the U.S. Securities and Exchange Commission 
(SEC), and
    (B) Any IRA Holder or 401(k) Account Holder or any duly authorized 
representative or beneficiary of an IRA or 401(k) Account; and
    (2) None of the persons described above in paragraph (p)(1)(B) 
shall be authorized to examine trade secrets of Renaissance, or 
commercial or financial information which is privileged or 
confidential, and should Renaissance refuse to disclose information on 
the basis that such information is exempt from disclosure, Renaissance 
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.

Section V. Definitions

    For purposes of this amendment:
    (a) The term ``Renaissance'' means Renaissance Technologies, LLC, 
and its affiliates.
    (b) An ``affiliate'' of a person includes--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with such entity (for purposes of this paragraph, the term ``control'' 
means the power to exercise a controlling influence over the management 
or policies of a person other than an individual); and
    (2) Any officer of, director of, or partner in such person.
    (c) The term ``Fair Value Pricing Policies'' means the Official 
Pricing Policy established in good faith by the Renaissance Valuation 
Committee for valuing an instrument, which is subject to the approval 
of the Renaissance Technologies LLC Board of Directors.
    (d) The term ``Fund'' or ``Funds'' means, individually or 
collectively, the eight privately offered U.S. and non-U.S. collective 
investment vehicles managed by Renaissance, comprised almost 
exclusively of assets of Renaissance and its owners and employees (the 
Proprietary Funds) and the eight privately offered U.S. and non-U.S. 
collective investment vehicles, consisting primarily of assets of 
clients of Renaissance (the non-Proprietary Funds).
    (e) The term ``Investment Allocation'' means the permitted 
investment allocation limit in the Medallion Funds applicable to a 
Renaissance employee, which such employee and his or her Spouse may 
utilize to make investments in a Medallion FF or Kaleidoscope, or in an 
applicable New Medallion Vehicle.
    (f) The term ``IRA'' means an ``individual retirement account'' as 
defined under section 408(a) of the Code that is beneficially owned by 
an IRA Holder or a ``Roth IRA'' as defined under section 408A of the 
Code that is beneficially owned by an IRA Holder.
    (g) The term ``IRA Holder'' means a Participant, or the Spouse of a 
Participant, who is eligible to invest in a New Medallion Vehicle 
through his or her IRA.
    (h) The term ``Kaleidoscope'' means Renaissance Kaleidoscope Fund 
LLC, a Delaware limited liability company established by Renaissance to 
facilitate the investment in the Proprietary Funds by employees of 
Renaissance who are not Accredited Investors under the Securities Act 
of 1933, as amended (the 1933 Act) or otherwise do not meet the 
financial requirements to invest in such Proprietary Funds.
    (i) The term ``Medallion Funds'' means the five Proprietary Funds 
of Renaissance that are organized in a ``master-feeder'' investment 
structure. The Medallion Funds are comprised of five feeder funds 
(Medallion FFs), each designed for a different type of investor, that 
engage in their investment and trading activities only through certain 
master funds and their subsidiaries (the Medallion Master Funds).
    (j) The term ``New Medallion Vehicle'' or ``New Medallion 
Vehicles'' means, individually or collectively, New Medallion FF, New 
Medallion FF RMPRF, and New Kaleidoscope.
    (k) The term ``New Kaleidoscope'' means Renaissance Kaleidoscope RF 
Fund LLC, the Delaware limited liability company established by 
Renaissance in order to facilitate investment, by IRA Holders and 
401(k) Plan participants who are not ``Accredited Investors'' under the 
1933 Act, in the Medallion Fund RF LP and Other Renaissance Managed RF 
Funds that are not parties in interest, or other disqualified persons, 
as applicable, to the IRA Holders' IRAs or to the New 401(k) Plan.
    (l) The term ``New Medallion FF'' means Medallion Fund RF LP, the 
Bermuda Limited Partnership that is treated as a corporation for US 
Federal Income Tax purposes, established by Renaissance in order to 
facilitate an investment by an IRA Holder or 401(k) Plan participant 
who is a ``Qualified Purchaser'' or ``Knowledgeable Employee'' under 
the Investment Company Act of 1940, as amended (the 1940 Act) in the 
Medallion Master Funds, through his or her IRA or 401(k) Account.
    (m) The term ``New Medallion FF RMPRF'' means Medallion RMPRF Fund 
LP, the Bermuda Limited Partnership that is treated as a corporation 
for U.S. Federal Income Tax purposes established by Renaissance in 
order to facilitate the investment by IRA Holders or 401(k) Plan 
participants who are neither Qualified Purchasers nor ``Knowledgeable 
Employees'' as defined in the 1940 Act, but who are Accredited 
Investors, in the Medallion Master Funds, through their IRAs or 401(k) 
Accounts.
    (n) The term ``Other Renaissance Managed RF Fund'' means an RF 
Series of any Renaissance-sponsored Fund, other than a Medallion Fund 
or Kaleidoscope Fund, that is a private investment vehicle established 
in compliance with the various federal securities laws and other 
applicable regulatory requirements and for which Renaissance is the 
investment manager, as well as the investment manager of any master 
trading vehicles that may be utilized by such a fund to invest and 
trade its assets.
    (o) The term ``Participant'' means a person who is either an 
employee or a Permitted Owner of Renaissance at the time of such 
individual's investment in the New Medallion Vehicles.
    (p) The term ``Permitted Owners'' means the eight individuals 
permitted to invest in the Medallion Funds following the termination of 
their Renaissance employment, comprised of three Renaissance 
``founders,'' and five former employees who are current owners of 
Renaissance.
    (q) The term ``Renaissance Valuation Committee,'' or ``RVC,'' means 
the committee, established by Renaissance in 2008, that oversees and 
monitors the valuation process, and establishes the methods of, and 
procedures for, valuing various instruments traded by Renaissance, 
composed of high-level Renaissance employees who also may be Fund 
investors.
    (r) The term ``Spouse'' means a person who is (1) married to a 
Participant, or (2) to the extent not prohibited by applicable law, in 
a civil union or similar marriage-equivalent institution established 
pursuant to State law of the State where the Participant resides (or 
otherwise recognized by the State where the Participant resides) with a 
Participant.
    (s) The term ``401(k) Account'' means the plan account established 
and maintained for the benefit of a

[[Page 66412]]

participant in the Renaissance Technologies LLC 401(k) Plan.
    (t) The term ``401(k) Account Holder'' means a participant in the 
Renaissance Technologies LLC 401(k) Plan who is eligible to invest in a 
New Medallion Vehicle through his or her 401(k) Account.

Section VI. Effective Date

    This amendment of PTE 2012-10 is effective as of the earlier of the 
date of publication in the Federal Register or October 1, 2014.

Written Comments

    The Department invited all interested persons to submit written 
comments with respect to the proposed amendment of exemption published 
in the Federal Register on August 14, 2014 at 79 FR 47674 (the Notice) 
on or before September 16, 2014. During the comment period, the 
Department received one written comment from the Applicant that 
requests: (1) modifications to certain definitions in Section V of the 
proposed amendment to take into account the 401(k) Account investments; 
(2) a clarification to a condition in the proposed amendment; (3) 
updates to information describing Renaissance and the Funds; (4) 
clarifications and/or updates to descriptions of the New Medallion 
Vehicles; (5) clarifications to descriptions of PTE 2012-10 and the 
covered transactions; and (6) clarifications regarding use of certain 
defined terms in the Summary of Facts and Representations in the Notice 
(the Summary). The Department received no other written comments. The 
Applicant's comment and the Department's responses thereto are 
described as follows.\3\
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    \3\ Capitalized terms not defined herein have the meanings 
ascribed to them in the Summary.
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    Modification of Section V(l) and Section V(m). The Applicant's 
comment requested a change to the definitions of ``New Medallion FF'' 
and ``New Medallion FF RMPRF'' in Section V of the proposed amendment 
to better describe the purpose of such investment vehicles. Section 
V(l) of the proposed amendment provides that ``[t]he term `New 
Medallion FF' means Medallion Fund RF LP, the Bermuda Limited 
Partnership that is treated as a corporation for US Federal Income Tax 
purposes, established by Renaissance in order to facilitate an 
investment by an IRA Holder who is a ``Qualified Purchaser'' or 
``Knowledgeable Employee'' under the Investment Company Act of 1940, as 
amended (the 1940 Act) in the Medallion Master Funds, through his or 
her IRA.'' Furthermore, Section V(m) of the proposed amendment provides 
that ``[t]he term `New Medallion FF RMPRF' means Medallion RMPRF Fund 
LP, the Bermuda Limited Partnership that is treated as a corporation 
for US Federal Income Tax purposes established by Renaissance in order 
to facilitate the investment by IRA Holders who are neither Qualified 
Purchasers nor `Knowledgeable Employees' as defined in the 1940 Act, 
but who are Accredited Investors, in the Medallion Master Funds, 
through their IRAs.''
    The Applicant states that the current definitions of ``New 
Medallion FF'' and ``New Medallion FF RMPRF'' in Sections V(l) and V(m) 
of the proposed amendment contain historical information about the 
reason such Funds were originally established, i.e., to facilitate the 
investment by IRA Holders in the Medallion Master Funds through their 
IRAs in connection with PTE 2012-10. However, the Applicant states that 
since the proposed amendment provides exemptive relief for the 
investment by 401(k) Account Holders in the Medallion Master Funds 
through their 401(k) Accounts in addition to the IRA investments 
described in PTE 2012-10, the definitions should be updated for the 
sake of clarification, as well as consistency with the definition of 
``New Kaleidoscope,'' which has already been modified in the proposed 
amendment. Accordingly, the Applicant requests that the definitions of 
``New Medallion FF'' and ``New Medallion FF RMPRF'' in Sections V(l) 
and V(m) be modified as follows: (1) In Section V(l), insert ``or 
401(k) Plan participant'' after ``an IRA Holder'', and insert ``or 
401(k) Account'' after ``his or her IRA''; and (2) In Section V(m), 
insert ``or 401(k) Plan participants'' after ``IRA Holders'', and 
insert ``or 401(k) Accounts'' after ``their IRAs''.
    The Department concurs with the Applicant's requested modification 
of the definitions of ``New Medallion FF'' and ``New Medallion FF 
RMPRF'' in Sections V(l) and V(m) and the final amendment has been 
modified accordingly.
    Clarification of Scope of Condition in Section IV(k). The 
Applicant, in its comment, seeks clarification with respect to the 
scope of the condition for exemptive relief in Section IV(k) of the 
proposed amendment, which provides that, with the respect to the 
covered transactions, ``Renaissance does not use the IRAs' or 401(k) 
Accounts' investments in the Funds in any of their marketing activities 
or publicity materials for the Funds.'' Specifically, the Applicant 
requests that the Department confirm that this condition does not 
prevent Renaissance from disclosing the existence and amounts of such 
investments for the sake of completeness, in order to avoid omitting 
material disclosures that are required by Federal securities laws or 
other applicable law. The Department confirms that the condition in 
Section IV(k) of the Notice is not intended to prevent Renaissance from 
making disclosures in compliance with Federal securities laws or other 
applicable laws.
    Updates to Information Describing Renaissance and the Funds. The 
Applicant's comment updates the number of Proprietary and non-
Proprietary Funds, as described in Section V(d) of the proposed 
amendment and paragraphs four and ten of the Summary. Paragraph four of 
the Summary provides that the Applicant is the investment manager of 
fifteen privately offered U.S. and non-U.S. collective investment 
vehicles, nine of which are proprietary funds (Proprietary Funds) and 
six of which are non-proprietary funds (non-Proprietary Funds)--with 
approximately $24 billion of assets under management. The Applicant 
notes that Renaissance now manages sixteen privately offered collective 
investment vehicles, split equally between Proprietary Funds and non-
Proprietary Funds, with approximately $23 billion of assets under 
management. The Applicant requests that Section V(d) of the proposed 
amendment be modified accordingly. Paragraph ten of the Summary states 
that Kaleidoscope is one of nine Proprietary Funds eligible to invest 
in the other eight Proprietary Funds. However, the Applicant notes that 
Kaleidoscope Fund is now one of eight Proprietary Funds and is eligible 
to invest in the other seven Proprietary Funds.
    The Applicant's comment also updates the number of Medallion Funds 
described in Section V(i) of the proposed amendment and paragraphs four 
and six of the Summary, as there are now five Medallion Funds--rather 
than six as stated in the Notice. The Applicant explains that one of 
the Medallion FF's, Medallion RMP, liquidated its investors' interests 
on December 31, 2012.
    The Applicant's comment also updates paragraph five of the Summary, 
which describes the breakdown of assets under management between the 
Proprietary Funds and the non-Proprietary Funds. In this regard, the 
Applicant notes that, as of June 30, 2014, the Proprietary Funds and 
the non-Proprietary Funds had $11.3 billion

[[Page 66413]]

and $11.7 billion in assets under management, respectively. In 
addition, the Applicant specified that, as of June 30, 2014, the 
Medallion Funds represent approximately $8.9 billion of the Proprietary 
Funds' $11.3 billion in assets under management.
    The Applicant's comment also updates paragraph seven of the 
Summary, which describes the Medallion Master Funds and Medallion FFs. 
In this regard, the Applicant notes that the Medallion Master Funds and 
Medallion FFs are now organized as limited partnerships, limited 
liability corporations and corporations--not just limited partnerships 
or corporations, as specified in the Summary. Additionally, the 
Applicant's comment notes that footnote three to paragraph seven of the 
Summary is no longer accurate. In this regard, footnote three provides 
that the Medallion FFs currently operate under the exemptions set forth 
in sections 3(c)(7), 3(c)(1), or 6(b) of the 1940 Act, and Rule 506 of 
Regulation D under the Securities Act of 1933, as amended. However, the 
Applicant notes that Medallion RMP was the only Medallion Fund that 
relied on the exemption set forth in section 6(b) of the 1940 Act, and 
as described above, Medallion RMP liquidated its assets on December 31, 
2012.
    Finally, the Applicant's comment updates paragraph nine of the 
Summary, which provides that the average annual returns of the 
Medallion Funds (before management fees and performance allocations) 
for the period January 1, 1994 through December 31, 2013 is 71.88%. The 
Applicant notes that the average annual returns of the Medallion Funds 
(before management fees and performance allocations) for the period 
January 1, 1994 through June 30, 2014 is 71.80%.
    The Department has modified Section V(d) and Section V(i) in the 
final amendment to reflect the Applicant's updates to the number of 
Proprietary and non-Proprietary Funds, including the number of 
Medallion Funds, and the Department takes note of the Applicant's other 
updates to the Summary, as described above.
    Clarifications and/or Updates to Descriptions of the New Medallion 
Vehicles. Paragraph fourteen and footnote five of the Summary provide 
descriptions of the New Medallion Vehicles, including their tax status, 
corporate form, legal jurisdiction, and their applicable securities 
law-based investor qualifications. The Applicant's comment provides 
several clarifications to paragraph fourteen and footnote five, and 
suggests certain clarifying language in paragraph fourteen to more 
accurately describe the New Medallion Vehicles, described as follows:
    The second sentence of paragraph fourteen provides that ``New 
Medallion FF is available only to IRAs maintained by IRA Holders who 
meet the same investor qualifications as those investing the Medallion 
Funds.'' The Applicant clarifies that the New Medallion FF is only open 
for investment by IRAs whose IRA Holders are qualified under section 
3(c)(7) of the 1940 Act, but one of the five Medallion Funds (Medallion 
USA) actually qualifies for an exemption under section 3(c)(1) of the 
1940 Act.
    The Applicant suggests that the first two sentences of paragraph 
fourteen provide descriptions of New Medallion FF and New Kaleidoscope, 
but do not provide a full description of New Medallion FF RMPRF. 
Accordingly, the Applicant provides the following clarifying 
description of New Medallion FF RMPRF: ``New Medallion FF RMPRF is 
organized as a Bermuda Limited Partnership that elects to be treated as 
a corporation for US Federal Income Tax purposes, and invests directly 
in the Medallion Master Funds. New Medallion FF RMPRF is available only 
to IRAs whose beneficial owners are Accredited Investors under 
Regulation D of the 1933 Act.''
    The third sentence of paragraph fourteen provides that New 
Kaleidoscope is available to IRAs of IRA Holders who are not eligible 
to invest in New Medallion FF. The Applicant clarifies that New 
Kaleidoscope is designed to accept investments from IRAs whose 
beneficial owners do not qualify for investment in either New Medallion 
FF or New Medallion RMPRF. The Applicant notes further that New 
Kaleidoscope may accept investments from up to 35 IRAs whose beneficial 
owners are non-Accredited Investors.
    The fourth sentence of paragraph fourteen states that New 
Kaleidoscope invests in the Medallion Funds through New Medallion FF 
RMPRF, and the second sentence of footnote five provides that, ``. . 
.New Medallion FF accepts direct IRA investment, whereas New Medallion 
FF RMPRF only accepts investment by New Kaleidoscope, and thus has no 
direct investment by IRAs.'' According to the Applicant, this sentence 
and footnote need to be clarified in several respects: First, the 
reference to the ``Medallion Funds'' should be instead to the 
``Medallion Master Funds,'' to more accurately reflect the ultimate 
investment by New Kaleidoscope; secondly, although New Kaleidoscope 
originally invested in the Medallion Master Funds through New Medallion 
FF RMPRF, Renaissance has since determined that New Kaleidoscope will 
invest in the Medallion Master Funds through New Medallion FF; and 
finally, New Medallion FF accepts direct investments from IRAs whose 
IRA Holders are qualified under section 3(c)(7) of the 1940 Act and 
from New Kaleidoscope, whereas New Medallion FF RMPRF accepts 
investments from IRAs whose IRA Holders are qualified under section 
3(c)(1) or section 3(c)(7) of the 1940 Act.
    Finally, the fifth sentence of paragraph fourteen states that `` . 
. .New Kaleidoscope will invest in the two other newly established 
feeder funds which are designed to facilitate investment in the non-
Medallion Funds.'' The Applicant clarifies that these two other feeder 
funds are the RF Series of RIEF LLC and RIFF LLC, and notes that the 
Applicant requested the amendment, in part, in order to facilitate New 
Kaleidoscope's investment in other non-Medallion Funds.
    Therefore, to resolve any confusion and make necessary updates to 
the descriptions of the New Medallion Vehicles in paragraph fourteen of 
the Summary, the Applicant's comment suggests that paragraph fourteen 
read as follows:

    ``New Medallion FF is organized as a Bermuda Limited Partnership 
that elects to be treated as a corporation for U.S. Federal Income 
Tax Purposes, and invests directly in the Medallion Master Funds. 
New Medallion FF is available only to IRAs whose beneficial owners 
are 3(c)(7) qualified investors. New Medallion FF RMPRF is organized 
as a Bermuda Limited Partnership that elects to be treated as a 
corporation for U.S. Federal Income Tax Purposes, and invests 
directly in the Medallion Master Funds. New Medallion FF RMPRF is 
available only to IRAs whose beneficial owners are 3(c)(1) or 
3(c)(7) qualified investors. New Kaleidoscope is a fund-of-funds 
that is available only to IRAs maintained by IRA Holders that do not 
meet the investor qualifications to invest directly in New Medallion 
FF or New Medallion FF RMPRF. New Kaleidoscope is organized as a 
Delaware limited liability company, and invests in the Medallion 
Funds through New Medallion FF. In addition, New Kaleidoscope 
invests in two other vehicles (the RF series of RIEF LLC and RIFF 
LLC) which are designed to facilitate its investment in non-
Medallion Funds, and relief has been requested to facilitate its 
investment in other non-Medallion Funds (see paragraph 30, infra).''

    The Department takes note of the Applicant's clarifications to 
paragraph fourteen of the Summary and suggested clarifying language, 
except that, with respect to the Applicant's suggested revision to the 
last sentence of paragraph fourteen, the Department is

[[Page 66414]]

not extending exemptive relief to investments by New Kaleidoscope in 
the non-Medallion Funds, because, according to the Applicant and as 
described in paragraph 32 of the Summary, such Funds do not constitute 
parties in interest or disqualified persons with respect to the IRAs or 
the 401(k) Plan.
    Clarifications to Description of PTE 2012-10 and the Covered 
Transactions. The Applicant's comment also provided clarifications to 
the Summary regarding the description of PTE 2012-10 and the covered 
transactions. In describing PTE 2012-10, paragraph one of the Summary 
provides that relief was granted for investments in ``six privately 
offered collective investment vehicles managed by Renaissance.'' 
However, the Applicant notes that PTE 2012-10 grants relief for 
investments in three privately offered collective investment vehicles, 
New Medallion FF, New Medallion FF RMPRF and New Kaleidoscope, which 
themselves ultimately invest in the Medallion Master Funds. In further 
describing PTE 2012-10, paragraph thirteen provides that Renaissance 
also created ``two other feeder funds,'' besides the New Medallion 
Vehicles, that were specifically designed to facilitate the investment 
by IRAs into other of Renaissance's Proprietary Funds (the non-
Medallion Funds). The Applicant notes, however that there are currently 
four such feeder funds: RIFF RMPRF LP and the RF Series of RIEF LLC, 
RIFF LLC and RIDA LLC.
    In describing PTE 2012-10, footnote six of the Summary provides 
that no management fees or profit participations of any kind are 
charged to IRAs investing (directly or through New Kaleidoscope) in any 
Renaissance investment vehicles designed to facilitate the investment 
into the non-Medallion Funds. The Applicant notes in its comment that 
this will also be the case for investments made by 401(k) Accounts in 
such vehicles. Furthermore, in describing PTE 2012-10, footnote seven 
of the Summary provides that Renaissance terminated the Old 401(k) Plan 
in late 2010 and distributed its assets to participants by December 31, 
2010. The Applicant notes in its comment that the effective date of 
such plan termination was December 15, 2010.
    In describing the covered transactions, paragraphs 21 and 23 of the 
Summary provide general descriptions of the procedures for purchases 
and redemptions of interests in the New Medallion Vehicles by 401(k) 
Plan Accounts. The Applicant notes in its comment that the phrase 
``purchases by 401(k) Accounts of interests in the Funds will be 
allowed quarterly and are purchased and redeemed at net asset value'' 
in paragraph 21 and the phrase ``Redemptions of interests in New 
Medallion Vehicles are always made in cash'' in paragraph 23 suggest 
that the 401(k) Account transactions for which relief was sought by the 
Applicant are already occurring. However, the Applicant represents that 
these transactions have yet to occur.
    Lastly, in describing the covered transactions, paragraph 40 of the 
Summary provides that, ``if the proposed amendment is granted, each 
Participant's `Investment Allocation' would limit the combined amount 
he or she is permitted to invest in the Medallion Funds via his or her 
personal account, IRA (including his or her Spouse's IRA), and 401(k) 
Account (in the case of the latter two, via the New Medallion 
Vehicles).'' The Applicant notes that a Participant's Investment 
Allocation applies in the aggregate to his or her investments in non-
fee-free Medallion Funds and in fee-free New Medallion Vehicles.
    The Department takes note of the Applicant's suggested 
clarifications to the Summary, as described above.
    Clarifications Regarding Use of Defined Terms. The Applicant 
suggests in its comment that there are several places in the proposed 
amendment and the Summary where clarification of certain defined terms 
is appropriate. Specifically, the Applicant states for purposes of 
clarification that, in paragraphs 14, 15, 28, 32, and in the last 
sentence of footnote twelve of the Summary, and in Sections I(a), II(a) 
and III(a) of the proposed amendment, references to ``Medallion Fund'' 
or ``Medallion Funds'' should be interpreted as references to 
``Medallion Master Fund'' or ``Medallion Master Funds.'' In this 
regard, according to the Applicant, when an IRA or 401(k) Account 
acquires an interest in a New Medallion Vehicle, it ultimately 
acquires, through that investment, an interest in a Medallion Master 
Fund, where the actual investment activity takes place.
    Additionally, the Applicant notes that in the second sentence of 
paragraph ten, the reference to ``Medallion RMP'' should refer to 
``Medallion Fund LP.'' In this regard, the Applicant states that 
Medallion RMP had all of its investors' interests liquidated on 
December 31, 2012, and Kaleidoscope's investment in the Medallion 
Master Funds was subsequently redirected through Medallion Fund LP. In 
addition, the Applicant states that in footnote eighteen of the 
Summary, the reference to ``New Kaleidoscope'' should be to ``New 
Medallion FF RMPRF,'' because Spouses are not eligible to invest in New 
Kaleidoscope.
    Lastly, the Applicant's comment also suggests that in paragraph 35 
and the last sentence of footnote twelve, the references to ``Medallion 
Funds'' should be interpreted to read ``New Medallion Vehicles.'' In 
this regard, the Applicant explains that although the ultimate 
investment by IRAs and 401(k) Accounts is in the Medallion [Master] 
Funds, the actual investment that is being offered to an IRA or 401(k) 
Account is an interest in a New Medallion Vehicle.
    The Department takes note of the Applicant's foregoing 
clarifications of the above-described defined terms in the proposed 
amendment and the Summary. However, the Department notes that the last 
sentence of footnote twelve of the Summary already provides that the 
investments in the Medallion Funds referenced therein are made 
indirectly through the New Medallion Vehicles, and as such no 
clarification thereto is necessary.
    After giving full consideration to the entire record, including the 
Applicant's written comment, subject to the Department's responses 
thereto, the Department has decided to grant the amendment to PTE 2012-
10. The complete application file is available for public inspection in 
the Public Disclosure Room of the Employee Benefits Security 
Administration, Room N-1515, U.S. Department of Labor, 200 Constitution 
Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this amendment, refer to 
the proposed amendment to PTE 2012-10 published in the Federal Register 
on August 14, 2014 at 79 FR 47674.

FOR FURTHER INFORMATION CONTACT: Ms. Jennifer Erin Brown of the 
Department at (202) 693-8352. (This is not a toll-free number.)

Family Dynamics, Inc., Pension Plan (the Plan) Located in Leesburg, 
Florida

[Prohibited Transaction Exemption 2014-10; Exemption Application No. 
D-11777]

Exemption

Section I: Retroactive Transactions

    The restrictions of sections 406(a)(1)(A), 406(a)(1)(B), 
406(a)(1)(D), 406(a)(1)(E), 406(a)(2), 406(b)(1), 406(b)(2), and 407 of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A), 4975(c)(1)(B),

[[Page 66415]]

4975(c)(1)(D), and 4975(c)(1)(E) of the Code,\4\ shall not apply, 
effective September 15, 2011, through December 28, 2012, to the 
following transactions, provided that the conditions, as set forth in 
Section II and Section V of this exemption, are satisfied:
---------------------------------------------------------------------------

    \4\ 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.
---------------------------------------------------------------------------

    (a) The contribution in-kind to the Plan of two (2) promissory 
notes (Note#1 and Note#2), of a series of twenty-nine (29) numbered 
promissory notes (collectively, the ``Notes'' and individually, 
``Note#1 through Note#29''), as defined below in Section VI(d), by 
Family Dynamics, Inc. (FDI), the sponsor of the Plan, for the purpose 
of satisfying the minimum funding obligation of FDI to the Plan for the 
plan year ending December 31, 2010;
    (b) The holding by the Plan of Note#1 and Note#2 until December 28, 
2012;
    (c) The extension of credit by the Plan to Minneola AG, LLC 
(Minneola), the issuer of the Notes and a party in interest with 
respect to the Plan, resulting from the holding of Note#1 and Note#2 by 
the Plan;
    (d) The extension of credit to the Plan:
    (1) By certain stockholders of FDI; and
    (2) By the members of Minneola, by reason of each such 
stockholder's and/or each such member's personal guaranty of all or a 
portion of the face amounts, plus accrued interest thereon, of Note#1 
and Note#2; and
    (e) The redemption of Note#1 and Note#2 on December 28, 2012, by 
Minneola for a cash payment that equaled the fair market value of such 
notes, including principal and all accrued interest thereon through the 
date of redemption.

Section II: Conditions for Retroactive Transactions

    (a) Prior to the in-kind contribution of Note#1 and Note#2, the 
fair market value of such notes was determined to be at least 
$2,316,047, as determined by an independent, qualified appraiser (the 
IQA);
    (b) Prior to the in-kind contribution of Note#1 and Note#2, FDI 
engaged the law firm of Alston and Bird, LLP (A&B), and FDI thereafter 
contributed Note#1 and Note#2 in a manner consistent with written 
guidance provided by A&B on September 10, 2011;
    (c) Note#1 and Note#2 were redeemed for $2,616,702.01, providing 
the Plan with a 10.39 percent (10.39%) annual rate of return in 
connection with its holding of such notes;
    (d) The terms and conditions of the transactions, as described in 
Section I, were no less favorable to the Plan than the terms and 
conditions negotiated at arm's length under similar circumstances 
between unrelated parties;
    (e) The Plan did not incur any commissions, fees, costs, other 
charges, or expenses in connection with the acquisition, the in-kind 
contribution, the holding, and/or the redemption of Note#1 and Note#2, 
except for the fees of a qualified, independent fiduciary acting on 
behalf of the Plan (the I/F), as defined below in Section VI(c), or 
persons engaged by the I/F on behalf of the Plan.

Section III: Prospective Transactions

    The restrictions of sections 406(a)(1)(A), 406(a)(1)(B), 
406(a)(1)(D), 406(a)(1)(E), 406(a)(2), 406(b)(1), 406(b)(2), and 407 of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A), 4975(c)(1)(B), 
4975(c)(1)(D), and 4975(c)(1)(E) of the Code, shall not apply as of the 
date the final exemption is published in the Federal Register and 
ending on the last day certain of the Notes (the Subsequent Notes), as 
defined below in Section VI(m), are held by the Plan, to the following 
transactions, provided that the conditions as set forth in Section IV 
and Section V of this exemption are satisfied:
    (a) The contribution in-kind to the Plan of the Subsequent Notes 
for the purpose of satisfying FDI's minimum funding obligations to the 
Plan;
    (b) The holding of the Subsequent Notes until the maturity date of 
such notes;
    (c) The extension of credit by the Plan to Minneola resulting from 
the holding of the Subsequent Notes by the Plan;
    (d) The extension of credit to the Plan by:
    (1) Certain major stockholders of FDI; and
    (2) The members of Minneola that are family trusts, by reason of 
each such stockholder's and/or each such member's personal guaranty of 
all or a portion of the face amount, plus accrued interest thereon, of 
any of the Subsequent Notes; and
    (e) The redemption by FDI, Family Dynamics Land Company, LLC 
(FDLC), Minneola, or any affiliate thereof, as affiliate is defined 
below in Section VI(a), of any of the Subsequent Notes on or before the 
maturity date of such notes for the greater of:
    (1) The aggregate principal plus accrued interest thereon of such 
notes, as of the date of redemption; or
    (2) The fair market value of such notes, as determined by an IQA, 
as of the date of redemption.

Section IV: Conditions for Prospective Transactions

    (a) The terms and conditions of the transactions will be no less 
favorable to the Plan than the terms and conditions negotiated at arm's 
length under similar circumstances between unrelated parties;
    (b) The terms of the transactions, as described in Section III, are 
determined in advance by the I/F, acting on behalf of the Plan, to be 
administratively feasible, in the interest of, and protective of the 
Plan and its participants and beneficiaries;
    (c) The I/F is engaged with full discretionary authority to act on 
behalf of the Plan with respect to each of the Subsequent Notes 
contributed in-kind to the Plan, including the exercise of any of the 
rights of the Plan under such notes, and the responsibility to monitor 
such notes, and to ensure compliance by FDI, Minneola, FDLC, and any 
affiliates thereof, with the terms and conditions of such notes, and 
with the terms and conditions of this exemption;
    (d) The Subsequent Notes will be contributed in-kind to the Plan in 
the next order of seniority of such notes (i.e., Note#3, Note#4, 
Note#5, etc.);
    (e) Prior to the in-kind contribution of any of the Subsequent 
Notes, the fair market value of such notes will be determined by an 
IQA, engaged by the I/F. The fair market value must reflect the then-
current terms of such Subsequent Notes, and take into account all 
factors deemed relevant, including the then-current value of a certain 
parcel of real property (the Property), as defined below in Section 
VI(f), all or a portion of which secures such notes, as well as the 
additional pledges and covenants the I/F has negotiated on behalf of 
the Plan;
    (f) Upon the contribution in-kind of any Subsequent Notes to the 
Plan,
    (1) The Plan receives a recorded, perfected security interest in 
the Property (or in a relevant portion of such Property)(the Security 
Interest) and retains such Security Interest until the Plan no longer 
holds any Subsequent Notes; and
    (2) The Property (or relevant portion thereof) in which the Plan 
holds the Security Interest has, at all times throughout the duration 
of the contributed Subsequent Notes, an appraised value equal to a 
minimum of five (5) times the aggregate outstanding balance, including 
all principal and accrued interest thereon, of all of the Subsequent 
Notes held by the Plan,

[[Page 66416]]

where such appraised value is determined by an IQA,
    (A) Immediately after the most recent contribution in-kind of such 
Subsequent Notes; and
    (B) Immediately after the sale or disposition of any portion of the 
Property;
    (g) The aggregate fair market value, as determined pursuant to 
Section IV(e) above, of the Subsequent Notes that are held by the Plan 
shall not exceed 20 percent (20%) of the fair market value of the total 
assets of the Plan, in each case determined by the I/F immediately 
after any in-kind contribution of such notes;
    (h) The Plan will not incur any commissions, fees, costs, other 
charges, or expenses in connection with the acquisition, the in-kind 
contribution, the holding, and/or the redemption of any of the 
Subsequent Notes, including the fees and expenses of the I/F, and the 
fees and expenses of an IQA, counsel, or other persons engaged by the 
I/F;
    (i) If, at any time, the fair market value of the Property, all or 
a portion of which serves as collateral for the Subsequent Notes 
contributed in-kind to the Plan, is less than 150 percent (150%) of the 
aggregate outstanding principal balance and accrued interest of such 
notes held by the Plan, the Plan has the right, exercisable on 120 
days' prior written notice by the I/F to FDI, to accelerate the payment 
of such notes in order to cause the fair market value of the relevant 
portion of the Property which serves as collateral to be at least 150 
percent (150%) of the aggregate outstanding principal and accrued 
interest amount of such Subsequent Notes;
    (j) If, at any time, the I/F determines that the Plan does not have 
sufficient liquidity to meet its projected 12-month forward expense 
obligations (including benefit payment obligations), the Plan has a 
right, exercisable, by the I/F, on ninety (90) days' prior written 
notice to FDI, to accelerate the repayment of the Subsequent Notes held 
by the Plan;
    (k)(1) FDI provides to the I/F a report from the custodian of the 
Plan no later than ten (10) days after the end of each calendar quarter 
detailing the assets of the Plan (excluding the Subsequent Notes held 
by the Plan) as of the last day of the calendar quarter just ended so 
long as the Plan owns any Subsequent Notes; and
    (2) FDI provides to the I/F, not later than thirty (30) days after 
the written request of the I/F, a report from the actuary of the Plan 
projecting the Plan's forward expense obligations for the following 
twelve (12) months;
    (l) The following FDI-related entities: Yeehaw Ranch Land, LLC 
(Yeehaw), PMCC, LLC (PMCC), Bi-Coastal Holdings, LLC (Bi-Coastal), and 
Arcadia Holdings, LLC (Arcadia): will covenant with FDI to use the 
``available proceeds,'' as defined in Section VI(1), from the sale of 
any real property owned by such entities, and all net royalties 
received by Arcadia from third parties, to pay off any debts owned by 
such entities to FDI. At the option of FDI, such available proceeds and 
such royalties either will be contributed to the Plan (as a current 
contribution or a pre-contribution of a future funding obligation) or 
will be loaned to Minneola with a written direction that Minneola pay 
the proceeds of such loan to the Plan as payment on any of the 
Subsequent Notes held by the Plan;
    (m) The covenants and agreements described in Section 
IV(l),(n),(o),and(p) of this exemption are entered into prior to any 
in-kind contribution of any Subsequent Notes to the Plan; and such 
notes will be amended to treat a breach of any such covenants and 
agreements as an event of default under such notes;
    (n) FDLC enters into a covenant agreement with the Plan, pursuant 
to which FDLC covenants to:
    (1) Refrain from mortgaging the Property; and
    (2) Distribute to Minneola the net proceeds (after the payment of 
expenses) from the sale of all or a portion of the Property by FDLC. If 
any mortgage is placed on the Property, such mortgage will create a 
default under the Subsequent Notes held in the Plan that will allow the 
Plan to enforce its rights under such a default;
    (o) FDI enters into an agreement with the Plan, whereby FDI shall 
apply all the funds that FDI receives during the Prospective Exemption 
Period, as defined below in Section VI(e), with respect to certain of 
FDI's illiquid assets, as defined below in Section VI(k), either to the 
repayment of the principal and accrued interest on the Subsequent Notes 
then held in the Plan, or to the use of such funds to satisfy FDI's 
current and future funding obligations to the Plan;
    (p) FDI covenants that it will cause Minneola, at the option of 
FDI, either to pay to the Plan any funds Minneola receives from FDLC, 
as payment on the Subsequent Notes held, or to loan such funds to FDI 
for the purpose of FDI making a contribution to the Plan within thirty 
(30) days of such loan (either as a current contribution or a pre-
contribution of a future funding obligation);
    (q) Any extension of the maturity date of the Subsequent Notes is 
subject to the approval of the I/F; and
    (r) The Notes are partially guaranteed by certain family trusts, 
based on the respective ownership of such trusts of interests in 
Minneola; and unconditionally guaranteed by Mrs. Gail Gregg-Strimenos 
(Mrs. Strimenos) and Mrs. Jeannie Gregg-Emack, who jointly and 
severally guarantee payment of the aggregate amount of such notes in 
full.

Section V: General Conditions

    (a) FDI, Minneola, FDLC, and any affiliates thereof, as applicable, 
maintain or causes to be maintained within the United States, starting 
on September 15, 2011, and ending on the date which is six (6) years 
after the last day any of the Subsequent Notes is held by the Plan, the 
records necessary to enable the persons, described below in Section 
V(b)(1)(A)-(C), to determine whether the conditions of this exemption 
have been met, except that:
    (1) A separate prohibited transaction shall not be considered to 
have occurred solely because, due to circumstances beyond the control 
of FDI, Minneola, FDLC, or their affiliates, as applicable, such 
records are lost or destroyed prior to the end of the six (6) year 
period, described in Section V(a) above, and
    (2) No party in interest with respect to the Plan, other than FDI, 
Minneola, FDLC, and their affiliates, as applicable, shall be subject 
to the civil penalty that may be assessed under section 502(i) of the 
Act, or to the taxes imposed by section 4975(a) and (b) of the Code, if 
the records are not maintained, or are not available for examination, 
as required, below, by Section V(b)(1).
    (b)(1) Except as provided in Section V(b)(2), and notwithstanding 
any provisions of subsections (a)(2) and (b) of section 504 of the Act, 
the records referred to, above, in Section V(a) are unconditionally 
available for examination at their customary location during normal 
business hours by:
    (A) Any duly authorized employee or representative of the 
Department, or the Internal Revenue Service; and
    (B) Any fiduciary of the Plan, and any duly authorized 
representative of such fiduciary; and
    (C) Any participant or beneficiary of the Plan, and any duly 
authorized representative of such participant or beneficiary;
    (2) None of the persons, described above in Section V(b)(1)(B) 
through (C), shall be authorized to examine trade secrets of FDI, 
Minneola, FDLC, or their affiliates or commercial or financial 
information which is privileged or confidential.

Section VI: Definitions

    (a) An ``affiliate'' of a person includes:

[[Page 66417]]

    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person;
    (2) Any officer, director, employee, relative, or partner in any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (b) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (c) The term ``I/F'' means Gallagher Fiduciary Advisers, LLC or any 
successor that has satisfied all of the criteria for a ``qualified 
independent fiduciary'' within the meaning of 29 CFR 2570.31(j).
    (d) The term ``Notes'' means a series of twenty-nine (29) 
promissory notes (declining in seniority from Note#1 to Note#29), 
issued by Minneola and acquired by FDI from Minneola as a result of the 
sale of FDLC which owns the Property by FDI to Minneola. Each of the 
Notes has a face value of $1,000,000, except for Note#29, which has a 
face value of $1,330,000. Each of the Notes has an interest rate of 
4.53 percent (4.53%) per annum compounded semi-annually.
    (e) The term ``Prospective Exemption Period'' means the period 
beginning on the date of publication in the Federal Register of the 
grant of this exemption and ending on the last day any of the 
Subsequent Notes is held by the Plan.
    (f) The term ``Property'' means a certain tract of approximately 
1,670 acres of real estate which is located in the City of Minneola, 
Florida.
    (g) The term ``Minneola'' means Minneola AG, LLC, a Florida limited 
liability company.
    (h) The term ``FDI'' means Family Dynamics, Inc., a Florida 
corporation.
    (i) The term ``FDLC'' means Family Dynamics Land Company, LLC, a 
Florida limited liability company.
    (j) The term ``Plan'' means the Family Dynamics, Inc. Pension Plan.
    (k) The phrase ``FDI's illiquid assets'' means the following 
assets:
    (1) A $6.730 million dollar note from Yeehaw;
    (2) A $2.872 million dollar note from PMCC;
    (3) A $5.463 million dollar note from Bi-Coastal, the sole owner of 
Arcadia;
    (4) A non-recourse loan to a Gregg family member in the amount of 
$5.661 million dollars;
    (5) The Notes with an aggregate value of $35.757 million dollars 
issued by Minneola and held by FDI which are the subject of this 
exemption; and
    (6) Miscellaneous assets worth $0.403 million dollars.
    (l) The term ``available proceeds'' means the proceeds from the 
sale of property less:
    (1) All reasonable expenses, including any brokerage commissions, 
payable to parties unrelated to FDI or its principals/beneficial 
owners; and
    (2) All debt required to be paid as a condition to closing on such 
sale to obtain a release of any mortgage on such property.
    (m) The term ``Subsequent Notes'' means Note#3 through Note#29.

DATES: Effective Dates: This exemption shall be effective with regard 
to the transactions described in Section I above for the period 
beginning on September 15, 2011, and ending on December 28, 2012. This 
exemption shall be effective with regard to the transactions described 
in Section III above beginning on the date of the publication in the 
Federal Register of the grant of this proposed exemption and ending on 
the last day any of the Subsequent Notes is held in the Plan.

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 within forty-five (45) days of the date of the 
publication of the Notice in the Federal Register on July 24, 2014. All 
comments and requests for a hearing were due by September 8, 2014. 
During the comment period, the Department received no requests for 
hearing.
    The Department received two (2) written comments during the comment 
period with respect to the Notice. One comment was submitted by a 
commenter who is a beneficiary of the Plan. The other was submitted by 
FDI. The comments, submitted by the commenter and by FDI, and the 
Department's responses, thereto, are discussed below in paragraphs 1 
and 2, respectively, of the final exemption. Paragraph 3 of the final 
exemption describes amendments and clarifications that the Department 
has made to the Summary of Facts and Representations (SFR) of the 
Notice and to certain conditions.

Commenter's Comments

    1. In a letter dated August 29, 2014, a commenter lodged a general 
objection to the proposed exemption. In this regard, the commenter 
proposes that an independent receiver be appointed to manage the assets 
of the Plan without the input from the previous fiduciaries of the Plan 
or their new agents. In addition, the commenter explains that he would 
prefer to be given a ``lump sum payout'' that would take into 
consideration his contribution to the Plan. In this regard, the 
commenter suggests that the assets of the Plan be disbursed evenly 
among the current and former employees of FDI.
    In response to the commenter's general objection to the proposed 
exemption, FDI argues that its intent, and the purpose of the exemption 
are to ensure that the Plan is ultimately fully funded so that 100 
percent (100%) of all accrued benefits under the Plan are paid in full. 
To accomplish this purpose, FDI explains that the Subsequent Notes 
contributed to the Plan will be collateralized by the Property (or 
relevant portion thereof) having an appraised value, at all times, 
equal to five (5) times the aggregate outstanding balance, including 
all principal and accrued interest thereon, of all of the Subsequent 
Notes held by the Plan.
    Moreover, FDI represents that the exemption contains numerous other 
safeguards. In this regard, an I/F will be engaged (at FDI's expense) 
to determine whether the acceptance by the Plan of the contribution of 
the Subsequent Notes in the future is in the best interest of the Plan 
and its participants. To the extent any Subsequent Notes are held by 
the Plan, FDI states that the I/F will exercise all of the Plan's 
rights with respect to such notes.
    With respect to the commenter's request for a ``lump sum payout'' 
of his benefit under the Plan, FDI states that the Plan does not 
provide for ``lump sum payouts'' (except for benefits with a lump sum 
value of $5,000 or less in which event a ``lump sum payout'' is 
mandatory). Rather, FDI explains, benefits under the Plan are paid in 
the form of an annuity which is consistent with both the purpose of the 
Plan to provide retirement income to the participants and the 
prevailing policy objective to discouraging ``lump sum payouts.''
    With regard to the commenter's request that each participant should 
receive an equal share of the Plan's $28.92 million in assets, FDI 
argues that the suggestion completely disregards the fact that the 
amount of accrued benefits that the participants are entitled to 
receive under the Plan varies widely among the participants.
    With respect to the commenter's request that an independent 
receiver be appointed to manage the funds, FDI states that all of the 
Plan's assets are currently managed by the Principal Life Insurance 
Company (Principal Life), a large, sophisticated financial services 
firm. Principal Life was engaged in 2013 and is unrelated to and 
independent of

[[Page 66418]]

FDI. If the Subsequent Notes are offered to the Plan, FDI explains that 
the I/F will act on behalf of the Plan to determine whether to accept 
such notes, and if accepted, to manage such notes.
    In summary, FDI submits that the exemption is in the best interest 
of the Plan and its participants and that there are adequate safeguards 
in place to protect their interests. FDI further submits that no 
changes to the proposed exemption or any other actions are warranted 
based on the comment letter.
    The Department concurs with FDI's responses to the commenter's 
concerns.

FDI's Requested Amendments and Clarifications

    2. In an email to the Department, dated August 28, 2014, FDI 
requested amendments to the language of the proposed exemption, as set 
forth in the Notice, and clarifications to the representations in the 
SFR, as follows:
    (a) FDI has requested a clarification to Representation 7, on page 
43083 of the SFR, which contains a statement that ``[t]he trustee of 
the Plan is Mrs. Strimenous.'' In this regard, FDI clarifies that Mrs. 
Strimenous is the trustee of the trust that was established solely for 
the purpose of holding Note#1 and Note#2, as well as for the purpose of 
holding any Subsequent Notes to be contributed to the Plan in the 
future. FDI represents that all of the other assets of the Plan are 
held pursuant to an insurance company annuity contract currently issued 
by Principal Life Insurance Company, and, as a result, are not required 
to be held in trust.
    The Department acknowledges the clarification made by FDI to 
Representation 7.
    (b) FDI has requested a clarification to footnote 3, on page 43083 
of the SFR, which states that FDLC, as owner of the Property, will be 
donating approximately ``fifty (50) acres'' to the City of Minneola 
which will reduce the acreage of the Property. In addition, FDI notes a 
reference to fifty (50) acres in the last sentence of Representation 16 
on page 43085 of the SFR. In this regard, FDI represents that 
subsequent to the filing of the application, the City of Minneola 
requested a donation of additional acreage to facilitate potential 
future expansion of the turnpike exchange from a 2-ramp exit to a 4-
ramp clover-leaf exit. FDLC has agreed to this request with the result 
that the acreage of the Property will likely be decreased by 
approximately one hundred (100) acres, rather than fifty (50) acres.
    The Department acknowledges the clarification made by FDI to 
footnote 3 and to Representation 16 of the SFR. In addition, the 
Department notes that the approximate size of the Property (1,770 
acres), as described in Representation 9, on page 43083 of the SFR, and 
in Section VI(f), on page 43091 of the Notice, should be decreased from 
1,770 acres to 1,670 acres. Accordingly, the Department has amended the 
language in Section VI(f) of the final exemption to reflect the change 
in the acreage of the Property.
    (c) Section IV(k)(1), on page 43090 of the Notice, requires the 
``custodian'' of the Plan to provide certain reports to the I/F. As 
noted in paragraph 2(a), above, all of the assets of the Plan (other 
than the Notes which are the subject of this exemption) are held by an 
insurance company pursuant to an annuity contract. FDI maintains that 
the reference to the word, ``custodian,'' in Section IV(k)(1) should be 
read to mean the insurance company in this context and, therefore, 
believes that no amendment to this condition is required.
    The Department concurs.
    (d) Representation 15, on page 43084 of the SFR, lists various 
sections of the Act with respect to which both retroactive and 
prospective relief was proposed, including relief from section 
406(a)(1)(D) of the Act which had been inadvertently omitted from the 
Notice. FDI also requests that corresponding references to section 
4975(c)(1)(D) of the Code should be included in the language of both 
Section I and Section III of the final exemption.
    The Department concurs with FDI`s request and has amended the 
language of Section I and Section III in the final exemption to include 
relief from section 406(a)(1)(D) of the Act and section 4975(c)(1)(D) 
of the Code.

Department's Revisions and Clarifications

    3. In addition to the changes to the language of the final 
exemption requested by FDI, as discussed above in paragraph 2, the 
Department has determined to make the following clarifications and/or 
changes to the SFR and the conditions of the final exemption:
    (a) In sub-paragraph (c) of Representation 26, on page 43088 of the 
SFR, and in Section II(c), on page 43089 of the summary of the terms 
and conditions for the Retroactive Transactions, the phrase, ``The 
Notes,'' should be deleted and the phrase ``Note#1 and Note#2'' should 
be inserted instead. Further, the phrase, ``Note#1 and Note#2,'' after 
the word, ``of,'' should be changed to the phrase, ``such notes.'' In 
this regard, the Department has amended Section II(c) of the final 
exemption to reflect this change;
    (b) In sub-paragraph (f)(2) of Representation 27, on page 43088 of 
the SFR, and in Section IV(f)(2), on page 43090 of the Notice, the 
parenthetical ``(or relevant portion thereof)'' should be inserted 
after the word ``Property,'' and before the word ``in.'' It is the 
Department's view that the Property (or relevant portion thereof) in 
which the Plan has a Security Interest, at all times throughout the 
duration of Plan's holding of the contributed Subsequent Notes, must 
have an appraised value equal to a minimum of five (5) times the 
aggregate outstanding balance, including all principal and accrued 
interest thereon, of all of the Subsequent Notes held by the Plan, 
where such appraised value is determined by an IQA immediately after 
the most recent contribution in-kind of such Subsequent Notes and 
immediately after the sale or disposition of any portion of the 
Property. In this regard, the Department has amended Section IV(f)(2) 
of the final exemption to reflect this change;
    (c) In Representation 21(f), on page 43087 of the SFR, the second 
sentence should be amended to read as follows:

    The aggregate fair market value of the Subsequent Notes that are 
held by the Plan shall not exceed 20 percent (20%) of the fair 
market value of the total assets of the Plan, in each case 
determined by GFA immediately after any in-kind contribution of such 
notes;

    (d) Section IV(g), on page 43090 of the Notice, should be amended 
to read as follows:

    The aggregate fair market value, as determined pursuant to 
Section IV(e) above, of the Subsequent Notes that are held by the 
Plan shall not exceed 20 percent (20%) of the fair market value of 
the total assets of the Plan, in each case determined by the I/F 
immediately after any in-kind contribution of such notes;

    (e) Section IV(i), on page 43090 of the Notice, should be amended 
to read as follows:

    If, at any time, the fair market value of the Property, all or a 
portion of which serves as collateral for the Subsequent Notes 
contributed in-kind to the Plan, is less than 150 percent (150%) of 
the aggregate outstanding principal balance and accrued interest of 
such notes held by the Plan, the Plan has the right, exercisable on 
120 days' prior written notice by the I/F to FDI, to accelerate the 
payment of such notes in order to cause the fair market value of the 
relevant portion of the Property which serves as collateral to be at 
least 150 percent (150%) of the aggregate outstanding principal and 
accrued interest amount of such Subsequent Notes;

    and;
    (f) In Section IV(m), on page 43090 of the Notice, the reference to 
subsection

[[Page 66419]]

(m) should be deleted and a reference to subsections (l),(n),(o),and(p) 
should be inserted;
    Accordingly, after giving full consideration and review to the 
entire record, including the written comments from the commenter, FDI 
and the Department, the Department has decided to grant the exemption, 
as amended and clarified above. Comments and responses submitted to the 
Department have been included as part of the public record of the 
exemption application. The complete application file (D-11777), 
including all supplemental submissions received by the Department is 
available for inspection in the Public Disclosure Room of the Employee 
Benefits Security Administration, Room N-1515, U.S. Department of 
Labor, 200 Constitution Ave. NW., Washington, DC 20210.
    For a complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice published in the Federal Register on July 24, 2014 at 79 FR 
43082.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc, Office of 
Exemption Determinations, Employee Benefits Security Administration, 
U.S. Department of Labor, telephone (202) 693-8551. (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) These exemptions are 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 each exemption is subject to the express 
condition that the material facts and representations contained in the 
applicable application accurately describes all material terms of the 
transaction which is the subject of the exemption.

    Signed at Washington, DC, this 3rd day of November 2014.
Lyssa E. Hall,
Director of Exemption Determinations, Employee Benefits Security, 
Administration, U.S. Department Of Labor.
[FR Doc. 2014-26432 Filed 11-6-14; 8:45 am]
BILLING CODE 4510-29-P