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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Bankers Trust Co., (BTC), et al. [Notices] [12/17/99]

Grant of Individual Exemptions; Bankers Trust Co., (BTC), et al. [12/17/99]

[PDF Version]

Volume 64, Number 242, Page 70748-70749

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 99-47; Exemption Application No. D-
10688, et al.]

 
Grant of Individual Exemptions; Bankers Trust Co., (BTC), 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, DC. 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.

Bankers Trust Company (BTC) Located in New York, New York

[Prohibited Transaction Exemption 99-47; Exemption Application Nos. D-
10688 through D-10691]

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 to 
the execution by certain employee benefit plans (the Plans) investing 
in Transwestern Office Partners II, L.P. (the LP) of a partner 
agreement and estoppel (the Estoppel) under which the Plans agree to 
honor capital calls made to the Plans by BTC as the representative of 
certain lenders (the Lenders) that will fund a so-called ``credit 
facility'' providing credit to the LP in connection with the Plans'' 
capital commitments to the LP where the LP has granted to BTC security 
interests in the capital commitments, and where the Lenders are parties 
in interest with respect to the Plans; provided that (a) the grants and 
agreements are on terms no less favorable to the Plans than those which 
the Plans could obtain in arm's-length transactions with unrelated 
parties; (b) the decisions on behalf of each Plan to invest in the LP 
and to execute such grants and agreements in favor of BTC are made by a 
fiduciary which is not included among, and is independent of and 
unaffiliated with, the Lenders and BTC; (c) with respect to Plans that 
have invested or may invest in the LP in the future, such Plans have or 
will have assets of not less than $100 million and not more than 5% of 
the assets of any such Plan are or will be invested in the LP. For 
purposes of this condition (c), in the case of multiple plans 
maintained by a single employer or single controlled group of 
employers, the assets of which are invested on a commingled basis, 
(e.g., through a master trust), this $100 million threshold will be 
applied to the aggregate assets of all such plans; and d) the general 
partner of the LP must be independent of BTC, the Lenders and the 
Plans.
    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 September 
24, 1999 at 64 FR 51794.

WRITTEN COMMENTS: The Department received one written comment, which 
was submitted by the applicant to correct a typographical error that 
appeared in the Notice. The applicant notes that the first sentence of 
paragraph 6 of the Summary of Facts and Representations (the Summary) 
should read as follows: ``BTC will become agent for a group of Lenders 
providing a $37 million revolving Credit Facility to the LP.'' 
[emphasis added] The Department notes this correction to the 
information contained in the Summary.
    No other comments were received from interested persons. 
Accordingly, the Department has determined to grant the exemption as 
proposed.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

Information Systems Development, Inc. Employees Profit Sharing Plan 
(the Plan) Located in Cincinnati, Ohio

[Prohibited Transaction Exemption 99-48; Exemption Application No. D-
10787]

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 to the sale by the Plan of certain illiquid limited 
partnership interests (collectively; the

[[Page 70749]]

Interests) to CONVERGYS Information Management Group Inc. (the 
Company), the sponsor of the Plan and a party in interest with respect 
to the Plan, provided that the following conditions are met:
    (1) The sale is a one-time transaction for cash;
    (2) The Plan receives an amount equal to the greater of: (a) The 
Plan's cost for the Interests, less all cash distributions received as 
a result of owning the Interests (i.e., the adjusted cost), (b) the 
fair market value of the Interests on the date of the sale, as 
established by a qualified independent appraiser, or (c) the estimated 
value of the Interests, as determined by the general partner of each 
partnership and reported on the most recent account statements 
available at the time of the sale;
    (3) The Plan pays no commissions or any other expenses relating to 
the sale; and
    (4) The Plan suffers no loss, as a result of its acquisition and 
holding of the Interests, taking into account all cash distributions 
received by the Plan as a result of owning the Interests.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on October 22, 1999 at 64 FR 
57151.

Tax Consequences of Transaction

    The Department of Treasury has determined that if a transaction 
between a qualified employee benefit plan and its sponsoring employer 
(or an affiliate thereof) results in the plan either paying less or 
receiving more than fair market value, such excess may be considered a 
contribution by the sponsoring employer to the plan, and therefore must 
be examined under the applicable provisions of the Internal Revenue 
Code, including sections 401(a)(4), 404 and 415.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department, 
telephone (202) 219-8883. (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 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 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 14th day of December, 1999.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 99-32754 Filed 12-16-99; 8:45 am]
BILLING CODE 4510-29-P