Exemptions From Certain Prohibited Transaction Restrictions, 72114-72123 [2016-25279]
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Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices
prima facie case. Accordingly, I will
deny Respondent’s application.
Order
Pursuant to the authority vested in me
by 21 U.S.C. 823(f) and 28 CFR 0.100(b),
I order that the application of Edge
Pharmacy, L.L.C., for a DEA Certificate
of Registration as a retail pharmacy, be,
and it hereby is, denied. This Order is
effectively immediately.
Dated: October 11, 2016.
Chuck Rosenberg,
Acting Administrator.
[FR Doc. 2016–25226 Filed 10–18–16; 8:45 am]
BILLING CODE 4410–09–P
DEPARTMENT OF JUSTICE
Office of Justice Programs
[OJP (OJP) Docket No. 1728]
Meeting of the Global Justice
Information Sharing Initiative Federal
Advisory Committee
Office of Justice Programs,
Justice.
ACTION: Notice of meeting.
AGENCY:
This is an announcement of a
meeting of the Global Justice
Information Sharing Initiative (Global)
Federal Advisory Committee (GAC) to
discuss the Global Initiative, as
described at www.it.ojp.gov/global.
DATES: The meeting will take place on
Tuesday, November 29, 2016, from 9:00
a.m. to 4:00 p.m. ET, and Wednesday,
November 30, 2016, from 9:00 a.m. to
11:30 a.m. ET.
ADDRESSES: The meeting will take place
at the Office of Justice Programs (in the
Main Conference Room), 810 7th Street,
Washington, DC 20531; Phone: (202)
514–2000 (Note: This is not a toll-free
number).
FOR FURTHER INFORMATION CONTACT: J.
Patrick McCreary, Global Designated
Federal Employee (DFE), Bureau of
Justice Assistance, Office of Justice
Programs, 810 7th Street, Washington,
DC 20531; Phone: (202) 616–0532 (Note:
This is not a toll-free number); Email:
James.P.McCreary@usdoj.gov.
SUPPLEMENTARY INFORMATION: This
meeting is open to the public. Due to
security measures, however, members of
the public who wish to attend this
meeting must register with Mr. J. Patrick
McCreary at the above address at least
seven (7) days in advance of the
meeting. Registrations will be accepted
on a space available basis. Access to the
meeting will not be allowed without
registration. All attendees will be
required to sign in at the meeting
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SUMMARY:
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registration desk. Please bring photo
identification and allow extra time prior
to the meeting.
Anyone requiring special
accommodations should notify Mr.
McCreary at least seven (7) days in
advance of the meeting.
Purpose
The GAC will act as the focal point for
justice information systems integration
activities in order to facilitate the
coordination of technical, funding, and
legislative strategies in support of the
Administrations justice priorities.
The GAC will guide and monitor the
development of the global information
sharing concept. It will advise the
Assistant Attorney General, OJP; the
Attorney General; the President
(through the Attorney General); and
local, state, tribal, and federal
policymakers in the executive,
legislative, and judicial branches. The
GAC will also advocate for strategies for
accomplishing a global information
sharing capability.
Interested persons whose registrations
have been accepted may be permitted to
participate in the discussions at the
discretion of the meeting chairman and
with approval of the DFE.
J. Patrick McCreary,
Global DFE, Bureau of Justice Assistance,
Office of Justice Programs.
[FR Doc. 2016–25217 Filed 10–18–16; 8:45 am]
BILLING CODE 4410–18–P
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
Exemptions From Certain Prohibited
Transaction Restrictions
Employee Benefits Security
Administration, Labor.
ACTION: Grant of Individual Exemptions.
AGENCY:
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: 2016–03, The Michael T.
Sewell, M.D., P.S.C. Profit Sharing Plan,
D–11813; 2016–04, Plumbers’ Pension
Fund, Local 130, U.A., D–11822; 2016–
05, Sears Holdings 401(k) Savings Plan
and the Sears Holdings Puerto Rico
Savings Plan, D–11846 and D–11847;
2016–06, Sears Holdings 401(k) Savings
Plan and the Sears Holdings Puerto Rico
Savings Plan, D–11851 and D–11852;
SUMMARY:
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2016–07, Liberty Media 401(k) Savings
Plan, D–11858; 2016–08, Baxter
International Inc., D–11866; and 2016–
09, Sears Holdings 401(k) Savings Plan
and the Sears Holdings Puerto Rico
Savings Plan, D–11871 and D–11872.
A notice
was published in the Federal Register of
the pendency before the Department of
a proposal to grant such exemption. The
notice set forth a summary of facts and
representations contained in the
application for exemption and referred
interested persons to the application for
a complete statement of the facts and
representations. The application has
been available for public inspection at
the Department in Washington, DC. The
notice also invited interested persons to
submit comments on the requested
exemption to the Department. In
addition the notice stated that any
interested person might submit a
written request that a public hearing be
held (where appropriate). The applicant
has represented that it has complied
with the requirements of the notification
to interested persons. No requests for a
hearing were received by the
Department. Public comments were
received by the Department as described
in the granted exemption.
The notice of proposed exemption
was issued and the exemption is 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.
SUPPLEMENTARY INFORMATION:
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:
(a) The exemption is administratively
feasible;
(b) The exemption is in the interests
of the plan and its participants and
beneficiaries; and
(c) The exemption is protective of the
rights of the participants and
beneficiaries of the plan.
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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Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices
The Michael T. Sewell, M.D., P.S.C.
Profit Sharing Plan (the Plan), Located
in Bardstown, Kentucky
[Prohibited Transaction Exemption 2016–03;
Exemption Application No. D–11813]
Exemption
The restrictions of 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, by reason of section
4975(c)(1)(A), (D) and (E) of the Code,2
shall not apply to the cash sale (the
Sale) by the individually-directed
account (the Account) in the Plan of
Michael T. Sewell, M.D. (Dr. Sewell) of
a parcel of unimproved real property
(the Property), to Dr. Sewell, 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 sales price for the Property is
the greater of: $916,501; or the sum of
the fair market value of the Property, as
established by a qualified independent
appraiser, and the fair market value of
timber on the Property, as determined
by a qualified independent timber
appraiser, in separate, updated
appraisals reports on the date of the
Sale;
(c) The Account pays no real estate
fees or commissions in connection with
the Sale;
(d) The terms of the Sale are no less
favorable to the Account than the terms
the Account would receive under
similar circumstances in an arm’s length
transaction with an unrelated party; and
(e) Michael T. Sewell, M.D., P.S.C.
bears 100% of the costs of obtaining this
exemption.
Plumbers’ Pension Fund, Local 130,
U.A. (the Plan, or the Applicant),
Located in Chicago, IL
[Prohibited Transaction Exemption 2016–04;
Exemption Application No. D–11822]
Exemption
In the notice of proposed exemption
(the Notice), the Department invited all
interested persons to submit written
comments and/or requests for a public
hearing within 30 days of the
publication, on April 28, 2016, of the
Notice in the Federal Register. All
comments were due by May 28, 2016.
During the comment period, the
Department received no comments or
hearing requests from interested
persons.
Accordingly, after giving full
consideration to the entire record, the
Department has decided to grant the
exemption. The complete application
file (Exemption Application No. D–
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 (E) of the
Code,3 shall not apply to the proposed
sale (the Sale) of two commercial
buildings (the Properties), by the Plan to
the Plumbers’ Pension Fund, Local 130,
U.A. (the Union), 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 price paid by the Union to the
Plan is equal to the greater of: (1)
$1,640,000, or (2) the fair market value
of the Properties, as determined by a
qualified independent appraiser (the
Independent Appraiser) as of the date of
the Sale;
(c) The Plan does not pay any
appraisal fees, real estate fees,
commissions, costs or other expenses in
connection with the Sale;
(d) The Plan trustees appointed by the
Union (the Union Trustees) recuse
themselves from: (1) Discussions and
voting with respect to the Plan’s
decision to enter into the Sale; and (2)
all aspects of the selection and
engagement of the Independent
Appraiser for the purposes of
determining the fair market value of the
Properties on the date of the Sale;
(e) The Plan trustees appointed by the
employer associations (the Employer
Trustees), who have no interest in the
2 For purposes of this exemption, references to
specific provisions of Title I of the Act, unless
otherwise specified, refer also to the corresponding
provisions of the Code.
3 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.
Written Comments
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11813), including all supplemental
submissions received by the
Department, 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
exemption, refer to the Notice published
in the Federal Register on April 28,
2016 at 81 FR 25433.
FOR FURTHER INFORMATION CONTACT: Mrs.
Blessed Chuksorji-Keefe of the
Department, telephone (202) 693–8567.
(This is not a toll-free number.)
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Sale: (1) Determine, among other things,
whether it is in the interest of the Plan
to proceed with the Sale; (2) review and
approve the methodology used by the
Independent Appraiser in the
independent appraisal report (the
Appraisal Report) that is being relied
upon; and (3) ensure that such
methodology is applied by the
Independent Appraiser in determining
the fair market value of the Properties
on the date of the Sale; and
(f) The Sale is not part of an
agreement, arrangement, or
understanding designed to benefit the
Union.
Written Comments
The Department invited all interested
persons to submit written comments
and/or requests for a public hearing
with respect to the notice of proposed
exemption, published on April 28, 2016,
at 81 FR 25435. All comments and
requests for a hearing were due by May
28, 2016.
During the comment period, the
Department received one written
comment and no requests for a public
hearing. In a comment letter, dated May
19, 2016, a Plan participant suggests
that the Sale price of the Properties be
no less than the average of three
different appraisals of the Properties,
rather than based on a single appraisal.
The commenter asserts that this is the
standard practice for bids and should be
used in this exemption because it is fair
and equitable.
The Department acknowledges the
participant’s comment, but wishes to
emphasize that the procedures (the
Procedures) governing the filing and the
processing of administrative exemptions
from the prohibited transaction
provisions of the Act, as amended, and
the Code, as amended, (29 CFR 2570,
October 27, 2011), do not require that an
applicant obtain multiple appraisals of
a property from different qualified
independent appraisers. Specifically,
section 2570.34(c)(4) of the Procedures
refers to the preparation of a single
appraisal report for a property by a
qualified independent appraiser, who is
acting solely on behalf of the affected
plan. Moreover, section 2570.34(c)(4) of
the Procedures describes the content of
such appraisal report in subparagraphs
(i)–(iii).
Accordingly, in the exemption request
under consideration, the Department is
of the view that the Independent
Appraiser of the Properties has fulfilled
the requirements mandated by Section
2570.34(c) of the Procedures.
In addition, the Department notes that
the Sale is subject to several conditions
that are meant to protect the Plan and
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Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices
its participants and beneficiaries. In this
regard, the Independent Appraiser will
render an updated appraisal of the
Properties, as of the date of the Sale. In
addition, the price paid by the Union to
the Plan will be equal to the greater of:
(1) $1,640,000, or (2) the fair market
value of the Properties, as determined
by the Independent Appraiser as of the
date of the Sale. Further, the Employer
Trustees, who have no interest in the
Sale, will review and approve the
methodology used by the Independent
Appraiser, and will ensure that such
methodology is properly applied.
Accordingly, after giving full
consideration to the entire record, the
Department has decided to grant the
exemption. The complete application
file (Application No. D–11822),
including all supplemental submissions
received by the Department, 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
exemption, refer to the Notice of
Proposed Exemption published on April
28, 2016, at 81 FR 25435.
FOR FURTHER INFORMATION CONTACT: Mr.
Joseph Brennan of the Department,
telephone (202) 693–8456. (This is not
a toll-free number.)
Sears Holdings 401(k) Savings Plan (the
Savings Plan) and the Sears Holdings
Puerto Rico Savings Plan (the PR Plan)
(Collectively, the Plans), Located in
Hoffman Estates, IL
[Prohibited Transaction Exemption 2016–05;
Exemption Application Nos. D–11846 and D–
11847]
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Exemption
Section I. Covered Transactions
(a) The restrictions of sections
406(a)(1)(E), 406(a)(2), 406(b)(1),
406(b)(2), and 407(a)(1)(A) of the Act
and the sanctions resulting from the
application of section 4975 of the Code,
by reason of section 4975(c)(1)(E) of the
Code,4 shall not apply to the acquisition
and holding by the Savings Plan of
certain subscription rights (the Rights)
to purchase shares of common stock (the
SC Stock) in Sears Canada Inc. (Sears
Canada) in connection with an offering
(the Offering) by Sears Holdings
4 For
purposes of this exemption, unless
indicated otherwise, references to section 406 of the
Act should be read to refer as well to the
corresponding provisions of section 4975 of the
Code.
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Corporation (Holdings) of shares of SC
Stock, provided that the conditions as
set forth, below, in Section II of this
exemption were satisfied for the
duration of the acquisition and holding;
and
(b) The restrictions of sections
406(a)(1)(E), 406(a)(2), 406(b)(1),
406(b)(2), and 407(a)(1)(A) of the Act 5
shall not apply to the acquisition and
holding of the Rights by the PR Plan in
connection with the Offering of the SC
Stock by Holdings, provided that the
conditions as set forth in Section II of
this exemption were satisfied for the
duration of the acquisition and holding.
Section II. Conditions for Relief
(a) The receipt of the Rights by the
Plans occurred in connection with the
Offering, in which all shareholders of
the common stock of Holdings
(Holdings Stock), including the Plans,
were treated in the same manner;
(b) The acquisition of the Rights by
the Plans resulted from an independent
act of Holdings, as a corporate entity;
(c) Each shareholder of Holdings
Stock, including each of the Plans,
received the same proportionate number
of Rights based on the number of shares
of Holdings Stock held by each such
shareholder;
(d) All decisions with regard to the
holding and disposition of the Rights by
the Plans were made by a qualified
independent fiduciary (the Independent
Fiduciary) within the meaning of 29
CFR 2570.31(j); 6
(e) The Independent Fiduciary
determined that it would be in the
interest of the Plans to sell all of the
Rights received in the Offering by the
5 The Applicant represents that there is no
jurisdiction under Title II of the Act with respect
to the PR Plan. Accordingly, the Department is not
providing any exemptive relief from section
4975(c)(1)(E) of the Code for the acquisition and
holding of the Rights by the PR Plan.
6 29 CFR 2570.31(j) defines a ‘‘qualified
independent fiduciary,’’ in relevant part, to mean
‘‘any individual or entity with appropriate training,
experience, and facilities to act on behalf of the
plan regarding the exemption transaction in
accordance with the fiduciary duties and
responsibilities prescribed by ERISA, that is
independent of and unrelated to any party in
interest engaging in the exemption transaction and
its affiliates;’’ in general, a fiduciary is presumed to
be independent ‘‘if the revenues it receives or is
projected to receive, within the current federal
income tax year from parties in interest (and their
affiliates) [with respect] to the transaction are not
more than 2% of such fiduciary’s annual revenues
based upon its prior income tax year. Although the
presumption does not apply when the
aforementioned percentage exceeds 2%, a fiduciary
nonetheless may be considered independent based
upon other facts and circumstances provided that
it receives or is projected to receive revenues that
are not more than 5% within the current federal
income tax year from parties in interest (and their
affiliates) [with respect] to the transaction based
upon its prior income tax year.’’
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Plans in blind transactions on the
NASDAQ Global Select Market;
(f) No brokerage fees, commissions,
subscription fees, or other charges were
paid by the Plans with respect to the
acquisition and holding of the Rights, or
were paid to any affiliate of Holdings,
Sears Canada, or the Independent
Fiduciary, with respect to the sale of the
Rights.
Section III. Definitions
(a) The term ‘‘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 person;
(2) Any officer, director, partner,
employee, or relative, as defined in
section 3(15) of the Act, of 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.
Effective Date: This exemption is
effective for the period beginning
October 16, 2014, and ending November
7, 2014 (the Offering Period).
Written Comments
The Department invited all interested
persons to submit written comments
and/or requests for a public hearing
with respect to the notice of proposed
exemption (the Notice), published on
May 12, 2016, at 81 FR 29705. All
comments and requests for hearing were
due by July 3, 2016. During the
comment period, the Department
received two comments from interested
persons and no requests for a public
hearing. A Savings Plan participant
submitted a written comment and
Holdings requested a clarification to the
Notice. Furthermore, during the
comment period, the Department
received several phone inquiries that
generally concerned matters outside the
scope of the exemption.
Participant’s Comment
In his comment letter of June 20,
2016, the participant represents that he
is a Holdings’ shareholder, who held a
balance in the Savings Plan at the time
of the Offering.7 The participant states
that ‘‘it appears I did not benefit from
7 The participant also submitted the same
comment to the Department in D–11851 and D–
11852, involving the Sears Notes Offering, 81 FR
29709 (May 12, 2016); and in D–11871 and D–
11873, involving the Seritage Growth Offering, 81
FR 29713 (May 12, 2016).
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[the Offering] as I should have’’ because
the price of Holdings Stock decreased
following the Offering. The participant
inquires whether the exemption should
reverse this loss.
In response to the participant’s
comment, Holdings explains that while
there have been fluctuations in the price
of Holdings Stock during the relevant
period, the Independent Fiduciary’s
decision to sell the Rights generated a
positive gain for the Sears Holdings
401(k) Savings Plan Master Trust Stock
Fund (the Stock Fund), of $200,557.36,
net of fees and expenses. According to
Holdings, changes in the value of a
publicly-traded company’s stock occur
due to many factors, including the
company’s performance. Depending on
the measurement period used, Holdings
represents that it is possible that a
contemporaneous decline in the price of
Holdings Stock negated the positive
gain for the Stock Fund. However,
according to Holdings, the performance
of Holdings Stock around the time of the
Offering was beyond the control of the
Plans and the Independent Fiduciary,
and it was independent of any actions
such fiduciary took with respect to the
Rights received by the Plans.
Holdings also represents that it made
the decision to commence the Offering,
which was a corporate decision, and
this decision was not fiduciary in
nature. Further, Holdings states that no
shareholder, including the Plans, had
the ability to prevent the Offering.
Therefore, the only decision presented
to the shareholders, including the Plans’
fiduciaries, was how to dispose of the
Rights that were distributed during the
Offering. Holdings represents that the
Independent Fiduciary’s decision to sell
the Rights resulted in a significant
deposit in the Stock Fund.
Holdings’ Comment
The Applicant states that it originally
requested relief from the restrictions of
sections 406(a)(1)(A), 406(a)(1)(E),
406(a)(2), 406(b)(1), 406(b)(2), and
407(a)(1)(A) of the Act in the exemption
application. However, the Applicant
notes that the Department decided not
to provide exemptive relief from section
406(a)(1)(A) of the Act in the Notice.
The Applicant believes the Plans’
acquisition of the Rights to purchase
Sears Canada Stock did not involve a
prohibited ‘‘sale or exchange, or leasing,
of any property between the plan and a
party in interest,’’ as described in
section 406(a)(1)(A) of the Act. The
Applicant states that it provided the
Rights automatically to all of its
shareholders, including the Plans, in a
manner similar to a stock dividend. The
Applicant also points out that the
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Department has clarified that it ‘‘does
not view an acquisition of stock by
means of a stock dividend or stock split
as a prohibited transaction,’’ in the
Preamble to Final Regulation, Fiduciary
Responsibility; Statutory Exemption for
Certain Acquisitions, Sales, or Leases of
Property, 45 FR 51194, 51196 (August 1,
1980). Therefore, the Applicant does not
believe an exemption from section
406(a)(1)(A) is required in the subject
case. Sears Holdings requests
confirmation that the Department shares
this view.
In response, the Department concurs
that exemptive relief from section
406(a)(1)(A) of the Act is not applicable
to the Plans’ acquisition of the Rights.
Technical Correction
Section III(c) of the proposed
exemption is redesignated as Section
III(b) of this exemption.
Accordingly, after giving full
consideration to the entire record, the
Department has decided to grant the
exemption. The complete application
file (Application Nos. D–11846 and D–
11847), including all supplemental
submissions received by the
Department, 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
exemption, refer to the notice of
proposed exemption published on May
12, 2016, at 81 FR 29705.
FOR FURTHER INFORMATION CONTACT: Mr.
Scott Ness of the Department, telephone
(202) 693–8561. (This is not a toll-free
number.)
Sears Holdings 401(k) Savings Plan (the
Savings Plan) and the Sears Holdings
Puerto Rico Savings Plan (the PR Plan)
(Collectively, the Plans), Located in
Hoffman Estates, IL
[Prohibited Transaction Exemption 2016–06;
Exemption Application Nos. D–11851 and D–
11852]
Exemption
Section I. Covered Transactions
(a) The restrictions of sections
406(a)(1)(E), 406(a)(2), 406(b)(1),
406(b)(2), and 407(a)(1)(A) of the Act
and the sanctions resulting from the
application of section 4975 of the Code,
by reason of section 4975(c)(1)(E) of the
Code,8 shall not apply to the acquisition
8 For purposes of this exemption, unless
indicated otherwise, references to section 406 of the
Act should be read to refer as well to the
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and holding of certain subscription
rights (the Rights) issued by Sears
Holdings Corporation (Holdings) by the
Savings Plan in connection with an
offering (the Offering) by Holdings of
unsecured obligations issued by
Holdings (Notes) and warrants to
purchase the common stock of Holdings
(Warrants)(together referred to as Units),
provided that the conditions as set forth,
below, in Section II of this exemption
were satisfied for the duration of the
acquisition and holding; and
(b) The restrictions of sections
406(a)(1)(E), 406(a)(2), 406(b)(1),
406(b)(2), and 407(a)(1)(A) of the Act 9
shall not apply to the acquisition and
holding of the Rights by the PR Plan in
connection with the Offering of the
Units by Holdings, provided that the
conditions as set forth in Section II of
this exemption were satisfied for the
duration of the acquisition and holding.
Section II. Conditions for Relief
(a) The receipt of the Rights by the
Plans occurred in connection with the
Offering, in which all shareholders of
the common stock of Holdings
(Holdings Stock), including the Plans,
were treated in the same manner;
(b) The acquisition of the Rights by
the Plans resulted from an independent
act of Holdings, as a corporate entity;
(c) Each shareholder of Holdings
Stock, including each of the Plans,
received the same proportionate number
of Rights based on the number of shares
of Holdings Stock held by each such
shareholder;
(d) All decisions with regard to the
holding and disposition of the Rights by
the Plans were made by a qualified
independent fiduciary (the Independent
Fiduciary) within the meaning of 29
CFR 2570.31(j); 10
corresponding provisions of section 4975 of the
Code.
9 The Applicant represents that there is no
jurisdiction under Title II of the Act with respect
to the PR Plan. Accordingly, the Department is not
providing any exemptive relief from section
4975(c)(1)(E) of the Code for the acquisition and
holding of the Rights by the PR Plan.
10 29 CFR 2570.31(j) defines a ‘‘qualified
independent fiduciary,’’ in relevant part, to mean
‘‘any individual or entity with appropriate training,
experience, and facilities to act on behalf of the
plan regarding the exemption transaction in
accordance with the fiduciary duties and
responsibilities prescribed by ERISA, that is
independent of and unrelated to any party in
interest engaging in the exemption transaction and
its affiliates;’’ in general, a fiduciary is presumed to
be independent ‘‘if the revenues it receives or is
projected to receive, within the current federal
income tax year from parties in interest (and their
affiliates) [with respect] to the transaction are not
more than 2% of such fiduciary’s annual revenues
based upon its prior income tax year. Although the
presumption does not apply when the
aforementioned percentage exceeds 2%, a fiduciary
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(e) The Independent Fiduciary
determined that it would be in the
interest of the Plans to sell all of the
Rights received in the Offering by the
Plans in blind transactions on the
NASDAQ Global Select Market;
(f) No brokerage fees, commissions,
subscription fees, or other charges were
paid by the Plans with respect to the
acquisition and holding of the Rights, or
were paid to any affiliate of Holdings or
the Independent Fiduciary, with respect
to the sale of the Rights.
Section III. Definitions
(a) The term ‘‘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 person;
(2) Any officer, director, partner,
employee, or relative, as defined in
section 3(15) of the Act, of 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.
Effective Date: This exemption is
effective for the period beginning
October 30, 2014, and ending November
18, 2014 (the Offering Period).
Written Comments
The Department invited all interested
persons to submit written comments
and/or requests for a public hearing
with respect to the notice of proposed
exemption (the Notice), published on
May 12, 2016, at 81 FR 29709. All
comments and requests for hearing were
due by July 3, 2016. During the
comment period, the Department
received two comments from interested
persons and no requests for a public
hearing. A Savings Plan participant
submitted a written comment, and
Holdings requested a clarification to the
Notice. Furthermore, during the
comment period, the Department
received several phone inquiries that
generally concerned matters outside the
scope of the exemption.
sradovich on DSK3GMQ082PROD with NOTICES
Participant’s Comment
In his comment letter of June 20,
2016, the participant represents that he
nonetheless may be considered independent based
upon other facts and circumstances provided that
it receives or is projected to receive revenues that
are not more than 5% within the current federal
income tax year from parties in interest (and their
affiliates) [with respect] to the transaction based
upon its prior income tax year.’’
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17:39 Oct 18, 2016
Jkt 241001
is a Holdings’ shareholder, who held a
balance in the Savings Plan at the time
of the Offering.11 The participant states
that ‘‘it appears I did not benefit from
[the Offering] as I should have’’ because
the price of Holdings Stock decreased
following the Offering. The participant
inquires whether the exemption should
reverse this loss.
In response to the participant’s
comment, Holdings explains that while
there have been fluctuations in the price
of Holdings Stock during the relevant
period, the Independent Fiduciary’s
decision to sell the Rights generated a
positive gain for the Sears Holdings
401(k) Savings Plan Master Trust Stock
Fund (the Stock Fund), of
$3,637,509.54, net of fees and expenses.
According to Holdings, changes in the
value of a publicly-traded company’s
stock occur due to many factors,
including the company’s performance.
Depending on the measurement period
used, Holdings represents that it is
possible that a contemporaneous
decline in the price of Holdings Stock
negated the positive gain for the Stock
Fund. However, according to Holdings,
the performance of Holdings Stock
around the time of the Offering was
beyond the control of the Plans and the
Independent Fiduciary, and it was
independent of any actions such
fiduciary took with respect to the Rights
received by the Plans.
Holdings also represents that it made
the decision to commence the Offering,
which was a corporate decision, and
this decision was not fiduciary in
nature. Further, Holdings states that no
shareholder, including the Plans, had
the ability to prevent the Offering.
Therefore, the only decision presented
to the shareholders, including the Plans’
fiduciaries, was how to dispose of the
Rights that were distributed during the
Offering. Holdings represents that the
Independent Fiduciary’s decision to sell
the Rights resulted in a significant
deposit in the Stock Fund.
Holdings’ Comment
The Applicant states that it originally
requested relief from the restrictions of
sections 406(a)(1)(A), 406(a)(1)(E),
406(a)(2), 406(b)(1), 406(b)(2), and
407(a)(1)(A) of the Act in the exemption
application. However, the Applicant
notes that the Department decided not
to provide exemptive relief from section
406(a)(1)(A) of the Act in the Notice.
11 The participant also submitted the same
comment to the Department in D–11846 and D–
11847, involving the Sears Canada Offering, 81 FR
29705 (May 12, 2016); and in D–11871 and D–
11873, involving the Seritage Growth Offering, 81
FR 29713 (May 12, 2016).
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The Applicant believes the Plans’
acquisition of the Rights to purchase
Sears Notes and Warrants did not
involve a prohibited ‘‘sale or exchange,
or leasing, of any property between the
plan and a party in interest,’’ as
described in section 406(a)(1)(A) of the
Act. The Applicant states that it
provided the Rights automatically to all
of its shareholders, including the Plans,
in a manner similar to a stock dividend.
The Applicant also points out that the
Department has clarified that it ‘‘does
not view an acquisition of stock by
means of a stock dividend or stock split
as a prohibited transaction,’’ in the
Preamble to Final Regulation, Fiduciary
Responsibility; Statutory Exemption for
Certain Acquisitions, Sales, or Leases of
Property, 45 FR 51194, 51196 (August 1,
1980). Therefore, the Applicant does not
believe an exemption from section
406(a)(1)(A) is required in the subject
case. Sears Holdings requests
confirmation that the Department shares
this view.
In response, the Department concurs
that exemptive relief from section
406(a)(1)(A) of the Act is not applicable
to the Plans’ acquisition of the Rights.
Technical Correction
Section III(c) of the proposed
exemption is redesignated as Section
III(b) of this exemption.
Accordingly, after giving full
consideration to the entire record, the
Department has decided to grant the
exemption. The complete application
file (Application Nos. D–11851 and D–
11852), including all supplemental
submissions received by the
Department, 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
exemption, refer to the notice of
proposed exemption published on May
12, 2016, at 81 FR 29709.
FOR FURTHER INFORMATION CONTACT: Mr.
Erin Hesse of the Department, telephone
(202) 693–8546. (This is not a toll-free
number.)
Liberty Media 401(k) Savings Plan (the
Plan), Located in Englewood, CO
[Prohibited Transaction Exemption 2016–07;
Exemption Application No. D–11858]
Exemption
Section I. Covered Transactions
The restrictions of sections
406(a)(1)(E), 406(a)(2), and 407(a)(1)(A)
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sradovich on DSK3GMQ082PROD with NOTICES
of the Act shall not apply to: (1) The
acquisition by the Plan of certain stock
subscription rights (the Rights) to
purchase shares of Liberty Broadband
Series C common stock (LB Series C
Stock), in connection with a rights
offering (the Rights Offering) held by
Liberty Broadband Corporation (Liberty
Broadband), a party in interest with
respect to the Plan; and (2) the holding
of the Rights by the Plan during the
subscription period of the Rights
Offering, provided that the conditions
described in Section II below have been
met.
Section II. Conditions for Relief
(a) The Plan’s acquisition of the
Rights resulted solely from an
independent corporate act of Liberty
Broadband;
(b) All holders of Liberty Broadband
Series A common stock and Liberty
Broadband Series C common stock
(collectively, the LB Stock), including
the Plan, were issued the same
proportionate number of Rights based
on the number of shares of LB Stock
held by each such shareholder;
(c) For purposes of the Rights
Offering, all holders of LB Stock,
including the Plan, were treated in a
like manner;
(d) The acquisition of the Rights by
the Plan was made in a manner that was
consistent with provisions of the Plan
for the individually-directed investment
of participant accounts;
(e) The Liberty Media 401(k) Savings
Plan Administrative Committee (the
Committee) directed the Plan trustee to
sell the Rights on the NASDAQ Global
Select Market, in accordance with Plan
provisions that precluded the Plan from
acquiring additional shares of LB Stock;
(f) The Committee did not exercise
any discretion with respect to the
acquisition and holding of the Rights;
and
(g) The Plan did not pay any fees or
commissions in connection with the
acquisition or holding of the Rights, and
did not pay any commissions to Liberty
Broadband, Liberty Media Corporation,
TruePosition, Inc., or any affiliates of
the foregoing in connection with the
sale of the Rights.
Effective Date: This exemption is
effective for the period beginning on
December 15, 2014, the date that the
Plan received the Rights, until
December 17, 2014, the date the Rights
were sold by the Plan on the NASDAQ
Global Select Market.
Written Comments
The Department invited all interested
persons to submit written comments
and/or requests for a public hearing
VerDate Sep<11>2014
17:39 Oct 18, 2016
Jkt 241001
with respect to the notice of proposed
exemption, published on April 28, 2016,
at 81 FR 25438. Liberty Media
completed delivery of the notice of
proposed exemption and accompanying
notice to interested persons on May 3,
2016. However, the Department
determined that certain elements of the
notice of proposed exemption as
published in the Federal Register were
omitted from the materials sent to
interested persons. Liberty Media
represented, under penalty of perjury,
that a corrected version of the notice of
proposed exemption was provided to all
interested persons on May 27, 2016. All
comments and requests for hearing were
due under the corrected version of the
notice by June 26, 2016, 30 days
following the date on which Liberty
Media certified delivery was completed.
During the comment period, the
Department received no comments and
no requests for a hearing from interested
persons. Accordingly, after giving full
consideration to the entire record, the
Department has decided to grant the
exemption. The complete application
file (Application No. D–11858),
including all supplemental submissions
received by the Department, 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
exemption, refer to the notice of
proposed exemption published on April
28, 2016, at 81 FR 25438.
FOR FURTHER INFORMATION CONTACT: Mr.
Scott Ness of the Department, telephone
(202) 693–8561. (This is not a toll-free
number.)
Baxter International Inc. (Baxter or the
Applicant), Located in Deerfield, IL
[Prohibited Transaction Exemption 2016–08;
Exemption Application No. D–11866]
Exemption
Section I. Transaction
The restrictions of sections
406(a)(1)(A) and (D) and sections
406(b)(1) and (2) of ERISA and sections
4975(c)(1)(A), (D), and (E) of the Code 12
shall not apply to the contribution of
publicly traded common stock of
Baxalta (the Contributed Stock) by
Baxter (the Contribution) to the Baxter
12 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.
PO 00000
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72119
International Inc. and Subsidiaries
Pension Plan (the Plan), provided:
(a) Fiduciary Counselors Inc. (the
Independent Fiduciary) will represent
the interests of the Plan, the
participants, and beneficiaries with
respect to the Contribution, including
but not limited to, taking the following
actions:
(i) Determining whether the
Contribution is in the interests of the
Plan and of its participants and
beneficiaries, and is protective of the
rights of participants and beneficiaries
of the Plan;
(ii) Determining whether and on what
terms the Contribution should be
accepted by the Plan;
(iii) If the Contribution is accepted by
the Plan, establishing and administering
the process (subject to such
modifications as the Independent
Fiduciary may make from time to time)
for liquidating the Contributed Stock, as
is prudent under the circumstances;
(iv) Determining the fair market value
of the Contributed Stock as of the date
of the Contribution;
(v) Monitoring the Contribution and
holding of Contributed Stock on a
continuing basis and taking all
appropriate actions necessary to
safeguard the interests of the Plan; and
(vi) If the Contribution is accepted by
the Plan, voting proxies and responding
to tender offers with respect to the
Contributed Stock held by the Plan;
(b) Solely for purposes of determining
the Plan’s minimum funding
requirements (as determined under
section 412 of the Code), adjusted
funding target attainment percentage
(AFTAP) (as determined under Treas.
Reg. section 1.436–1(j)(1)), and funding
target attainment percentage (as
determined under section 430(d)(2) of
the Code), the Plan’s actuary (the
Actuary) will not count as a
contribution to the Plan any shares of
Contributed Stock that have not been
liquidated;
(c) For purposes of determining the
amount of any Contribution, the
Contributed Stock shall be deemed
contributed only at the time it is sold,
equal to the lesser of: (1) The proceeds
from the sale of such Contributed Stock;
or (2) the value of such Contributed
Stock on the date of the initial
contribution as determined by the
Independent Fiduciary;
(d) The Contributed Stock represents
no more than 20% of the fair market
value of the total assets of the Plan at
the time it is contributed to the Plan;
(e) The Plan pays no commissions,
costs, or other expenses in connection
with the Contribution, holding, or
subsequent sale of the Contributed
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Stock, and any such expenses paid by
Baxter will not be treated as a
contribution to the Plan;
(f) Baxter makes cash contributions to
the Plan to the extent that the
cumulative proceeds from the sale of the
Contributed Stock at each contribution
due date (determined under section
303(j) of ERISA) are less than the
cumulative cash contributions Baxter
would have been required to make to
the Plan, in the absence of the
Contribution. Such cash contributions
shall be made until all of the
Contributed Stock is sold by the Plan;
and
(g) Baxter contributes to the Plan cash
amounts needed for the Plan to attain an
AFTAP (determined under Treas. Reg.
section 1.436–1(j)(1)) of at least 80% as
of the first day of each plan year during
which the Plan holds Contributed Stock,
as determined by the Actuary, without
taking into account any unsold
Contributed Stock as of April 1 of the
plan year.
Effective Date: This exemption is
effective as of May 9, 2016, the date the
Contribution was received by the Plan.
sradovich on DSK3GMQ082PROD with NOTICES
Written Comments
The Department invited all interested
persons to submit written comments
and/or requests for a public hearing
with respect to the notice of proposed
exemption, published on April 28, 2016,
at 81 FR 25441. All comments and
requests for hearing were due by June 3,
2016. During the comment period, the
Department received one substantive
written comment, one substantive
phone comment, and a variety of
written and telephonic inquiries
requesting information outside the
scope of the proposed exemption. The
Department did not receive any requests
for a hearing from interested persons. A
description of the comments and the
Applicant’s responses is below.
Participant Comments and Applicant’s
Responses
Among other things, the commenter
expressed concern about exposing
participants to additional risk from
holding Baxalta stock in a transaction
intended to benefit Baxter. The
Applicant responds that participants in
the Plan will not be subject to any
additional risk from holding Baxalta
stock because the value of the Baxalta
stock at the time of the contribution was
approximately $700 million, and the
plan subsequently sold the stock for
approximately $760 million, under the
direction of the Independent Fiduciary.
Accordingly, the Applicant represents
that this transaction added about $760
million in cash to the pension plan.
VerDate Sep<11>2014
17:39 Oct 18, 2016
Jkt 241001
Furthermore, the Applicant notes that if
Baxter had sold the stock and then put
the cash into the Plan, it would have
been required to pay taxes on the
proceeds of the sale, which would have
reduced the amount available to be
contributed to the plan by
approximately $266 million. Putting the
stock into the Plan first and then selling
the stock under the supervision of the
Independent Fiduciary yielded
significantly more money for the Plan
and its participants.
The commenter also stated that the
contribution of the Baxalta Stock would
exceed the Plan’s allocation for large
cap stocks. In response, the Applicant
explains that the Baxter Investment
Committee has amended the investment
policy to permit the 24% target
allocation to be exceeded temporarily to
allow the plan to accept the
contribution of the Baxalta stock, which
as described above was sold by the plan
shortly after the contribution.
Thereafter, the proceeds from the sale of
the Baxalta stock will be invested in
accordance with the investment policy.
Finally, the commenter expressed
concern about potential IRS challenges
to the transaction and litigation risk to
the Plan from Baxalta shareholders if
the stock price was depressed as a result
of this transaction. The Applicant notes
that prior to seeking this individual
exemption, Baxter obtained a ruling
from the IRS that specifically allows it
to contribute the Baxalta stock to the
Plan (a copy of which was also provided
to the Department as part of the
application process) on a tax-free basis.
The Applicant further explains that, if
for any reason there were an IRS
challenge, it would be Baxter’s
responsibility to respond to the IRS
challenge, and it would not affect the
funding of the Plan. Similarly,
according to the Applicant, there is very
little risk of litigation from Baxalta
shareholders because during the spinoff, shareholders were made aware that
such a disposition of Baxalta stock was
possible and the Independent Fiduciary
who has been retained to sell the
Baxalta stock on behalf of the Plan is
required under the terms of its
agreement to sell the stock in such a
manner as to minimize the impact of the
sales on the market for Baxalta shares.
The Department received one other
comment from a plan participant who
inquired into Baxter’s financial ability
to continue funding the Plan after
spinning off half the company into
Baxalta. The Applicant represents that
Baxter does not anticipate that the spinoff of Baxalta will reduce Baxter’s
financial ability to continue funding the
Plan. Although Baxter is now a smaller
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
company, the Plan is also slightly
smaller, because the portion of the Plan
that benefits Baxalta employees was
transferred to Baxalta, and Baxalta is
responsible for funding that portion of
the Plan (a new and distinct plan) after
the spin-off. Finally, the Applicant
states that the proposed exemption, if
approved, would allow Baxter to make
a one-time contribution to the plan of
approximately $760 million. This
contribution increased the assets of the
Plan by over 20%, significantly
improving the funded status of the Plan.
The Applicant explains that this means
that Baxter’s cost of funding the Plan in
the future will be reduced.
Applicant’s Comment
The Applicant also submitted the
Final Report from the Independent
Fiduciary (the Final Report), detailing
the Contribution and subsequent
liquidation of the Baxalta Stock.
Fiduciary Counselors represents that on
May 9, 2016, State Street, the Plan’s
trustee, received the Baxalta
Contribution from Baxter. The Final
Report provides that, while the Baxalta
Contribution skewed the Large Cap
weighting above the targeted 24.0%, this
was a temporary deviation and the
allocation will return to pre-Baxalta
Contribution levels once the Baxalta
Stock is sold. Fiduciary Counselors
started liquidating the Baxalta Stock on
May 10, 2016, and completed the
liquidation on June 2, 2016. The Plan
realized $762,118,481.31 in gross
proceeds. The Plan incurred
$188,070.01 of fees and expenses as part
of the liquidation program, with a net
gain to the Plan of $761,930,411.30.
Baxter reimbursed the Plan for such fees
and expenses as well as additional
portfolio accounting fees ($208.33),
custody fees ($2,879.49), and trading
fees ($203.00) for a total reimbursement
to the Plan of $191,360.83.
After giving full consideration to the
entire record, including all comments
from interested persons and the
responses from the Applicant, the
Department has decided to grant the
exemption, as described above. The
complete application file (Application
No. D–11866) 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
exemption, refer to the notice of
proposed exemption published on April
28, 2016, at 81 FR 25441.
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Mr.
Erin S. Hesse of the Department,
telephone (202) 693–8546. (This is not
a toll-free number.)
FOR FURTHER INFORMATION CONTACT:
Sears Holdings 401(k) Savings Plan (the
Savings Plan) and the Sears Holdings
Puerto Rico Savings Plan (the PR Plan)
(Together, the Plans), Located in
Hoffman Estates, IL
[Prohibited Transaction Exemption 2016–09;
Exemption Application Nos. D–11871 and D–
11872, respectively]
Exemption
Section I. Transactions
The restrictions of sections
406(a)(1)(E), 406(a)(2), 406(b)(1),
406(b)(2), and 407(a)(1)(A) of the Act
and the sanctions resulting from the
application of section 4975 of the Code,
by reason of section 4975(c)(1)(E) of the
Code,13 shall not apply, effective for the
period beginning June 11, 2015, and
ending July 2, 2015, to the acquisition
and holding by the Savings Plan of
certain subscription rights (the Rights)
to purchase shares of common stock
(Seritage Growth Stock) in Seritage
Growth Properties (Seritage Growth), in
connection with an offering (the
Offering) by Sears Holdings Corporation
(Holdings or the Applicant) of Seritage
Growth Stock, provided that the
conditions, as set forth below, were
satisfied for the duration of the
acquisition and holding; and
(b) The restrictions of sections
406(a)(1)(E), 406(a)(2), 406(b)(1),
406(b)(2), and 407(a)(1)(A) of the Act 14
shall not apply, effective for the period
beginning June 11, 2015, and ending
July 2, 2015, to the acquisition and
holding of the Rights by the PR Plan in
connection with the Offering of Seritage
Growth Stock by Holdings, provided
that the conditions, as set forth below,
were satisfied for the duration of the
acquisition and holding.
Section II. Conditions
sradovich on DSK3GMQ082PROD with NOTICES
(a) The receipt of the Rights by the
Plans occurred in connection with the
Offering, in which all shareholders of
the common stock of Holdings
13 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.
14 The Applicant represents that there is no
jurisdiction under Title II of the Act with respect
to the PR Plan because the PR Plan fiduciaries have
not made an election under section 1022(i)(2) of the
Act, whereby the PR Plan would be treated as a
trust created and organized in the United States for
purposes of tax qualification under section 401(a)
of the Code. Accordingly, the Department is not
providing exemptive relief from section
4975(c)(1)(E) of the Code for the acquisition and
holding of the Rights by the PR Plan.
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17:39 Oct 18, 2016
Jkt 241001
(Holdings Stock), including the Plans,
were treated in the same manner;
(b) The acquisition of the Rights by
the Plans resulted solely from an
independent act of Holdings, as a
corporate entity;
(c) Each shareholder of Holdings
Stock, including each of the Plans,
received the same proportionate number
of Rights based on the number of shares
of Holdings Stock held by each such
shareholder;
(d) All decisions with regard to the
holding and disposition of the Rights by
the Plans were made by a qualified
independent fiduciary (the Independent
Fiduciary) within the meaning of 29
CFR 2570.31(j); 15
(e) The Independent Fiduciary
determined that it would be in the
interest of the Plans to sell all of the
Rights received in the Offering by the
Plans in blind transactions on the New
York Stock Exchange; and
(f) No brokerage fees, commissions,
subscription fees, or other charges were
paid by the Plans with respect to the
acquisition and holding of the Rights; or
were paid to any affiliate of the
Independent Fiduciary or Holdings, in
connection with the sale of the Rights.
Effective Date: This exemption is
effective for the Offering period,
beginning June 11, 2015, and ending
July 2, 2015.
Written Comments
In the notice of proposed exemption
(the Notice), the Department invited all
interested persons to submit written
comments within 52 days of the
publication, on May 12, 2016, of the
Notice in the Federal Register. All
comments were due by July 3, 2016.
During the comment period, the
Department received three comments
from interested persons and no requests
for a public hearing. Two Savings Plan
15 29 CFR 2570.31(j) defines a ‘‘qualified
independent fiduciary,’’ in relevant part, to mean
‘‘any individual or entity with appropriate training,
experience, and facilities to act on behalf of the
plan regarding the exemption transaction in
accordance with the fiduciary duties and
responsibilities prescribed under the Act, that is
independent of and unrelated to any party in
interest engaging in the exemption transaction and
its affiliates;’’ in general, a fiduciary is presumed to
be independent ‘‘if the revenues it receives or is
projected to receive, within the current federal
income tax year from parties in interest (and their
affiliates) [with respect] to the transaction are not
more than 2% of such fiduciary’s annual revenues
based upon its prior income tax year. Although the
presumption does not apply when the
aforementioned percentage exceeds 2%, a fiduciary
nonetheless may be considered independent based
upon other facts and circumstances provided that
it receives or is projected to receive revenues that
are not more than 5% within the current federal
income tax year from parties in interest (and their
affiliates) [with respect] to the transaction based
upon its prior income tax year.’’
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72121
participants submitted written
comments. One participant supported
the granting of the exemption, while the
other did not. The third comment,
which was submitted by the Applicant,
requests several minor revisions and
clarifications to the Notice.
Following is a discussion of the
comment received by the Department
from the objecting participant, and the
one submitted by the Applicant. Also
presented are the responses made by the
Applicant to the participant’s comment,
as well as the Department’s responses to
the Applicant’s comment.
Participant’s Comment
In his comment letter of June 20,
2016, the participant represents that he
is a Holdings’ shareholder, who held a
balance in the Savings Plan at the time
of the Offering.16 The participant states
that ‘‘it appears I did not benefit from
[the Offering] as I should have’’ because
the price of Seritage Growth Stock
decreased following the Offering. The
participant inquires whether the
exemption should reverse this loss.
In response to the participant’s
comment, the Applicant explains that
while there have been fluctuations in
the price of Holdings Stock during the
relevant period, the Independent
Fiduciary’s decision to sell the Rights
generated a positive gain for the Sears
Holdings 401(k) Savings Plan Master
Trust Stock Fund (the Stock Fund), of
$4,106,921.19, net of fees and expenses.
According to the Applicant, changes in
the value of a publicly-traded
company’s stock occur due to many
factors, including the company’s
performance. Depending on the
measurement period used, the
Applicant represents that it is possible
that a contemporaneous decline in the
price of Holdings Stock negated the
positive gain for the Stock Fund.
However, according to the Applicant,
the performance of Holdings Stock
around the time of the Offering was
beyond the control of the Plans and the
Independent Fiduciary. It was also
independent of any actions such
fiduciary took with respect to the Rights
received by the Plans.
The Applicant also represents that
Holdings made the decision to
commence the Offering, which was a
corporate decision, and was not
fiduciary in nature. Further, the
Applicant explains that no shareholder,
including the Plans, had the ability to
16 The participant also submitted the same
comment to the Department in D–11851 and D–
11852, involving the Sears Notes Offering, 81 FR
29709 (May 12, 2016); and in D–11846 and D–
11847 involving the Sears Canada Offering, 81 FR
29705 (May 12, 2016).
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Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices
prevent the Offering. Therefore, the only
decision presented to the shareholders,
including the Plans’ fiduciaries, was
how to dispose of the Rights that were
distributed during the Offering. Because
the Independent Fiduciary decided to
sell the Rights, the Applicant represents
that this event resulted in a significant
deposit in the Stock Fund.
sradovich on DSK3GMQ082PROD with NOTICES
Applicant’s Comment
1. Scope of Exemptive Relief. The
Applicant states that it originally
requested relief from the restrictions of
sections 406(a)(1)(A), 406(a)(1)(E),
406(a)(2), 406(b)(1), 406(b)(2), and
407(a)(1)(A) of the Act in the exemption
application. However, the Applicant
explains that the Department decided
not to provide exemptive relief from
section 406(a)(1)(A) of the Act in the
Notice.
The Applicant believes the Plans’
acquisition of the Rights to purchase
Seritage Growth Stock did not involve a
prohibited ‘‘sale or exchange, or leasing,
of any property between the plan and a
party in interest,’’ as described in
section 406(a)(1)(A) of the Act. The
Applicant states that it provided the
Rights automatically to all of its
shareholders, including the Plans, in a
manner similar to a stock dividend. The
Applicant also points out that the
Department has clarified that it ‘‘does
not view an acquisition of stock by
means of a stock dividend or stock split
as a prohibited transaction,’’ in the
Preamble to Final Regulation, Fiduciary
Responsibility; Statutory Exemption for
Certain Acquisitions, Sales, or Leases of
Property, 45 FR 51194, 51196 (August 1,
1980). Therefore, the Applicant does not
believe an exemption from section
406(a)(1)(A) is required in the subject
case. Therefore, the Applicant requests
confirmation that the Department shares
this view.
The Department concurs that
exemptive relief from section
406(a)(1)(A) of the Act is not applicable
to the Plans’ acquisition of the Rights
and that the scope of relief set forth in
Section I of the proposed exemption,
and this exemption, is appropriate for
the transactions covered herein.
2. Purchase of Units in Stock Funds.
Page 29714 of the Notice states that the
Plans allow participants to ‘‘purchase
units in certain stock funds which
invest in Holdings Stock.’’ The
Applicant wishes to clarify that only
one investment option in the Plans
exists for the purpose of investment in
Holdings Stock. The Stock Fund is held
in the Sears Holdings 401(k) Savings
Plan Master Trust, and participants in
both the Savings Plan and the PR Plan
VerDate Sep<11>2014
17:39 Oct 18, 2016
Jkt 241001
own Holdings Stock through this one
Stock Fund.
The Department notes this
clarification to the Notice.
3. Entities Adopting the Savings Plan.
Page 29714 of the Notice states that
‘‘Sears, Roebuck and Co. (Sears
Roebuck) and all of its wholly-owned
(direct and indirect) subsidiaries (except
Lands’ End Inc. (Lands’ End), Sears de
Puerto Rico, Inc., Kmart Holding
Corporation (Kmart), and its whollyowned (direct and indirect) subsidiaries
(excluding employees residing in Puerto
Rico), and Sears Holdings Management
Corporation, with respect to certain
employees, have adopted the Savings
Plan and are employers under such
plan.’’ The Applicant clarifies that
Kmart Holding Corporation and its
wholly-owned subsidiaries have
adopted the Savings Plan and are
employers under such plan (excluding
employees residing in Puerto Rico).
Also, the Applicant clarifies that
employees of Sears de Puerto Rico, Inc.
who reside in the United States
participate in the Savings Plan.
The Department notes this
clarification to the Notice.
4. PR Plan and Holdings Stock. Page
29715 of the Notice states that the PR
Plan held ‘‘39,782,55’’ shares as of the
record date. The Applicant clarifies that
the number of shares held by the PR
Plan has a misplaced decimal mark and
should be revised to ‘‘39,782.55’’ shares.
The Department notes this
clarification to the Notice.
5. Holdings Description. Page 29715
of the Notice states that Holdings ‘‘is a
retail merchant with full-line and
specialty retail stores in,’’ among other
places, Canada. The Applicant points
out that in October and November of
2014, Holdings entered into a series of
transactions, including a rights offering,
to de-consolidate Sears Canada Inc. As
a result of these transactions, Sears
Holdings no longer maintains a
controlling interest in Sears Canada Inc.
and no longer itself, maintains stores in
Canada.
The Department notes this
clarification to the Notice.
6. Role of the Independent Fiduciary.
Page 29716 of the Notice states that the
Plans’ Independent Fiduciary, Evercore
Trust Company N.A., conducted a due
diligence process evaluating the rights
offering, including discussions and
correspondence, that enabled it ‘‘to
improve certain elements related to the
Offering.’’ The Applicant explains that,
in pertinent part, Evercore’s
Independent Fiduciary Report states
that its due diligence process enabled it
to ‘‘better understand a number of
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
important elements related to the Rights
Offering.’’
The Department notes this
clarification to the Notice.
Accordingly, after giving full
consideration to the entire record, the
Department has decided to grant the
exemption. The complete application
file (Exemption Application Nos. D–
11871 and D–11872) and the written
comments are 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
exemption, refer to the Notice published
in the Federal Register on May 12, 2016
at 81 FR 29713.
FOR FURTHER INFORMATION CONTACT: Ms.
Blessed Chuksorji-Keefe of the
Department, telephone (202) 693–8567.
(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 these
exemptions 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.
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Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices
Signed at Washington, DC, this 14th day of
October 2016.
Lyssa E. Hall,
Director of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2016–25279 Filed 10–18–16; 8:45 am]
BILLING CODE 4510–29–P
NATIONAL ARCHIVES AND RECORDS
ADMINISTRATION
[NARA–2017–004]
Records Schedules; Availability and
Request for Comments
National Archives and Records
Administration (NARA).
ACTION: Notice of availability of
proposed records schedules; request for
comments.
AGENCY:
The National Archives and
Records Administration (NARA)
publishes notice at least once monthly
of certain Federal agency requests for
records disposition authority (records
schedules). Once approved by NARA,
records schedules provide mandatory
instructions on what happens to records
when agencies no longer need them for
current Government business. The
records schedules authorize agencies to
preserve records of continuing value in
the National Archives of the United
States and to destroy, after a specified
period, records lacking administrative,
legal, research, or other value. NARA
publishes notice in the Federal Register
for records schedules in which agencies
propose to destroy records not
previously authorized for disposal or
reduce the retention period of records
already authorized for disposal. NARA
invites public comments on such
records schedules, as required by 44
U.S.C. 3303a(a).
DATES: NARA must receive requests for
copies in writing by November 18, 2016.
Once NARA finishes appraising the
records, we will send you a copy of the
schedule you requested. We usually
prepare appraisal memoranda that
contain additional information
concerning the records covered by a
proposed schedule. You may also
request these. If you do, we will also
provide them once we have completed
the appraisal. You have 30 days after we
send to you these requested documents
in which to submit comments.
ADDRESSES: You may request a copy of
any records schedule identified in this
notice by contacting Records Appraisal
and Agency Assistance (ACRA) using
one of the following means:
Mail: NARA (ACRA); 8601 Adelphi
Road, College Park, MD 20740–6001.
sradovich on DSK3GMQ082PROD with NOTICES
SUMMARY:
VerDate Sep<11>2014
17:39 Oct 18, 2016
Jkt 241001
Email: request.schedule@nara.gov.
FAX: 301–837–3698.
You must cite the control number,
which appears in parentheses after the
name of the agency that submitted the
schedule, and a mailing address. If you
would like an appraisal report, please
include that in your request.
FOR FURTHER INFORMATION CONTACT:
Margaret Hawkins, Director, by mail at
Records Appraisal and Agency
Assistance (ACRA); National Archives
and Records Administration, 8601
Adelphi Road, College Park, MD 20740–
6001, by phone at 301–837–1799, or by
email at request.schedule@nara.gov.
SUPPLEMENTARY INFORMATION: Each year,
Federal agencies create billions of
records on paper, film, magnetic tape,
and other media. To control this
accumulation, agency records managers
prepare schedules proposing records
retention periods and submit these
schedules for NARA’s approval. These
schedules provide for timely transfer
into the National Archives of
historically valuable records and
authorize the agency to dispose of all
other records after the agency no longer
needs them to conduct its business.
Some schedules are comprehensive and
cover all the records of an agency or one
of its major subdivisions. Most
schedules, however, cover records of
only one office or program or a few
series of records. Many of these update
previously approved schedules, and
some include records proposed as
permanent.
The schedules listed in this notice are
media neutral unless otherwise
specified. An item in a schedule is
media neutral when an agency may
apply the disposition instructions to
records regardless of the medium in
which it creates or maintains the
records. Items included in schedules
submitted to NARA on or after
December 17, 2007, are media neutral
unless the item is expressly limited to
a specific medium. (See 36 CFR
1225.12(e).)
Agencies may not destroy Federal
records without Archivist of the United
States’ approval. The Archivist approves
destruction only after thoroughly
considering the records’ administrative
use by the agency of origin, the rights
of the Government and of private people
directly affected by the Government’s
activities, and whether or not the
records have historical or other value.
In addition to identifying the Federal
agencies and any subdivisions
requesting disposition authority, this
notice lists the organizational unit(s)
accumulating the records (or notes that
the schedule has agency-wide
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
72123
applicability when schedules cover
records that may be accumulated
throughout an agency); provides the
control number assigned to each
schedule, the total number of schedule
items, and the number of temporary
items (the records proposed for
destruction); and includes a brief
description of the temporary records.
The records schedule itself contains a
full description of the records at the file
unit level as well as their disposition. If
NARA staff has prepared an appraisal
memorandum for the schedule, it also
includes information about the records.
You may request additional information
about the disposition process at the
addresses above.
Schedules Pending
1. Department of Defense, National
Guard Bureau (DAA–0168–2016–0003,
3 items, 2 temporary items). Records
relating to legislative inquiries to agency
leadership including routine or
administrative information. Proposed
for permanent retention are records
relating to questions of policy, budget,
appropriations and similar records.
2. Department of Defense, Office of
the Secretary of Defense (DAA–0330–
2016–0015, 1 item, 1 temporary item).
Master files of an electronic information
system used to track nominators and
candidates of a program for business
and community leaders to gain a greater
awareness of national defense issues.
3. Department of Defense, Office of
the Secretary of Defense (DAA–0330–
2016–0016, 1 item, 1 temporary item).
Records relating to employers who have
pledged to provide a supportive work
environment for members of the
National Guard and Reserves.
4. Department of Energy, Agencywide (DAA–0434–2016–0007, 2 items, 1
temporary item). Records relating to the
Ombudsman program including case
files. Proposed for permanent retention
are the charter, mission statement, and
statistical analysis.
5. Department of Health and Human
Services, Office of the Secretary (DAA–
0468–2016–0002, 8 items, 4 temporary
items). Records of the Office of the
Inspector General including routine
correspondence, regulation support
records, testimonies, and working
papers. Proposed for permanent
retention are substantive Congressional
correspondence and mandated reports,
policy records, and press releases.
6. Department of Homeland Security,
Immigration and Customs Enforcement
(DAA–0567–2015–0008, 8 items, 8
temporary items). Protective equipment
records including incident case files,
annual incident reports, proficiency and
instructor certifications, body armor
E:\FR\FM\19OCN1.SGM
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]]>Agencies
[Federal Register Volume 81, Number 202 (Wednesday, October 19, 2016)]
[Notices]
[Pages 72114-72123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25279]
=======================================================================
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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.
-----------------------------------------------------------------------
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: 2016-03, The Michael T. Sewell,
M.D., P.S.C. Profit Sharing Plan, D-11813; 2016-04, Plumbers' Pension
Fund, Local 130, U.A., D-11822; 2016-05, Sears Holdings 401(k) Savings
Plan and the Sears Holdings Puerto Rico Savings Plan, D-11846 and D-
11847; 2016-06, Sears Holdings 401(k) Savings Plan and the Sears
Holdings Puerto Rico Savings Plan, D-11851 and D-11852; 2016-07,
Liberty Media 401(k) Savings Plan, D-11858; 2016-08, Baxter
International Inc., D-11866; and 2016-09, Sears Holdings 401(k) Savings
Plan and the Sears Holdings Puerto Rico Savings Plan, D-11871 and D-
11872.
SUPPLEMENTARY INFORMATION: A notice was published in the Federal
Register of the pendency before the Department of a proposal to grant
such exemption. The notice set forth a summary of facts and
representations contained in the application for exemption and referred
interested persons to the application for a complete statement of the
facts and representations. The application has been available for
public inspection at the Department in Washington, DC. The notice also
invited interested persons to submit comments on the requested
exemption to the Department. In addition the notice stated that any
interested person might submit a written request that a public hearing
be held (where appropriate). The applicant has represented that it has
complied with the requirements of the notification to interested
persons. No requests for a hearing were received by the Department.
Public comments were received by the Department as described in the
granted exemption.
The notice of proposed exemption was issued and the exemption is
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:
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
(a) The exemption is administratively feasible;
(b) The exemption is in the interests of the plan and its
participants and beneficiaries; and
(c) The exemption is protective of the rights of the participants
and beneficiaries of the plan.
[[Page 72115]]
The Michael T. Sewell, M.D., P.S.C. Profit Sharing Plan (the Plan),
Located in Bardstown, Kentucky
[Prohibited Transaction Exemption 2016-03; Exemption Application No. D-
11813]
Exemption
The restrictions of 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, by reason of section 4975(c)(1)(A), (D)
and (E) of the Code,\2\ shall not apply to the cash sale (the Sale) by
the individually-directed account (the Account) in the Plan of Michael
T. Sewell, M.D. (Dr. Sewell) of a parcel of unimproved real property
(the Property), to Dr. Sewell, a party in interest with respect to the
Plan; provided that the following conditions are satisfied:
---------------------------------------------------------------------------
\2\ For purposes of this exemption, references to specific
provisions of Title I of the Act, unless otherwise specified, refer
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------
(a) The Sale is a one-time transaction for cash;
(b) The sales price for the Property is the greater of: $916,501;
or the sum of the fair market value of the Property, as established by
a qualified independent appraiser, and the fair market value of timber
on the Property, as determined by a qualified independent timber
appraiser, in separate, updated appraisals reports on the date of the
Sale;
(c) The Account pays no real estate fees or commissions in
connection with the Sale;
(d) The terms of the Sale are no less favorable to the Account than
the terms the Account would receive under similar circumstances in an
arm's length transaction with an unrelated party; and
(e) Michael T. Sewell, M.D., P.S.C. bears 100% of the costs of
obtaining this exemption.
Written Comments
In the notice of proposed exemption (the Notice), the Department
invited all interested persons to submit written comments and/or
requests for a public hearing within 30 days of the publication, on
April 28, 2016, of the Notice in the Federal Register. All comments
were due by May 28, 2016. During the comment period, the Department
received no comments or hearing requests from interested persons.
Accordingly, after giving full consideration to the entire record,
the Department has decided to grant the exemption. The complete
application file (Exemption Application No. D-11813), including all
supplemental submissions received by the Department, 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 exemption, refer to
the Notice published in the Federal Register on April 28, 2016 at 81 FR
25433.
FOR FURTHER INFORMATION CONTACT: Mrs. Blessed Chuksorji-Keefe of the
Department, telephone (202) 693-8567. (This is not a toll-free number.)
Plumbers' Pension Fund, Local 130, U.A. (the Plan, or the Applicant),
Located in Chicago, IL
[Prohibited Transaction Exemption 2016-04; Exemption Application No. D-
11822]
Exemption
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 (E) of the Code,\3\ shall not
apply to the proposed sale (the Sale) of two commercial buildings (the
Properties), by the Plan to the Plumbers' Pension Fund, Local 130, U.A.
(the Union), a party in interest with respect to the Plan, provided
that the following conditions are satisfied:
---------------------------------------------------------------------------
\3\ 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 Sale is a one-time transaction for cash;
(b) The price paid by the Union to the Plan is equal to the greater
of: (1) $1,640,000, or (2) the fair market value of the Properties, as
determined by a qualified independent appraiser (the Independent
Appraiser) as of the date of the Sale;
(c) The Plan does not pay any appraisal fees, real estate fees,
commissions, costs or other expenses in connection with the Sale;
(d) The Plan trustees appointed by the Union (the Union Trustees)
recuse themselves from: (1) Discussions and voting with respect to the
Plan's decision to enter into the Sale; and (2) all aspects of the
selection and engagement of the Independent Appraiser for the purposes
of determining the fair market value of the Properties on the date of
the Sale;
(e) The Plan trustees appointed by the employer associations (the
Employer Trustees), who have no interest in the Sale: (1) Determine,
among other things, whether it is in the interest of the Plan to
proceed with the Sale; (2) review and approve the methodology used by
the Independent Appraiser in the independent appraisal report (the
Appraisal Report) that is being relied upon; and (3) ensure that such
methodology is applied by the Independent Appraiser in determining the
fair market value of the Properties on the date of the Sale; and
(f) The Sale is not part of an agreement, arrangement, or
understanding designed to benefit the Union.
Written Comments
The Department invited all interested persons to submit written
comments and/or requests for a public hearing with respect to the
notice of proposed exemption, published on April 28, 2016, at 81 FR
25435. All comments and requests for a hearing were due by May 28,
2016.
During the comment period, the Department received one written
comment and no requests for a public hearing. In a comment letter,
dated May 19, 2016, a Plan participant suggests that the Sale price of
the Properties be no less than the average of three different
appraisals of the Properties, rather than based on a single appraisal.
The commenter asserts that this is the standard practice for bids and
should be used in this exemption because it is fair and equitable.
The Department acknowledges the participant's comment, but wishes
to emphasize that the procedures (the Procedures) governing the filing
and the processing of administrative exemptions from the prohibited
transaction provisions of the Act, as amended, and the Code, as
amended, (29 CFR 2570, October 27, 2011), do not require that an
applicant obtain multiple appraisals of a property from different
qualified independent appraisers. Specifically, section 2570.34(c)(4)
of the Procedures refers to the preparation of a single appraisal
report for a property by a qualified independent appraiser, who is
acting solely on behalf of the affected plan. Moreover, section
2570.34(c)(4) of the Procedures describes the content of such appraisal
report in subparagraphs (i)-(iii).
Accordingly, in the exemption request under consideration, the
Department is of the view that the Independent Appraiser of the
Properties has fulfilled the requirements mandated by Section
2570.34(c) of the Procedures.
In addition, the Department notes that the Sale is subject to
several conditions that are meant to protect the Plan and
[[Page 72116]]
its participants and beneficiaries. In this regard, the Independent
Appraiser will render an updated appraisal of the Properties, as of the
date of the Sale. In addition, the price paid by the Union to the Plan
will be equal to the greater of: (1) $1,640,000, or (2) the fair market
value of the Properties, as determined by the Independent Appraiser as
of the date of the Sale. Further, the Employer Trustees, who have no
interest in the Sale, will review and approve the methodology used by
the Independent Appraiser, and will ensure that such methodology is
properly applied.
Accordingly, after giving full consideration to the entire record,
the Department has decided to grant the exemption. The complete
application file (Application No. D-11822), including all supplemental
submissions received by the Department, 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 exemption, refer to
the Notice of Proposed Exemption published on April 28, 2016, at 81 FR
25435.
FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department,
telephone (202) 693-8456. (This is not a toll-free number.)
Sears Holdings 401(k) Savings Plan (the Savings Plan) and the Sears
Holdings Puerto Rico Savings Plan (the PR Plan) (Collectively, the
Plans), Located in Hoffman Estates, IL
[Prohibited Transaction Exemption 2016-05; Exemption Application Nos.
D-11846 and D-11847]
Exemption
Section I. Covered Transactions
(a) The restrictions of sections 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act and the sanctions
resulting from the application of section 4975 of the Code, by reason
of section 4975(c)(1)(E) of the Code,\4\ shall not apply to the
acquisition and holding by the Savings Plan of certain subscription
rights (the Rights) to purchase shares of common stock (the SC Stock)
in Sears Canada Inc. (Sears Canada) in connection with an offering (the
Offering) by Sears Holdings Corporation (Holdings) of shares of SC
Stock, provided that the conditions as set forth, below, in Section II
of this exemption were satisfied for the duration of the acquisition
and holding; and
---------------------------------------------------------------------------
\4\ For purposes of this exemption, unless indicated otherwise,
references to section 406 of the Act should be read to refer as well
to the corresponding provisions of section 4975 of the Code.
---------------------------------------------------------------------------
(b) The restrictions of sections 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act \5\ shall not apply
to the acquisition and holding of the Rights by the PR Plan in
connection with the Offering of the SC Stock by Holdings, provided that
the conditions as set forth in Section II of this exemption were
satisfied for the duration of the acquisition and holding.
---------------------------------------------------------------------------
\5\ The Applicant represents that there is no jurisdiction under
Title II of the Act with respect to the PR Plan. Accordingly, the
Department is not providing any exemptive relief from section
4975(c)(1)(E) of the Code for the acquisition and holding of the
Rights by the PR Plan.
---------------------------------------------------------------------------
Section II. Conditions for Relief
(a) The receipt of the Rights by the Plans occurred in connection
with the Offering, in which all shareholders of the common stock of
Holdings (Holdings Stock), including the Plans, were treated in the
same manner;
(b) The acquisition of the Rights by the Plans resulted from an
independent act of Holdings, as a corporate entity;
(c) Each shareholder of Holdings Stock, including each of the
Plans, received the same proportionate number of Rights based on the
number of shares of Holdings Stock held by each such shareholder;
(d) All decisions with regard to the holding and disposition of the
Rights by the Plans were made by a qualified independent fiduciary (the
Independent Fiduciary) within the meaning of 29 CFR 2570.31(j); \6\
---------------------------------------------------------------------------
\6\ 29 CFR 2570.31(j) defines a ``qualified independent
fiduciary,'' in relevant part, to mean ``any individual or entity
with appropriate training, experience, and facilities to act on
behalf of the plan regarding the exemption transaction in accordance
with the fiduciary duties and responsibilities prescribed by ERISA,
that is independent of and unrelated to any party in interest
engaging in the exemption transaction and its affiliates;'' in
general, a fiduciary is presumed to be independent ``if the revenues
it receives or is projected to receive, within the current federal
income tax year from parties in interest (and their affiliates)
[with respect] to the transaction are not more than 2% of such
fiduciary's annual revenues based upon its prior income tax year.
Although the presumption does not apply when the aforementioned
percentage exceeds 2%, a fiduciary nonetheless may be considered
independent based upon other facts and circumstances provided that
it receives or is projected to receive revenues that are not more
than 5% within the current federal income tax year from parties in
interest (and their affiliates) [with respect] to the transaction
based upon its prior income tax year.''
---------------------------------------------------------------------------
(e) The Independent Fiduciary determined that it would be in the
interest of the Plans to sell all of the Rights received in the
Offering by the Plans in blind transactions on the NASDAQ Global Select
Market;
(f) No brokerage fees, commissions, subscription fees, or other
charges were paid by the Plans with respect to the acquisition and
holding of the Rights, or were paid to any affiliate of Holdings, Sears
Canada, or the Independent Fiduciary, with respect to the sale of the
Rights.
Section III. Definitions
(a) The term ``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 person;
(2) Any officer, director, partner, employee, or relative, as
defined in section 3(15) of the Act, of 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.
Effective Date: This exemption is effective for the period
beginning October 16, 2014, and ending November 7, 2014 (the Offering
Period).
Written Comments
The Department invited all interested persons to submit written
comments and/or requests for a public hearing with respect to the
notice of proposed exemption (the Notice), published on May 12, 2016,
at 81 FR 29705. All comments and requests for hearing were due by July
3, 2016. During the comment period, the Department received two
comments from interested persons and no requests for a public hearing.
A Savings Plan participant submitted a written comment and Holdings
requested a clarification to the Notice. Furthermore, during the
comment period, the Department received several phone inquiries that
generally concerned matters outside the scope of the exemption.
Participant's Comment
In his comment letter of June 20, 2016, the participant represents
that he is a Holdings' shareholder, who held a balance in the Savings
Plan at the time of the Offering.\7\ The participant states that ``it
appears I did not benefit from
[[Page 72117]]
[the Offering] as I should have'' because the price of Holdings Stock
decreased following the Offering. The participant inquires whether the
exemption should reverse this loss.
---------------------------------------------------------------------------
\7\ The participant also submitted the same comment to the
Department in D-11851 and D-11852, involving the Sears Notes
Offering, 81 FR 29709 (May 12, 2016); and in D-11871 and D-11873,
involving the Seritage Growth Offering, 81 FR 29713 (May 12, 2016).
---------------------------------------------------------------------------
In response to the participant's comment, Holdings explains that
while there have been fluctuations in the price of Holdings Stock
during the relevant period, the Independent Fiduciary's decision to
sell the Rights generated a positive gain for the Sears Holdings 401(k)
Savings Plan Master Trust Stock Fund (the Stock Fund), of $200,557.36,
net of fees and expenses. According to Holdings, changes in the value
of a publicly-traded company's stock occur due to many factors,
including the company's performance. Depending on the measurement
period used, Holdings represents that it is possible that a
contemporaneous decline in the price of Holdings Stock negated the
positive gain for the Stock Fund. However, according to Holdings, the
performance of Holdings Stock around the time of the Offering was
beyond the control of the Plans and the Independent Fiduciary, and it
was independent of any actions such fiduciary took with respect to the
Rights received by the Plans.
Holdings also represents that it made the decision to commence the
Offering, which was a corporate decision, and this decision was not
fiduciary in nature. Further, Holdings states that no shareholder,
including the Plans, had the ability to prevent the Offering.
Therefore, the only decision presented to the shareholders, including
the Plans' fiduciaries, was how to dispose of the Rights that were
distributed during the Offering. Holdings represents that the
Independent Fiduciary's decision to sell the Rights resulted in a
significant deposit in the Stock Fund.
Holdings' Comment
The Applicant states that it originally requested relief from the
restrictions of sections 406(a)(1)(A), 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act in the exemption
application. However, the Applicant notes that the Department decided
not to provide exemptive relief from section 406(a)(1)(A) of the Act in
the Notice.
The Applicant believes the Plans' acquisition of the Rights to
purchase Sears Canada Stock did not involve a prohibited ``sale or
exchange, or leasing, of any property between the plan and a party in
interest,'' as described in section 406(a)(1)(A) of the Act. The
Applicant states that it provided the Rights automatically to all of
its shareholders, including the Plans, in a manner similar to a stock
dividend. The Applicant also points out that the Department has
clarified that it ``does not view an acquisition of stock by means of a
stock dividend or stock split as a prohibited transaction,'' in the
Preamble to Final Regulation, Fiduciary Responsibility; Statutory
Exemption for Certain Acquisitions, Sales, or Leases of Property, 45 FR
51194, 51196 (August 1, 1980). Therefore, the Applicant does not
believe an exemption from section 406(a)(1)(A) is required in the
subject case. Sears Holdings requests confirmation that the Department
shares this view.
In response, the Department concurs that exemptive relief from
section 406(a)(1)(A) of the Act is not applicable to the Plans'
acquisition of the Rights.
Technical Correction
Section III(c) of the proposed exemption is redesignated as Section
III(b) of this exemption.
Accordingly, after giving full consideration to the entire record,
the Department has decided to grant the exemption. The complete
application file (Application Nos. D-11846 and D-11847), including all
supplemental submissions received by the Department, 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 exemption, refer to
the notice of proposed exemption published on May 12, 2016, at 81 FR
29705.
FOR FURTHER INFORMATION CONTACT: Mr. Scott Ness of the Department,
telephone (202) 693-8561. (This is not a toll-free number.)
Sears Holdings 401(k) Savings Plan (the Savings Plan) and the Sears
Holdings Puerto Rico Savings Plan (the PR Plan) (Collectively, the
Plans), Located in Hoffman Estates, IL
[Prohibited Transaction Exemption 2016-06; Exemption Application Nos.
D-11851 and D-11852]
Exemption
Section I. Covered Transactions
(a) The restrictions of sections 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act and the sanctions
resulting from the application of section 4975 of the Code, by reason
of section 4975(c)(1)(E) of the Code,\8\ shall not apply to the
acquisition and holding of certain subscription rights (the Rights)
issued by Sears Holdings Corporation (Holdings) by the Savings Plan in
connection with an offering (the Offering) by Holdings of unsecured
obligations issued by Holdings (Notes) and warrants to purchase the
common stock of Holdings (Warrants)(together referred to as Units),
provided that the conditions as set forth, below, in Section II of this
exemption were satisfied for the duration of the acquisition and
holding; and
---------------------------------------------------------------------------
\8\ For purposes of this exemption, unless indicated otherwise,
references to section 406 of the Act should be read to refer as well
to the corresponding provisions of section 4975 of the Code.
---------------------------------------------------------------------------
(b) The restrictions of sections 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act \9\ shall not apply
to the acquisition and holding of the Rights by the PR Plan in
connection with the Offering of the Units by Holdings, provided that
the conditions as set forth in Section II of this exemption were
satisfied for the duration of the acquisition and holding.
---------------------------------------------------------------------------
\9\ The Applicant represents that there is no jurisdiction under
Title II of the Act with respect to the PR Plan. Accordingly, the
Department is not providing any exemptive relief from section
4975(c)(1)(E) of the Code for the acquisition and holding of the
Rights by the PR Plan.
---------------------------------------------------------------------------
Section II. Conditions for Relief
(a) The receipt of the Rights by the Plans occurred in connection
with the Offering, in which all shareholders of the common stock of
Holdings (Holdings Stock), including the Plans, were treated in the
same manner;
(b) The acquisition of the Rights by the Plans resulted from an
independent act of Holdings, as a corporate entity;
(c) Each shareholder of Holdings Stock, including each of the
Plans, received the same proportionate number of Rights based on the
number of shares of Holdings Stock held by each such shareholder;
(d) All decisions with regard to the holding and disposition of the
Rights by the Plans were made by a qualified independent fiduciary (the
Independent Fiduciary) within the meaning of 29 CFR 2570.31(j); \10\
---------------------------------------------------------------------------
\10\ 29 CFR 2570.31(j) defines a ``qualified independent
fiduciary,'' in relevant part, to mean ``any individual or entity
with appropriate training, experience, and facilities to act on
behalf of the plan regarding the exemption transaction in accordance
with the fiduciary duties and responsibilities prescribed by ERISA,
that is independent of and unrelated to any party in interest
engaging in the exemption transaction and its affiliates;'' in
general, a fiduciary is presumed to be independent ``if the revenues
it receives or is projected to receive, within the current federal
income tax year from parties in interest (and their affiliates)
[with respect] to the transaction are not more than 2% of such
fiduciary's annual revenues based upon its prior income tax year.
Although the presumption does not apply when the aforementioned
percentage exceeds 2%, a fiduciary nonetheless may be considered
independent based upon other facts and circumstances provided that
it receives or is projected to receive revenues that are not more
than 5% within the current federal income tax year from parties in
interest (and their affiliates) [with respect] to the transaction
based upon its prior income tax year.''
---------------------------------------------------------------------------
[[Page 72118]]
(e) The Independent Fiduciary determined that it would be in the
interest of the Plans to sell all of the Rights received in the
Offering by the Plans in blind transactions on the NASDAQ Global Select
Market;
(f) No brokerage fees, commissions, subscription fees, or other
charges were paid by the Plans with respect to the acquisition and
holding of the Rights, or were paid to any affiliate of Holdings or the
Independent Fiduciary, with respect to the sale of the Rights.
Section III. Definitions
(a) The term ``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 person;
(2) Any officer, director, partner, employee, or relative, as
defined in section 3(15) of the Act, of 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.
Effective Date: This exemption is effective for the period
beginning October 30, 2014, and ending November 18, 2014 (the Offering
Period).
Written Comments
The Department invited all interested persons to submit written
comments and/or requests for a public hearing with respect to the
notice of proposed exemption (the Notice), published on May 12, 2016,
at 81 FR 29709. All comments and requests for hearing were due by July
3, 2016. During the comment period, the Department received two
comments from interested persons and no requests for a public hearing.
A Savings Plan participant submitted a written comment, and Holdings
requested a clarification to the Notice. Furthermore, during the
comment period, the Department received several phone inquiries that
generally concerned matters outside the scope of the exemption.
Participant's Comment
In his comment letter of June 20, 2016, the participant represents
that he is a Holdings' shareholder, who held a balance in the Savings
Plan at the time of the Offering.\11\ The participant states that ``it
appears I did not benefit from [the Offering] as I should have''
because the price of Holdings Stock decreased following the Offering.
The participant inquires whether the exemption should reverse this
loss.
---------------------------------------------------------------------------
\11\ The participant also submitted the same comment to the
Department in D-11846 and D-11847, involving the Sears Canada
Offering, 81 FR 29705 (May 12, 2016); and in D-11871 and D-11873,
involving the Seritage Growth Offering, 81 FR 29713 (May 12, 2016).
---------------------------------------------------------------------------
In response to the participant's comment, Holdings explains that
while there have been fluctuations in the price of Holdings Stock
during the relevant period, the Independent Fiduciary's decision to
sell the Rights generated a positive gain for the Sears Holdings 401(k)
Savings Plan Master Trust Stock Fund (the Stock Fund), of
$3,637,509.54, net of fees and expenses. According to Holdings, changes
in the value of a publicly-traded company's stock occur due to many
factors, including the company's performance. Depending on the
measurement period used, Holdings represents that it is possible that a
contemporaneous decline in the price of Holdings Stock negated the
positive gain for the Stock Fund. However, according to Holdings, the
performance of Holdings Stock around the time of the Offering was
beyond the control of the Plans and the Independent Fiduciary, and it
was independent of any actions such fiduciary took with respect to the
Rights received by the Plans.
Holdings also represents that it made the decision to commence the
Offering, which was a corporate decision, and this decision was not
fiduciary in nature. Further, Holdings states that no shareholder,
including the Plans, had the ability to prevent the Offering.
Therefore, the only decision presented to the shareholders, including
the Plans' fiduciaries, was how to dispose of the Rights that were
distributed during the Offering. Holdings represents that the
Independent Fiduciary's decision to sell the Rights resulted in a
significant deposit in the Stock Fund.
Holdings' Comment
The Applicant states that it originally requested relief from the
restrictions of sections 406(a)(1)(A), 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act in the exemption
application. However, the Applicant notes that the Department decided
not to provide exemptive relief from section 406(a)(1)(A) of the Act in
the Notice.
The Applicant believes the Plans' acquisition of the Rights to
purchase Sears Notes and Warrants did not involve a prohibited ``sale
or exchange, or leasing, of any property between the plan and a party
in interest,'' as described in section 406(a)(1)(A) of the Act. The
Applicant states that it provided the Rights automatically to all of
its shareholders, including the Plans, in a manner similar to a stock
dividend. The Applicant also points out that the Department has
clarified that it ``does not view an acquisition of stock by means of a
stock dividend or stock split as a prohibited transaction,'' in the
Preamble to Final Regulation, Fiduciary Responsibility; Statutory
Exemption for Certain Acquisitions, Sales, or Leases of Property, 45 FR
51194, 51196 (August 1, 1980). Therefore, the Applicant does not
believe an exemption from section 406(a)(1)(A) is required in the
subject case. Sears Holdings requests confirmation that the Department
shares this view.
In response, the Department concurs that exemptive relief from
section 406(a)(1)(A) of the Act is not applicable to the Plans'
acquisition of the Rights.
Technical Correction
Section III(c) of the proposed exemption is redesignated as Section
III(b) of this exemption.
Accordingly, after giving full consideration to the entire record,
the Department has decided to grant the exemption. The complete
application file (Application Nos. D-11851 and D-11852), including all
supplemental submissions received by the Department, 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 exemption, refer to
the notice of proposed exemption published on May 12, 2016, at 81 FR
29709.
FOR FURTHER INFORMATION CONTACT: Mr. Erin Hesse of the Department,
telephone (202) 693-8546. (This is not a toll-free number.)
Liberty Media 401(k) Savings Plan (the Plan), Located in Englewood, CO
[Prohibited Transaction Exemption 2016-07; Exemption Application No. D-
11858]
Exemption
Section I. Covered Transactions
The restrictions of sections 406(a)(1)(E), 406(a)(2), and
407(a)(1)(A)
[[Page 72119]]
of the Act shall not apply to: (1) The acquisition by the Plan of
certain stock subscription rights (the Rights) to purchase shares of
Liberty Broadband Series C common stock (LB Series C Stock), in
connection with a rights offering (the Rights Offering) held by Liberty
Broadband Corporation (Liberty Broadband), a party in interest with
respect to the Plan; and (2) the holding of the Rights by the Plan
during the subscription period of the Rights Offering, provided that
the conditions described in Section II below have been met.
Section II. Conditions for Relief
(a) The Plan's acquisition of the Rights resulted solely from an
independent corporate act of Liberty Broadband;
(b) All holders of Liberty Broadband Series A common stock and
Liberty Broadband Series C common stock (collectively, the LB Stock),
including the Plan, were issued the same proportionate number of Rights
based on the number of shares of LB Stock held by each such
shareholder;
(c) For purposes of the Rights Offering, all holders of LB Stock,
including the Plan, were treated in a like manner;
(d) The acquisition of the Rights by the Plan was made in a manner
that was consistent with provisions of the Plan for the individually-
directed investment of participant accounts;
(e) The Liberty Media 401(k) Savings Plan Administrative Committee
(the Committee) directed the Plan trustee to sell the Rights on the
NASDAQ Global Select Market, in accordance with Plan provisions that
precluded the Plan from acquiring additional shares of LB Stock;
(f) The Committee did not exercise any discretion with respect to
the acquisition and holding of the Rights; and
(g) The Plan did not pay any fees or commissions in connection with
the acquisition or holding of the Rights, and did not pay any
commissions to Liberty Broadband, Liberty Media Corporation,
TruePosition, Inc., or any affiliates of the foregoing in connection
with the sale of the Rights.
Effective Date: This exemption is effective for the period
beginning on December 15, 2014, the date that the Plan received the
Rights, until December 17, 2014, the date the Rights were sold by the
Plan on the NASDAQ Global Select Market.
Written Comments
The Department invited all interested persons to submit written
comments and/or requests for a public hearing with respect to the
notice of proposed exemption, published on April 28, 2016, at 81 FR
25438. Liberty Media completed delivery of the notice of proposed
exemption and accompanying notice to interested persons on May 3, 2016.
However, the Department determined that certain elements of the notice
of proposed exemption as published in the Federal Register were omitted
from the materials sent to interested persons. Liberty Media
represented, under penalty of perjury, that a corrected version of the
notice of proposed exemption was provided to all interested persons on
May 27, 2016. All comments and requests for hearing were due under the
corrected version of the notice by June 26, 2016, 30 days following the
date on which Liberty Media certified delivery was completed. During
the comment period, the Department received no comments and no requests
for a hearing from interested persons. Accordingly, after giving full
consideration to the entire record, the Department has decided to grant
the exemption. The complete application file (Application No. D-11858),
including all supplemental submissions received by the Department, 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 exemption, refer to
the notice of proposed exemption published on April 28, 2016, at 81 FR
25438.
FOR FURTHER INFORMATION CONTACT: Mr. Scott Ness of the Department,
telephone (202) 693-8561. (This is not a toll-free number.)
Baxter International Inc. (Baxter or the Applicant), Located in
Deerfield, IL
[Prohibited Transaction Exemption 2016-08; Exemption Application No. D-
11866]
Exemption
Section I. Transaction
The restrictions of sections 406(a)(1)(A) and (D) and sections
406(b)(1) and (2) of ERISA and sections 4975(c)(1)(A), (D), and (E) of
the Code \12\ shall not apply to the contribution of publicly traded
common stock of Baxalta (the Contributed Stock) by Baxter (the
Contribution) to the Baxter International Inc. and Subsidiaries Pension
Plan (the Plan), provided:
---------------------------------------------------------------------------
\12\ 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) Fiduciary Counselors Inc. (the Independent Fiduciary) will
represent the interests of the Plan, the participants, and
beneficiaries with respect to the Contribution, including but not
limited to, taking the following actions:
(i) Determining whether the Contribution is in the interests of the
Plan and of its participants and beneficiaries, and is protective of
the rights of participants and beneficiaries of the Plan;
(ii) Determining whether and on what terms the Contribution should
be accepted by the Plan;
(iii) If the Contribution is accepted by the Plan, establishing and
administering the process (subject to such modifications as the
Independent Fiduciary may make from time to time) for liquidating the
Contributed Stock, as is prudent under the circumstances;
(iv) Determining the fair market value of the Contributed Stock as
of the date of the Contribution;
(v) Monitoring the Contribution and holding of Contributed Stock on
a continuing basis and taking all appropriate actions necessary to
safeguard the interests of the Plan; and
(vi) If the Contribution is accepted by the Plan, voting proxies
and responding to tender offers with respect to the Contributed Stock
held by the Plan;
(b) Solely for purposes of determining the Plan's minimum funding
requirements (as determined under section 412 of the Code), adjusted
funding target attainment percentage (AFTAP) (as determined under
Treas. Reg. section 1.436-1(j)(1)), and funding target attainment
percentage (as determined under section 430(d)(2) of the Code), the
Plan's actuary (the Actuary) will not count as a contribution to the
Plan any shares of Contributed Stock that have not been liquidated;
(c) For purposes of determining the amount of any Contribution, the
Contributed Stock shall be deemed contributed only at the time it is
sold, equal to the lesser of: (1) The proceeds from the sale of such
Contributed Stock; or (2) the value of such Contributed Stock on the
date of the initial contribution as determined by the Independent
Fiduciary;
(d) The Contributed Stock represents no more than 20% of the fair
market value of the total assets of the Plan at the time it is
contributed to the Plan;
(e) The Plan pays no commissions, costs, or other expenses in
connection with the Contribution, holding, or subsequent sale of the
Contributed
[[Page 72120]]
Stock, and any such expenses paid by Baxter will not be treated as a
contribution to the Plan;
(f) Baxter makes cash contributions to the Plan to the extent that
the cumulative proceeds from the sale of the Contributed Stock at each
contribution due date (determined under section 303(j) of ERISA) are
less than the cumulative cash contributions Baxter would have been
required to make to the Plan, in the absence of the Contribution. Such
cash contributions shall be made until all of the Contributed Stock is
sold by the Plan; and
(g) Baxter contributes to the Plan cash amounts needed for the Plan
to attain an AFTAP (determined under Treas. Reg. section 1.436-1(j)(1))
of at least 80% as of the first day of each plan year during which the
Plan holds Contributed Stock, as determined by the Actuary, without
taking into account any unsold Contributed Stock as of April 1 of the
plan year.
Effective Date: This exemption is effective as of May 9, 2016, the
date the Contribution was received by the Plan.
Written Comments
The Department invited all interested persons to submit written
comments and/or requests for a public hearing with respect to the
notice of proposed exemption, published on April 28, 2016, at 81 FR
25441. All comments and requests for hearing were due by June 3, 2016.
During the comment period, the Department received one substantive
written comment, one substantive phone comment, and a variety of
written and telephonic inquiries requesting information outside the
scope of the proposed exemption. The Department did not receive any
requests for a hearing from interested persons. A description of the
comments and the Applicant's responses is below.
Participant Comments and Applicant's Responses
Among other things, the commenter expressed concern about exposing
participants to additional risk from holding Baxalta stock in a
transaction intended to benefit Baxter. The Applicant responds that
participants in the Plan will not be subject to any additional risk
from holding Baxalta stock because the value of the Baxalta stock at
the time of the contribution was approximately $700 million, and the
plan subsequently sold the stock for approximately $760 million, under
the direction of the Independent Fiduciary. Accordingly, the Applicant
represents that this transaction added about $760 million in cash to
the pension plan. Furthermore, the Applicant notes that if Baxter had
sold the stock and then put the cash into the Plan, it would have been
required to pay taxes on the proceeds of the sale, which would have
reduced the amount available to be contributed to the plan by
approximately $266 million. Putting the stock into the Plan first and
then selling the stock under the supervision of the Independent
Fiduciary yielded significantly more money for the Plan and its
participants.
The commenter also stated that the contribution of the Baxalta
Stock would exceed the Plan's allocation for large cap stocks. In
response, the Applicant explains that the Baxter Investment Committee
has amended the investment policy to permit the 24% target allocation
to be exceeded temporarily to allow the plan to accept the contribution
of the Baxalta stock, which as described above was sold by the plan
shortly after the contribution. Thereafter, the proceeds from the sale
of the Baxalta stock will be invested in accordance with the investment
policy.
Finally, the commenter expressed concern about potential IRS
challenges to the transaction and litigation risk to the Plan from
Baxalta shareholders if the stock price was depressed as a result of
this transaction. The Applicant notes that prior to seeking this
individual exemption, Baxter obtained a ruling from the IRS that
specifically allows it to contribute the Baxalta stock to the Plan (a
copy of which was also provided to the Department as part of the
application process) on a tax-free basis. The Applicant further
explains that, if for any reason there were an IRS challenge, it would
be Baxter's responsibility to respond to the IRS challenge, and it
would not affect the funding of the Plan. Similarly, according to the
Applicant, there is very little risk of litigation from Baxalta
shareholders because during the spin-off, shareholders were made aware
that such a disposition of Baxalta stock was possible and the
Independent Fiduciary who has been retained to sell the Baxalta stock
on behalf of the Plan is required under the terms of its agreement to
sell the stock in such a manner as to minimize the impact of the sales
on the market for Baxalta shares.
The Department received one other comment from a plan participant
who inquired into Baxter's financial ability to continue funding the
Plan after spinning off half the company into Baxalta. The Applicant
represents that Baxter does not anticipate that the spin-off of Baxalta
will reduce Baxter's financial ability to continue funding the Plan.
Although Baxter is now a smaller company, the Plan is also slightly
smaller, because the portion of the Plan that benefits Baxalta
employees was transferred to Baxalta, and Baxalta is responsible for
funding that portion of the Plan (a new and distinct plan) after the
spin-off. Finally, the Applicant states that the proposed exemption, if
approved, would allow Baxter to make a one-time contribution to the
plan of approximately $760 million. This contribution increased the
assets of the Plan by over 20%, significantly improving the funded
status of the Plan. The Applicant explains that this means that
Baxter's cost of funding the Plan in the future will be reduced.
Applicant's Comment
The Applicant also submitted the Final Report from the Independent
Fiduciary (the Final Report), detailing the Contribution and subsequent
liquidation of the Baxalta Stock. Fiduciary Counselors represents that
on May 9, 2016, State Street, the Plan's trustee, received the Baxalta
Contribution from Baxter. The Final Report provides that, while the
Baxalta Contribution skewed the Large Cap weighting above the targeted
24.0%, this was a temporary deviation and the allocation will return to
pre-Baxalta Contribution levels once the Baxalta Stock is sold.
Fiduciary Counselors started liquidating the Baxalta Stock on May 10,
2016, and completed the liquidation on June 2, 2016. The Plan realized
$762,118,481.31 in gross proceeds. The Plan incurred $188,070.01 of
fees and expenses as part of the liquidation program, with a net gain
to the Plan of $761,930,411.30. Baxter reimbursed the Plan for such
fees and expenses as well as additional portfolio accounting fees
($208.33), custody fees ($2,879.49), and trading fees ($203.00) for a
total reimbursement to the Plan of $191,360.83.
After giving full consideration to the entire record, including all
comments from interested persons and the responses from the Applicant,
the Department has decided to grant the exemption, as described above.
The complete application file (Application No. D-11866) 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 exemption, refer to
the notice of proposed exemption published on April 28, 2016, at 81 FR
25441.
[[Page 72121]]
FOR FURTHER INFORMATION CONTACT: Mr. Erin S. Hesse of the Department,
telephone (202) 693-8546. (This is not a toll-free number.)
Sears Holdings 401(k) Savings Plan (the Savings Plan) and the Sears
Holdings Puerto Rico Savings Plan (the PR Plan) (Together, the Plans),
Located in Hoffman Estates, IL
[Prohibited Transaction Exemption 2016-09; Exemption Application Nos.
D-11871 and D-11872, respectively]
Exemption
Section I. Transactions
The restrictions of sections 406(a)(1)(E), 406(a)(2), 406(b)(1),
406(b)(2), and 407(a)(1)(A) of the Act and the sanctions resulting from
the application of section 4975 of the Code, by reason of section
4975(c)(1)(E) of the Code,\13\ shall not apply, effective for the
period beginning June 11, 2015, and ending July 2, 2015, to the
acquisition and holding by the Savings Plan of certain subscription
rights (the Rights) to purchase shares of common stock (Seritage Growth
Stock) in Seritage Growth Properties (Seritage Growth), in connection
with an offering (the Offering) by Sears Holdings Corporation (Holdings
or the Applicant) of Seritage Growth Stock, provided that the
conditions, as set forth below, were satisfied for the duration of the
acquisition and holding; and
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\13\ 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.
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(b) The restrictions of sections 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act \14\ shall not apply,
effective for the period beginning June 11, 2015, and ending July 2,
2015, to the acquisition and holding of the Rights by the PR Plan in
connection with the Offering of Seritage Growth Stock by Holdings,
provided that the conditions, as set forth below, were satisfied for
the duration of the acquisition and holding.
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\14\ The Applicant represents that there is no jurisdiction
under Title II of the Act with respect to the PR Plan because the PR
Plan fiduciaries have not made an election under section 1022(i)(2)
of the Act, whereby the PR Plan would be treated as a trust created
and organized in the United States for purposes of tax qualification
under section 401(a) of the Code. Accordingly, the Department is not
providing exemptive relief from section 4975(c)(1)(E) of the Code
for the acquisition and holding of the Rights by the PR Plan.
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Section II. Conditions
(a) The receipt of the Rights by the Plans occurred in connection
with the Offering, in which all shareholders of the common stock of
Holdings (Holdings Stock), including the Plans, were treated in the
same manner;
(b) The acquisition of the Rights by the Plans resulted solely from
an independent act of Holdings, as a corporate entity;
(c) Each shareholder of Holdings Stock, including each of the
Plans, received the same proportionate number of Rights based on the
number of shares of Holdings Stock held by each such shareholder;
(d) All decisions with regard to the holding and disposition of the
Rights by the Plans were made by a qualified independent fiduciary (the
Independent Fiduciary) within the meaning of 29 CFR 2570.31(j); \15\
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\15\ 29 CFR 2570.31(j) defines a ``qualified independent
fiduciary,'' in relevant part, to mean ``any individual or entity
with appropriate training, experience, and facilities to act on
behalf of the plan regarding the exemption transaction in accordance
with the fiduciary duties and responsibilities prescribed under the
Act, that is independent of and unrelated to any party in interest
engaging in the exemption transaction and its affiliates;'' in
general, a fiduciary is presumed to be independent ``if the revenues
it receives or is projected to receive, within the current federal
income tax year from parties in interest (and their affiliates)
[with respect] to the transaction are not more than 2% of such
fiduciary's annual revenues based upon its prior income tax year.
Although the presumption does not apply when the aforementioned
percentage exceeds 2%, a fiduciary nonetheless may be considered
independent based upon other facts and circumstances provided that
it receives or is projected to receive revenues that are not more
than 5% within the current federal income tax year from parties in
interest (and their affiliates) [with respect] to the transaction
based upon its prior income tax year.''
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(e) The Independent Fiduciary determined that it would be in the
interest of the Plans to sell all of the Rights received in the
Offering by the Plans in blind transactions on the New York Stock
Exchange; and
(f) No brokerage fees, commissions, subscription fees, or other
charges were paid by the Plans with respect to the acquisition and
holding of the Rights; or were paid to any affiliate of the Independent
Fiduciary or Holdings, in connection with the sale of the Rights.
Effective Date: This exemption is effective for the Offering
period, beginning June 11, 2015, and ending July 2, 2015.
Written Comments
In the notice of proposed exemption (the Notice), the Department
invited all interested persons to submit written comments within 52
days of the publication, on May 12, 2016, of the Notice in the Federal
Register. All comments were due by July 3, 2016. During the comment
period, the Department received three comments from interested persons
and no requests for a public hearing. Two Savings Plan participants
submitted written comments. One participant supported the granting of
the exemption, while the other did not. The third comment, which was
submitted by the Applicant, requests several minor revisions and
clarifications to the Notice.
Following is a discussion of the comment received by the Department
from the objecting participant, and the one submitted by the Applicant.
Also presented are the responses made by the Applicant to the
participant's comment, as well as the Department's responses to the
Applicant's comment.
Participant's Comment
In his comment letter of June 20, 2016, the participant represents
that he is a Holdings' shareholder, who held a balance in the Savings
Plan at the time of the Offering.\16\ The participant states that ``it
appears I did not benefit from [the Offering] as I should have''
because the price of Seritage Growth Stock decreased following the
Offering. The participant inquires whether the exemption should reverse
this loss.
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\16\ The participant also submitted the same comment to the
Department in D-11851 and D-11852, involving the Sears Notes
Offering, 81 FR 29709 (May 12, 2016); and in D-11846 and D-11847
involving the Sears Canada Offering, 81 FR 29705 (May 12, 2016).
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In response to the participant's comment, the Applicant explains
that while there have been fluctuations in the price of Holdings Stock
during the relevant period, the Independent Fiduciary's decision to
sell the Rights generated a positive gain for the Sears Holdings 401(k)
Savings Plan Master Trust Stock Fund (the Stock Fund), of
$4,106,921.19, net of fees and expenses. According to the Applicant,
changes in the value of a publicly-traded company's stock occur due to
many factors, including the company's performance. Depending on the
measurement period used, the Applicant represents that it is possible
that a contemporaneous decline in the price of Holdings Stock negated
the positive gain for the Stock Fund. However, according to the
Applicant, the performance of Holdings Stock around the time of the
Offering was beyond the control of the Plans and the Independent
Fiduciary. It was also independent of any actions such fiduciary took
with respect to the Rights received by the Plans.
The Applicant also represents that Holdings made the decision to
commence the Offering, which was a corporate decision, and was not
fiduciary in nature. Further, the Applicant explains that no
shareholder, including the Plans, had the ability to
[[Page 72122]]
prevent the Offering. Therefore, the only decision presented to the
shareholders, including the Plans' fiduciaries, was how to dispose of
the Rights that were distributed during the Offering. Because the
Independent Fiduciary decided to sell the Rights, the Applicant
represents that this event resulted in a significant deposit in the
Stock Fund.
Applicant's Comment
1. Scope of Exemptive Relief. The Applicant states that it
originally requested relief from the restrictions of sections
406(a)(1)(A), 406(a)(1)(E), 406(a)(2), 406(b)(1), 406(b)(2), and
407(a)(1)(A) of the Act in the exemption application. However, the
Applicant explains that the Department decided not to provide exemptive
relief from section 406(a)(1)(A) of the Act in the Notice.
The Applicant believes the Plans' acquisition of the Rights to
purchase Seritage Growth Stock did not involve a prohibited ``sale or
exchange, or leasing, of any property between the plan and a party in
interest,'' as described in section 406(a)(1)(A) of the Act. The
Applicant states that it provided the Rights automatically to all of
its shareholders, including the Plans, in a manner similar to a stock
dividend. The Applicant also points out that the Department has
clarified that it ``does not view an acquisition of stock by means of a
stock dividend or stock split as a prohibited transaction,'' in the
Preamble to Final Regulation, Fiduciary Responsibility; Statutory
Exemption for Certain Acquisitions, Sales, or Leases of Property, 45 FR
51194, 51196 (August 1, 1980). Therefore, the Applicant does not
believe an exemption from section 406(a)(1)(A) is required in the
subject case. Therefore, the Applicant requests confirmation that the
Department shares this view.
The Department concurs that exemptive relief from section
406(a)(1)(A) of the Act is not applicable to the Plans' acquisition of
the Rights and that the scope of relief set forth in Section I of the
proposed exemption, and this exemption, is appropriate for the
transactions covered herein.
2. Purchase of Units in Stock Funds. Page 29714 of the Notice
states that the Plans allow participants to ``purchase units in certain
stock funds which invest in Holdings Stock.'' The Applicant wishes to
clarify that only one investment option in the Plans exists for the
purpose of investment in Holdings Stock. The Stock Fund is held in the
Sears Holdings 401(k) Savings Plan Master Trust, and participants in
both the Savings Plan and the PR Plan own Holdings Stock through this
one Stock Fund.
The Department notes this clarification to the Notice.
3. Entities Adopting the Savings Plan. Page 29714 of the Notice
states that ``Sears, Roebuck and Co. (Sears Roebuck) and all of its
wholly-owned (direct and indirect) subsidiaries (except Lands' End Inc.
(Lands' End), Sears de Puerto Rico, Inc., Kmart Holding Corporation
(Kmart), and its wholly-owned (direct and indirect) subsidiaries
(excluding employees residing in Puerto Rico), and Sears Holdings
Management Corporation, with respect to certain employees, have adopted
the Savings Plan and are employers under such plan.'' The Applicant
clarifies that Kmart Holding Corporation and its wholly-owned
subsidiaries have adopted the Savings Plan and are employers under such
plan (excluding employees residing in Puerto Rico). Also, the Applicant
clarifies that employees of Sears de Puerto Rico, Inc. who reside in
the United States participate in the Savings Plan.
The Department notes this clarification to the Notice.
4. PR Plan and Holdings Stock. Page 29715 of the Notice states that
the PR Plan held ``39,782,55'' shares as of the record date. The
Applicant clarifies that the number of shares held by the PR Plan has a
misplaced decimal mark and should be revised to ``39,782.55'' shares.
The Department notes this clarification to the Notice.
5. Holdings Description. Page 29715 of the Notice states that
Holdings ``is a retail merchant with full-line and specialty retail
stores in,'' among other places, Canada. The Applicant points out that
in October and November of 2014, Holdings entered into a series of
transactions, including a rights offering, to de-consolidate Sears
Canada Inc. As a result of these transactions, Sears Holdings no longer
maintains a controlling interest in Sears Canada Inc. and no longer
itself, maintains stores in Canada.
The Department notes this clarification to the Notice.
6. Role of the Independent Fiduciary. Page 29716 of the Notice
states that the Plans' Independent Fiduciary, Evercore Trust Company
N.A., conducted a due diligence process evaluating the rights offering,
including discussions and correspondence, that enabled it ``to improve
certain elements related to the Offering.'' The Applicant explains
that, in pertinent part, Evercore's Independent Fiduciary Report states
that its due diligence process enabled it to ``better understand a
number of important elements related to the Rights Offering.''
The Department notes this clarification to the Notice.
Accordingly, after giving full consideration to the entire record,
the Department has decided to grant the exemption. The complete
application file (Exemption Application Nos. D-11871 and D-11872) and
the written comments are 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 exemption, refer to
the Notice published in the Federal Register on May 12, 2016 at 81 FR
29713.
FOR FURTHER INFORMATION CONTACT: Ms. Blessed Chuksorji-Keefe of the
Department, telephone (202) 693-8567. (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 these exemptions 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.
[[Page 72123]]
Signed at Washington, DC, this 14th day of October 2016.
Lyssa E. Hall,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 2016-25279 Filed 10-18-16; 8:45 am]
BILLING CODE 4510-29-P
