Exemptions From Certain Prohibited Transaction Restrictions, 14320-14337 [2018-06755]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 83, Number 64 (Tuesday, April 3, 2018)]
[Notices]
[Pages 14320-14337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06755]



[[Page 14319]]

Vol. 83

Tuesday,

No. 64

April 3, 2018

Part II





 Department of Labor





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Employee Benefits Security Administration





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 Exemptions from Certain Prohibited Transaction Restrictions; Notice

Federal Register / Vol. 83 , No. 64 / Tuesday, April 3, 2018 / 
Notices

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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Exemptions From Certain Prohibited Transaction Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code). 
This notice includes the following: 2018-01, Health Management 
Associates, Inc. Retirement Savings Plan and The Mooresville Retirement 
Savings Plan, D-11929 and D-11930; 2018-02, Liberty Mutual Insurance 
Company, D-11869; 2018-03, Russell Investment Management, LLC (RIM), 
Russell Investments Capital, LLC (RiCap), and Their Affiliates, D-
11916; 2018-04, Toledo Electrical Joint Apprenticeship & Training Fund, 
D-11867; 2018-05, EXCO Resources, Inc. 401(k) Plan, D-11821; 2018-06, 
The Grossberg, Yochelson, Fox & Beyda LLP Profit Sharing Plan, D-11895.

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:
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    \1\ The Department has considered exemption applications 
received prior to December 27, 2011 under the exemption procedures 
set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 
10, 1990).
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    (a) The 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.

Health Management Associates, Inc. Retirement Savings Plan and The 
Mooresville Retirement Savings Plan (Together, the Plans) Located in 
Naples, FL

[Prohibited Transaction Exemption 2018-01; Exemption Application Nos. 
D-11929 and D-11930, respectively]

Written Comments

    On June 28, 2017, the Department of Labor (the Department) 
published a notice of proposed exemption in the Federal Register at 82 
FR 29340 for: (1) The acquisition by the Plans of contingent value 
rights (CVRs) received by the Plans in connection with the merger (the 
Merger Transaction) of FWCT-2 Acquisition Corporation, a wholly-owned 
subsidiary of Community Health Systems, Inc. (CHS), with and into 
Health Management Associates, Inc. (HMA), with HMA surviving as a 
wholly-owned subsidiary of CHS; and (2) the holding of the CVRs by the 
Plans, subject to certain conditions described herein.
    The proposed exemption invited all interested persons, including 
current participants and beneficiaries of the Plans, to submit comments 
or requests for a hearing to the Department by August 28, 2017. During 
the comment period, the Department received one written comment from 
CHS that requested certain changes to the operative language and the 
Summary of Facts and Representations of the proposed exemption. CHS's 
comments and the Department's responses are discussed below.
Revisions to Operative Language
    1. Condition (k). On page 29343 of the proposed exemption, 
Condition (k) of the operative language states that: ``The CVR Trustee 
will certify to the Department that the CVR Payment Amount has been 
properly calculated for each affected participant in the Plans.''
    CHS requests that the Department revise this condition to read as 
follows:
    ``(k) CHS will exercise its option under Section 3.1(d) of the CVR 
Agreement to retain an Independent Advisor to assist with the 
calculation of the CVR Payment Amount. The Independent Advisor retained 
by CHS (and any successor) will be an advisor that: (1) Has the 
appropriate training, experience, and facilities to perform such 
calculation; (2) does not directly or indirectly control, is not 
controlled by and is not under common control with, CHS; (3) does not 
directly or indirectly receive any compensation or other consideration 
in connection with any transaction described in this exemption other 
than for acting as Independent Advisor in the manner described in the 
CVR Agreement, and provided that the compensation payable is not 
contingent upon, or in any way affected by, the Independent Advisor's 
ultimate determination of the CVR Payment Amount; and (4) does not 
receive annual gross revenue from CHS, during any year of its 
engagement, that exceeds three percent (3%) of such Independent 
Advisor's annual gross revenue from all sources (for federal income tax 
purposes) for its prior tax year. CHS will deliver to the Department 
copies of the reports and calculations of such Independent Advisor used 
to determine the CVR Payment Amount.''
    The Department concurs with the comment and has revised the 
condition, accordingly.
    2. Condition (l). On page 29343 of the proposed exemption, 
Condition (l) states that: ``The CVR Trustee will certify to the 
Department that no excess portion of the CVR Payment Amount reverts to 
CHS, its successors, or their affiliates.'' CHS requests that the 
Department remove the reference to the CVR Trustee from this condition 
because CHS states that it has no way to require that the CVR Trustee 
provide such certification to the Department. Therefore, CHS requests 
that Condition (l) be modified to read as follows: ``(l) No excess 
portion of the CVR Payment Amount will revert to CHS, its successors, 
or their affiliates.''
    CHS represents that since it neither holds nor intends to buy any 
CVRs, there is no circumstance under which it

[[Page 14321]]

will receive a reversion of any portion of the CVR Payment Amount. CHS 
represents that instead of engaging a third party to certify this 
result to the Department, CHS is willing to have the final exemption 
conditioned on CHS not receiving any such reversion.
    After considering this comment, the Department has revised the 
condition in the manner requested by CHS.
Revisions to Summary of Facts and Representations
    1. Clarifications to Paragraph 1 of Representation 8. On pages 
29341 and 29342 of the proposed exemption, in the Summary of Facts and 
Representations, the first sentence of paragraph one of Representation 
8, states (without the footnotes) that, ``Under the CVR Agreement, CHS 
is required to pay to the CVR Trustee, and the CVR Trustee is required 
to pay to the CVR holders, $1.00 per CVR (the CVR Payment Amount) 
promptly upon the final resolution (Final Resolution) of certain 
existing litigation (the Existing Litigation), subject to certain 
reductions.''
    CHS requests that the Department clarify that the reference to 
``certain reductions'' relates to fees and expenses associated with the 
Existing Litigation.
    The Department concurs with CHS's comments and notes the foregoing 
revision to the first paragraph of Representation 8.
    2. Revisions to Paragraph 2 of Representation 8. On pages 29341 and 
29342 of the proposed exemption, in the Summary of Facts and 
Representations, the first sentence of the second paragraph of 
Representation 8 states: ``On a date established by CHS that is not 
later than thirty (30) days after the date on which Final Resolution of 
the Existing Litigation occurs, CHS will deliver the CVR Payment Amount 
to the CVR Trustee and provide notice of the calculation made to 
determine the CVR Payment Amount to the CVR holders.''
    CHS requests that the Department revise this sentence to read as 
follows: ``On a date established by CHS that is not later than thirty 
(30) days after the date on which Final Resolution of the Existing 
Litigation occurs, CHS will deliver notice of the CVR Payment Amount to 
the CVR Trustee, in the form of a Payment Certificate, that will 
provide notice of the calculation made to determine the CVR Payment 
Amount.''
    After consideration of CHS's comment, the Department notes the 
foregoing revisions to the second paragraph of Representation 8.
    3. Revisions to Footnote 12. On page 39342 of the proposed 
exemption, in Summary of Facts and Representations, Footnote 12 reads 
as follows: ``The Applicants state that, pursuant to Section 3.1(e) of 
the CVR Agreement, if the CVR Payment Amount is greater than zero, CHS 
will deliver cash to the paying agent within sixty (60) days of the 
date on which Final Resolution occurs.''
    CHS requests that Footnote 12 be revised to reflect the fact that 
under the CVR Agreement: (a) CHS is responsible calculating the CVR 
Payment Amount; (b) CHS has the option of selecting the Independent 
Advisor to assist it in calculating the CVR Payment Amount; (c) any 
reports and calculations of such Independent Advisor are binding on the 
third-party holders of the CVRs; and (d) that, pursuant to Section 
3.1(e) of the CVR Agreement, if the CVR Payment Amount is greater than 
zero, the Payment Certificate will specify the date that CHS will 
deliver cash to the CVR Trustee, which will be within sixty (60) days 
of the date on which Final Resolution occurs.
    After considering CHS's comment, the Department notes the foregoing 
revisions to Footnote 12.
    4. Revisions to Second Sentence of Paragraph 2 of Representation 8. 
In the Summary of Facts and Representations, the second sentence of 
paragraph two of Representation 8 states that: ``The CVR Trustee, 
acting as the paying agent, will then pay to each CVR holder the amount 
in cash equal to the CVR Payment Amount multiplied by the number of 
CVRs held by such holder.'' CHS requests that the Department revise 
this sentence to read as follows: ``Once the CVR Payment Amount has 
been made, the CVR Trustee, acting as the paying agent, will then pay 
to each CVR holder the amount in cash equal to the CVR Payment Amount 
multiplied by the number of CVRs held by such holder.'' CHS explains 
that this revision is intended to clarify the actual process called for 
under the CVR Agreement for notice of the calculation of the CVR 
Payment Amounts and the subsequent delivery of the CVR Payment Amount 
to the CVR Trustee.
    After considering CHS's comment, the Department notes this 
clarification to Representation 8.
    5. Deletion of Paragraph 4 of Representation 8. In the Summary of 
Facts and Representations, the fourth paragraph of Representation 8 
states that: ``In addition, the CVR Trustee will certify to the 
Department that the CVR Payment Amount has been properly calculated for 
each affected participant in the Plans. The CVR Trustee will also 
certify to the Department that no excess portion of the CVR Payment 
Amount reverts to CHS, its successors, or their affiliates.'' CHS 
requests that this sentence be deleted to correspond with requested 
revisions to Conditions (k) and (l) of the operative language, as 
discussed above.
    After considering CHS's comment, the Department notes this 
clarification to Representation 8.
    Accordingly, after giving full consideration to the entire record, 
including the CHS comment, the Department has determined to grant the 
exemption as modified herein.
    For further information regarding the CHS comment and other matters 
discussed herein, interested persons are encouraged to obtain copies of 
the exemption application files (Exemption Application Nos. D-11929 and 
D-11930) the Department is maintaining in this case. The complete 
application files, as well as all supplemental submissions received by 
the Department, are made available for public inspection in the Public 
Disclosure Room of the Employee Benefits Security Administration, Room 
N-1513, 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 June 28, 2017, at 82 FR 
29340.

Exemption

    The restrictions of sections 406(a)(1)(E), 406(a)(2) and 
407(a)(1)(A) of the Act shall not apply, effective January 27, 2014, 
to: (1) The acquisition by the Plans of contingent value rights (CVRs) 
received by the Plans in connection with the merger (the Merger 
Transaction) of FWCT-2 Acquisition Corporation, a wholly-owned 
subsidiary of Community Health Systems, Inc. (CHS), with and into 
Health Management Associates, Inc. (HMA), with HMA surviving as a 
wholly owned subsidiary of CHS; and (2) the holding of the CVRs by the 
Plans.
    This exemption is subject to the following conditions:
    (a) The receipt of the CVRs by the Plans occurred in connection 
with the Merger Transaction, which was approved by ninety-nine percent 
(99%) of the shareholders of common stock of HMA (HMA Common Stock);
    (b) For purposes of the Merger Transaction, all HMA Common Stock 
shareholders, including the Plans, were treated in the same manner;
    (c) The acquisition of the CVRs by the Plans occurred on the same 
terms, and in the same manner, as the acquisition

[[Page 14322]]

of CVRs by all other shareholders of HMA Common Stock who acquired 
CVRs;
    (d) The terms of the Merger Transaction were negotiated at arm's-
length;
    (e) No fees, commissions or other charges are paid by the Plans 
with respect to the acquisition and holding of the CVRs by the Plans;
    (f) Morgan Stanley & Co. LLC, Lazard Fr[egrave]res & Co. LLC and 
UBS Securities LLC advised HMA that the consideration received by HMA 
shareholders, including participants of the Plans, in exchange for 
their Shares was ``fair,'' from a financial point of view;
    (g) The Plans have not and will not acquire or hold CVRs other than 
those acquired in connection with the Merger Transaction;
    (h) Participants in the Plans may direct the Plans' trustee to sell 
CVRs allocated to their respective participant accounts in the Plans, 
at any time;
    (i) The Plans do not sell a CVR to CHS or any of its subsidiaries 
or affiliates, including HMA, in a non-``blind'' transaction;
    (j) For so long as the CVRs remain a permissible investment for 
each Plan, the retention or disposition of CVRs allocated to a 
participant's account has been and will be administered in accordance 
with the provisions of each Plan that are in effect for individually-
directed investments of participant accounts;
    (k) CHS will exercise its option under Section 3.1(d) of the CVR 
Agreement to retain an independent advisor (the Independent Advisor) to 
assist with the calculation of the CVR Payment Amount. The Independent 
Advisor retained by CHS (and any successor) will be an advisor that: 
(1) Has the appropriate training, experience, and facilities to perform 
such calculation; (2) does not directly or indirectly control, is not 
controlled by and is not under common control with, CHS; (3) does not 
directly or indirectly receive any compensation or other consideration 
in connection with any transaction described in this exemption other 
than for acting as Independent Advisor in the manner described in the 
CVR Agreement, and provided that the compensation payable is not 
contingent upon, or in any way affected by, the Independent Advisor's 
ultimate determination of the CVR Payment Amount; and (4) does not 
receive annual gross revenue from CHS, during any year of its 
engagement, that exceeds three percent (3%) of such Independent 
Advisor's annual gross revenue from all sources (for federal income tax 
purposes) for its prior tax year. CHS will deliver to the Department 
copies of the reports and calculations of such Independent Advisor used 
to determine the CVR Payment Amount; and
    (l) No excess portion of the CVR Payment Amount will revert to CHS, 
its successors, or their affiliates.
    Effective Date: This exemption is effective as of January 27, 2014.

FOR FURTHER INFORMATION CONTACT: Anna Mpras Vaughan of the Department, 
telephone (202) 693-8565. (This is not a toll-free number.)

Liberty Mutual Insurance Company (Liberty Mutual or the Applicant) 
Located in Boston, MA

[Prohibited Transaction Exemption 2018-02; Exemption Application No. D-
11869]

Exemption

    The Department is granting an exemption under the authority of 
section 408(a) of the Employee Retirement Income Security Act of 1974, 
as amended (ERISA or the Act) and section 4975(c)(2) of the Internal 
Revenue Code of 1986, as amended (the Code), and in accordance with the 
procedures set forth in 29 CFR part 2570, subpart B (76 FR 66637, 
66644, October 27, 2011).\2\ The restrictions of sections 406(a)(1)(A), 
406(a)(1)(B), and 406(a)(1)(D) of ERISA and the sanctions resulting 
from the application of sections 4975(a) and 4975(b) of the Code, by 
reason of sections 4975(c)(1)(A), 4975(c)(1)(B), and 4975(c)(1)(D) of 
the Code, shall not apply to a transaction between a party in interest 
with respect to an employee benefit plan sponsored by Liberty Mutual or 
its affiliates (the Liberty Mutual Plan) and such Liberty Mutual Plan, 
as described in Part I of Prohibited Transaction Exemption 96-23 (PTE 
96-23),\3\ provided that the in-house asset manager (INHAM) for the 
Liberty Mutual Plan has discretionary control with respect to plan 
assets involved in the transaction, and certain conditions are 
satisfied.
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    \2\ For purposes of this exemption, references to the provisions 
of section 406 of Title I of ERISA, unless otherwise specified, 
should be read to refer as well to the corresponding provisions of 
section 4975 of the Code.
    \3\ 61 FR 15975 (April 10, 1996), as amended at 76 FR 18255 
(April 1, 2011).
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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 August 3, 2017, 
at 82 FR 36214. The Notice, along with an accompanying supplemental 
notice, was distributed: (1) By email to those interested persons who 
agreed to receive electronic communication regarding the Retirement 
Plan; and (2) by first-class mail to interested persons who had not 
agreed to receive electronic communications. Although all comments and 
requests for hearing were initially due by September 17, 2017, the 
Applicant advised the Department that due to a printer error, 
distribution of the Notice was delayed by three days past the 
distribution period set forth therein. Therefore, the Department 
extended the comment period by three calendar days, to September 20, 
2017.
    During the comment period, the Department received numerous 
telephone inquiries from Plan participants that generally concerned 
matters outside the scope of the exemption, and 27 written comments. 
The Department did not receive any requests for a public hearing from 
any of the commenters.
    Of the written comments the Department received, many of the 
commenters expressed concern that the exemption might adversely affect 
the payment of their benefits. Therefore, they urged the Department not 
to approve the exemption and allow Liberty Mutual to engage in 
investments on behalf of the Plan that would not be in the best 
interests of Plan participants or could be motivated by conflicts of 
interest.
    Many of the commenters also expressed confusion about the intent, 
scope, and/or impact of the proposed exemption.
    In response to the commenters' concerns, the Applicant states that 
the proposed exemption imposes duties, obligations and conditions on 
the conduct of Liberty Mutual when acting as a discretionary fiduciary 
on behalf of the Plan. The Applicant states that the proposed exemption 
does not in any way authorize Liberty Mutual to make inappropriate 
investments, to commingle the Plan's assets with Liberty Mutual's own 
accounts, or to use Plan assets to finance Liberty Mutual's corporate 
transactions. The Applicant represents that the proposed exemption is 
intended to enable professional asset managers to effect transactions 
that they have concluded meet their fiduciary obligations to make 
investments prudently and in the best interests of Plan participants. 
Coupled with the generally applicable duties and responsibilities that 
ERISA imposes on fiduciaries, and the conditions and limitations 
contained in the proposed exemption to protect the interests of Plan 
participants, the Applicant states

[[Page 14323]]

that adequate safeguards are in place to ensure that the Plan's assets 
are invested prudently and in the best interests of the Plan 
participants.
    The Applicant acknowledges that many of the commenters noted their 
reliance on income from the Plan and fear of changes that could 
jeopardize their benefits, and represents that it understands these 
apprehensions. The Applicant states that it shares the commenters' 
views that the assets of the Plan need to be invested prudently and in 
a manner that will enable the Plan to meet its obligations to Plan 
participants. The Applicant further states that, without the benefit of 
the exemption, certain investments that would be made to protect or 
enhance the assets of the Plan might otherwise be prohibited or could 
only be made with greater expense and/or complexity due to reliance on 
third-party service providers.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Application No. D-11869), 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 August 3, 2017, at 82 FR 
36214.

Final Exemption Operative Language

Section I. Covered Transactions
    The restrictions of sections 406(a)(1)(A), 406(a)(1)(B), and 
406(a)(1)(D) of ERISA and the sanctions resulting from the application 
of sections 4975(a) and 4975(b) of the Code, by reason of sections 
4975(c)(1)(A), 4975(c)(1)(B), and 4975(c)(1)(D) of the Code, shall not 
apply to a transaction between a party in interest with respect to a 
Liberty Mutual Plan (as defined in Section II(h)) and such Liberty 
Mutual Plan, provided that the Liberty Mutual Asset Manager (as defined 
in Section II(a)) has discretionary authority or control with respect 
to the assets of the Liberty Mutual Plan involved in the transaction 
and the following conditions are satisfied:
    (a) The terms of the transaction are negotiated on behalf of the 
Liberty Mutual Plan by, or under the authority and general direction 
of, the Liberty Mutual Asset Manager, and either the Liberty Mutual 
Asset Manager or, so long as the Liberty Mutual Asset Manager retains 
full fiduciary responsibility with respect to the transaction, a sub-
adviser acting in accordance with written guidelines established and 
administered by the Liberty Mutual Asset Manager, makes the decision on 
behalf of the Plan to enter into the transaction;
    (b) The transaction is not described in--
    (1) Prohibited Transaction Exemption 2006-16 (71 FR 63786, October 
31, 2006) (relating to securities lending arrangements) (as amended or 
superseded);
    (2) Prohibited Transaction Exemption 83-1 (48 FR 895, January 7, 
1983) (relating to acquisitions by plans of interests in mortgage 
pools) (as amended or superseded); or
    (3) Prohibited Transaction Exemption 88-59 (53 FR 24811, June 30, 
1988) (relating to certain mortgage financing arrangements) (as amended 
or superseded);
    (c) The transaction is not part of an arrangement, agreement, or 
understanding designed to violate or evade compliance with ERISA or the 
Code;
    (d) At the time the transaction is entered into, and at the time of 
any subsequent renewal or modification thereof that requires the 
consent of the Liberty Mutual Asset Manager, the terms of the 
transaction are at least as favorable to the Liberty Mutual Plan as the 
terms generally available in arm's length transactions between 
unrelated parties;
    (e) The party in interest dealing with the Liberty Mutual Plan:
    (1) Is a party in interest with respect to the Liberty Mutual Plan 
(including a fiduciary); either
    (A) Solely by reason of providing services to the Liberty Mutual 
Plan, or solely by reason of a relationship to a service provider 
described in section 3(14)(F), (G), (H) or (I) of ERISA; or
    (B) Solely by reason of being a 10-percent or more shareholder, 
partner or joint venturer, in a person, which is 50 percent or more 
owned by an employer of employees covered by the Liberty Mutual Plan 
(directly or indirectly in capital or profits), or the parent company 
of such an employer, provided that such person is not controlled by, 
controlling, or under common control with such employer; or
    (C) By reason of both (A) and (B) only; and
    (2) Does not have discretionary authority or control with respect 
to the investment of the Liberty Mutual Plan assets involved in the 
transaction and does not render investment advice (within the meaning 
of 29 CFR 2510.3-21(c)) with respect to those assets;
    (f) The party in interest dealing with the Liberty Mutual Plan is 
neither the Liberty Mutual Asset Manager nor a person related to the 
Liberty Mutual Asset Manager (within the meaning of Section II(d));
    (g) The Liberty Mutual Asset Manager adopts, maintains, and follows 
written policies and procedures (the Policies) that:
    (1) Are designed to assure compliance with the conditions of the 
exemption and its fiduciary responsibilities and avoid any conflicts of 
interest or risk exposure, including an investment allocation policy 
and best execution policy, and ensure that the Liberty Mutual Asset 
Manager and its personnel operate within an impartial conduct standard 
in accordance with a duty of loyalty and prudence pursuant to section 
404 of the Act with respect to the Liberty Mutual Plan when conducting 
business with, or on behalf of, the applicable Liberty Mutual Plan;
    (2) Describe the objective requirements of the exemption, and 
describe the steps adopted by the Liberty Mutual Asset Manager to 
assure compliance with each of these requirements:
    (A) The requirements of Section I of the exemption, including 
Section I(a) regarding the discretionary authority or control of the 
Liberty Mutual Asset Manager with respect to the plan assets involved 
in the transaction, in negotiating the terms of the transaction, and 
with regard to the decision on behalf of the Liberty Mutual Plan to 
enter into the transaction;
    (B) That any procedure for approval or veto of the transaction 
meets the requirements of Section I(a);
    (C) For a transaction described in Section I:
    (i) That the transaction is not entered into with any person who is 
excluded from relief under Section I(e)(1), Section I(e)(2), or Section 
I(f); and
    (ii) That the transaction is not described in any of the class 
exemptions listed in Section I(b);
    (3) Are reasonably designed to prevent the Liberty Mutual Asset 
Manager or its personnel from violating ERISA or other federal or state 
laws or regulations applicable with respect to the investment of the 
assets of the applicable Liberty Mutual Plan (Applicable Law);
    (4) Cover, at a minimum, the following areas to the extent 
applicable to the Liberty Mutual Asset Manager:

[[Page 14324]]

    (A) Portfolio management processes, including allocation of 
investment opportunities among any Liberty Mutual Plan and Liberty 
Mutual's proprietary investments, taking into account the investment 
objectives of the applicable Liberty Mutual Plan and any restrictions 
under Applicable Law;
    (B) Trading practices, including procedures by which the Liberty 
Mutual Asset Manager satisfies its best execution obligation, and 
allocates aggregated trades among all Liberty Mutual Plans and/or 
Liberty Mutual proprietary accounts for which it provides investment 
management services;
    (C) Personal trading activities of any employee of Liberty Mutual 
and its subsidiaries who has personal involvement and responsibility 
for investment decisions regarding the investment of the assets of the 
applicable Liberty Mutual Plan (an LM Advisory Employee);
    (D) The Liberty Mutual Asset Manager's policies regulating 
conflicts of interest;
    (E) The accuracy of disclosures, including account statements, made 
to the trustee(s) or fiduciaries of any Liberty Mutual Plan or to any 
regulators;
    (F) Safeguarding of Liberty Mutual Plan assets from conversion or 
inappropriate use by any LM Advisory Employee;
    (G) The accurate creation of required records and their maintenance 
in a manner that secures them from unauthorized alteration or use and 
protects them from untimely destruction;
    (H) Processes to value holdings of any Liberty Mutual Plan, to the 
extent, if any, that such valuation is within the control of the 
Liberty Mutual Asset Manager;
    (I) Safeguards for the privacy protection of records and 
information pertaining to each Liberty Mutual Plan; and
    (J) Business continuity plans; and
    (5) Any violations of or failure to comply with items (1) through 
(4) above are corrected promptly upon discovery and any such violations 
or compliance failures not promptly corrected are reported, upon 
discovering the failure to promptly correct, in writing to appropriate 
corporate officers, the Chief Compliance Officer (as described below in 
Section I(j)) of the Liberty Mutual Asset Manager, and the independent 
auditor described in Section I(h) below, and a fiduciary of the 
relevant Liberty Mutual Plan; the Liberty Mutual Asset Manager will not 
be treated as having failed to adopt, maintain, or follow the Policies, 
provided that it corrects any instances of noncompliance promptly when 
discovered or when they reasonably should have known of the 
noncompliance (whichever is earlier), and provided that it adheres to 
the reporting requirements set forth in this item (5);
    (h)(1) The Liberty Mutual Asset Manager submits to an audit 
conducted annually by an independent auditor, who has been prudently 
selected and who has the appropriate technical training or experience 
and proficiency with ERISA's fiduciary responsibility provisions and 
applicable securities laws to evaluate the adequacy of, and compliance 
with, the Policies described herein, and compliance with the 
requirements of the exemption, and so represents in writing. Upon the 
Department's request, the auditor must demonstrate its qualifications 
as required by this paragraph and its independence from Liberty Mutual. 
The audit must be incorporated into the Policies and cover a 
consecutive twelve-month period beginning on the effective date of the 
exemption. Each annual audit must be completed within six months 
following the end of the twelve-month period to which the audit 
relates;
    (2) To the extent necessary for the auditor, in its sole opinion, 
to complete its audit and comply with the conditions for relief 
described herein, and as permitted by law, the Liberty Mutual Asset 
Manager and, if applicable, Liberty Mutual, will grant the auditor 
unconditional access to its business, including, but not limited to: 
its computer systems, business records, transactional data, workplace 
locations, training materials, and personnel;
    (3) The auditor's engagement must specifically require the auditor 
to determine whether the Liberty Mutual Asset Manager has complied with 
the conditions for the exemption, including the requirement to adopt, 
maintain, and follow Policies in Section I(g);
    (4) The auditor's engagement shall specifically require the auditor 
to test the Liberty Mutual Asset Manager's operational compliance with 
the exemption, including the Policies in Section I(g). In this regard, 
the auditor must test a sample of the Liberty Mutual Asset Manager's 
transactions involving the Liberty Mutual Plan sufficient in size and 
nature to afford the auditor a reasonable basis to determine the 
operational compliance with the Policies;
    (5) For each audit, the auditor shall issue a written report (the 
Audit Report) to Liberty Mutual and the Liberty Mutual Asset Manager 
that describes the procedures performed by the auditor during the 
course of its examination, to be completed within six months following 
the end of the twelve-month period to which the audit relates. The 
Audit Report shall include the auditor's specific determinations 
regarding the compliance with the conditions for the exemption; the 
adequacy of, and compliance with, the Policies; the auditor's 
recommendations (if any) with respect to strengthening such Policies; 
and any instances of noncompliance with the conditions for the 
exemption or the Policies described in paragraph (g) above. Any 
determinations made by the auditor regarding the adequacy of the 
Policies and the auditor's recommendations (if any) with respect to 
strengthening the Policies shall be promptly addressed by the Liberty 
Mutual Asset Manager, and any actions taken by the Liberty Mutual Asset 
Manager to address such recommendations shall be included in an 
addendum to the Audit Report. Any determinations by the auditor that 
the Liberty Mutual Asset Manager has adopted, maintained, and followed 
sufficient Policies shall not be based solely or in substantial part on 
an absence of evidence indicating noncompliance. In this last regard, 
any finding that the Liberty Mutual Asset Manager has complied with the 
requirements under this subsection must be based on evidence that 
demonstrates the Liberty Mutual Asset Manager has actually adopted, 
maintained, and followed the Policies required by this exemption;
    (6) The auditor shall notify the Liberty Mutual Asset Manager and 
Liberty Mutual of any instances of noncompliance with the conditions 
for the exemption or the Policies identified by the auditor within five 
(5) business days after such noncompliance is identified by the 
auditor, regardless of whether the audit has been completed as of that 
date;
    (7) With respect to each Audit Report, the General Counsel or the 
Chief Compliance Officer (described in Section I(j)) of the Liberty 
Mutual Asset Manager certifies in writing, under penalty of perjury, 
that the officer has reviewed the Audit Report and this exemption; 
addressed, corrected, or remedied any inadequacies identified in the 
Audit Report; and determined that the Policies in effect at the time of 
signing are adequate to ensure compliance with the conditions of this 
exemption and with the applicable provisions of ERISA and the Code;
    (8) A senior executive officer with a direct reporting line to the 
highest ranking compliance officer of Liberty Mutual reviews the Audit 
Report and certifies in writing, under penalty of

[[Page 14325]]

perjury, that such officer has reviewed each Audit Report; and
    (9) The Liberty Mutual Asset Manager makes its Audit Report 
unconditionally available for examination by any duly authorized 
employee or representative of the Department, other relevant 
regulators, and any participant in a Liberty Mutual Plan;
    (i) The Liberty Mutual Asset Manager will prepare and make 
available to all participants of, and beneficiaries entitled to receive 
benefits under, the Liberty Mutual Plans (the Eligible Recipients) a 
plain English, narrative brochure (the Brochure) that contains all 
substantive information, comparable to that required by Part 2A of Form 
ADV filed under the Investment Advisers Act of 1940, but modified such 
that the disclosure is relevant to Eligible Recipients with respect to 
the management of the applicable Liberty Mutual Plan;
    (1) The Brochure shall include, among other things:
    (A) The Liberty Mutual Asset Manager's investment strategy with 
respect to the applicable Liberty Mutual Plan;
    (B) The Liberty Mutual Asset Manager's policies regarding conflicts 
of interest;
    (C) Any disciplinary information related to employees of the 
Liberty Mutual Asset Manager; and
    (D) A prominent statement that the Eligible Recipients may request 
a copy of the Policies, with instructions on how to make such request 
and receive such copy;
    (2) The Liberty Mutual Asset Manager must make the Brochure 
available to the Eligible Recipients: (1) With respect to any Liberty 
Mutual Plan for which Liberty Mutual or its affiliate is then acting as 
an investment manager, within 90 days of the effective date of this 
exemption; and (2) with respect to any other Liberty Mutual Plan for 
which any Liberty Mutual Asset Manager thereafter becomes an investment 
manager, within ten (10) business days of the date that the applicable 
Investment Management Agreement or Sub-Adviser Agreement with a Liberty 
Mutual Plan becomes effective;
    (3) Liberty Mutual annually updates such brochure (the Updated 
Brochure), containing or accompanied by a summary of material changes. 
Each Updated Brochure that is made available following the completion 
of the first audit required with respect to any Liberty Mutual Asset 
Manager in accordance with this exemption must include a prominently 
displayed statement indicating that the Liberty Mutual Asset Manager 
has completed the required audit, and must also provide clear 
instructions for obtaining a copy of the audit;
    (4) The Liberty Mutual Asset Manager will be deemed to have met the 
requirements pertaining to the provision of the Brochure and the 
Updated Brochure if it makes such documents available to the Eligible 
Recipients through a prominently displayed link on a website (the Plan 
Benefits website) where it makes available information to the Eligible 
Recipients about their benefits and rights under the applicable Liberty 
Mutual Plan (Plan Information), and contact information for an 
appropriate representative of Liberty Mutual to direct inquiries from 
the Eligible Recipients, which is readily available to such Eligible 
Recipients. Notwithstanding the above, the Liberty Mutual Asset Manager 
will not be deemed to have met the requirements of this subparagraph 
unless it provides notice of the Plan Benefits website, and the link to 
the Brochure and Updated Brochure at least once annually, to all 
Eligible Recipients;
    (5) For any such Eligible Recipient to whom Liberty Mutual makes 
Plan Information available by hard copy or other means (Supplemental 
Delivery), the Brochure and the Updated Brochure must be provided to 
such Eligible Recipient at the same time and by the same means that 
Plan Information is provided;
    (6) The Liberty Mutual Asset Manager will also provide supplements 
to the Brochure (each, a Brochure Supplement) that contain information 
about any LM Advisory Employee, including the LM Advisory Employee's 
educational background, business experience, other business activities, 
and disciplinary history;
    (7) Each Brochure Supplement must be made available in the same 
manner as the Brochure, and must be posted to the Plan Benefits 
website, not later than 90 days following the date that any such LM 
Advisory Employee begins to provide advisory services to that Liberty 
Mutual Plan. Such Brochure Supplement must be included with the next 
Updated Brochure included in the material provided to any Eligible 
Recipient receiving such Updated Brochure by Supplemental Delivery;
    (8) With respect to any individuals who become Eligible Recipients 
with respect to any Liberty Mutual Plan for which Liberty Mutual or its 
affiliate is then acting as an investment manager (the New Eligible 
Recipients) after the delivery of the Brochure to the Eligible 
Recipients with respect to the Liberty Mutual Plan, the Liberty Mutual 
Asset Manager will provide a copy of the Brochure as well as the most 
recent Updated Brochure, if applicable, and any Brochure Supplements 
related to LM Advisory Employees employed by the Liberty Mutual Asset 
Manager at the time the New Eligible Recipients became Eligible 
Recipients, within 90 days of the New Eligible Recipients becoming 
Eligible Recipients with respect to the Liberty Mutual Plan. The 
Liberty Mutual Asset Manager will be deemed to have met the disclosure 
requirements pertaining to the New Eligible Recipients if it makes the 
applicable documents available to the New Eligible Recipients through a 
prominently displayed link on the Plan Benefits website described in 
section I(i)(4) of this exemption. Notwithstanding the above, the 
Liberty Mutual Asset Manager will not be deemed to have met the 
requirements of this subparagraph unless it provides notice of the Plan 
Benefits website, and the link to the Brochure, Updated Brochure, and 
Brochure Supplements to all New Eligible Recipients. For any such New 
Eligible Recipient to whom Liberty Mutual makes Plan Information 
available by Supplemental Delivery, the Brochure and the Updated 
Brochure must be provided to such New Eligible Recipient at the same 
time and by the same means that Plan Information is provided;
    (j) Each Liberty Mutual Asset Manager must establish an internal 
compliance program that addresses the Liberty Mutual Asset Manager's 
performance of its fiduciary and substantive obligations under ERISA 
(the Compliance Program);
    (1) Each Liberty Mutual Asset Manager must designate a Chief 
Compliance Officer (the CCO), who must be knowledgeable about ERISA and 
have the authority to develop and enforce appropriate compliance 
policies and procedures for the Liberty Mutual Asset Manager;
    (2) As part of the Compliance Program, each Liberty Mutual Asset 
Manager must adopt and enforce a written code of ethics that, among 
other things, will reflect the Liberty Mutual Asset Manager's fiduciary 
duties to the Liberty Mutual Plans. At a minimum, the Liberty Mutual 
Asset Manager's code of ethics must:
    (A) Set forth a minimum standard of conduct for all LM Advisory 
Employees and any other employees of the Liberty Mutual Asset Manager 
whose responsibilities include assisting the LM Advisory Employees in 
managing the investments of any Liberty Mutual Plan (the LM 
Facilitating Employees);
    (B) Require LM Advisory Employees and LM Facilitating Employees to 
comply with Applicable Law in

[[Page 14326]]

fulfilling their investment management duties to the Liberty Mutual 
Plans;
    (C) Require each LM Advisory Employee to report his or her 
securities holdings at the later of the time that the person becomes an 
LM Advisory Employee or within 90 days after this exemption becomes 
effective and at least once annually thereafter and to make a report at 
least once quarterly of all personal securities transactions in 
reportable securities to the Liberty Mutual Asset Manager's CCO or 
other designated person;
    (D) Require the CCO or other designated persons to pre-approve 
investments by any LM Advisory Employee in IPOs or limited offerings;
    (E) Require each LM Advisory Employee or LM Facilitating Employees 
to promptly report any violation of Applicable Law to the Liberty 
Mutual Asset Manager's CCO or other designated person;
    (F) Require the Liberty Mutual Asset Manager to provide training on 
applicable law and to obtain a written acknowledgment from each LM 
Advisory Employee documenting his/her agreement to abide by the code of 
ethics, the Policies, and applicable law; and
    (G) Require the Liberty Mutual Asset Manager to keep records of any 
violations of applicable law and of any actions taken against the 
violators;
    (k) The Liberty Mutual Asset Manager must act in the Best Interest 
of the Liberty Mutual Plan at the time of the transaction. For purposes 
of this paragraph, a Liberty Mutual Asset Manager acts in the ``Best 
Interest'' of the Liberty Mutual Plan when the Liberty Mutual Asset 
Manager acts with the care, skill, prudence, and diligence under the 
circumstances then prevailing that a prudent person acting in a like 
capacity and familiar with such matters would use in the conduct of an 
enterprise of a like character and with like aims, based on the 
investment objectives, risk tolerance, financial circumstances, and 
needs of the Liberty Mutual Plan, without regard to the financial or 
other interests of the Liberty Mutual Asset Manager, any affiliate or 
other party;
    (l) The Liberty Mutual Asset Manager's statements about material 
conflicts of interest and any other matters relevant to the Liberty 
Mutual Asset Manager's relationship with the Liberty Mutual Plan, are 
not materially misleading at the time they are made. For purposes of 
this paragraph, a ``material conflict of interest'' exists when a 
Liberty Mutual Asset Manager has a financial interest that a reasonable 
person would conclude could affect the exercise of its best judgment as 
a Liberty Mutual Asset Manager; and
    (m) The Liberty Mutual Asset Manager will not charge any asset 
management fees or receive any fee in connection with transactions 
covered by this exemption.
Section II. Definitions
    (a) The term ``Liberty Mutual Asset Manager'' means Liberty Mutual 
or any organization that is either a direct or indirect 80 percent or 
more owned subsidiary of Liberty Mutual, or a direct or indirect 80 
percent more owned subsidiary of a parent organization of Liberty 
Mutual, provided that such Liberty Mutual Asset Manager:
    (1) Is an insurance company which is qualified under the laws of 
more than one State to manage, acquire, or dispose of any assets of a 
plan, which company has, as of the last day of its most recent fiscal 
year, net worth (capital, paid-in and contributed surplus, unassigned 
surplus, contingency reserves, group contingency reserves, and special 
reserves) in excess of $1,000,000;
    (2) Is subject to supervision and examination by a State authority 
having supervision over insurance companies and is subject to periodic 
audits by applicable State insurance regulators in accordance with the 
requirements of applicable state law, which, under current law, would 
be no less than once every five years;
    (3) Has any arrangements between it and any Liberty Mutual Plan 
reviewed by the applicable State insurance regulators, including any 
investment management agreements (or revisions thereto) with the 
Liberty Mutual Plan and sub-advisor agreements with any other Liberty 
Mutual Asset Managers, the results of which will be made available 
without limitation to the independent auditor conducting the audit 
required under Section I(i);
    (4) As of the last day of its most recent fiscal year, has under 
its management and control total assets in excess of $1 billion; and
    (5) Together with its affiliates, maintains Liberty Mutual Plans 
holding aggregate assets of at least $500 million as of the last day of 
each Liberty Mutual Plan's reporting year;
    (b) For purposes of Sections II(a) and II(h), an ``affiliate'' of a 
Liberty Mutual Asset Manager means a member of either (1) a controlled 
group of corporations (as defined in section 414(b) of the Code) of 
which the Liberty Mutual Asset Manager is a member, or (2) a group of 
trades or businesses under common control (as defined in section 414(c) 
of the Code) of which the Liberty Mutual Asset Manager is a member; 
provided that ``50 percent'' shall be substituted for ``80 percent'' 
wherever ``80 percent'' appears in section 414(b) or 414(c) of the Code 
or the rules thereunder;
    (c) The term ``party in interest'' means a person described in 
section 3(14) of ERISA and includes a ``disqualified person'' as 
defined in section 4975(e)(2) of the Code;
    (d) A Liberty Mutual Asset Manager is ``related'' to a party in 
interest for purposes of Section I(f) of this exemption, if, as of the 
last day of its most recent calendar quarter: (i) The Liberty Mutual 
Asset Manager (or a person controlling, or controlled by, the Liberty 
Mutual Asset Manager) owns a ten percent or more interest in the party 
in interest; or (ii) the party in interest (or a person controlling, or 
controlled by, the party in interest) owns a 10 percent or more 
interest in the Liberty Mutual Asset Manager.
    For purposes of this definition:
    (1) The term ``interest'' means with respect to ownership of an 
entity--
    (A) The combined voting power of all classes of stock entitled to 
vote or the total value of the shares of all classes of stock of the 
entity if the entity is a corporation,
    (B) The capital interest or the profits interest of the entity if 
the entity is a partnership, or
    (C) The beneficial interest of the entity if the entity is a trust 
or unincorporated enterprise; and
    (2) A person is considered to own an interest if, other than in a 
fiduciary capacity, the person has or shares the authority--
    (A) To exercise any voting rights or to direct some other person to 
exercise the voting rights relating to such interest, or
    (B) To dispose or to direct the disposition of such interest; and
    (3) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual;
    (e) For purposes of this exemption, the time as of which any 
transaction occurs is the date upon which the transaction is entered 
into. In addition, in the case of a transaction that is continuing, the 
transaction shall be deemed to occur until it is terminated. Nothing in 
this paragraph shall be construed as exempting a transaction entered 
into by a plan which becomes a transaction described in section 406 of 
ERISA or section 4975 of the Code while the transaction is continuing, 
unless the conditions of the exemption were met either at the time the 
transaction was entered into or at the time the transaction would have 
become

[[Page 14327]]

prohibited but for this exemption. In determining compliance with the 
conditions of the exemption at the time that the transaction was 
entered into for purposes of the preceding sentence, Section I(e) will 
be deemed satisfied if the transaction was entered into between a 
Liberty Mutual Plan and a person who was not then a party in interest;
    (f) The term ``LMGAMI'' means Liberty Mutual Group Asset Management 
Inc., a separate investment management subsidiary of Liberty Mutual;
    (g) The term ``Liberty Mutual'' means Liberty Mutual Insurance 
Company; and
    (h) The term ``Liberty Mutual Plan'' means the Liberty Mutual 
Retirement Benefit Plan and any other employee benefit plan subject to 
the fiduciary responsibility provisions of Part IV of Title I of ERISA 
maintained by Liberty Mutual or an affiliate of Liberty Mutual, and 
covering the employees of such entities.
    Effective Date: This exemption is effective as of the date that a 
final notice of granted exemption is published in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Scott Ness of the Department, 
telephone (202) 693-8561. (This is not a toll-free number.)

Russell Investment Management, LLC (RIM), Russell Investments Capital, 
LLC (RiCap), and Their Affiliates (Collectively, Russell Investments or 
the Applicants) Located in Seattle, WA

[Prohibited Transaction Exemption 2018-03; Exemption Application No. D-
11916]

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 August 3, 2017, at 82 FR 
36224. All comments and requests for public hearing were due by 
September 18, 2017.
    Subsequent to the publication of the proposed exemption, the 
Applicants informed the Department, in a memorandum dated October 26, 
2017, that there were no interested persons to whom notice of the 
proposed exemption could be provided. Therefore, this final exemption 
is now effective as of the date this grant notice is published in the 
Federal Register. The Department has also clarified subparagraphs 
(j)(1)(3)(ii), (k)(3), and (l)(2) of Section II to more clearly express 
the requirement that negative consent will not occur until at least 
thirty days have passed from the date that Russell Investments provides 
certain required notices or information to the Second Fiduciary.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Application No. D-11916), 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 August 3, 2017, at 82 FR 
36224.

Exemption

Section I: Covered Transactions
    The restrictions of sections 406(a)(1)(D) and 406(b) of the Act (or 
ERISA) and the sanctions resulting from the application of section 4975 
of the Code, by reason of sections 4975(c)(1)(D) through (F) of the 
Code,\4\ shall not apply to: (a) The receipt of a fee by Russell 
Investments, from an open-end investment company or open-end investment 
companies (Affiliated Fund(s)), in connection with the direct 
investment in shares of any such Affiliated Fund, by an employee 
benefit plan or by employee benefit plans (Client Plan(s)), where 
Russell Investments serves as a fiduciary with respect to such Client 
Plan, and where Russell Investments: (1) Provides investment advisory 
services, or similar services to any such Affiliated Fund; and (2) 
provides to any such Affiliated Fund other services (Secondary 
Service(s)); and (b) In connection with the indirect investment by a 
Client Plan in shares of an Affiliated Fund through investment in a 
pooled investment vehicle or pooled investment vehicles (Collective 
Fund(s)), where Russell Investments serves as a fiduciary with respect 
to such Client Plan, the receipt of fees by Russell Investments from: 
(1) An Affiliated Fund for the provision of investment advisory 
services, or similar services by Russell Investments to any such 
Affiliated Fund; and (2) an Affiliated Fund for the provision of 
Secondary Services by Russell Investments to any such Affiliated Fund.
---------------------------------------------------------------------------

    \4\ For purposes of this exemption reference to specific 
provisions of Title I of the Act, unless otherwise specified, should 
be read to refer as well to the corresponding provisions of the 
Code.
---------------------------------------------------------------------------

Section II: Specific Conditions
    (a)(1) Each Client Plan which is invested directly in shares of an 
Affiliated Fund either:
    (i) Does not pay to Russell Investments, for the entire period of 
such investment, any investment management fee, any investment advisory 
fee, or any similar fee at the plan-level (the Plan-Level Management 
Fee), as defined below in Section IV(m), with respect to any of the 
assets of such Client Plan which are invested directly in shares of 
such Affiliated Fund; or
    (ii) Pays to Russell Investments a Plan-Level Management Fee, based 
on total assets of such Client Plan under management by Russell 
Investments at the plan-level, from which a credit has been subtracted 
from such Plan-Level Management Fee, where the amount subtracted 
represents such Client Plan's pro rata share of any investment advisory 
fee and any similar fee (the Affiliated Fund Level Advisory Fee), as 
defined below in Section IV(o), paid by such Affiliated Fund to Russell 
Investments.
    If, during any fee period, in the case of a Client Plan invested 
directly in shares of an Affiliated Fund, such Client Plan has prepaid 
its Plan Level Management Fee, and such Client Plan purchases shares of 
an Affiliated Fund directly, the requirement of this Section 
II(a)(1)(ii) shall be deemed met with respect to such prepaid Plan-
Level Management Fee, if, by a method reasonably designed to accomplish 
the same, the amount of the prepaid Plan-Level Management Fee that 
constitutes the fee with respect to the assets of such Client Plan 
invested directly in shares of an Affiliated Fund:
    (A) Is anticipated and subtracted from the prepaid Plan-Level 
Management Fee at the time of the payment of such fee; or
    (B) Is returned to such Client Plan, no later than during the 
immediately following fee period; or
    (C) Is offset against the Plan-Level Management Fee for the 
immediately following fee period or for the fee period immediately 
following thereafter.
    For purposes of Section II(a)(1)(ii), a Plan-Level Management Fee 
shall be deemed to be prepaid for any fee period, if the amount of such 
Plan-Level Management Fee is calculated as of a date not later than the 
first day of such period.
    (2) Each Client Plan invested in a Collective Fund the assets of 
which are not invested in shares of an Affiliated Fund:
    (i) Does not pay to Russell Investments for the entire period of 
such

[[Page 14328]]

investment any Plan-Level Management Fee with respect to any assets of 
such Client Plan invested in such Collective Fund.
    The requirements of this Section II(a)(2)(i) do not preclude the 
payment of a Collective Fund-Level Management Fee by such Collective 
Fund to Russell Investments, based on the assets of such Client Plan 
invested in such Collective Fund; or
    (ii) Does not pay to Russell Investments for the entire period of 
such investment any Collective Fund-Level Management Fee with respect 
to any assets of such Client Plan invested in such Collective Fund.
    The requirements of this Section II(a)(2)(ii) do not preclude the 
payment of a Plan-Level Management Fee by such Client Plan to Russell 
Investments, based on total assets of such Client Plan under management 
by Russell Investments at the plan-level; or
    (iii) Such Client Plan pays to Russell Investments a Plan-Level 
Management Fee, based on total assets of such Client Plan under 
management by Russell Investments at the plan-level, from which a 
credit has been subtracted from such Plan-Level Management Fee (the 
``Net'' Plan-Level Management Fee), where the amount subtracted 
represents such Client Plan's pro rata share of any Collective Fund-
Level Management Fee paid by such Collective Fund to Russell 
Investments.
    The requirements of this Section II(a)(2)(iii) do not preclude the 
payment of a Collective Fund-Level Management Fee by such Collective 
Fund to Russell Investments, based on the assets of such Client Plan 
invested in such Collective Fund.
    (3) Each Client Plan invested in a Collective Fund, the assets of 
which are invested in shares of an Affiliated Fund:
    (i) Does not pay to Russell Investments for the entire period of 
such investment any Plan-Level Management Fee (including any ``Net'' 
Plan-Level Management Fee, as described, above, in Section 
II(a)(2)(ii)), and does not pay directly to Russell Investments or 
indirectly to Russell Investments through the Collective Fund for the 
entire period of such investment any Collective Fund-Level Management 
Fee with respect to the assets of such Client Plan which are invested 
in such Affiliated Fund; or
    (ii) Pays indirectly to Russell Investments a Collective Fund-Level 
Management Fee, in accordance with Section II(a)(2)(i) above, based on 
the total assets of such Client Plan invested in such Collective Fund, 
from which a credit has been subtracted from such Collective Fund-Level 
Management Fee, where the amount subtracted represents such Client 
Plan's pro rata share of any Affiliated Fund-Level Advisory Fee paid to 
Russell Investments by such Affiliated Fund; and does not pay to 
Russell Investments for the entire period of such investment any Plan-
Level Management Fee with respect to any assets of such Client Plan 
invested in such Collective Fund; or
    (iii) Pays to Russell Investments a Plan-Level Management Fee, in 
accordance with Section II(a)(2)(ii) above, based on the total assets 
of such Client Plan under management by Russell Investments at the 
plan-level, from which a credit has been subtracted from such Plan-
Level Management Fee, where the amount subtracted represents such 
Client Plan's pro rata share of any Affiliated Fund-Level Advisory Fee 
paid to Russell Investments by such Affiliated Fund; and does not pay 
directly to Russell Investments or indirectly to Russell Investments 
through the Collective Fund for the entire period of such investment 
any Collective Fund-Level Management Fee with respect to any assets of 
such Client Plan invested in such Collective Fund; or
    (iv) Pays to Russell Investments a ``Net'' Plan-Level Management 
Fee, in accordance with Section II(a)(2)(iii) above, from which a 
further credit has been subtracted from such ``Net'' Plan-Level 
Management Fee, where the amount of such further credit which is 
subtracted represents such Client Plan's pro rata share of any 
Affiliated Fund-Level Advisory Fee paid to Russell Investments by such 
Affiliated Fund.
    Provided that the conditions of this proposed exemption are 
satisfied, the requirements of Section II(a)(1)(i)-(ii) and Section 
II(a)(3)(i)-(iv) do not preclude the payment of an Affiliated Fund-
Level Advisory Fee by an Affiliated Fund to Russell Investments under 
the terms of an investment advisory agreement adopted in accordance 
with section 15 of the Investment Company Act of 1940 (the Investment 
Company Act). Further, the requirements of Section II(a)(1)(i)-(ii) and 
Section II(a)(3)(i)-(iv) do not preclude the payment of a fee by an 
Affiliated Fund to Russell Investments for the provision by Russell 
Investments of Secondary Services to such Affiliated Fund under the 
terms of a duly adopted agreement between Russell Investments and such 
Affiliated Fund.
    For the purpose of Section II(a)(1)(ii) and Section II(a)(3)(ii)-
(iv), in calculating a Client Plan's pro rata share of an Affiliated 
Fund-Level Advisory Fee, Russell Investments must use an amount 
representing the ``gross'' advisory fee paid to Russell Investments by 
such Affiliated Fund. For purposes of this paragraph, the ``gross'' 
advisory fee is the amount paid to Russell Investments by such 
Affiliated Fund, including the amount paid by such Affiliated Fund to 
sub-advisers.
    (b) The purchase price paid and the sales price received by a 
Client Plan for shares in an Affiliated Fund purchased or sold 
directly, and the purchase price paid and the sales price received by a 
Client Plan for shares in an Affiliated Fund purchased or sold 
indirectly through a Collective Fund, is the net asset value per share 
(NAV), as defined below in Section IV(f), at the time of the 
transaction, and is the same purchase price that would have been paid 
and the same sales price that would have been received for such shares 
by any other shareholder of the same class of shares in such Affiliated 
Fund at that time.\5\
---------------------------------------------------------------------------

    \5\ The selection of a particular class of shares of an 
Affiliated Fund as an investment for a Client Plan indirectly 
through a Collective Fund is a fiduciary decision that must be made 
in accordance with the provisions of section 404(a) of the Act.
---------------------------------------------------------------------------

    (c) Russell Investments, including any officer and any director of 
Russell Investments, does not purchase any shares of an Affiliated Fund 
from, and does not sell any shares of an Affiliated Fund to, any Client 
Plan which invests directly in such Affiliated Fund, and Russell 
Investments, including any officer and director of Russell Investments, 
does not purchase any shares of any Affiliated Fund from, and does not 
sell any shares of an Affiliated Fund to, any Collective Fund in which 
a Client Plan invests indirectly in shares of such Affiliated Fund.
    (d) No sales commissions, no redemption fees, and no other similar 
fees are paid in connection with any purchase and in connection with 
any sale by a Client Plan directly in shares of an Affiliated Fund, and 
no sales commissions, no redemption fees, and no other similar fees are 
paid by a Collective Fund in connection with any purchase, and in 
connection with any sale, of shares in an Affiliated Fund by a Client 
Plan indirectly through such Collective Fund. However, this Section 
II(d) does not prohibit the payment of a redemption fee, if:
    (1) Such redemption fee is paid only to an Affiliated Fund; and
    (2) The existence of such redemption fee is disclosed in the 
summary prospectus for such Affiliated Fund in effect both at the time 
of any purchase of shares in such Affiliated Fund and at the time of 
any sale of such shares.
    (e) The combined total of all fees received by Russell Investments 
is not in excess of reasonable compensation

[[Page 14329]]

within the meaning of section 408(b)(2) of the Act, for services 
provided:
    (1) By Russell Investments to each Client Plan;
    (2) By Russell Investments to each Collective Fund in which a 
Client Plan invests;
    (3) By Russell Investments to each Affiliated Fund in which a 
Client Plan invests directly in shares of such Affiliated Fund; and
    (4) By Russell Investments to each Affiliated Fund in which a 
Client Plan invests indirectly in shares of such Affiliated Fund 
through a Collective Fund.
    (f) Russell Investments does not receive any fees payable pursuant 
to Rule 12b-1 under the Investment Company Act in connection with the 
transactions covered by this proposed exemption;
    (g) No Client Plan is an employee benefit plan sponsored or 
maintained by Russell Investments.
    (h)(1) In the case of a Client Plan investing directly in shares of 
an Affiliated Fund, a second fiduciary (the Second Fiduciary), as 
defined below in Section IV(h), acting on behalf of such Client Plan, 
receives, in writing, in advance of any investment by such Client Plan 
directly in shares of such Affiliated Fund, a full and detailed 
disclosure via first class mail or via personal delivery of (or, if the 
Second Fiduciary consents to such means of delivery, through electronic 
email, in accordance with Section II(q), as set forth below) 
information concerning such Affiliated Fund, including but not limited 
to the items listed below:
    (i) A current summary prospectus issued by each such Affiliated 
Fund;
    (ii) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for:
    (A) Investment advisory and similar services to be paid to Russell 
Investments by each Affiliated Fund;
    (B) Secondary Services to be paid to Russell Investments by each 
such Affiliated Fund; and
    (C) All other fees to be charged by Russell Investments to such 
Client Plan and to each such Affiliated Fund and all other fees to be 
paid to Russell Investments by each such Client Plan and by each such 
Affiliated Fund;
    (iii) The reasons why Russell Investments may consider investment 
directly in shares of such Affiliated Fund by such Client Plan to be 
appropriate for such Client Plan;
    (iv) A statement describing whether there are any limitations 
applicable to Russell Investments with respect to which assets of such 
Client Plan may be invested directly in shares of such Affiliated Fund, 
and if so, the nature of such limitations; and
    (v) Upon the request of the Second Fiduciary acting on behalf of 
such Client Plan, a copy of the notice of proposed exemption, a copy of 
the final exemption, if granted, and any other reasonably available 
information regarding the transactions which are the subject of this 
proposed exemption.
    (2) In the case of a Client Plan whose assets are proposed to be 
invested in a Collective Fund after such Collective Fund has begun 
investing in shares of an Affiliated Fund, a Second Fiduciary, acting 
on behalf of such Client Plan, receives, in writing, in advance of any 
investment by such Client Plan in such Collective Fund, a full and 
detailed disclosure via first class mail or via personal delivery (or, 
if the Second Fiduciary consents to such means of delivery, through 
electronic email, in accordance with Section II(q), as set forth below) 
of information concerning such Collective Fund and information 
concerning each such Affiliated Fund in which such Collective Fund is 
invested, including but not limited to the items listed, below:
    (i) A current summary prospectus issued by each such Affiliated 
Fund;
    (ii) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for:
    (A) Investment advisory and similar services to be paid to Russell 
Investments by each Affiliated Fund;
    (B) Secondary Services to be paid to Russell Investments by each 
such Affiliated Fund; and
    (C) All other fees to be charged by Russell Investments to such 
Client Plan, to such Collective Fund, and to each such Affiliated Fund 
and all other fees to be paid to Russell Investments by such Client 
Plan, by such Collective Fund, and by each such Affiliated Fund;
    (iii) The reasons why Russell Investments may consider investment 
by such Client Plan in shares of each such Affiliated Fund indirectly 
through such Collective Fund to be appropriate for such Client Plan;
    (iv) A statement describing whether there are any limitations 
applicable to Russell Investments with respect to which assets of such 
Client Plan may be invested indirectly in shares of each such 
Affiliated Fund through such Collective Fund, and if so, the nature of 
such limitations;
    (v) Upon the request of the Second Fiduciary, acting on behalf of 
such Client Plan, a copy of the Notice, a copy of the final exemption, 
if granted, and any other reasonably available information regarding 
the transactions which are the subject of this proposed exemption; and
    (vi) A copy of the organizational documents of such Collective Fund 
which expressly provide for the addition of one or more Affiliated 
Funds to the portfolio of such Collective Fund.
    (3) In the case of a Client Plan whose assets are proposed to be 
invested in a Collective Fund before such Collective Fund has begun 
investing in shares of any Affiliated Fund, a Second Fiduciary, acting 
on behalf of such Client Plan, receives, in writing, in advance of any 
investment by such Client Plan in such Collective Fund, a full and 
detailed disclosure via first class mail or via personal delivery (or, 
if the Second Fiduciary consents to such means of delivery through 
electronic email, in accordance with Section II(q), as set forth below) 
of information, concerning such Collective Fund, including but not 
limited to, the items listed below:
    (i) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for all fees 
to be charged by Russell Investments to such Client Plan and to such 
Collective Fund and all other fees to be paid to Russell Investments by 
such Client Plan, and by such Collective Fund;
    (ii) Upon the request of the Second Fiduciary, acting on behalf of 
such Client Plan, a copy of the Notice, a copy of the final exemption, 
if granted, and any other reasonably available information regarding 
the transactions which are the subject of this proposed exemption; and
    (iii) A copy of the organizational documents of such Collective 
Fund which expressly provide for the addition of one or more Affiliated 
Funds to the portfolio of such Collective Fund.
    (i) On the basis of the information, described above in Section 
II(h), a Second Fiduciary, acting on behalf of a Client Plan:
    (1) Authorizes in writing the investment of the assets of such 
Client Plan, as applicable:
    (i) Directly in shares of an Affiliated Fund;
    (ii) Indirectly in shares of an Affiliated Fund through a 
Collective Fund where such Collective Fund has already invested in 
shares of an Affiliated Fund; and
    (iii) In a Collective Fund which is not yet invested in shares of 
an Affiliated Fund but whose organizational document expressly provides 
for the addition of one or more Affiliated Funds to the portfolio of 
such Collective Fund; and

[[Page 14330]]

    (2) Authorizes in writing, as applicable:
    (i) The Affiliated Fund-Level Advisory Fee received by Russell 
Investments for investment advisory services and similar services 
provided by Russell Investments to such Affiliated Fund;
    (ii) The fee received by Russell Investments for Secondary Services 
provided by Russell Investments to such Affiliated Fund;
    (iii) The Collective Fund-Level Management Fee received by Russell 
Investments for investment management, investment advisory, and similar 
services provided by Russell Investments to such Collective Fund in 
which such Client Plan invests;
    (iv) The Plan-Level Management Fee received by Russell Investments 
for investment management and similar services provided by Russell 
Investments to such Client Plan at the plan-level; and
    (v) The selection by Russell Investments of the applicable fee 
method, as described above in Section II(a)(1)-(3).
    All authorizations made by a Second Fiduciary pursuant to this 
Section II(i) must be consistent with the responsibilities, 
obligations, and duties imposed on fiduciaries by Part 4 of Title I of 
the Act;
    (j)(1) Any authorization, described above in Section II(i), and any 
authorization made pursuant to negative consent, as described below in 
Section II(k) and in Section II(l), made by a Second Fiduciary, acting 
on behalf of a Client Plan, shall be terminable at will by such Second 
Fiduciary, without penalty to such Client Plan (including any fee or 
charge related to such penalty), upon receipt by Russell Investments 
via first class mail, via personal delivery, or via electronic email of 
a written notification of the intent of such Second Fiduciary to 
terminate any such authorization;
    (2) A form (the Termination Form), expressly providing an election 
to terminate any authorization, described above in Section II(i), or to 
terminate any authorization made pursuant to negative consent, as 
described below in Section II(k) and in Section II(l), with 
instructions on the use of such Termination Form, must be provided to 
such Second Fiduciary at least annually, either in writing via first 
class mail or via personal delivery (or if such Second Fiduciary 
consents to such means of delivery through electronic email, in 
accordance with Section II(q), as set forth below). However, if a 
Termination Form has been provided to such Second Fiduciary pursuant to 
Section II(k) or pursuant to Section II(l) below, then a Termination 
Form need not be provided pursuant to this Section II(j), until at 
least six (6) months, but no more than twelve (12) months, have 
elapsed, since the prior Termination Form was provided;
    (3) The instructions for the Termination Form must include the 
following statements:
    (i) Any authorization, described above in Section II(i), and any 
authorization made pursuant to negative consent, as described below in 
Section II(k) or in Section II(l), is terminable at will by a Second 
Fiduciary, acting on behalf of a Client Plan, without penalty to such 
Client Plan, upon receipt by Russell Investments via first class mail 
or via personal delivery or via electronic email of the Termination 
Form, or some other written notification of the intent of such Second 
Fiduciary to terminate such authorization;
    (ii) As of the date that is at least thirty (30) days from the date 
that Russell Investments sends the Termination Form to such Second 
Fiduciary, the failure by such Second Fiduciary to return such 
Termination Form or the failure by such Second Fiduciary to provide 
some other written notification of the Client Plan's intent to 
terminate any authorization, described in Section II(i), or intent to 
terminate any authorization made pursuant to negative consent, as 
described below in Section II(k) or in Section II(l), will be deemed to 
be an approval by such Second Fiduciary;
    (4) In the event that a Second Fiduciary, acting on behalf of a 
Client Plan, at any time returns a Termination Form or returns some 
other written notification of intent to terminate any authorization, as 
described above in Section II(i), or intent to terminate any 
authorization made pursuant to negative consent, as described below in 
Section II(k) or in Section II(l);
    (i)(A) In the case of a Client Plan which invests directly in 
shares of an Affiliated Fund, the termination will be implemented by 
the withdrawal of all investments made by such Client Plan in the 
affected Affiliated Fund, and such withdrawal will be effected by 
Russell Investments within one (1) business day of the date that 
Russell Investments receives such Termination Form or receives from the 
Second Fiduciary, acting on behalf of such Client Plan, some other 
written notification of intent to terminate any such authorization;
    (B) From the date a Second Fiduciary, acting on behalf of a Client 
Plan that invests directly in shares of an Affiliated Fund, returns a 
Termination Form or returns some other written notification of intent 
to terminate such Client Plan's investment in such Affiliated Fund, 
such Client Plan will not be subject to pay a pro rata share of any 
Affiliated Fund-Level Advisory Fee and will not be subject to pay any 
fees for Secondary Services paid to Russell Investments by such 
Affiliated Fund, or any other fees or charges;
    (ii)(A) In the case of a Client Plan which invests in a Collective 
Fund, the termination will be implemented by the withdrawal of such 
Client Plan from all investments in such affected Collective, and such 
withdrawal will be implemented by Russell Investments within such time 
as may be necessary for withdrawal in an orderly manner that is 
equitable to the affected withdrawing Client Plan and to all non-
withdrawing Client Plans, but in no event shall such withdrawal be 
implemented by Russell Investments more than five business (5) days 
after the day Russell Investments receives from the Second Fiduciary, 
acting on behalf of such withdrawing Client Plan, a Termination Form or 
receives some other written notification of intent to terminate the 
investment of such Client Plan in such Collective Fund, unless such 
withdrawal is otherwise prohibited by a governmental entity with 
jurisdiction over the Collective Fund, or the Second Fiduciary fails to 
instruct Russell Investments as to where to reinvest or send the 
withdrawal proceeds; and
    (B) From the date Russell Investments receives from a Second 
Fiduciary, acting on behalf of a Client Plan, that invests in a 
Collective Fund, a Termination Form or receives some other written 
notification of intent to terminate such Client Plan's investment in 
such Collective Fund, such Client Plan will not be subject to pay a pro 
rata share of any fees arising from the investment by such Client Plan 
in such Collective Fund, including any Collective Fund-Level Management 
Fee, nor will such Client Plan be subject to any other charges to the 
portfolio of such Collective Fund, including a pro rata share of any 
Affiliated Fund-Level Advisory Fee and any fee for Secondary Services 
arising from the investment by such Collective Fund in an Affiliated 
Fund.
    (k)(1) Russell Investments, at least thirty (30) days in advance of 
the implementation of each fee increase (Fee Increase(s)), as defined 
below in Section IV(l), must provide in writing via first class mail or 
via personal delivery (or if the Second Fiduciary consents to such 
means of delivery through electronic email, in accordance with Section 
II(q), as set forth below), a

[[Page 14331]]

notice of change in fees (the Notice of Change in Fees) (which may take 
the form of a proxy statement, letter, or similar communication which 
is separate from the summary prospectus of such Affiliated Fund) and 
which explains the nature and the amount of such Fee Increase to the 
Second Fiduciary of each affected Client Plan. Such Notice of Change in 
Fees shall be accompanied by a Termination Form and by instructions on 
the use of such Termination Form, as described above in Section 
II(j)(3);
    (2) Subject to the crediting, interest-payback, and other 
requirements below, for each Client Plan affected by a Fee Increase, 
Russell Investments may implement such Fee Increase without waiting for 
the expiration of the 30-day period, described above in Section 
II(k)(1), provided Russell Investments does not begin implementation of 
such Fee Increase before the first day of the 30-day period, described 
above in Section II(k)(1), and provided further that the following 
conditions are satisfied:
    (i) Russell Investments delivers, in the manner described in 
Section II(k)(1), to the Second Fiduciary for each affected Client 
Plan, the Notice of Change of Fees, as described in Section II(k)(1), 
accompanied by the Termination Form and by instructions on the use of 
such Termination Form, as described above in Section II(j)(3);
    (ii) Each affected Client Plan receives from Russell Investments a 
credit in cash equal to each such Client Plan's pro rata share of such 
Fee Increase to be received by Russell Investments for the period from 
the date of the implementation of such Fee Increase to the earlier of:
    (A) The date when an affected Client Plan, pursuant to Section 
II(j), terminates any authorization, as described above in Section 
II(i), or terminates any negative consent authorization, as described 
in Section II(k) or in Section II(l); or
    (B) The 30th day after the day that Russell Investments delivers to 
the Second Fiduciary of each affected Client Plan the Notice of Change 
of Fees, described in Section II(k)(1), accompanied by the Termination 
Form and by the instructions on the use of such Termination Form, as 
described above in Section II(j)(3).
    (iii) Russell Investments pays to each affected Client Plan the 
cash credit, as described above in Section II(k)(2)(ii), with interest 
thereon, no later than five (5) business days following the earlier of:
    (A) The date such affected Client Plan, pursuant to Section II(j), 
terminates any authorization, as described above in Section II(i), or 
terminates, any negative consent authorization, as described in Section 
II(k) or in Section II(l); or
    (B) The 30th day after the day that Russell Investments delivers to 
the Second Fiduciary of each affected Client Plan, the Notice of Change 
of Fees, described in Section II(k)(1), accompanied by the Termination 
Form and instructions on the use of such Termination Form, as described 
above in Section II(j)(3);
    (iv) Interest on the credit in cash is calculated at the prevailing 
Federal funds rate plus two percent (2%) for the period from the day 
Russell Investments first implements the Fee Increase to the date 
Russell Investments pays such credit in cash, with interest thereon, to 
each affected Client Plan;
    (v) An independent accounting firm (the Auditor) at least annually 
audits the payments made by Russell Investments to each affected Client 
Plan, audits the amount of each cash credit, plus the interest thereon, 
paid to each affected Client Plan, and verifies that each affected 
Client Plan received the correct amount of cash credit and the correct 
amount of interest thereon;
    (vi) Such Auditor issues an audit report of its findings no later 
than six (6) months after the period to which such audit report 
relates, and provides a copy of such audit report to the Second 
Fiduciary of each affected Client Plan; and
    (3) As of the date that is at least thirty (30) days from the date 
that Russell Investments sends to the Second Fiduciary of each affected 
Client Plan the Notice of Change of Fees and the Termination Form, the 
failure by such Second Fiduciary to return such Termination Form and 
the failure by such Second Fiduciary to provide some other written 
notification of the Client Plan's intent to terminate the 
authorization, described in Section II(i), or to terminate the negative 
consent authorization, as described in Section II(k) or in Section 
II(l), will be deemed to be an approval by such Second Fiduciary of 
such Fee Increase.
    (l) Effective upon the date that the final exemption is granted, in 
the case of (a) a Client Plan which has received the disclosures 
detailed in Section II(h)(2)(i), II(h)(2)(ii)(A), II(h)(2)(ii)(B), 
II(h)(2)(ii)(C), II(h)(2)(iii), II(h)(2)(iv), II(h)(2)(v), and 
II(h)(2)(vi), and which has authorized the investment by such Client 
Plan in a Collective Fund in accordance with Section II(i)(1)(ii) 
above, and (b) a Client Plan which has received the disclosures 
detailed in Section II(h)(3)(i), II(h)(3)(ii), and II(h)(3)(iii), and 
which has authorized investment by such Client Plan in a Collective 
Fund, in accordance with Section II(i)(1)(iii) above, the authorization 
pursuant to negative consent in accordance with this Section II(l), 
applies to:
    (1) The purchase, as an addition to the portfolio of such 
Collective Fund, of shares of an Affiliated Fund (a New Affiliated 
Fund) where such New Affiliated Fund has not been previously authorized 
pursuant to Section II(i)(1)(ii), or, as applicable, Section 
II(i)(1)(iii), and such Collective Fund may commence investing in such 
New Affiliated Fund without further written authorization from the 
Second Fiduciary of each Client Plan invested in such Collective Fund, 
provided that:
    (i) The organizational documents of such Collective Fund expressly 
provide for the addition of one or more Affiliated Funds to the 
portfolio of such Collective Fund, and such documents were disclosed in 
writing via first class mail or via personal delivery (or, if the 
Second Fiduciary consents to such means of delivery, through electronic 
email, in accordance with Section II(q)) to the Second Fiduciary of 
each such Client Plan invested in such Collective Fund, in advance of 
any investment by such Client Plan in such Collective Fund;
    (ii) At least thirty (30) days in advance of the purchase by a 
Client Plan of shares of such New Affiliated Fund indirectly through a 
Collective Fund, Russell Investments provides, either in writing via 
first class or via personal delivery (or if the Second Fiduciary 
consents to such means of delivery through electronic email, in 
accordance with Section II(q)) to the Second Fiduciary of each Client 
Plan having an interest in such Collective Fund, full and detailed 
disclosures about such New Affiliated Fund, including but not limited 
to:
    (A) A notice of Russell Investments' intent to add a New Affiliated 
Fund to the portfolio of such Collective Fund, where such notice may 
take the form of a proxy statement, letter, or similar communication 
that is separate from the summary prospectus of such New Affiliated 
Fund to the Second Fiduciary of each affected Client Plan;
    (B) Such notice of Russell Investments' intent to add a New 
Affiliated Fund to the portfolio of such Collective Fund shall be 
accompanied by the information described in Section II(h)(2)(i), 
II(h)(2)(ii)(A), II(h)(2)(ii)(B), II(h)(2)(ii)(C), II(h)(2)(iii), 
II(h)(2)(iv), and II(2)(v) with respect to each such New Affiliated 
Fund proposed to be

[[Page 14332]]

added to the portfolio of such Collective Fund; and
    (C) A Termination Form and instructions on the use of such 
Termination Form, as described in Section II(j)(3); and
    (2) As of the date that is at least thirty (30) days from the date 
that Russell Investments sends to the Second Fiduciary of each affected 
Client Plan the information described above in Section II(l)(1)(ii), 
the failure by such Second Fiduciary to return the Termination Form or 
to provide some other written notification of the Client Plan's intent 
to terminate the authorization described in Section II(i)(1)(ii), or, 
as appropriate, to terminate the authorization, described in Section 
II(i)(1)(iii), or to terminate any authorization, pursuant to negative 
consent, as described in this Section II(l), will be deemed to be an 
approval by such Second Fiduciary of the addition of a New Affiliated 
Fund to the portfolio of such Collective Fund in which such Client Plan 
invests, and will result in the continuation of the authorization of 
Russell Investments to engage in the transactions which are the subject 
of this proposed exemption with respect to such New Affiliated Fund.
    (m) Russell Investments is subject to the requirement to provide 
within a reasonable period of time any reasonably available information 
regarding the covered transactions that the Second Fiduciary of such 
Client Plan requests Russell Investments to provide.
    (n) All dealings between a Client Plan and an Affiliated Fund, 
including all such dealings when such Client Plan is invested directly 
in shares of such Affiliated Fund and when such Client Plan is invested 
indirectly in such shares of such Affiliated Fund through a Collective 
Fund, are on a basis no less favorable to such Client Plan, than 
dealings between such Affiliated Fund and other shareholders of the 
same class of shares in such Affiliated Fund.
    (o) In the event a Client Plan invests directly in shares of an 
Affiliated Fund, and, as applicable, in the event a Client Plan invests 
indirectly in shares of an Affiliated Fund through a Collective Fund, 
if such Affiliated Fund places brokerage transactions with Russell 
Investments, Russell Investments will provide to the Second Fiduciary 
of each such Client Plan, so invested, at least annually a statement 
specifying:
    (1) The total, expressed in dollars, of brokerage commissions that 
are paid to Russell Investments by each such Affiliated Fund;
    (2) The total, expressed in dollars, of brokerage commissions that 
are paid by each such Affiliated Fund to brokerage firms unrelated to 
Russell Investments;
    (3) The average brokerage commissions per share, expressed as cents 
per share, paid to Russell Investments I by each such Affiliated Fund; 
and
    (4) The average brokerage commissions per share, expressed as cents 
per share, paid by each such Affiliated Fund to brokerage firms 
unrelated to Russell Investments;
    (p)(1) Russell Investments provides to the Second Fiduciary of each 
Client Plan invested directly in shares of an Affiliated Fund with the 
disclosures, as set forth below, and at the times set forth below in 
Section II(p)(1)(i), II(p)(1)(ii), II(p)(1)(iii), II(p)(1)(iv), and 
II(p)(1)(v), either in writing via first class mail or via personal 
delivery (or if the Second Fiduciary consents to such means of 
delivery, through electronic email, in accordance with Section II(q) as 
set forth below):
    (i) Annually, with a copy of the current summary prospectus for 
each Affiliated Fund in which such Client Plan invests directly in 
shares of such Affiliated Fund;
    (ii) Upon the request of such Second Fiduciary, a copy of the 
statement of additional information for each Affiliated Fund in which 
such Client Plan invests directly in shares of such Affiliated Fund 
which contains a description of all fees paid by such Affiliated Fund 
to Russell Investments;
    (iii) With regard to any Fee Increase received by Russell 
Investments pursuant to Section II(k)(2), a copy of the audit report 
referred to in Section II(k)(2)(v) within sixty (60) days of the 
completion of such audit report;
    (iv) Oral or written responses to the inquiries posed by the Second 
Fiduciary of such Client Plan, as such inquiries arise; and
    (v) Annually, with a Termination form, as described in Section 
II(j)(1), and instructions on the use of such form, as described in 
Section II(j)(3), except that if a Termination Form has been provided 
to such Second Fiduciary, pursuant to Section II(k) or pursuant to 
Section II(l), then a Termination Form need not be provided again 
pursuant to this Section II(p)(1)(v) until at least six (6) months but 
no more than twelve (12) months have elapsed since a Termination Form 
was provided.
    (2) Russell Investments provides to the Second Fiduciary of each 
Client Plan invested in a Collective Fund, with the disclosures, as set 
forth below, and at the times set forth below in Section II(p)(2)(i), 
II(p)(2)(ii), II(p)(2)(iii), II(p)(2)(iv), II(p)(2)(v), II(p)(2)(vi), 
II(p)(2)(vii), and II(p)(2)(viii), either in writing via first class 
mail or via personal delivery (or if the Second Fiduciary consents to 
such means of delivery, through electronic email, in accordance with 
Section II(q), as set forth below:
    (i) Annually, with a copy of the current summary prospectus for 
each Affiliated Fund in which such Client Plan invests indirectly in 
shares of such Affiliated Fund through each such Collective Fund;
    (ii) Upon the request of such Second Fiduciary, a copy of the 
statement of additional information for each Affiliated Fund in which 
such Client Plan invests indirectly in shares of such Affiliated Fund 
through each such Collective Fund which contains a description of all 
fees paid by such Affiliated Fund to Russell Investments;
    (iii) Annually, with a statement of the Collective Fund-Level 
Management Fee for investment management, investment advisory or 
similar services paid to Russell Investments by each such Collective 
Fund, regardless of whether such Client Plan invests in shares of an 
Affiliated Fund through such Collective Fund;
    (iv) A copy of the annual financial statement of each such 
Collective Fund in which such Client Plan invests, regardless of 
whether such Client Plan invests in shares of an Affiliated Fund 
through such Collective Fund, within sixty (60) days of the completion 
of such financial statement;
    (v) With regard to any Fee Increase received by Russell Investments 
pursuant to Section II(k)(2), a copy of the audit report referred to in 
Section II(k)(2)(v) within sixty (60) days of the completion of such 
audit report;
    (vi) Oral or written responses to the inquiries posed by the Second 
Fiduciary of such Client Plan as such inquiries arise;
    (vii) For each Client Plan invested indirectly in shares of an 
Affiliated Fund through a Collective Fund, a statement of the 
approximate percentage (which may be in the form of a range) on an 
annual basis of the assets of such Collective Fund that was invested in 
Affiliated Funds during the applicable year; and
    (viii) Annually, with a Termination Form, as described in Section 
II(j)(1), and instructions on the use of such form, as described in 
Section II(j)(3), except that if a Termination Form has been provided 
to such Second Fiduciary, pursuant to Section II(k) or pursuant to 
Section II(l), then a Termination Form need not be provided again 
pursuant to this Section II(p)(2)(viii) until at least six (6) months 
but no more than twelve (12) months

[[Page 14333]]

have elapsed since a Termination Form was provided.
    (q) Any disclosure required herein to be made by Russell 
Investments to a Second Fiduciary may be delivered by electronic email 
containing direct hyperlinks to the location of each such document 
required to be disclosed, which are maintained on a website by Russell 
Investments, provided:
    (1) Russell Investments obtains from such Second Fiduciary prior 
consent in writing to the receipt by such Second Fiduciary of such 
disclosure via electronic email;
    (2) Such Second Fiduciary has provided to Russell Investments a 
valid email address; and
    (3) The delivery of such electronic email to such Second Fiduciary 
is provided by Russell Investments in a manner consistent with the 
relevant provisions of the Department's regulations at 29 CFR 
2520.104b-1(c) (substituting the word ``Russell Investments'' for the 
word ``administrator'' as set forth therein, and substituting the 
phrase ``Second Fiduciary'' for the phrase ``the participant, 
beneficiary or other individual'' as set forth therein).
    (r) The authorizations described in Sections II(k) or II(l) may be 
made affirmatively, in writing, by a Second Fiduciary, in a manner that 
is otherwise consistent with the requirements of those sections.
    (s) All of the conditions of PTE 77-4, as amended and/or restated, 
are met. Notwithstanding this, if PTE 77-4 is amended and/or restated, 
the requirements of paragraph (e) therein will be deemed to be met with 
respect to authorizations described in Section II(l) above, but only to 
the extent the requirements of Section II(l) are met. Similarly, if PTE 
77-4 is amended and/or restated, the requirements of paragraph (f) 
therein will be deemed to be met with respect to authorizations 
described in Section II(k) above, if the requirements of Section II(k) 
are met.
    (t) Standards of Impartial Conduct. If Russell Investments is a 
fiduciary within the meaning of section 3(21)(A)(i) or (ii) of the Act, 
or section 4975(e)(3)(A) or (B) of the Code, with respect to the assets 
of a Client Plan involved in the transaction, Russell Investments must 
comply with the following conditions with respect to the transaction: 
(1) Russell Investments acts in the Best Interest (as defined below, in 
Section IV(q)) of the Client Plan, at the time of the Transaction; (2) 
all compensation received by Russell Investments in connection with the 
transaction in relation to the total services the fiduciary provides to 
the Client Plan does not exceed reasonable compensation within the 
meaning of section 408(b)(2) of the Act; and (3) Russell Investments' 
statements about recommended investments, fees, material conflicts of 
interest,\6\ and any other matters relevant to a Client Plan's 
investment decisions are not materially misleading at the time they are 
made.
---------------------------------------------------------------------------

    \6\ A ``material conflict of interest'' exists when a fiduciary 
has a financial interest that could affect the exercise of its best 
judgment as a fiduciary in rendering advice to a Client Plan. For 
this purpose, the failure of Russell Investments to disclose a 
material conflict of interest relevant to the services it is 
providing to a Client Plan, or other actions it is taking in 
relation to a Client Plan's investment decisions, is deemed to be a 
misleading statement.
---------------------------------------------------------------------------

    For purposes of this section, Russell Investments acts in the 
``Best Interest'' of the Client Plan when Russell Investments acts with 
the care, skill, prudence, and diligence under the circumstances then 
prevailing that a prudent person would exercise based on the investment 
objectives, risk tolerance, financial circumstances, and needs of the 
plan or IRA, without regard to the financial or other interests of the 
fiduciary, any affiliate or other party.
Section III. General Conditions
    (a) Russell Investments maintains for a period of six (6) years the 
records necessary to enable the persons, described below in Section 
III(b), to determine whether the conditions of this proposed exemption 
have been met, except that:
    (1) A prohibited transaction will not be considered to have 
occurred, if solely because of circumstances beyond the control of 
Russell Investments, the records are lost or destroyed prior to the end 
of the six-year period; and
    (2) No party in interest other than Russell Investments shall be 
subject to the civil penalty that may be assessed under section 502(i) 
of the Act or to the taxes imposed by section 4975(a) and (b) of the 
Code, if the records are not maintained or are not available for 
examination, as required below by Section III(b).
    (b)(1) Except as provided in Section III(b)(2) and notwithstanding 
any provisions of section 504(a)(2) of the Act, the records referred to 
in Section III(a) are unconditionally available at their customary 
location for examination during normal business hours by:
    (i) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service, or the Securities & 
Exchange Commission;
    (ii) Any fiduciary of a Client Plan invested directly in shares of 
an Affiliated Fund, any fiduciary of a Client Plan who has the 
authority to acquire or to dispose of the interest in a Collective Fund 
in which a Client Plan invests, any fiduciary of a Client Plan invested 
indirectly in an Affiliated Fund through a Collective Fund where such 
fiduciary has the authority to acquire or to dispose of the interest in 
such Collective Fund, and any duly authorized employee or 
representative of such fiduciary; and
    (iii) Any participant or beneficiary of a Client Plan invested 
directly in shares of an Affiliated Fund or invested in a Collective 
Fund, and any participant or beneficiary of a Client Plan invested 
indirectly in shares of an Affiliated Fund through a Collective Fund, 
and any representative of such participant or beneficiary; and
    (2) None of the persons described in Section III(b)(1)(ii) and 
(iii) shall be authorized to examine trade secrets of Russell 
Investments, or commercial or financial information which is privileged 
or confidential.
Section IV. Definitions
    For purposes of this exemption:
    (a) The term ``Russell Investments'' means RIM (f/k/a Russell 
Investment Management Company), RICap, and any affiliate thereof, as 
defined below, in Section IV(c).
    (b) The term ``Client Plan(s)'' means a 401(k) plan(s), an 
individual retirement account(s), other tax-qualified plan(s), and 
other plan(s) as defined in the Act and Code, but does not include any 
employee benefit plan sponsored or maintained by Russell Investments, 
as defined above in Section IV(a).
    (c) An ``affiliate'' of a person includes:
    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person;
    (2) Any officer, director, employee, relative, or partner in any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (d) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (e) The term ``Affiliated Fund(s)'' means Russell Investment 
Company, a series of mutual funds managed by RIM, and any other 
diversified open-end investment company or companies registered with 
the Securities and Exchange Commission under the Investment Company 
Act, as amended, established and maintained by Russell Investments now 
or in the future for

[[Page 14334]]

which Russell Investments serves as an investment adviser.
    (f) The term ``net asset value per share'' and the term ``NAV'' 
mean the amount for purposes of pricing all purchases and sales of 
shares of an Affiliated Fund, calculated by dividing the value of all 
securities, determined by a method as set forth in the summary 
prospectus for such Affiliated Fund and in the statement of additional 
information, and other assets belonging to such Affiliated Fund or 
portfolio of such Affiliated Fund, less the liabilities charged to each 
such portfolio or each such Affiliated Fund, by the number of 
outstanding shares.
    (g) The term ``relative'' means a relative as that term is defined 
in section 3(15) of the Act (or a member of the family as that term is 
defined in section 4975(e)(6) of the Code), or a brother, a sister, or 
a spouse of a brother or a sister.
    (h) The term ``Second Fiduciary'' means the fiduciary of a Client 
Plan who is independent of and unrelated to Russell Investments. For 
purposes of this proposed exemption, the Second Fiduciary will not be 
deemed to be independent of and unrelated to Russell Investments if:
    (1) Such Second Fiduciary, directly or indirectly, through one or 
more intermediaries, controls, is controlled by, or is under common 
control with Russell Investments;
    (2) Such Second Fiduciary, or any officer, director, partner, 
employee, or relative of such Second Fiduciary, is an officer, 
director, partner, or employee of Russell Investments (or is a relative 
of such person); or
    (3) Such Second Fiduciary, directly or indirectly, receives any 
compensation or other consideration for his or her personal account in 
connection with any transaction described in this proposed exemption.
    If an officer, director, partner, or employee of Russell 
Investments (or relative of such person) is a director of such Second 
Fiduciary, and if he or she abstains from participation in:
    (i) The decision of a Client Plan to invest in and to remain 
invested in shares of an Affiliated Fund directly, the decision of a 
Client Plan to invest in shares of an Affiliated Fund indirectly 
through a Collective Fund, and the decision of a Client Plan to invest 
in a Collective Fund that may in the future invest in shares of an 
Affiliated Fund;
    (ii) Any authorization in accordance with Section II(i), and any 
authorization, pursuant to negative consent, as described in Section 
II(k) or in Section II(l); and
    (iii) The choice of such Client Plan's investment adviser, then 
Section IV(h)(2) above shall not apply.
    (i) The term ``Secondary Service(s)'' means a service or services 
other than an investment management service, investment advisory 
service, and any similar service which is provided by Russell 
Investments to an Affiliated Fund, including, but not limited to, 
custodial, accounting, administrative services, and brokerage services. 
Russell Investments may also serve as a dividend disbursing agent, 
shareholder servicing agent, transfer agent, fund accountant, or 
provider of some other Secondary Service, as defined in this Section 
IV(i).
    (j) The term ``Collective Fund(s)'' means a separate account of an 
insurance company, as defined in section 2510.3-101(h)(1)(iii) of the 
Department's plan assets regulations,\7\ maintained by Russell 
Investments, and a bank-maintained common or collective investment 
trust maintained by Russell Investments.
---------------------------------------------------------------------------

    \7\ 51 FR 41262 (November 13, 1986).
---------------------------------------------------------------------------

    (k) The term ``business day'' means any day that:
    (1) Russell Investments is open for conducting all or substantially 
all of its business; and
    (2) The New York Stock Exchange (or any successor exchange) is open 
for trading.
    (l) The term ``Fee Increase(s)'' includes any increase by Russell 
Investments in a rate of a fee previously authorized in writing by the 
Second Fiduciary of each affected Client Plan pursuant to Section 
II(i)(2)(i)-(iv) above, and in addition includes, but is not limited 
to:
    (1) Any increase in any fee that results from the addition of a 
service for which a fee is charged;
    (2) Any increase in any fee that results from a decrease in the 
number of services and any increase in any fee that results from a 
decrease in the kind of service(s) performed by Russell Investments for 
such fee over an existing rate of fee for each such service previously 
authorized by the Second Fiduciary, in accordance with Section 
II(i)(2)(i)-(iv) above; and
    (3) Any increase in any fee that results from Russell Investments 
changing from one of the fee methods, as described above in Section 
II(a)(1)-(3), to using another of the fee methods, as described above 
in Section II(a)(1)-(3).
    (m) The term ``Plan-Level Management Fee'' includes any investment 
management fee, investment advisory fee, and any similar fee paid by a 
Client Plan to Russell Investments for any investment management 
services, investment advisory services, and similar services provided 
by Russell Investments to such Client Plan at the plan-level. The term 
``Plan-Level Management Fee'' does not include a separate fee paid by a 
Client Plan to Russell Investments for asset allocation service(s) 
(Asset Allocation Service(s)), as defined below in Section IV(p), 
provided by Russell Investments to such Client Plan at the plan-level.
    (n) The term ``Collective Fund-Level Management Fee'' includes any 
investment management fee, investment advisory fee, and any similar fee 
paid by a Collective Fund to Russell Investments for any investment 
management services, investment advisory services, and any similar 
services provided by Russell Investments to such Collective Fund at the 
collective fund level.
    (o) The term ``Affiliated Fund-Level Advisory Fee'' includes any 
investment advisory fee and any similar fee paid by an Affiliated Fund 
to Russell Investments under the terms of an investment advisory 
agreement adopted in accordance with section 15 of the Investment 
Company Act.
    (p) The term ``Asset Allocation Service(s)'' means a service or 
services to a Client Plan relating to the selection of appropriate 
asset classes or target-date ``glidepath'' and the allocation or 
reallocation (including rebalancing) of the assets of a Client Plan 
among the selected asset classes. Such services do not include the 
management of the underlying assets of a Client Plan, the selection of 
specific funds or manager, and the management of the selected 
Affiliated Funds or Collective Funds.
    (q) The term ``Best Interest'' means acting with the care, skill, 
prudence, and diligence under the circumstances then prevailing that a 
prudent person acting in a like capacity and familiar with such matters 
would use in the conduct of an enterprise of a like character and with 
like aims, based on the investment objectives, risk tolerance, 
financial circumstances, and needs of the plan or IRA, without regard 
to the financial or other interests of Russell Investments, any 
affiliate or other party.
    Effective Date: This exemption is effective as of the date the 
notice granting the final exemption is published in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department, 
telephone (202) 693-8456. (This is not a toll-free number.)

[[Page 14335]]

Toledo Electrical Joint Apprenticeship & Training Fund (the Training 
Plan or the Applicant) Located in Rossford, Ohio

[Prohibited Transaction Exemption 2018-04; Exemption Application No. L-
11867]

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 June 28, 2017, at 82 FR 
29336. All comments and requests for hearing were due by August 14, 
2017. During the comment period, the Department received no written 
comments and no requests for a public hearing.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Application No. L-11867), 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 June 28, 2017, at 82 FR 
29336.

Exemption

Section I: Covered Transaction
    The restrictions of sections 406(a)(1)(A), 406(a)(1)(D), and 
406(b)(1) and 406(b)(2) of the Act (or ERISA) shall not apply to the 
Purchase (the Purchase) by the Training Plan of certain unimproved real 
property (the Property) from the International Brotherhood of 
Electrical Workers Local Union No. 8 Building Corporation (the Building 
Corporation), a party in interest with respect to the Training Plan, 
provided that the conditions set forth below in Section II are 
satisfied.
Section II: Conditions
    (a) The Purchase is a one-time transaction for cash;
    (b) The purchase price paid by the Training Plan to the Building 
Corporation is equal to the fair market value of the Property, as 
determined by a qualified independent fiduciary (the Independent 
Fiduciary), based upon an appraisal of the Property (the Appraisal 
Report) by a qualified independent appraiser (the Independent 
Appraiser) on the date of the Purchase, less the total fees paid by the 
Training Plan for: (i) Independent Fiduciary services; (ii) Independent 
Appraiser services; (iii) environmental assessments of the Property; 
(iv) feasibility studies of the Property; (v) closing costs associated 
with the Purchase; and (vi) attorney's fees.
    (c) The Training Plan trustees, appointed by Local Union No. 8 of 
the International Union of Electrical Workers (the Union), recuse 
themselves from all aspects relating to the decision to purchase the 
Property on behalf of the Training Plan;
    (d) With respect to the Purchase, the Independent Fiduciary 
undertakes the following duties on behalf of the Training Plan:
    (1) Determines whether the Purchase is in the interests of, and 
protective of the Training Plan and the Training Plan participants;
    (2) Reviews, negotiates, and approves the terms and conditions of 
the Purchase;
    (3) Reviews and approves the methodology used by the Independent 
Appraiser in the Appraisal Report to ensure such methodology is 
consistent with sound principles of valuation, prior to the 
consummation of the Purchase;
    (4) Ensures that the appraisal methodology is properly applied by 
the Independent Appraiser in determining the fair market value of the 
Property on the date of the Purchase, and determines whether it is 
prudent to proceed with such transaction;
    (5) Represents the Training Plan's interests for all purposes with 
respect to the Purchase; and
    (6) Not later than 90 days after the Purchase is completed, submits 
a written statement to the Department demonstrating that the Purchase 
has satisfied the requirements of Section II(b), above;
    (e) The Training Plan does not incur any fees, costs, commissions 
or other charges as a result of the Purchase, with the exception of the 
fees reimbursed by the Building Corporation, as set forth in Section 
II(b), above;
    (f) The Purchase is not part of an agreement, arrangement, or 
understanding designed to benefit the Union; and
    (g) The terms and conditions of the Purchase are at least as 
favorable to the Training Plan as those obtainable in an arm's-length 
transaction with an unrelated party.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department, 
telephone (202) 693-8456. (This is not a toll-free number.)

EXCO Resources, Inc. 401(k) Plan (the Plan) Located in Dallas, TX

[Prohibited Transaction Exemption 2018-05; Exemption Application No. D-
11821]

Written Comments

    In the Notice of Proposed Exemption published in the Federal 
Register on December 30, 2014 at 79 FR 78489 (the Notice), the 
Department invited all interested persons to submit written comments 
and requests for a hearing within forty-five (45) days of the date of 
the publication. All comments and requests for a hearing were due by 
February 13, 2015.
    During the comment period, the Department received one comment 
letter, dated February 10, 2015, and no requests for a public hearing. 
The comment letter was submitted by EXCO (the Applicant). In the 
letter, the Applicant requests certain clarifications and corrections 
to the operative language and the Summary of Facts and Representations 
(the Summary) of the Notice. The Department concurs with all of the 
Applicant's clarifications and corrections, which are discussed below.
    1. Modification of the Operative Language. Section II(h) of the 
operative language states that the Applicant did not influence any 
Invested Participant's election with respect to the Rights.'' In its 
letter, the Applicant states that, while it understands the purpose of 
this language, it believes that the term ``influence'' can be read too 
broadly without any qualifiers as to its scope and breadth. The 
Applicant believes a more narrowly tailored representation is more 
appropriate, and proposes the following revised Section II(h): ``(h) 
EXCO did not direct or advise any Invested Participant with respect to 
such Invested Participant's election with respect to the Rights.''
    The Department agrees with this comment and has revised Section 
II(h) of the operative by substituting the word ``regarding'' for the 
second reference to the phrase ``with respect to.'' Therefore, the 
revised condition reads as follows: ``(h) EXCO did not direct or advise 
any Invested Participant regarding such Invested Participant's election 
with respect to the Rights.''
    2. Record Date. Representation 6 of the Summary includes footnote 
16, which states, ``[i]t is represented that there was no material 
impact to the Accounts of Invested Participants as a result of the 
Record Date being set two (2) days after the commencement of the 
Offering.'' The Applicant clarifies that it believes there was no 
material impact.
    3. Stock Price as of the Commencement Date of the Offering.

[[Page 14336]]

Representation 7 of the Summary states that, on the Commencement Date 
of the Offering, the Common Stock was trading on the NYSE at $4.83 per 
share. The Applicant explains that due to a scrivener's error with 
respect to this representation, the correct price should be $4.88 per 
share.
    4. Shares Purchased and Gross Proceeds. The last paragraph of 
Representation 8 of the Summary states, ``It is represented that there 
were valid exercises to purchase an aggregate of 28,248,049 shares of 
Common Stock, pursuant to directions from holders of the Rights. The 
exercise of the Rights resulted in gross proceeds for EXCO of 
approximately $141.2 million.'' The Applicant asserts that a technical 
correction is needed to this portion of Representation 8, because the 
amount of shares of Common Stock purchased and the gross proceeds 
listed in these sentences actually exclude the number of shares 
purchased by and the gross proceeds received from the Investors (i.e WL 
Ross & Co., LLC and its affiliates and Hamblin Watson Investment 
Counsel Ltd. and its affiliates, as referred to in Representation 5 and 
Footnote 16 of the Summary). Therefore, the Applicant suggests that 
Representation 8 should be clarified as follows: ``It is represented 
that there were valid exercises to purchase an aggregate of 28,248,049 
shares of Common Stock, pursuant to directions from holders of the 
Rights (other than the Investors). The exercise of the Rights (by 
holders other than the Investors) resulted in gross proceeds for EXCO 
of approximately $141.2 million.''
    5. Processing Time for Invested Participants. The Applicant states 
that, with regard to Representation 9, the Department omitted a 
representation which the Applicant had provided in its submission, 
relating to the process by which Invested Participants elected to 
exercise their Rights, and which clarifies that an extra three days of 
processing time was necessary for Invested Participants (which 
otherwise did not apply to individual shareholders (i.e., non-Plan 
participants)).
    6. Exercise Price. The first sentence of the third paragraph of 
Representation 11 states, ``the Rights held by these accounts were all 
exercised on January 7, 2014, at an exercise price of $5.07 per 
share.'' The Applicant notes that the Rights were exercised at a 
subscription price (i.e., the exercise price) of $5.00 per share on 
January 7, 2014, while the fair market value of such shares was $5.07 
per share.

The Make Whole Payment

    To ensure that the Rights Offering was in the interests of the 
Plan, the Applicant has agreed to contribute $6,359.87 to the Plan on 
behalf of three Invested Participants who exercised their rights to 
purchase shares of EXCO Common Stock in connection with the Rights 
Offering. The Invested Participants collectively exercised a total of 
9,952 Rights to acquire a total of 2,970 shares of EXCO Common Stock at 
a subscription price of $5.00 per share. The Invested Participants 
subsequently sold their acquired shares of the EXCO Common Stock and 
sustained investment losses. To make the Invested Participants 
``whole,'' as if they had sold their Rights during the Rights Offering 
and had not incurred any loss on such sale, EXCO will contribute, 
within 30 days of the granting of this exemption, a total of $6,359.87 
to the Plan. The Make Whole Payment will be equal to: (1) The amount of 
the investment loss incurred by the Invested Participant on the sale of 
EXCO Common Stock acquired, plus (2) the amount the Invested 
Participant would have received had their Rights been sold during the 
Rights Offering.
    Accordingly, after full consideration and review of the entire 
record, including the comment letter filed by the Applicant, the 
Department has determined to grant the exemption, as set forth above. 
The Applicant's comment letter has been included as part of the public 
record of the exemption application. The complete application file (D-
11821) is available for public inspection in the Public Disclosure Room 
of the Employee Benefits Security Administration, Room N-1513, 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 on November 26, 2014, at 79 FR 78489.

Exemption

Section I: Transactions
    Effective for the period beginning December 17, 2013, and ending on 
January 9, 2014, 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:
---------------------------------------------------------------------------

    \8\ For purposes of this proposed exemption, references to 
specific provisions of Title I of the Act, unless otherwise 
specified, should be read to refer as well to the corresponding 
provisions of the Code.
---------------------------------------------------------------------------

    (a) To the acquisition of certain transferable subscription 
right(s) (the Right or Rights) by the individually-directed account(s) 
(the Account or Accounts) of certain participant(s), (the Invested 
Participant(s)) in the Plan, in connection with an offering (the 
Offering) of shares of the common stock (the Common Stock) of EXCO 
Resources, Inc. (EXCO) by EXCO, the plan sponsor (the Plan Sponsor) and 
a party in interest with respect to the Plan; and
    (b) To the holding of the Rights received by the Accounts during 
the subscription period of the Offering; provided that the conditions 
set forth in Section II of this exemption were satisfied for the 
duration of the acquisition and holding of such Rights.
Section II: Conditions
    (a) The acquisition of the Rights by the Accounts of the Invested 
Participants occurred in connection with the Offering, and the Rights 
were made available by EXCO on the same material terms to all 
shareholders of record of the Common Stock of EXCO, including the 
Accounts of Invested Participants;
    (b) The acquisition of the Rights by the Accounts of Invested 
Participants resulted from an independent corporate act of EXCO;
    (c) Each shareholder of the Common Stock of EXCO, including each of 
the Accounts of Invested Participants, received the same proportionate 
number of Rights, and this proportionate number of Rights was based on 
the number of shares of Common Stock held by each such shareholder, as 
of 5:00 p.m. New York City time, on December 19, 2013 (the Record 
Date);
    (d) The Rights were acquired pursuant to, and in accordance with, 
provisions under the Plan for individually-directed investment of the 
Accounts by the Invested Participants, all of whose Accounts in the 
Plan held the Common Stock;
    (e) The decision with regard to the holding and the disposition of 
the Rights by an Account was made by the Invested Participant whose 
Account received the Rights;
    (f) If any of the Invested Participants failed to give instructions 
as to the exercise of the Rights received in the Offering, or gave 
instructions to the Plan trustee to sell the Rights, such Rights were 
automatically sold in blind transactions on the New York Stock Exchange 
and the proceeds from such sales were distributed pro-rata to the

[[Page 14337]]

Accounts in the Plan of such Invested Participants whose Rights were 
sold;
    (g) No brokerage fees, no commissions, no subscription fees, and no 
other charges were paid by the Plan or by the Accounts of Invested 
Participants with respect to the acquisition and holding of the Rights, 
and no commissions, no fees, and no expenses were paid by the Plan or 
by the Accounts of Invested Participants to any related broker in 
connection with the sale or exercise of any of the Rights, or with 
regard to the acquisition of the Common Stock through the exercise of 
such Rights;
    (h) EXCO did not direct or advise any Invested Participant 
regarding such Invested Participant's election with respect to the 
Rights;
    (i) The terms of the Offering were described to the Invested 
Participants in clearly written communications, including, but not 
limited to, the prospectus for the Rights Offering; and
    (j) Within 30 days of the granting of the exemption, EXCO 
contributes a make whole payment (the Make Whole Payment) to the Plan 
totaling $6,359.87 on behalf of three Invested Participants who 
exercised their rights to purchase EXCO Common Stock in connection with 
the Rights Offering but sustained losses in connection with the sale of 
their shares of EXCO Common Stock. The Make Whole Payment will be equal 
to:
    (1) The amount of the investment loss incurred by the Invested 
Participants on the sale of EXCO Common Stock acquired, plus
    (2) The amount the Invested Participants would have received had 
their Rights been sold during the Rights Offering.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department, 
telephone (202) 693-8456. (This is not a toll-free number.)

The Grossberg, Yochelson, Fox & Beyda LLP Profit Sharing Plan (the Plan 
or Applicant) Located in Washington, DC

[Prohibited Transaction Exemption 2018-06; Exemption Application No. D-
11895]

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 40 days of the publication, on 
June 28, 2017, of the Notice in the Federal Register. All comments were 
due by August 7, 2017. 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-11895), 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 June 28, 2017 at 82 FR 
29334.

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 of the Code, by reason of section 
4975(c)(1)(A), (D) and (E) of the Code,\9\ will not apply to the sale 
(the Sale) by the Plan of a limited liability company interest (the LLC 
Interest) to GYFB-Commons, LLC (GYFB-Commons), an entity that will be 
owned by the current partners of the law firm, Grossberg, Yochelson, 
Fox & Beyda, LLP (the Plan Sponsor); provided that the following 
conditions are satisfied:
---------------------------------------------------------------------------

    \9\ For purposes of this exemption, references to section 406 of 
Title I of the Act, unless otherwise specified, should be read to 
refer as well to the corresponding provisions of section 4975 of the 
Code.
---------------------------------------------------------------------------

    (a) The Sale of the LLC Interest is a one-time transaction for 
cash;
    (b) The Sale price for the LLC Interest is the greater of: 
$518,400; or the fair market value of the LLC Interest as determined by 
a qualified independent appraiser (the Independent Appraiser) in an 
updated appraisal on the date of the Sale. The updated appraisal must 
be submitted to the Department within 30 days of the Sale and will be 
included as part of the record developed under D-11895;
    (c) The terms and conditions of the Sale are no less favorable to 
the Plan than the terms the Plan would receive under similar 
circumstances in an arm's-length transaction with an unrelated third 
party; and
    (d) The Plan pays no commissions, fees, or other costs or expenses 
associated with the Sale, including the fees of the Independent 
Appraiser and the costs of obtaining the exemption.

FOR FURTHER INFORMATION CONTACT: 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.

    Signed at Washington, DC, this 29th day of March, 2018.
Lyssa E. Hall,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2018-06755 Filed 4-2-18; 8:45 am]
 BILLING CODE 4510-29-P