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10074 Federal Register / Vol. 62, No.

43 / Wednesday, March 5, 1997 / Notices

DEPARTMENT OF LABOR Notice of Interested Persons by a qualified, independent appraiser,


Notice of the proposed exemptions or (b) the original acquisition and
Pension and Welfare Benefits will be provided to all interested holding costs, plus attributable
Administration persons in the manner agreed upon by opportunity costs.
the applicant and the Department Summary of Facts and Representations
[Application No. D–10307, et al.] within 15 days of the date of publication
1. The Plan is a combination 401(K)
in the Federal Register. Such notice
Proposed Exemptions; ADP Fluor and profit sharing plan sponsored by
shall include a copy of the notice of
Daniel, Incorporated Retirement ADP Fluor Daniel, Incorporated (ADP).
proposed exemption as published in the
Savings Plan (the Plan) ADP is an Arizona corporation engaged
Federal Register and shall inform
in the business of international
interested persons of their right to
AGENCY:Pension and Welfare Benefits architecture and engineering. As of
comment and to request a hearing
Administration, Labor. December 31, 1994, the Plan had 250
(where appropriate).
participants and assets with a fair
ACTION: Notice of proposed exemptions. SUPPLEMENTARY INFORMATION: The
market value of approximately
proposed exemptions were requested in $4,642,585.00.
SUMMARY: This document contains applications filed pursuant to section 2. Among the assets of the Plan are
notices of pendency before the 408(a) of the Act and/or section the Units, which are two shares of the
Department of Labor (the Department) of 4975(c)(2) of the Code, and in Central Corridor-Osborn Investors
proposed exemptions from certain of the accordance with procedures set forth in Limited Partnership (the Limited
prohibited transaction restriction of the 29 CFR Part 2570, Subpart B (55 FR Partnership), an Arizona limited
Employee Retirement Income Security 32836, 32847, August 10, 1990). partnership. The Plan’s percentage
Act of 1974 (the Act) and/or the Internal Effective December 31, 1978, section ownership represented by its Units in
Revenue Code of 1986 (the Code). 102 of Reorganization Plan No. 4 of the Limited Partnership is 3.11%. The
1978 (43 FR 47713, October 17, 1978) Limited Partnership owns a 2.26 acre
Written Comments and Hearing
transferred the authority of the Secretary property located at the southeast corner
Requests
of the Treasury to issue exemptions of of Central Avenue and Osborn Road, in
Unless otherwise stated in the Notice the type requested to the Secretary of Phoenix, Arizona. The Plan acquired the
of Proposed Exemption, all interested Labor. Therefore, these notices of Units directly from the Limited
persons are invited to submit written proposed exemption are issued solely Partnership, an unrelated third party, in
comments, and with respect to by the Department. 1987. The decision to acquire the Units
exemptions involving the fiduciary The applications contain was made by the Plan trustees; Richard
prohibitions of section 406(b) of the Act, representations with regard to the Anderson, Philip Owen, Dale Harman,
requests for hearing within 45 days from proposed exemptions which are Solomon Pan, and Michael Stanley (the
the date of publication of this Federal summarized below. Interested persons Trustees).1 It is represented that the Plan
Register Notice. Comments and request are referred to the applications on file
paid a total of $25,000 to acquire the
for a hearing should state: (1) The name, with the Department for a complete
Units and subsequently made additional
address, and telephone number of the statement of the facts and
cash contributions and various other
person making the comment or request, representations.
payments totaling $34,800 between
and (2) the nature of the person’s ADP Fluor Daniel, Incorporated 1989 and 1996 in connection with the
interest in the exemption and the Retirement Savings Plan (The Plan) holding of the Units. It is further
manner in which the person would be Located in Tucson, Arizona represented that the Plan never derived
adversely affected by the exemption. A any income from the investment in the
request for a hearing must also state the (Application No. D–10307)
Units to offset the expenditures made by
issues to be addressed and include a Proposed Exemption the Plan related to the acquisition and
general description of the evidence to be holding of the Units. In this regard, it is
The Department is considering
presented at the hearing. A request for represented that the cumulative costs
granting an exemption under the
a hearing must also state the issues to paid by the Plan in connection with the
authority of section 408(a) of the Act
be addressed and include a general acquisition and holding of the Units is
and section 4975(c)(2) of the Code and
description of the evidence to be $59,800.
in accordance with the procedures set
presented at the hearing. 3. The Applicant represents that the
forth in 29 CFR part 2570, subpart B (55
ADDRESSES: All written comments and FR 32847, August 10, 1990). If the Plan wishes to sell the Units in order to
request for a hearing (at least three exemption is granted, the restrictions of divest itself of an asset which has and
copies) should be sent to the Pension sections 406(a) and 406(b) (1) and (2) of may continue to depreciate in value. It
and Welfare Benefits Administration, the Act and the sanctions resulting from is further represented that the Units
Office of Exemption Determinations, the application of section 4975(c)(1) (A) which are not publicly traded are
Room N–5649, U.S. Department of through (E) of the Code, shall not apply incompatible with the Plan’s new
Labor, 200 Constitution Avenue, NW., to the proposed sale by the Plan of two administrative investment features,
Washington, DC 20210. Attention: limited partnership interests (the Units) which permits participants to access
Application No. stated in each Notice of to ADP Fluor Daniel, Incorporated, a daily valuations and to individually
Proposed Exemption. The applications party in interest with respect to the direct the investments of their accounts.
for exemption and the comments Plan, providing the following conditions Selling the Units to ADP will enable the
received will be available for public are satisfied: (1) the sale is a one-time Plan to convert an illiquid, non-publicly
inspection in the Public Documents transaction for cash; (2) the Plan pays no traded real estate investment into cash,
Room of Pension and Welfare Benefits commissions nor other expenses 1 The Department expresses no opinion herein on
Administration, U.S. Department of relating to the sale; and (3) the purchase whether the acquisition and holding of the Units by
Labor, Room N–5507, 200 Constitution price is the greater of: (a) The fair the Plan violated any of the provisions of Part 4 of
Avenue, NW., Washington, DC 20210. market value of the Units as determined Title I of the Act.
Federal Register / Vol. 62, No. 43 / Wednesday, March 5, 1997 / Notices 10075

which will then be allocated to the market value, such excess may be (b) The decision to make a capital
accounts of participants and invested considered to be a contribution by the contribution to a TA Fund is made on
pursuant to the direction of those sponsoring employer to the plan and behalf of the Plan by a Plan fiduciary
participants. therefore must be examined under which is independent of and unrelated
The Applicant obtained an applicable provisions of the Code, to TA and the portfolio company whose
independent appraisal of the units from including sections 401(a)(4), 404 and interest is acquired by the TA Fund.
Gary Ringel, President of U.S.L. 415. (c) TA does not otherwise provide
Valuation, Inc., a real estate appraiser investment advice to the Plan within the
and consultant located in Scottsdale, Notice to Interested Persons
meaning of Regulation section 29 CFR
Arizona. After reviewing the pertinent Notice of the proposed exemption 2510.3–21(c) with respect to such Plan’s
data, Mr. Ringel estimated that the shall be given to all interested persons assets that are invested in the TA Fund.
Units’ fair market value as of April 30, by personal delivery and by first-class (d) At the Determination Date, the
1996 was $20,800. mail within 10 days of publication of Plan has aggregate assets that are in
4. The Applicant proposes to the notice of pendency in the Federal excess of $50 million. In the case of
purchase the Units from the Plan for Register. Such notice shall include a multiple Plans which are invested
$85,072, which will be allocated on a copy of the notice of proposed through a master or group trust in a TA
pro rate basis among the participants’ exemption as published in the Federal Fund, the assets of which are ‘‘plan
accounts that are invested in the Units. Register and shall inform interested assets’’ under 29 CFR 2510.3–101 (the
This amount represents the greater of: persons of their right to comment and/ Plan Asset Regulation), the $50 million
(a) The fair market value of the Units as or request a hearing with respect to the threshold applies to the aggregate assets
determined by a qualified, independent proposed exemption. Comments and of such trust.
appraiser, or (b) the Units’ original requests for a hearing are due within 40 (e) Subsequent to the Determination
acquisition and holding costs to the days of the date of publication of the Date, the TA Fund is a party in interest
Plan plus opportunity costs attributable notice in the Federal Register. with respect to the Plan solely by reason
to the Units. It is represented, that of a relationship to a portfolio company
because the fair market value of the FOR FURTHER INFORMATION CONTACT: Ms.
Janet L. Schmidt of the Department, which is a service provider to a Plan, as
Units is less than their acquisition cost,
telephone (202) 219–8883. (This is not described in section 3(14) (H) or (I) of
ADP will purchase the units for the
a toll-free number.) the Act, including a fiduciary with
latter amount. Taking into account the
respect to such Plan.
purchase price of the Units ($25,000) TA Associates, Inc. (TA Associates) (f) At the Determination Date, the
and the associated holding costs Located in Boston, MA capital commitment of the Plan
($25,272), the Plan will receive a rate of
(Application No. D–10314) (together with the capital commitments
return approximately equal to six
of any other Plans maintained by the
percent for each of the eight years that Proposed Exemption same employer or employee
the Plan has held the Units.
The Applicant represents that the The Department is considering organization) with respect to the TA
subject transaction is in the interest of granting an exemption under the Fund, does not exceed 15 percent of the
the Plan because if the Plan sold the authority of section 408(a) of the Act total capital commitments with respect
Units on the open market, the Plan and section 4975(c)(2) of the Code and to such TA Fund.
would receive substantially less than in accordance with the procedures set (g) At the Determination Date, the
the amount the Applicant is willing to forth in 29 CFR part 2570, subpart B (55 percentage of the Plan’s assets
pay. In addition, the Plan could not at FR 32836, 32847, August 10, 1990). If committed to be invested in the TA
this time sell the Units to an unrelated the exemption is granted, the Fund does not exceed 5 percent of the
third party at other than a substantial restrictions of sections 406(a) of the Act Plan’s total assets.
discount. and the sanctions resulting from the (h) At the Determination Date, a
5. In summary, the Applicant application of section 4975 of the Code, Plan’s aggregate capital commitment to
represents that the subject transaction by reason of section 4975(c)(1) (A) all TA Funds does not exceed 25
satisfies the statutory criteria for an through (D) of the Code shall not apply, percent of the Plan’s total assets.
exemption under section 408 of the Act effective December 29, 1993, to the (i) The Plan receives the following
for the following reasons: (1) The sale making, by an employee benefit plan initial and ongoing disclosures with
will be a one-time transaction for cash; (the Plan), of capital contributions to respect to the TA Fund:
(2) the Plan will not pay commissions any venture capital fund (the TA Fund) (1) A copy of the private placement
nor other expenses relating to the sale; that is organized, sponsored and/or memorandum applicable to the TA
(3) the sale will enhance the liquidity of managed by TA Associates and/or any Fund or another comparable document
the assets of the Plan; and (4) the of its affiliates (collectively, TA) containing substantially the same
purchase price will be the greater of: (a) pursuant to a contractual obligation by information;
the fair market value of the Units as a Plan having an interest in the TA (2) A copy of the limited partnership
determined by a qualified, independent Fund.2 or other agreement establishing the TA
appraiser, or (b) the original acquisition This proposed exemption is subject to Fund;
and holding costs of the Units plus the following conditions: (3) A copy of the subscription
attributable opportunity costs. (a) At the time the Plan undertakes agreement applicable to the TA Fund, if
the obligation to make such capital any;
Tax Consequences of Transaction (4) Copies of the proposed exemption
contributions (the Determination Date),
The Department of the Treasury has the TA Fund is not a party in interest and grant notice related to the
determined that if a transaction between with respect to the Plan. exemptive relief described herein; and
a qualified employee benefit plan and (5) Periodic, but no less frequently
its sponsoring employer (or affiliate 2 As discussed herein, TA Funds are expected to than annually, reports relating to the
thereof) results in the plan either paying be organized as venture capital operating overall financial position and
less than or receiving more than fair companies that are managed by TA. operational results of the TA Fund
10076 Federal Register / Vol. 62, No. 43 / Wednesday, March 5, 1997 / Notices

including copies of the TA Fund’s government plans, endowments and operating companies, the applicant
annual financial statements. other tax exempt organizations. The represents that none of the TA Funds
(j) With respect to capital applicant represents that venture capital will hold ‘‘plan assets’’ and that the
contributions made to a TA Fund by a funds, such as the TA Funds, allow compensation paid to TA by the TA
Plan after the date of issuance of the Plans, particularly those having Funds will not be subject to the
final exemption, TA maintains or causes significant asset bases, to achieve greater prohibitions under the Act.5
to be maintained for a period of six diversification by asset class. As such, TA’s most recent fund, Advent VII,
years from the date of the transaction many of the investors in existing TA has aggregate capital commitments of
the records necessary to enable the Funds and many potential investors in approximately $303 million from 83
persons described in paragraph (k) to future TA Funds will be Plan investors individual and institutional investors.
determine whether the conditions of that are covered by the Act. Of the institutional investors, 14
this exemption have been met, except 2. Each TA Fund is organized and
operated so that the assets of such TA investors are Plans that are covered
that—
(1) A prohibited transaction will not Fund will not be deemed to be plan under the provisions of the Act. These
be considered to have occurred, if due assets under the Plan Asset Regulation. Plans have made a total capital
to circumstances beyond the control of In most cases, this results from the fact commitment to Advent VII of $95
TA, the records are lost or destroyed that the TA Fund is operated in a million.
prior to the end of the six year period; manner which causes such fund to 4. Each investor in a TA Fund,
and qualify as a venture capital operating including each Plan investor, enters into
(2) No party in interest, other than company.3 In some cases, it may be the a binding commitment to make capital
TA, shall be subject to the civil penalty result of the fact that the equity contributions to the TA Fund in an
that may be assessed under section participation in the TA Fund by benefit amount specified by the investor.
502(i) of the Act, or to the taxes imposed plan investors is not significant (i.e., Although an investor’s capital
by section 4975 (a) and (b) of the Code, more than 75 percent or more of the commitments are not required to be
if the records are not maintained, or are equity interest in the entity is held by made at the outset, capital is drawn
not available for examination as non-benefit plan investors).4 down over time as the TA Fund
required by paragraph (k). 3. The TA Funds have typically been identifies and makes its venture capital
(k)(1) Except as provided in paragraph structured as limited partnerships with and other investments. Generally,
(k)(2) and notwithstanding any TA serving as general partner and, in capital is called down in installments
provisions of subsection (a)(2) and (b) of some cases, having an interest as limited ranging from 5 percent to 10 percent of
section 504 of the Act, the records partner. (TA Funds organized in the the total commitment. In most cases, all
referred to in paragraph (j) are future may be organized as limited of the capital commitments will have
unconditionally available at their liability companies.) The TA Funds are been drawn down within 3 to 5 years of
customary location for examination managed by TA which receives a pre- the establishment of the TA Fund.
during normal business hours by— specified management fee as well as a
5. In recent years, the TA Funds have
(A) Any duly authorized employee or pre-specified incentive allocation after
expanded their focus to include a wide
representative of the Department or the investors have received distributions in
excess of their capital contributions plus variety of portfolio companies.6
Internal Revenue Service; Specifically, the TA Funds have
(B) Any fiduciary of a Plan who has a pre-specified minimum rate of return.
Because the TA Funds are expected to acquired, and expect to acquire,
an interest in the TA Fund and has the
be organized as venture capital interests in portfolio companies which
authority to acquire or dispose of the
are involved, either directly or through
interest of the Plan in the TA Fund, or
subsidiaries, in various aspects of the
any duly authorized employee or 3 Regulation section 29 CFR 2510.3–101(c) of the

Plan Asset Regulation defines the term ‘‘operating financial services industry. TA believes
representative of such fiduciary; and
(C) Any participant or beneficiary of
company’’ as an entity that is primarily engaged, this broader scope is necessary to enable
directly or through a majority-owned subsidiary or the TA Funds to maximize investment
any Plans or duly authorized employee subsidiaries, in the production or sale of a product
or representative of such participant or or service other than the investment of capital. The opportunities and investment returns. In
beneficiary. term ‘‘operating company’’ includes a ‘‘venture TA’s view, business opportunities can
capital operating company.’’ arise in connection with start-up or
(2) None of the persons described in Regulation section 29 CFR 2510.3–101(d)
paragraph (k)(1)(B) and (k)(1)(C) shall be provides, in part, that an entity is a ‘‘venture capital
later-stage companies (including spin-
authorized to examine trade secrets of operating company’’ if at least 50 percent of its offs and management buy-outs of
TA or commercial or financial assets are invested in venture capital investments, existing business operations) in
and the entity, in the ordinary course of its
information which is privileged or business, actually exercises management rights with 5 The Department is providing no opinion with
confidential. respect to one or more operating companies in regard to whether a TA Fund is a venture capital
EFFECTIVE DATE: If granted, this proposed which it invests. Regulation section 29 CFR 2510.3– operating company or whether the equity
exemption will be effective December 101(d)(3) explains that a venture capital investment participation by Plans investing in a TA Fund is not
is an investment in an operating company (other significant. In addition, the Department is not
29, 1993. than a venture capital operating company) as to expressing any views with respect to the
which the investor has or obtains management compensation that is paid to TA by a TA Fund.
Summary of Facts and Representations rights. The term ‘‘management rights’’ is defined 6 According to the applicant, the term ‘‘portfolio
1. TA is a Delaware corporation under regulation section 29 CFR 2510.3–
101(d)(3)(ii) to mean contractual rights directly company’’ refers to each of the operating companies
involved in the venture capital industry between the investor and an operating company to in which a venture capital fund has made an
since 1968. TA has organized, substantially participate in, or substantially investment. Thus, for example, when a venture
sponsored and/or managed 21 venture influence the conduct of, the management of the capital fund, such as a TA Fund, makes an
operating company. investment in a start-up, high tech company, that
capital funds, involving total capital 4 Regulation section 2510.3–101(f)(1) states, in company becomes one of the venture capital fund’s
commitments of approximately $1.46 pertinent part, that equity participation in an entity portfolio companies and will remain so as long as
billion. The investors in the TA Funds by benefit plan investors is ‘‘significant’’ on any the venture capital fund retains its investment in
are primarily wealthy individuals and date, if immediately after the most recent that high tech company. Similarly, if a venture
acquisition of any equity interest in the entity, 25 capital fund acquires an interest in an investment
sophisticated investors, including percent or more of the value of any class of equity management firm, the investment management firm
employee benefit plans that are subject interests in the entity is held by benefit plan will become a portfolio company of the venture
to the Act, private foundations, investors. capital fund.
Federal Register / Vol. 62, No. 43 / Wednesday, March 5, 1997 / Notices 10077

virtually any type of business rather an administrative exemption from the exceed 5 percent of the Plan’s total
than exclusively in the hi-technology Department. assets. Seventh, at the Determination
area. 7. If granted, the proposed exemption Date, a Plan’s aggregate capital
6. As part of this diversification trend, will be effective December 29, 1993. On commitment with respect to all TA
TA Funds have been and will be that date, one of the TA Funds acquired Funds must not exceed 25 percent of
acquiring interests in portfolio 100 percent of the interest in a portfolio such Plan’s total assets. TA represents
companies that are involved in company which owned or subsequently that the transaction which occurred on
providing money management services, acquired several investment managers. December 29, 1993 met all of the
brokerage services or other types of At least one of the investment managers foregoing substantive conditions.
services which may be utilized by Plans provided services to a Plan that was also 9. The conditions of the exemption
and institutional investors. The an investor in the TA Fund. As a result, also require that each Plan receive the
portfolio company may be, or may TA believes that prohibited transactions following initial and ongoing written
become, a party in interest with respect may have occurred when the Plan disclosures from TA: (a) A copy of the
to one or more Plans which hold an subsequently funded its remaining private placement memorandum
interest in the TA Fund when such capital contributions to the TA Fund. applicable to the TA Fund or another
portfolio company, or any subsidiary It is represented that the discovery of comparable document containing
thereof performs services for a Plan. The the prohibited transactions was made by substantially the same information; (b) a
services may include fiduciary services TA and not by the investment manager. copy of the limited partnership or other
(e.g., management of assets of the Plan The only role that the investment agreement establishing the TA Fund; (c)
other than those invested in a TA Fund). manager played in these determinations a copy of the subscription agreement
In no event will the portfolio company was its provision to TA of a list of applicable to the TA Fund, if any; (d)
clients which enabled TA to compare copies of the proposed exemption and
or its subsidiary act in a fiduciary
the investment manager’s clients with grant notice related to the exemptive
capacity with respect to the assets of the
the list of investors in the affected TA relief described herein; and (e) periodic,
Plan that are invested in the TA Fund.
Fund. It is represented that the but no less frequently than annually,
If the TA Fund owns, directly or investment manager did not have any reports relating to the overall financial
indirectly, a 10 percent or more interest responsibility with respect to the assets position and operational results of the
in a service provider, TA notes that the of the Plan that were invested in the TA TA Fund including copies of the TA
Fund will become a party in interest Fund. Fund’s annual financial statements. In
with respect to such Plan under section 8. The requested exemption is subject addition, with respect to capital
3(14) (H) and (I) of the Act.7 Since a TA to a number of conditions that will contributions made to a TA Fund by a
Fund frequently purchases a 10 percent apply both retroactively and Plan after the date of issuance of the
or more interest in a portfolio company, prospectively. First, the TA Fund’s final exemption, TA will maintain or
TA represents that it is possible that a party in interest status will, in all cases, cause to be maintained for a period of
TA Fund could become a 10 percent or arise on the Determination Date, i.e., six years from the date of each
more owner of a service provider and a after the Plan has made a binding transaction, records of each Plan
party in interest with respect to each commitment to invest in the TA Fund, investing in a TA Fund and each
Plan as to which the portfolio company including its commitment to make portfolio company comprising a TA
(or one of its subsidiaries) is a service future capital contributions to the TA Fund. Such records will enable the
provider. Once a TA Fund becomes a Fund. Second, the decision to undertake Department and other persons to
party in interest with respect to a Plan, the obligation to make a binding determine whether the terms and
TA states that the Plan would be commitment must be made on behalf of conditions of the exemption are being
prohibited from engaging in any the Plan by a Plan fiduciary which is met.
transaction with that TA Fund. independent of and unrelated to TA and 10. If the exemption is not granted,
If a TA Fund were to become a party the portfolio company. Third, TA must TA represents that it and the TA Funds
in interest with respect to a Plan, TA is not otherwise provide investment would be required to make one of
concerned that a capital contribution advice to the Plan within the meaning several adjustments designed to avoid
made by the Plan subsequent to the TA of Regulation section 29 CFR 2510.3– the prohibited transaction concern that
Fund’s becoming a party in interest 21(c) with respect to such Plan’s assets is the subject of this request. However,
would violate section 406(a)(1)(D) of the that are invested in the TA Fund. TA states that it does not believe these
Act notwithstanding the fact that the Fourth, at the Determination Date, the adjustments would be in the best
capital contribution is being made Plan must have aggregate assets that are interest of existing or prospective Plan
pursuant to a pre-existing binding in excess of $50 million. In the case of investors. In this regard, TA represents
contractual commitment made by the multiple Plans which are invested that it might attempt to avoid the
Plan at a time when the TA Fund was through a master or group trust in an problem by not acquiring any portfolio
not a party in interest. Therefore, to entity, the $50 million threshold will companies which are, directly or
resolve these potential technical apply to the aggregate assets of such indirectly, service providers to any of a
violations of the Act, TA has requested trust or entity. Fifth, as of the TA Fund’s Plan investors. However, TA
Determination Date, the capital does not consider this alternative
7 In this regard, it is noted that the corresponding commitment of the Plan (together with satisfactory because it would limit the
section of the Code relating to disqualified persons the capital commitments of any other TA Fund’s potential range of
(see section 4975(e)(2) (H) and (I) does not contain Plans maintained by the same employer investments and diminish the expected
a similar provision which would make the owner
of 10 percent or more of a service provider a
or employee organization) with respect investment return of such Fund.
disqualified person with respect to a Plan. to the TA Fund, must not exceed 15 Moreover, TA points out that a portfolio
Nevertheless, because the service provider is a percent of the total capital commitments company which is not a service
disqualified person under section 4975(e)(2)(B) of with respect to such TA Fund. Sixth, at provider at the time of the TA Fund’s
the Code, TA has requested that the exemption
extend to both the Code and the Act in order to
the Determination Date, the percentage investment might become a service
avoid any potential concerns regarding the of the Plan’s assets committed to be provider at some time in the future.
possibility of indirect prohibited transactions. invested in the TA Fund must not Under these circumstances, TA
10078 Federal Register / Vol. 62, No. 43 / Wednesday, March 5, 1997 / Notices

represents that it would be impractical commitment of the Plan (together with duties respecting the plan solely in the
to restrict the activities of all portfolio the capital commitment of any other interest of the participants and
companies in which the TA Fund related Plans maintained by the same beneficiaries of the plan and in a
invests to assure that no such portfolio employer or employee organization) has prudent fashion in accordance with
company would ever become a service not and will not exceed more than 15 section 404(a)(1)(b) of the act; nor does
provider to any TA Fund’s Plan percent of the total outstanding capital it affect the requirement of section
investors. According to TA, such commitments with respect to the TA 401(a) of the Code that the plan must
restriction would be contrary to the best Fund; (d) at the Determination Date, the operate for the exclusive benefit of the
interest of the TA Funds and their percentage of the Plan’s assets employees of the employer maintaining
investors, particularly, their Plan committed to be invested in the TA the plan and their beneficiaries;
investors. Fund does not and will not exceed 5 (2) Before an exemption may be
As another alternative, TA represents percent of the Plan’s total assets and the granted under section 408(a) of the Act
that it could limit the offering of Plan’s aggregate commitment to all TA and/or section 4975(c)(2) of the Code,
interests in the TA Funds to those Plans Funds has not and will not exceed 25 the Department must find that the
which could take advantage of percent of the Plan’s total assets; (e) a exemption is administratively feasible,
Prohibited Transaction Exemption (PTE) Plan investing in a TA Fund has or will in the interests of the plan and of its
84–14 (49 FR 9494 March 13, 1984), the have assets that are in excess of $50 participants and beneficiaries of the
Class Exemption for Plan Asset million; and (f) TA has or will make plan;
Transactions Determined by written disclosures to the Plan regarding (3) The proposed exemptions, if
Independent Qualified Professional the TA Fund both at the time of the granted, will be supplemental to, and
Asset Managers (QPAMs) or PTE 96–23 initial commitment to invest in such not in derogation of, any other
(61 FR 15975, April 10, 1996), the Class Fund as well as on an ongoing basis. provisions of the Act and/or the Code,
Exemption for Plan Asset Transactions including statutory or administrative
Determined by In-House Asset Managers Notice to Interested Persons
exemptions and transitional rules.
(INHAMs).8 However, TA believes that Those persons who may be interested Furthermore, the fact that a transaction
such an approach would be unduly in the pendency of the requested is subject to an administrative or
restrictive and not in the best interest of exemption include fiduciaries of Plans statutory exemption is not dispositive of
the Plans since relatively few Plans whose assets are currently invested in a whether the transaction is in fact a
could take advantage of PTE 96–23. TA Fund. Accordingly, the Department prohibited transaction; and
Also Plans would be forced to hire a has determined that the only practical
(4) The proposed exemptions, if
QPAM and incur an additional expense form of providing notice to such Plan
granted, will be subject to the express
in order to invest in a TA Fund if the fiduciaries is the distribution, by TA, of
condition that the material facts and
Plan’s named fiduciary would otherwise a copy of the proposed exemption by
representations contained in each
make that decision itself. first class mail within 30 days of the
application are true and complete and
11. In summary, it is represented that date of publication of the pendency
accurately describe all material terms of
the proposed exemption has satisfied or notice in the Federal Register. The
the transaction which is the subject of
will satisfy the statutory conditions for notice will include a copy of the notice
the exemption. In the case of continuing
an exemption under section 408(a) of of proposed exemption, as published in
exemption transactions, if any of the
the Act because: (a) At the the Federal Register, as well as a
supplemental statement, as required, material facts or representations
Determination Date, the TA Fund’s
pursuant to 29 CFR 2570.43(b)(2), which described in the application change
party in interest status has or will, in all
shall inform interested persons of their after the exemption is granted, the
cases, arise after the Plan has made its
right to comment on the pending exemption will cease to apply as of the
binding commitment to invest in the TA
exemption. Comments with respect to date of such change. In the event of any
Fund, including its commitment to
the proposed exemption are due 60 days such change, application for a new
make future capital contributions to the
after the date of publication of the exemption may be made to the
TA Fund; (b) the decision by a Plan to
proposed exemption in the Federal Department.
make capital contributions to the TA
Fund has been and will be made on Register. Signed at Washington, DC, this 28th day of
behalf of the Plan by a Plan fiduciary FOR FURTHER INFORMATION CONTACT: Ms. February 1997.
which is independent of and unrelated Jan D. Broady of the Department, Ivan Strasfeld,
to TA and the portfolio company that is telephone (202) 219–8881. (This is not Director of Exemption Determinations,
acquired by the TA Fund; (c) TA will a toll-free number.) Pension and Welfare Benefits Administration,
not otherwise provide investment U.S. Department of Labor.
General Information [FR Doc. 97–5430 Filed 3–4–97; 8:45 am]
advice to the Plan within the meaning
of 29 CFR 2510.3–21(c) of the Act with The attention of interested persons is BILLING CODE 4510–29–M
respect to such Plan’s assets that are directed to the following:
invested in the TA Fund; (d) as of the (1) The fact that a transaction is the
subject of an exemption under section [Prohibited Transaction Exemption 97–15;
Determination Date, the capital Exemption Application No. D–10172, et al.]
408(a) of the Act and/or section 4975
8 PTE 84–14 permits various parties which are (c)(2) of the Code does not believe a
Grant of Individual Exemptions; The
related to employee benefit plans to engage in fiduciary or other party in interest of
transactions involving plan assets, if among other Chicago Corporation (TCC), et al.
disqualified person from certain other
conditions, the assets are managed by QPAMs (i.e.,
banks, savings and loan associations, insurance
provisions of the Act and/or the Code, AGENCY: Pension and Welfare Benefits
companies or investment advisers registered under including any prohibited transaction Administration, Labor.
the Investment Advisers Act of 1940), which are provisions to which the exemption does ACTION: Grant of individual exemptions.
independent of the parties in interest and meet not apply and the general fiduciary
certain financial standards. PTE 96–23 permits
various transactions involving employee benefit
responsibility provisions of section 404 SUMMARY: This document contains
plans whose assets are managed by INHAMs and of the act, which among other things exemptions issued by the Department of
party in interest service providers. require a fiduciary to discharge his Labor (the Department) from certain of