Exemptions from Certain Prohibited Transaction Restrictions, 66752-66757 [2018-28092]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Notices]
[Pages 66752-66757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28092]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Exemptions from Certain Prohibited Transaction Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grants 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: 2018-08, Liberty Media 401(k) 
Savings Plan, D-11890; and 2018-09, CLS Investments, LLC and 
Affiliates, D-11931.

SUPPLEMENTARY INFORMATION: Notices were published in the Federal 
Register of the pendency before the Department of proposals to grant 
such exemptions. Each notice set forth a summary of the facts and 
representations made by the applicant for the exemption, and referred 
interested persons to the application for a complete statement of the 
facts and representations. Each application is available for public 
inspection at the Department in Washington, DC Each notice also invited 
interested persons to submit comments on the requested exemption to the 
Department. In addition, each notice stated that any interested person 
might submit a written request that a public hearing be held (where 
appropriate). Each 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.
    Each notice of proposed exemption was issued, and each 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) and based upon 
the entire record, the Department makes the following findings:
    (a) Each exemption is administratively feasible;
    (b) Each exemption is in the interests of the plan and its 
participants and beneficiaries; and
    (c) Each exemption is protective of the rights of the participants 
and beneficiaries of the plan.

Liberty Media 401(k) Savings Plan (the Plan) Located in Englewood, CO

[Prohibited Transaction Exemption 2018-08; Exemption Application No. 
D-11890]

Written Comments

    In the Notice of Proposed Exemption published in the Federal 
Register on April 4, 2018 at 83 FR 14505 (the Notice), the Department 
invited all interested persons to submit written comments and requests 
for a hearing within thirty-seven (37) days of the date of the 
publication. All comments and requests for a hearing were due by May 
11, 2018.
    During the comment period, the Department received no comments and 
no requests for a public hearing.
    After full consideration and review of the entire record, the 
Department has determined to grant the exemption, as set forth above. 
The complete application file (D-11890) 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 April 4, 2018 at 83 FR 14505.

Exemption

Section I. Transactions
    Effective for the period beginning May 24, 2016, and ending June 
16, 2016, the restrictions of sections 406(a)(1)(E), 406(a)(2), and 
407(a)(1)(A) of the Act \1\ shall not apply to:
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    \1\ For purposes of this 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.
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    (a) The acquisition by the Plan of certain stock subscription 
rights (the Rights) to purchase shares of Series C Liberty Braves 
common stock (the Series

[[Page 66753]]

C Liberty Braves Stock), in connection with a rights offering (the 
Rights Offering) held by Liberty Media Corporation (LMC), the Plan 
sponsor and a party in interest with respect to the Plan; and
    (b) The holding of the Rights by the Plan during the subscription 
period of the Rights Offering, provided that certain conditions are 
satisfied.
Section II. Conditions
    (a) The Plan's acquisition of the Rights resulted solely from an 
independent corporate act of LMC;
    (b) All holders of Series A, Series B, or Series C Liberty Braves 
common stock (Series A, B, or C Liberty Braves Stock), including the 
Plan, were issued the same proportionate number of Rights based on the 
number of shares of the Series A, B, or C Liberty Braves Stock held by 
each such shareholder;
    (c) For purposes of the Rights Offering, all holders of Series A, 
B, or C Liberty Braves Stock, including the Plan, were treated in a 
like manner, with two exceptions: (1) The oversubscription option 
available under the Rights Offering was not available to participants 
in the Plan; and (2) certain participants deemed to be reporting 
persons under Rule 16(b) with respect to LMC did not have the right to 
instruct Fidelity to either sell or exercise the Rights credited to 
their Plan Accounts;
    (d) The acquisition of the Rights by the Plan was made in a manner 
that was consistent with provisions of the Plan for the individually-
directed investment of participant accounts;
    (e) The Liberty Media 401(k) Savings Plan Committee (the Committee) 
directed the Plan trustee to sell the Rights on the NASDAQ Global 
Select Market (the NASDAQ), in accordance with Plan provisions that 
precluded the Plan from acquiring additional shares of Series C Liberty 
Braves Stock;
    (f) The Committee did not exercise any discretion with respect to 
the acquisition and holding of the Rights; and
    (g) The Plan did not pay any fees or commissions in connection with 
the acquisition or holding of the Rights, and it did not pay any 
commissions to any affiliates of LMC in connection with the sale of the 
Rights.

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

CLS Investments, LLC and Affiliates (CLS or the Applicant) Located in 
Omaha, NE

[Prohibited Transaction Exemption 2018-09; Exemption Application No. 
D-11931]

Written Comments

    In the Notice of Proposed Exemption published in the Federal 
Register on April 4, 2018 at 83 FR 14509 (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 May 
19, 2018.
    During the comment period, the Department received one comment 
letter, dated May 7, 2018, and no requests for a public hearing. The 
comment letter, which was submitted by CLS (the Applicant), requests 
certain clarifications and corrections to the operative language and 
the Summary of Facts and Representations (the Summary) of the Notice. 
Specifically, the Applicant requested that:
    1. The first paragraph of Section II(m)(l) be revised so that the 
reference therein to ``Section II(m)(l)(i)-(v)'' should be changed to 
``Section II(m)(l)(i)-(iv).''
    2. Section II(m)(1)(iv) be revised so that the reference therein to 
``this Section II(m)(l)(v)'' should be changed to ``this Section 
II(m)(l)(iv).''
    3. Section II(o) be revised so that the reference therein to 
``those sections'' should be changed to ``that section.''
    4. The second sentence of Section II(p) be revised so that the 
reference to ``paragraph (d) therein'' should be changed to ``paragraph 
(f) therein.''
    5. The last paragraph of Section II(q) be deleted, as the 
definition of ``Best Interest'' is already provided in Section IV(o).
    6. Section IV(k)(3) be revised so that both references therein to 
``Section II(a)(l)-(4)'' should be changed to ``Section II(a)(l)-(2).''
    7. Section IV(k)(4) be revised by adding the word ``expenses'' 
between the words ``operating'' and ``payable.''
    8. Representation 2 of the Summary clarify that CLS does not 
provide secondary services, although its affiliates may provide such 
services.
    In response, the Department concurs with the Applicant's 
clarifications and revisions to the Notice, and has made corresponding 
changes to the operative language. The Department has also noted 
changes to the Summary in accordance with the Applicant's request.
    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-11931) 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 April 4, 2018 at 83 FR 14509.

Exemption

Section I. 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,\2\ shall not apply to the receipt of a fee by CLS from a 
registered, open-end investment company for which CLS serves as an 
investment advisor (an Affiliated Fund), in connection with the 
investment by an employee benefit plan in shares of such Affiliated 
Fund, where CLS serves as an investment advisor or investment manager 
with respect to such plan (Client Plan), provided the conditions of 
this exemption are met.
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    \2\ For purposes of this 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.
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Section II. Specific Conditions
    (a) Each Client Plan which is invested in shares of an Affiliated 
Fund either:
    (1) Does not pay to CLS, for the entire period of such investment, 
any investment management fee, or any investment advisory fee, or any 
similar fee at the plan-level (the Plan-Level Management Fee), as 
defined below in Section IV(l), with respect to any of the assets of 
such Client Plan which are invested in shares of such Affiliated Fund; 
or
    (2) Pays to CLS a Plan-Level Management Fee, based on total assets 
of such Client Plan under management by CLS 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(m), 
paid by such Affiliated Fund to CLS.
    If, during any fee period, in the case of a Client Plan invested in 
shares of an Affiliated Fund, such Client Plan has prepaid its Plan 
Level Management Fee, and such Client Plan purchases shares

[[Page 66754]]

of an Affiliated Fund, the requirement of this Section II(a)(2) 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 in shares of an 
Affiliated Fund:
    (i) Is anticipated and subtracted from the prepaid Plan-Level 
Management Fee at the time of the payment of such fee; or
    (ii) Is returned to such Client Plan, no later than during the 
immediately following fee period; or
    (iii) 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)(2), 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.
    (b) 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 in shares of an Affiliated Fund. However, 
this Section II(b) 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.
    (c) The combined total of all fees received by CLS is not in excess 
of reasonable compensation within the meaning of section 408(b)(2) of 
the Act, for services provided:
    (1) By CLS to each Client Plan; and
    (2) By CLS to each Affiliated Fund in which a Client Plan invests 
in shares of such Affiliated Fund;
    (d) CLS does not receive any fees payable pursuant to Rule 12b-1 
under the Investment Company Act in connection with the transactions 
covered by this exemption;
    (e) No Client Plan is an employee benefit plan sponsored or 
maintained by CLS;
    (f) In the case of a Client Plan investing in shares of an 
Affiliated Fund, 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 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(n), as set forth below) information concerning such Affiliated Fund, 
including but not limited to the items listed below:
    (1) A current summary prospectus issued by each such Affiliated 
Fund;
    (2) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for:
    (i) Investment advisory and similar services to be paid to CLS by 
each Affiliated Fund;
    (ii) Secondary Services to be paid to CLS by each such Affiliated 
Fund; and
    (iii) All other fees to be charged by CLS to such Client Plan and 
to each such Affiliated Fund and all other fees to be paid to CLS by 
each such Client Plan and by each such Affiliated Fund;
    (3) The reasons why CLS may consider investment in shares of such 
Affiliated Fund by such Client Plan to be appropriate for such Client 
Plan;
    (4) A statement describing whether there are any limitations 
applicable to CLS with respect to which assets of such Client Plan may 
be invested in shares of such Affiliated Fund, and if so, the nature of 
such limitations; and
    (5) Upon the request of the Second Fiduciary acting on behalf of 
such Client Plan, a copy of the Notice of Proposed Exemption (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 exemption;
    (g) On the basis of the information described above in Section 
II(f), a Second Fiduciary acting on behalf of a Client Plan authorizes, 
in writing:
    (1) The investment of the assets of such Client Plan in shares of 
an Affiliated Fund;
    (2) The Affiliated Fund-Level Advisory Fee received by CLS for 
investment advisory services and similar services provided by CLS to 
such Affiliated Fund;
    (3) The fee received by CLS for Secondary Services provided by CLS 
to such Affiliated Fund;
    (4) The Plan-Level Management Fee received by CLS for investment 
management and similar services provided by CLS to such Client Plan at 
the plan-level; and
    (5) The selection, by CLS, of the applicable fee method, as 
described above in Section II(a)(1)-(2);
    All authorizations made by a Second Fiduciary pursuant to this 
Section II(g) must be consistent with the responsibilities, 
obligations, and duties imposed on fiduciaries by Part 4 of Title I of 
the Act;
    (h)(1) Any authorization, described above in Section II(g), and any 
authorization made pursuant to negative consent, as described below in 
Section II(i), 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 CLS 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(g), or to 
terminate any authorization made pursuant to negative consent, as 
described below in Section II(i), 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(n), 
as set forth below). However, if a Termination Form has been provided 
to such Second Fiduciary pursuant to Section II(i), then a Termination 
Form need not be provided pursuant to this Section II(h), 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(g), and any 
authorization made pursuant to negative consent, as described below in 
Section II(i), is terminable at will by a Second Fiduciary, acting on 
behalf of a Client Plan, without penalty to such Client Plan, upon 
receipt by CLS, 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; and
    (ii) As of the date that is at least thirty (30) days from the date 
that CLS 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(g), or intent to terminate any 
authorization made pursuant to negative consent, as described below in

[[Page 66755]]

Section II(i), 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(g), or intent to terminate any 
authorization made pursuant to negative consent, as described below in 
Section II(i), 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 implemented by CLS within one (1) 
business day of the date that CLS 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;
    (5) From the date a Second Fiduciary, acting on behalf of a Client 
Plan that invests 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 CLS by such Affiliated Fund, or any 
other fees or charges;
    (i)(1) CLS, at least thirty (30) days in advance of the 
implementation of each fee increase (Fee Increase(s)), as defined below 
in Section IV(k), 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(n), as 
set forth below), a 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(h); and
    (2) As of the date that is at least thirty (30) days from the date 
that CLS sends the Notice of Change of Fees and the Termination Form to 
such Second Fiduciary, the failure by such Second 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(g), or to 
terminate the negative consent authorization, as described in Section 
II(i), will be deemed to be an approval by such Second Fiduciary of 
such Fee Increase.
    (j) CLS 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 CLS to provide.
    (k) All dealings between a Client Plan and an Affiliated 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.
    (l) In the event a Client Plan invests in shares of an Affiliated 
Fund, if such Affiliated Fund places brokerage transactions with CLS, 
CLS 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 CLS 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 
CLS;
    (3) The average brokerage commissions per share, expressed as cents 
per share, paid to CLS 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 CLS;
    (m)(1) CLS provides to the Second Fiduciary of each Client Plan 
invested in shares of an Affiliated Fund with the disclosures, as set 
forth below, and at the times set forth below in Section II(m)(1)(i)-
(iv), 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 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 in shares of such Affiliated Fund which 
contains a description of all fees paid by such Affiliated Fund to CLS;
    (iii) Oral or written responses to the inquiries posed by the 
Second Fiduciary of such Client Plan, as such inquiries arise; and
    (iv) Annually, with a Termination form, as described in Section 
II(h)(1), and instructions on the use of such form, as described in 
Section II(h)(3), except that if a Termination Form has been provided 
to such Second Fiduciary pursuant to Section II(i), then a Termination 
Form need not be provided again pursuant to this Section II(m)(1)(iv) 
until at least six (6) months but no more than twelve (12) months have 
elapsed since a Termination Form was provided;
    (n) Any disclosure required herein to be made by CLS 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 CLS, provided:
    (1) CLS 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 CLS a valid email 
address; and
    (3) The delivery of such electronic email to such Second Fiduciary 
is provided by CLS in a manner consistent with the relevant provisions 
of the Department's regulations at 29 CFR 2520.104b-1(c) (substituting 
the word ``CLS'' 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).
    (o) The authorizations described in Section II(i) may be made 
affirmatively, in writing, by a Second Fiduciary, in a manner that is 
otherwise consistent with the requirements of that section;
    (p) 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(i) above, but only to 
the extent the requirements of Section II(i) 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(i) above, if the requirements of Section II(i) 
are met;
    (q) Standards of Impartial Conduct. If CLS 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, CLS must comply with the 
following conditions with respect to the transaction: (1) CLS acts in 
the Best Interest (as defined below, in Section

[[Page 66756]]

IV(o)) of the Client Plan; (2) all compensation received by CLS 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) CLS's statements about recommended investments, fees, material 
conflicts of interest,\3\ and any other matters relevant to a Client 
Plan's investment decisions are not materially misleading at the time 
they are made.
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    \3\ 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 CLS 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.
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    (r) The purchase price paid and the sales price received by a 
Client Plan for shares in an Affiliated Fund purchased or sold directly 
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; and
    (s) CLS, including any officer and any director of CLS, 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.
Section III. General Conditions
    (a) CLS 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 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 CLS, 
the records are lost or destroyed prior to the end of the six-year 
period; and
    (2) No party in interest other than CLS 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 in shares of an 
Affiliated Fund and any duly authorized employee or representative of 
such fiduciary; and
    (iii) Any participant or beneficiary of a Client Plan invested in 
shares of an Affiliated Fund and any representative of such participant 
or beneficiary;
    (2) None of the persons described in Section III(b)(1)(ii) and 
(iii) shall be authorized to examine trade secrets of CLS, or 
commercial or financial information which is privileged or 
confidential.
Section IV. Definitions
    For purposes of this exemption:
    (a) The term ``CLS'' means CLS Investments, LLC 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 CLS, 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'' means a diversified open-end 
investment company registered with the U.S. Securities and Exchange 
Commission under the Investment Company Act, as amended, for which CLS 
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 CLS. For purposes of this 
exemption, the Second Fiduciary will not be deemed to be independent of 
and unrelated to CLS if:
    (1) Such Second Fiduciary, directly or indirectly, through one or 
more intermediaries, controls, is controlled by, or is under common 
control with CLS;
    (2) Such Second Fiduciary, or any officer, director, partner, 
employee, or relative of such Second Fiduciary, is an officer, 
director, partner, or employee of CLS (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 exemption.
    If an officer, director, partner, or employee of CLS (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;
    (ii) Any authorization in accordance with Section II(g), and any 
authorization, pursuant to negative consent, as described in Section 
II(i); 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 CLS to an 
Affiliated Fund, including, but not limited to, custodial, accounting, 
administrative services, and brokerage services. CLS 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 ``business day'' means any day that:
    (1) CLS is open for conducting all or substantially all of its 
business; and

[[Page 66757]]

    (2) The New York Stock Exchange (or any successor exchange) is open 
for trading.
    (k) The term ``Fee Increase(s)'' includes any increase by CLS in a 
rate of a fee previously authorized in writing by the Second Fiduciary 
of each affected Client Plan pursuant to Section II(g) above, and in 
addition includes, but is not limited to:
    (1) Any fee increase that results from the addition of a service;
    (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 CLS for such fee over 
an existing rate of fee for each such service previously authorized by 
the Second Fiduciary, in accordance with Section II(g) above;
    (3) Any increase in any fee that results from CLS changing from one 
of the fee methods, as described above in Section II(a)(1)-(2), to 
another of the fee methods, as described above in Section II(a)(1)-(2); 
and
    (4) Any change in the amount of operating expenses of a Fund that 
is reimbursed or otherwise waived by CLS or its affiliates to the 
extent that such change results in an increase in the total operating 
expenses payable by the Fund.
    (l) The term ``Plan-Level Management Fee'' includes any investment 
management fee, investment advisory fee, and any similar fee paid by a 
Client Plan to CLS for any investment management services, investment 
advisory services, and similar services provided by CLS 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 CLS for asset 
allocation service(s) (Asset Allocation Service(s)), as defined below 
in Section IV(n), provided by CLS to such Client Plan at the plan-
level.
    (m) The term ``Affiliated Fund-Level Advisory Fee'' includes any 
investment advisory fee and any similar fee paid by an Affiliated Fund 
to CLS under the terms of an investment advisory agreement adopted in 
accordance with section 15 of the Investment Company Act.
    (n) 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.
    (o) 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 CLS, any affiliate or other 
party.

DATES: This exemption will be 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.)

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 20th day of December, 2018.
Lyssa Hall,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2018-28092 Filed 12-26-18; 8:45 am]
BILLING CODE 4510-29-P