Grant of Individual Exemptions; TA Associates, Inc. (TA Associates), et al. [Notices] [08/08/1997]
Grant of Individual Exemptions; TA Associates, Inc. (TA
Associates), et al. [08/08/1997]
Volume 62, Number 153, Page 42839-42842[DOCID:fr08au97-119]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 97-42, et al.; Exemption Application
No. D-10314, et al.]
Grant of Individual Exemptions; TA Associates, Inc. (TA
Associates), et al.
AGENCY: Pension and Welfare Benefits 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
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
Notices were published in the Federal Register of the pendency
before the Department of proposals to grant such exemptions. The
notices set forth a summary of facts and representations contained in
each application for exemption and referred interested persons to the
respective applications for a complete statement of the facts and
representations. The applications have been available for public
inspection at the Department in Washington, D.C. The notices also
invited interested persons to submit comments on the requested
exemptions to the Department. In addition the notices stated that any
interested person might submit a written request that a public hearing
be held (where appropriate). The applicants have represented that they
have complied with the requirements of the notification to interested
persons. No public comments and no requests for a hearing, unless
otherwise stated, were received by the Department.
The notices of proposed exemption were issued and the exemptions
are being granted solely by the Department because, effective December
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR
47713, October 17, 1978) 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 (55 FR 32836, 32847, August 10, 1990) and based upon
the entire record, the Department makes the following findings:
(a) The exemptions are administratively feasible;
(b) They are in the interests of the plans and their participants
and beneficiaries; and
(c) They are protective of the rights of the participants and
beneficiaries of the plans.
TA Associates, Inc. (TA Associates) Located in Boston, MA
[Prohibited Transaction Exemption 97-42; Exemption Application No. D-
10314]
Exemption
The restrictions of section 406(a) of the Act and the sanctions
resulting from the application of section 4975 of the Code, by reason
of section 4975(c)(1)(A) through (D) of the Code, shall not apply,
effective December 29, 1993, to the making, by an employee benefit plan
(the Plan), of capital contributions to any venture capital fund (the
TA Fund) that is organized, sponsored and/or managed by TA Associates
and/or any of its affiliates (collectively, TA) pursuant to a
contractual obligation by a Plan having an interest in the TA Fund.
This exemption is subject to the following conditions:
(a) At the time the Plan undertakes the obligation to make such
capital contributions (the Determination Date), the TA Fund is not a
party in interest with respect to the Plan.
(b) The decision to make a capital contribution to a TA Fund is
made on behalf of the Plan by a Plan fiduciary which is independent of
and unrelated to TA and the portfolio company whose interest is
acquired by the TA Fund.
(c) TA does not otherwise provide investment advice to the Plan
within the meaning of Regulation section 29 CFR 2510.3-21(c) with
respect to such Plan's assets that are invested in the TA Fund.
(d) At the Determination Date, the Plan has aggregate assets that
are in excess of $50 million; provided however, that in the case of--
(1) Two or more Plans which are not maintained by the same
employer, controlled group of corporations or employee organization
(the Unrelated Plans), whose assets are invested in a TA Fund through a
group trust, an insurance company pooled separate account or any other
form of entity the assets of which are ``plan assets'' under 29 CFR
2510.3-101 (the Plan Asset Regulation), the foregoing $50 million
requirement shall in any event be satisfied if such trust, separate
account or other entity has aggregate assets which are in excess of $50
million, provided further that the fiduciary responsible for making the
investment decision on behalf of such group trust, insurance company
pooled separate account or other entity has--
(i) Full investment responsibility <SUP>1</SUP> with respect to the
plan assets invested therein; and
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\1\ For purposes of this exemption, the term ``full investment
responsibility'' means that the fiduciary responsible for making the
investment decision has and exercises discretionary management
authority over all of the assets of the group trust or other plan
assets entity.
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(ii) Total assets under its management and control, exclusive of
the assets invested in the TA Fund, which are in excess of $100
million, for TA Funds established after the date this grant notice is
published in the Federal Register.
(2) Two or more Plans which are maintained by the same employer,
controlled group of corporations or employee organization (the Related
Plans), whose assets are invested in a TA Fund through a master trust
or any other entity the assets of which are ``plan assets'' under the
Plan Asset Regulation, the $50 million requirement shall in any event
be satisfied if such trust or other entity has aggregate assets which
are in excess of $50 million, provided, further, that, in the case of a
[[Page 42840]]
TA Fund established after the date this grant notice is published in
the Federal Register, in addition to the $50 million requirement, if
the fiduciary responsible for making the investment decision on behalf
of such master trust or other entity is not the employer or an
affiliate of the employer, then such fiduciary has total assets under
its management and control, exclusive of the assets invested in the TA
Fund, which are in excess of $100 million.
(e) Subsequent to the Determination Date, the TA Fund is a party in
interest with respect to the Plan solely by reason of a relationship to
a portfolio company which is a service provider to a Plan, as described
in section 3(14) (H) or (I) of the Act, including a fiduciary with
respect to such Plan.
(f) At the Determination Date, the capital commitment of the Plan
(together with the capital commitments of any other Plans maintained by
the same employer, controlled group of corporations or employee
organization) with respect to the TA Fund, does not exceed 15 percent
of the total capital commitments with respect to such TA Fund.
(g) At the Determination Date, the percentage of the Plan's assets
committed to be invested in the TA Fund does not exceed 5 percent of
the Plan's total assets.
(h) At the Determination Date, a Plan's aggregate capital
commitment to all TA Funds does not exceed 25 percent of the Plan's
total assets.
(i) The Plan receives the following initial and ongoing disclosures
with respect to the TA Fund:
(1) A copy of the private placement memorandum applicable to the TA
Fund or another comparable document containing substantially the same
information;
(2) A copy of the limited partnership or other agreement
establishing the TA Fund;
(3) A copy of the subscription agreement applicable to the TA Fund,
if any;
(4) Copies of the proposed exemption and grant notice related to
the exemptive relief described herein; and
(5) Periodic, but no less frequently than annually, reports
relating to the overall financial position and operational results of
the TA Fund including copies of the TA Fund's annual financial
statements.
(j) With respect to capital contributions made to a TA Fund by a
Plan after the date of issuance of the final exemption, TA maintains or
causes to be maintained for a period of six years from the date of the
transaction the records necessary to enable the persons described in
paragraph (k) 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 due to circumstances beyond the control of TA, the records
are lost or destroyed prior to the end of the six year period; and
(2) No party in interest, other than TA, 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 by paragraph (k).
(k)(1) Except as provided in paragraph (k)(2) and notwithstanding
any provisions of subsection (a)(2) and (b) of section 504 of the Act,
the records referred to in paragraph (j) are unconditionally available
at their customary location for examination during normal business
hours by--
(A) Any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(B) Any fiduciary of a Plan which has an interest in the TA Fund
and has the authority to acquire or dispose of the interest of the Plan
in the TA Fund, or any duly authorized employee or representative of
such fiduciary; and
(C) Any participant or beneficiary of any Plan which has an
interest in the TA Fund or duly authorized representative of such
participant or beneficiary.
(2) None of the persons described in paragraph (k)(1)(B) and
(k)(1)(C) shall be authorized to examine trade secrets of TA or
commercial or financial information which is privileged or
confidential.
EFFECTIVE DATE: This exemption is effective as of December 29, 1993.
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 (the Notice) published on March 5,
1997 at 62 FR 10075.
Written Comments
The Department received one written comment with respect to the
Notice. The comment, which was submitted by the applicant, requested
modifications to the conditional language (the Conditions) and the
Summary of Facts and Representations (the Summary) of the Notice in the
following areas:
1. Condition (d). Condition (d) of the Notice establishes a $50
million threshold for Plans that are or will be covered by the
exemption. Specifically, there is a sentence in Condition (d) which
provides that the $50 million threshold will apply to the aggregate
assets of a group trust or a master trust which invests in a TA Fund.
TA requests that this concept also be applied to investments in a TA
Fund by insurance company pooled separate accounts, large collective
investment funds which are organized as partnerships, or other tax
pass-through entities, provided the assets of these entities are deemed
to be plan assets under the Plan Asset Regulation. Under these
circumstances, TA believes that as long as the investing entity has
assets in excess of $50 million and as long as the decision to invest
in the TA Fund is made by an independent fiduciary unrelated to TA,
then it is appropriate to apply the $50 million threshold to the
aggregate assets held by the investing entity.
Although the Department does not object to this provision, it
wishes to emphasize its view that a fiduciary exercising investment
discretion over a pooled investment vehicle that is invested in a TA
Fund should possess some minimum level of investor sophistication.
Therefore, the Department is proposing certain additional requirements
for pooled arrangements involving the assets of either Unrelated Plans
or Related Plans. These requirements are as follows:
A. Unrelated Plans
For two or more Plans which are not maintained by the same
employer, controlled group of corporations or employee organization,
whose assets are invested in a TA Fund through a group trust, insurance
company pooled separate account or other plan asset look-through
entity, the $50 million threshold will apply to the aggregate assets of
such entity so long as the fiduciary responsible for making the
investment decision on behalf of the group trust, insurance company
pooled separate account or other entity has full investment
responsibility with respect to plan assets invested therein. However,
in the event the entity holding the assets of Unrelated Plans is
invested in a TA Fund established after the date this final exemption
is granted, the fiduciary must, in addition to meeting the $50 million
investment threshold, have total assets under its management and
control, exclusive of the assets invested in the TA Fund, which are in
excess of $100 million.
B. Related Plans
With respect to two or more Plans, which are maintained by the same
employer, controlled group of
[[Page 42841]]
corporations or employee organization, whose assets are invested in a
TA Fund through a master trust or any other form of plan asset look-
through entity, the Department notes that the $50 million threshold may
be satisfied by aggregating the assets of the investing Plans within
the pooled vehicle. In this regard, the Department notes that an
employer may retain an independent investment manager to manage all or
a portion of Plan assets invested in a master trust. Under these
circumstances, the Department believes that the independent investment
manager must satisfy the outside business test for any TA Fund that is
established after the date this grant notice is published in the
Federal Register. In addition, the pooled vehicle would still have to
meet the $50 million investment threshold.
Accordingly, Condition (d) has been amended to read as follows:
(d) At the Determination Date, the Plan has aggregate assets
that are in excess of $50 million; provided however, that in the
case of--
(1) Two or more Plans which are not maintained by the same
employer, controlled group of corporations or employee organization
(the Unrelated Plans), whose assets are invested in a TA Fund
through a group trust, an insurance company pooled separate account
or any other form of entity the assets of which are ``plan assets''
under 29 CFR 2510.3-101 (the Plan Asset Regulation), the foregoing
$50 million requirement shall in any event be satisfied if such
trust, separate account or other entity has aggregate assets which
are in excess of $50 million, provided further that the fiduciary
responsible for making the investment decision on behalf of such
group trust, insurance company pooled separate account or other
entity has--
(i) Full investment responsibility with respect to the plan
assets invested therein; and
(ii) Total assets under its management and control, exclusive of
the assets invested in the TA Fund, which are in excess of $100
million, for TA Funds established after the date this grant notice
is published in the Federal Register.
(2) Two or more Plans which are maintained by the same employer,
controlled group of corporations or employee organization (the
Related Plans), whose assets are invested in a TA Fund through a
master trust or any other entity the assets of which are ``plan
assets'' under the Plan Asset Regulation, the $50 million
requirement shall in any event be satisfied if such trust or other
entity has aggregate assets which are in excess of $50 million,
provided, further, that, in the case of a TA Fund established after
the date this grant notice is published in the Federal Register, in
addition to the $50 million requirement, if the fiduciary
responsible for making the investment decision on behalf of such
master trust or other entity is not the employer or an affiliate of
the employer, then such fiduciary has total assets under its
management and control, exclusive of the assets invested in the TA
Fund, which are in excess of $100 million.
2. Condition (k)(1)(B). The applicant notes that the word ``who''
in Condition (k)(1)(B) should be changed to the word ``which.'' The
Department concurs and has made the requested change.
3. Condition (k)(1)(C). The applicant requests that Condition
(k)(1)(C) be amended to clarify that a participant or a beneficiary of
a Plan having an interest ``in a TA Fund'' (or the authorized
representatives of these individuals) may review records that TA
maintains with respect to the exemption. Therefore, the Department has
agreed to modify this condition to read as follows:
Any participant or beneficiary of any Plan which has an interest in
the TA Fund or duly authorized representative of such participant or
beneficiary.
4. Representation 3. Representation 3 of the Summary states that
TA's most recent venture capital fund is Advent VII. Although Advent
VII was the most recent TA Fund at the time the exemption application
was filed, TA states that it subsequently closed a new TA Fund, TA/
Advent VIII, L.P. (Advent VIII), which as of December 31, 1996, had
aggregate capital commitments of approximately $800 million from 96
individual and institutional investors. Of the institutional investors,
17 investors are Plans that are covered by the Act. As of December 31,
1996, these Plans had made a total capital commitment to Advent VIII of
approximately $188 million. In addition, TA wishes to clarify that it
currently has organized, sponsored and/or managed 22 venture capital
funds involving total capital commitments of approximately $2.25
billion. The Department has noted these clarifications.
5. Representation 7. To correct an inadvertent error on its part,
TA wishes to clarify that the fourth line of Representation 7 of the
Summary should refer to ``a greater than 10 percent interest in a
portfolio'' rather than a ``100 percent interest.'' The Department
notes this revision.
6. Representation 8. TA wishes to clarify that in the sixth line of
Representation 8 of the Summary, the word ``on'' should be changed to
the word ``after.'' Again, the Department notes this revision.
Thus, after giving full consideration to the entire record,
including the written comment, the Department has made the
aforementioned changes to the Notice and has decided to grant the
exemption subject to the clarifications described above. The comment
letter has been included as part of the public record of the exemption
application. The complete application file, as well as all supplemental
submissions received by the Department, is made available for public
inspection in the Public Documents Room of the Pension and Welfare
Benefits Administration, Room N-5638, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D.C. 20210.
FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
First Savings Bank, F.S.B. Profit Sharing and Employee Stock Ownership
Plan (the Plan) Located in Clovis, New Mexico
[Prohibited Transaction Exemption 97-43 Exemption Application No. D-
10409]
Exemption
The restrictions of sections 406(a), 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) through (E) of the Code,
shall not apply, effective December 26, 1996 to (1) the acquisition by
the Plan of certain stock rights (the Rights) pursuant to a stock
rights offering (the Offering) by Access Anytime Bancorp, Inc. (the
Parent), which is the parent corporation of First Savings Bank, F.S.B.,
the sponsor of the Plan; (2) the holding of the Rights by the Plan
during the subscription period of the Offering; and (3) the exercise of
certain of the Rights by the Plan; provided that the following
conditions are met:
(A) The Plan's acquisition and holding of the Rights occurred in
connection with the Offering made available to all shareholders of
common stock of the Parent;
(B) All holders of the common stock of the Parent were treated in
the same manner with respect to the Offering, including the Plan;
(C) All decisions regarding the holding and potential exercise of
the Rights by the Plan were made in accordance with Plan provisions for
individually-directed investment of participant accounts by the
individual Plan participants whose accounts in the Plan received Rights
in the Offering; and
(D) With respect to any participants' accounts in the Plan for
which no valid instructions were timely filed regarding the Rights
during the Offering, such Rights expired unexercised in the same manner
as unexercised Rights issued to all other holders of the common stock
of the Parent, since the Rights were not transferable and could not be
sold.
[[Page 42842]]
EFFECTIVE DATE: This exemption is effective as of December 26, 1996.
WRITTEN COMMENTS: The Department no requests for a hearing and one
written comment with respect to the proposed exemption. The comment was
submitted by the applicant, the First Savings Bank, in correction of
information submitted by the applicant which appeared in the Summary of
Facts and Representations (the Summary) in the Notice of Proposed
Exemption. The fourth paragraph of the Summary includes the Employer's
representation that 5,000 Rights were exercised by Invested
Participants, and that the remaining 4,798 Rights expired on the
Expiration Date. The applicant notes that this representation was in
error, reflecting a misunderstanding about the information that was
requested. The applicant represents that the actual number of Rights
exercised by Invested Participants was 367.
After consideration of the entire record, as corrected by the
applicant, the Department has determined to grant the exemption.
For a more complete statement of the summary of facts and
representations supporting the Department's decision to grant this
exemption refer to the Notice of Proposed Exemption published on June
4, 1997 at 62 FR 30620.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
telephone (202) 219-8881. (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 exemptions do 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 each
application are true and complete and accurately describe all material
terms of the transaction which is the subject of the exemption. In the
case of continuing exemption transactions, if any of the material facts
or representations described in the application change after the
exemption is granted, the exemption will cease to apply as of the date
of such change. In the event of any such change, application for a new
exemption may be made to the Department.
Signed at Washington, D.C., this 5th day of August, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 97-21005 Filed 8-7-97; 8:45 am]
BILLING CODE 4510-29-P
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