Proposed Exemptions; Comerica Bank
[09/10/2004]
Volume 69, Number 175, Page 54804-54812
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Application No. D-11098, et al.]
Proposed Exemptions; Comerica Bank
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of proposed exemptions.
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SUMMARY: This document contains notices of pendency before the
Department of Labor (the Department) of proposed exemptions 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).
Written Comments and Hearing Requests
All interested persons are invited to submit written comments or
requests for a hearing on the pending exemptions, unless otherwise
stated in the Notice of Proposed Exemption, within 45 days from the
date of publication of this Federal Register Notice. Comments and
requests for a hearing should state: (1) The name, address, and
telephone number of the person making the comment or request, and (2)
the nature of the person's interest in the exemption and the manner in
which the person would be adversely affected by the exemption. A
request for a hearing must also state the issues to be addressed and
include a general description of the evidence to be presented at the
hearing.
ADDRESSES: All written comments and requests for a hearing (at least
three copies) should be sent to the Employee Benefits Security
Administration (EBSA), Office of Exemption Determinations, Room N-5649,
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC
20210. Attention: Application No. ------, stated in each Notice of
Proposed Exemption. Interested persons are also invited to submit
comments and/or hearing requests to EBSA via e-mail or FAX. Any such
comments or requests should be sent either by e-mail to:
moffitt.betty@dol.gov, or by FAX to (202) 219-0204 by the end of the
scheduled comment period. The applications for exemption and the
comments received will be available for public inspection in the Public
Documents Room of the Employee Benefits Security Administration, U.S.
Department of Labor, Room N-1513, 200 Constitution Avenue, NW.,
Washington, DC 20210.
Notice to Interested Persons
Notice of the proposed exemptions will be provided to all
interested persons in the manner agreed upon by the applicant and the
Department within 15 days of the date of publication in the Federal
Register. Such notice shall include a copy of the notice of proposed
exemption as published in the Federal Register and shall inform
interested persons of their right to comment and to request a hearing
(where appropriate).
SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in
applications filed pursuant to section 408(a) of the Act and/or section
4975(c)(2) of the Code, and in accordance with procedures set forth in
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990).
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 requested to
the Secretary of Labor. Therefore, these notices of proposed exemption
are issued solely by the Department.
The applications contain representations with regard to the
proposed exemptions which are summarized below. Interested persons are
referred to the applications on file with the Department for a complete
statement of the facts and representations.
Comerica Bank, Located in Detroit, MI
[Application No. D-11098]
Proposed Exemption
The Department is considering granting an exemption under the
authority of section 408(a) of the Employee Retirement Income Security
Act of 1974 (ERISA or the Act) and section 4975(c)(2) of the Internal
Revenue Code of 1986 (the Code) and in accordance with the procedures
set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August
10, 1990).
Section I--Proposed Exemption For Receipt of Fees
If the proposed exemption is granted, the restrictions of sections
406(a) and 406(b) 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 (F) of the Code, shall not apply to the receipt
of fees by Comerica Bank and its affiliates (Comerica) from the Munder
Funds (the Funds), open-end investment companies registered under the
Investment Company Act of 1940 (the 1940 Act), for acting as an
investment adviser for the Funds, as well as for providing any other
services to the Funds which are not investment advisory services
(``Secondary Services'' as defined in Section III(h) below) in
connection with the purchase and sale of shares of the Funds by certain
defined benefit and defined contribution pension plans and funded
employee welfare benefit plans (Client Plans) for which Comerica serves
as fiduciary with investment discretion, provided that the following
conditions and the General Conditions set forth in Section II are met:
(a) No sales commissions, redemption fees, or other fees are paid
by the Client Plans in connection with the purchase or sale of shares
of the Funds.
(b) The price paid or received by a Client Plan for shares in a
Fund is the net asset value per share, as defined in Section III (e),
at the time of the transaction, and is the same price that would have
been paid or received for the shares by any other investor at that
time.
(c) Comerica, including any officer or director of Comerica, does
not purchase or sell shares of the Funds from or to any Client Plan.
(d) Each Client Plan receives a credit, through a cash rebate of
such Plan's proportionate share of all fees charged to the Funds by
Comerica for investment advisory services, including
[[Page 54805]]
any investment advisory fees paid by Comerica to third-party
subadvisers. Cash rebates for investment advisory services provided to
the Client Funds are received by a Plan on or before the date Comerica
charges the Client Plan for plan-level investment management services.
Comerica management fees and Munder advisory fees are paid in arrears
for services provided to the Client Plans and the Funds, respectively.
The crediting of all such fees is audited by Comerica through a system
of internal controls to verify the proper crediting of the fees to each
Client Plan.
(e) Comerica will supply, annually and upon request, to the second
fiduciary acting for a Client Plan, who is independent of and unrelated
to Comerica (the Second Fiduciary), all information reasonably
necessary for such fiduciary to verify that the fee credit calculation
is correct and any additional information that the Second Fiduciary may
require to determine that the conditions of this exemption are being
met by Comerica.
(f) For each Client Plan, the combined total of all fees received
by Comerica for the provision of services to a Client Plan, and in
connection with the provision of services to the Funds in which the
Client Plan may invest, is not in excess of ``reasonable compensation''
within the meaning of section 408(b)(2) of ERISA.
(g) Comerica does not receive any fees payable pursuant to Rule
12b-1 under the 1940 Act in connection with the transactions.
(h) The Client Plans are not employee benefit plans sponsored or
maintained by Comerica.
(i) The Second Fiduciary receives, in advance of any initial
investment by the Client Plan in a Fund, full and detailed written
disclosure of information concerning the Fund, including, but not
limited to:
(1) A current prospectus for each Fund in which a Client Plan is
considering investing;
(2) A statement describing the fees for investment advisory or
similar services and any Secondary Services as defined in Section III
(h), and all other fees to be charged to or paid by the Client Plan and
by the Funds, including the nature and extent of any differential
between the rates of such fees;
(3) The reasons why Comerica may consider such investment to be
appropriate for the Client Plan;
(4) A statement describing whether there are any limitations
applicable to Comerica with respect to which assets of a Client Plan
may be invested in the Funds, and if so, the nature of such
limitations; and
(5) Upon the request of the Second Fiduciary, a copy of the
proposed exemption and/or a copy of the final exemption, if granted,
once such documents is published in the Federal Register.
(j) After consideration of the information described in paragraph
(i) above, the Second Fiduciary authorizes in writing the investment of
assets of the Client Plan in each particular Fund, the fees to be paid
by such Fund to Comerica, and the cash rebate to the Client Plan of
fees received by Comerica from the Funds for investment advisory
services.
(k) All authorizations made by a Second Fiduciary regarding
investments in a Fund and the fees paid to Comerica are subject to an
annual reauthorization wherein any such prior authorization referred to
in paragraph (j) above shall be terminable at will by the Client Plan,
without penalty to the Plan, upon receipt by Comerica of written notice
of termination. A form expressly providing an election to terminate the
authorization described in paragraph (j) above (the Termination Form)
with instructions on the use of the form must be supplied to the Second
Fiduciary no less than annually. However, if the Termination Form has
been provided to the Second Fiduciary pursuant to paragraph (m) below,
then the Termination Form need not be provided again for an annual
reauthorization pursuant to this paragraph unless at least six months
have elapsed since the form was provided in connection with the
additional service or fee increase. The instructions for the
Termination Form must include the following information:
(1) The authorization is terminable at will by any of the Client
Plans, without penalty to such Client Plans, upon receipt by Comerica
of written notice from the Second Fiduciary; and
(2) Failure by the Second Fiduciary to return the Termination Form
on behalf of a Client Plan will result in continued authorization of
Comerica to engage in the transactions described in paragraph (j) above
on behalf of the Client Plan.
(3) A copy of the Termination Form will be sent to the Second
Fiduciary for the Client Plan upon request.
(l) The Second Fiduciary receives full written disclosure, prior to
the effective date, in a Fund prospectus or otherwise, of any increases
in the rates of fees charged by Comerica to the Funds for investment
advisory services even though such fees will be rebated as required by
paragraph (d) above.
(m) In the event that Comerica provides an additional Secondary
Service to a Fund for which a fee is charged or there is an increase in
the rate of any fee paid by the Funds to Comerica for any Secondary
Services that results from either an increase in the rate of such fee
or a decrease in the number or kind of services performed by Comerica
for such fees in connection with a previously authorized Secondary
Service, Comerica will, at least 30 days in advance of the
implementation of such additional service for which a fee is charged or
fee increase, provide written notice (that is separate from the
prospectus of the Fund) to the Second Fiduciary explaining the nature
and the amount of the additional services or of the effective increase
in fees of the affected Fund. Such notice shall be accompanied by the
Termination Form.
(n) On an annual basis, Comerica provides the Second Fiduciary of a
Client Plan investing in the Funds with:
(1) A copy of the current prospectus for the Funds and, upon such
Second Fiduciary's request, a copy of the Statement of Additional
Information for such Funds that contains a description of all fees paid
by the Funds to Comerica (including fees for investment advisory
services);
(2) A copy of the annual financial disclosure report of the Funds
in which such Client Plan is invested, which includes information about
the Fund portfolios; and
(3) Oral or written responses to inquiries of the Second Fiduciary
as they arise.
(o) All dealings between the Client Plans and the Funds are on a
basis no less favorable to the Client Plans than dealings with other
shareholders of the Funds.
Section II--General Conditions
(a) Comerica maintains for a period of six years the records
necessary to enable the persons described in paragraph (b) of Section
II 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 Comerica, the
records are lost or destroyed prior to the end of the six-year period,
and
(2) No party in interest other than Comerica shall be subject to
the civil penalty that may be assessed under section 502(i) of ERISA or
to the taxes imposed by section 4975(a) and (b) of the Code if the
records are not maintained or not available for examination as required
by paragraph (b) below.
[[Page 54806]]
(b) Except as provided in paragraph (b)(2) below and
notwithstanding any provisions of section 504(a)(2) and (b) of ERISA,
the records referred to in paragraph (a) of Section II are
unconditionally available at their customary location for examination
during normal business hours by: (i) Any duly authorized employee or
representative of the Department of Labor or the Internal Revenue
Service; (ii) Any fiduciary of a Client Plan who has authority to
acquire or dispose of shares of the Funds owned by the Client Plan, or
any duly authorized employee or representative of such fiduciary; and
(iii) Any participant or beneficiary of a Client Plan or duly
authorized employee or representative of such participant or
beneficiary.
(1) None of the persons described in subparagraph (b)(1)(ii) and
(iii) above shall be authorized to examine trade secrets of Comerica,
or commercial or financial information, which is privileged or
confidential.
Section III--Definitions
For purposes of this exemption:
(a) ``Comerica'' means Comerica Bank, a Michigan banking
corporation, and any affiliate thereof (as affiliate is defined below
in paragraph (b) of this section).
(b) 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.
(c) ``Control'' means the power to exercise a controlling influence
over the management or policies of a person other than an individual.
(d) The term ``Fund'' or ``Funds'' shall include the Munder Funds,
each series thereof, or any other diversified open-end investment
company registered under the 1940 Act for which Comerica serves as an
investment adviser and may also serve as a Fund accountant, transfer
agent or provide some other Secondary Service (as defined below in
paragraph (h) of Section III) which has been approved by such Funds.
(e) ``Net asset value'' means the amount for purposes of pricing
all purchases and sales, calculated by dividing the value of all
securities, determined by a method as set forth in a Fund's prospectus
and statement of additional information, and other assets belonging to
the Fund or portfolio of the Fund, less the liabilities charged to each
such portfolio or Fund, by the number of outstanding shares.
(f) ``Relative'' means a ``relative'' as that term is defined in
section 3(15) of ERISA (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.
(g) ``Second Fiduciary'' means a fiduciary of a Client Plan who is
independent of and unrelated to Comerica. For purposes of this
exemption, the Second Fiduciary will not be deemed to be independent of
and unrelated to Comerica if:
(1) Such fiduciary directly or indirectly controls, is controlled
by, or is under common control with Comerica;
(2) Such fiduciary, or any officer, director, partner, employee, or
relative of the fiduciary is an officer, director, partner, or employee
of Comerica (or is a relative of such persons); or
(3) Such fiduciary directly or indirectly receives any compensation
or other consideration for his or her own personal account in
connection with any transaction described in this proposed exemption:
If an officer, director, partner, or employee of Comerica (or
relative of such persons), is a director of such Second Fiduciary, and
if he or she abstains from participation in (i) the choice of the
Client Plan's investment adviser, (ii) the approval of any such
purchase or sale between the Client Plan and the Funds, and (iii) the
approval of any change in fees charged to or paid by the Client Plan in
connection with any of the transactions described in Section I and
Section II above, then subparagraph (g)(2) of Section III shall not
apply.
(h) ``Secondary Service'' means a service other than an investment
management, investment advisory, or similar service which is provided
by Comerica to the Funds including (but not limited to) custodian
services, transfer and dividend disbursing agent services,
administrator or sub-administrator services, accounting services, and
shareholder servicing agent services.
However, for purposes of this exemption, the term ``Secondary
Service'' will not include any brokerage services provided to the Funds
by Comerica for the execution of securities transactions engaged in by
the Funds.
(i) ``Termination Form'' means the form supplied to the Second
Fiduciary that expressly provides an election to the Second Fiduciary
to terminate on behalf of a Client Plan the authorization described in
paragraph (j) of Section I above. Such Termination Form may be used at
will by the Second Fiduciary to terminate an authorization without
penalty to the Plan and to notify Comerica in writing to effect a
termination by selling the shares of the Funds held by the Client Plan
requesting such termination within one business day following receipt
by Comerica of the form; provided that if, due to circumstances beyond
the control of Comerica, the sale cannot be executed within one
business day, Comerica shall have one additional business day to
complete such sale.
Effective Date: The proposed exemption, if granted, will be
effective as of the date the final exemption is published in the
Federal Register.
Summary of Facts and Representations
1. Comerica represents that it acts as trustee with investment
discretion for approximately 62 Client Plans that are subject to ERISA.
The Client Plans include defined benefit and defined contribution
pension plans, and funded employee welfare benefit plans. Comerica Bank
is a banking corporation chartered under the laws of the State of
Michigan. It is a wholly owned subsidiary of Comerica Incorporated
which is a bank holding company regulated by and registered under the
Bank Holding Company Act of 1956 as amended.
2. Comerica represents that it has been granted trust powers by the
Office of Financial and Insurance Services of the State of Michigan,
which regulates Comerica Bank pursuant to Michigan law. As to fiduciary
matters, the Office of Financial and Insurance Services generally
requires Michigan chartered banks to comply with the regulations
promulgated by the United States Comptroller of Currency as well as
Michigan law. Comerica Bank is also regulated by the Federal Reserve
Board. As of March 31, 2004, Comerica Bank had approximately $26.8
billion under trust management.
3. Comerica represents that Munder Capital Management (Munder) is
the investment advisor to several open-end investment companies
registered under the 1940 Act (Munder Funds). Munder is a Delaware
general partnership with three partners, two of which, WAM Holdings,
Inc. and WAM Holdings II, Inc. own a 95.5% interest in Munder, and are
wholly owned subsidiaries of Comerica Investment Services, Inc. which
itself is a wholly owned subsidiary of Comerica Incorporated. Munder
is, consequently, an affiliate of Comerica Bank as defined at 29 CFR
2510.3-21(e).
4. The Munder Funds are Massachusetts business trusts. The
[[Page 54807]]
Munder Funds involved in the exemption transactions are: Munder Bond
Fund B Class Y, Munder Fram Emerging Mkts B Y, Munder Fram Healthcare
FD-Y, Munder Framlington Intl GRW, Munder Fund of Funds, Munder Future
Technology CL Y, Munder Index 500 Fund B CL K, Munder Index 500 Fund B
CL Y, Munder Inst S&P Midcap 400, Munder Instl S&P Smallcap 600, Munder
Instl S&P 500 Idx Equ Fd, Munder Instl S&P 600 Fd CL K, Munder Intermed
Bd Fd (K Shs), Munder Intermediate Bd-Y, Munder International Eq-Y,
Munder Intl Bond Fund--CL Y, Munder Intl Equity Fund (K Shs), Munder
Intl Net Net CL Y, Munder Large Cap Growth Fd CL Y, Munder Large Cap
Value Fund CL Y, Munder Micro Cap Equity B Y, Munder Midcap Select Fund
CL Y, Munder Multi-Seas Gwth Fd (CL K), Munder Multi-Season Growth B Y,
Munder Net Net Fund CL Y, Munder Power Plus Fund CL Y, Munder Real
Estate Eq Inv-Y, Munder Small Cap Value Fd-Y, Munder Small Co GRY Shrs,
Munder U.S. GVT Income FD (K SHS), Munder U.S. Govt Income FD-Y (the
Funds). Comerica anticipates that other Munder Funds may be established
in the future, and it intends to offer appropriate Munder Funds to its
Client Plans as they are organized.
5. Comerica represents that it uses its fiduciary authority to
invest Client Plan assets in the Funds and that all investments in the
Funds on behalf of the Client Plans are made by Comerica pursuant to
initial written authorizations and annual reauthorizations of the
investments by an independent fiduciary of each of the Client Plans
after receipt by that fiduciary of the current prospectus for the
relevant Munder Funds and written disclosure of the investment advisory
fees charged to the Client Plan and the Munder Funds.
6. The Applicant believes that the advantages of permitting
Comerica to invest the assets of Client Plans in the Funds include the
fact that the Funds are valued daily, and their market values are
quoted in daily publications of mass circulation. This permits the
independent fiduciaries of the Client Plans to monitor their plans'
investment performance on a daily basis without the need to communicate
with Comerica Bank, unlike the case with Comerica's collective
investment funds. The Funds also have the advantage of permitting
investment and redemption on a daily basis, so that funds may be
immediately invested in the desired medium, whereas some investments,
such as some of Comerica's collective funds, are only available for
investment and redemption monthly.
7. The Applicant states that all investments of Client Plan assets
in the Funds occur either through the direct purchase of shares of the
Funds for a Client Plan by Comerica Bank, the liquidation of shares
owned by a Client Plan in one Munder Fund and the simultaneous purchase
of shares in another Munder Fund at the direction of Comerica, or an
automated sweep of uninvested cash of a Client Plan by Comerica Bank
into one or more Funds previously designated by the Client Plan for
that purpose. Comerica states that the terms and conditions of these
transactions are at least as favorable to the Client Plans as offered
to other customers of Comerica Bank. The Client Plans pay no sales
commissions or redemption fees in connection with transactions in the
Fund shares executed at Comerica Bank's instruction. Comerica
represents that it does not and will not receive fees payable pursuant
to Rule 12b-1 in connection with transactions for Client Plans
involving shares of the Funds.
8. Comerica states that it charges management fees to its Client
Plans in accordance with written fee agreements. These agreements are
individually negotiated between the independent fiduciaries of the
Client Plans and Comerica Bank. The fee agreements establish base
management fees calculated as a percentage of assets under management
and per-transaction fees for Secondary Services. Comerica represents
that the fees charged to Client Plans for services performed are exempt
from the prohibited transaction provisions of ERISA by Section
408(b)(2) and the regulations under that Section at 29 CFR 2550.408b-
2.\1\
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\1\ The Department notes that no relief is being proposed herein
for prohibited transactions under the Act that arise in connection
with the provision of services directly to the Client Plans that are
not otherwise covered by section 408(b)(2) of the Act.
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9. The Applicant represents that Munder is compensated for acting
as investment advisor to each of the Munder Funds. Munder charges a
uniform fee for acting as investment advisor to each of the Munder
Funds equal to 0.75% of average net daily assets of each of the
respective Munder Funds. The fee agreements between Munder and the
Funds are approved by the Board of Directors of the Munder Funds in
accordance with the applicable provisions of the 1940 Act. As described
in detail below, Comerica states that it regularly rebates to Client
Plans their proportional shares of Munder's investment advisory fee, so
that Client Plans do not pay duplicative fees for investment advisory
services to both Munder and Comerica Bank.
10. The Applicant represents that all investments of Client Plans
in the Funds occur through direct purchases of Fund shares from the
Funds' distributor, Funds Distributors, Inc., which is not an affiliate
of Comerica Bank. The Applicant represents that Client Plans pay no
commissions or redemption fees in connection with purchases or sales of
Fund shares, but Funds Distributors, Inc. is compensated by the Funds
under a distribution plan adopted by the Funds pursuant to Rule 12b-1
under the 1940 Act equal to an annual rate of 0.25% of the Funds'
average daily net assets. The distribution fee is calculated daily and
paid monthly.\2\
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\2\ With respect to any fees paid by the Funds to parties
unrelated to Comerica and its affiliates, the Department notes that
Comerica, as a trustee or investment manager for a Client Plan's
assets that are invested in the Funds, has a fiduciary duty to
ensure that the fees indirectly paid by a plan to third parties are
reasonable. The Department notes further that Comerica should ensure
that services performed by Comerica or an affiliate for a fund are
not duplicative of any similar services performed by third parties.
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11. The Applicant states that Comerica Bank provides shareholder
services to the Funds. Comerica Bank further notes that it receives
shareholder servicing fees from the Funds of 0.25% of the average daily
net asset value of Class K shares of equity and bond Munder Funds, and
.15% of the average daily net asset value of Class K shares of money
market Munder Funds under the Munder Funds' shareholder servicing
plans. These services are not investment advisory services to the
Funds, and consequently do not duplicate the fees for asset management
charged by Comerica Bank to the Client Plans. Moreover, the Applicant
represents that the shareholder services that Comerica Bank provides to
the Funds are not duplicative of secondary trustee services for which
Comerica Bank is compensated by the Client Plans or their sponsors
either as part of the base management fee or from per-transaction fees.
These secondary trustee services include processing distributions,
maintaining participant accounts, executing investment directions,
valuing plan assets, filing required reports, and compiling participant
and plan sponsor reports. These trustee services are necessary whether
or not a Client Plan's assets are invested in a Fund and may involve
maintenance of Client Plan accounts reflecting ownership of Fund
shares, whereas Comerica Bank's services to the Funds relate to
securities owned by the
[[Page 54808]]
Funds and procedures necessary for servicing the Funds'
shareholders.\3\
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\3\ Paragraph (f) of Section I provides that the combined total
of all fees received by Comerica directly and indirectly from the
Client Plans for the provision of services to the Client Plans and/
or to the Funds may not be in excess of ``reasonable compensation''
within the meaning of section 408(b)(2) of the Act.
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12. Comerica represents that it does not and will not provide
securities brokerage services to either the Funds or the Client Plans,
so that Comerica Bank will not generate brokerage fees with respect to
securities transactions for the Client Plans.
13. Comerica Bank represents that it uses automatic data systems to
manage its fee arrangements with Client Plans. The automatic data
systems create cash rebates of the appropriate amounts of Munder fees
rather than crediting the Munder fees against Comerica Bank's
management fees. It is solely for this reason that Comerica Bank cannot
rely upon Prohibited Transaction Class Exemption 77-4 \4\ for the
transactions described herein.
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\4\ PTE 77-4, in pertinent part, permits the purchase and sale
by an employee benefit plan of shares of a registered, open-end
investment company when a fiduciary with respect to the plan is also
the investment adviser for the investment company, provided that,
among other things, the plan does not pay an investment management,
investment advisory or similar fee with respect to the plan assets
invested in such shares for the entire period of such investment.
Section II(c) of PTE 77-4 states that this condition does not
preclude the payment of investment advisory fees by the investment
company under the terms of an investment advisory agreement adopted
in accordance with section 15 of the 1940 Act. Section II(c) states
further that this condition does not preclude payment of an
investment advisory fee by the plan based on total plan assets from
which a credit has been subtracted representing the plan's pro rata
share of investment advisory fees paid by the investment company.
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14. With respect to transactions that occurred prior to the
effective date of this proposed exemption, Comerica notes the
following: ``Comerica Bank's ERISA compliance officer was not aware
until recently that the Department intended that PTE 77-4 be followed
literally in crediting fund investment management fees rather than in
rebating them. When the compliance officer was made aware of the
distinction by published commentary, an assessment of the operation of
Comerica Bank's trust fee systems was instituted and it was discovered
that the computer system maintained by Comerica Bank generated rebates,
not credits. The compliance officer then caused the Comerica exemption
application to be prepared and filed. Comerica continues to rebate fund
level investment management fees. Because the Department has issued
other individual exemptions permitting the rebate of investment
management fees and because the Client Plans reap financial advantages
from Comerica Bank's rebating procedures, it was decided that the
current procedures will be continued and be adjusted, if necessary, to
secure the Department's approval of the individual exemption.''
Comerica further notes that: ``Correction of the exemption transactions
would require the Client Plans to refund the investment returns
received by virtue of receiving fee rebates earlier than fee credits
would have been received under the requirements of PTE 77-4. Comerica
Bank believes that the correction of the transactions is inappropriate
under the circumstances.'' \5\
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\5\ The Department expresses no opinion herein on whether the
previous receipt of fees by Comerica from the Funds violated any of
the provisions of Part 4 of Title I of the Act. The Department is
providing no retroactive exemptive relief herein with respect to
Comerica's previous receipt of fees from the Funds.
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15. Comerica represents that it either charges a Client Plan
directly for management fees or it invoices the Client Plan's plan
sponsor for management fees. In some cases, a portion of a Client
Plan's management fees are charged directly and a portion invoiced to
the plan sponsor. Comerica states that it utilizes an automated system
for Client Plans to which all management fees are charged directly. The
automated system calculates the appropriate Munder fee rebate for each
month on the last day of that month. The transfer of funds by Comerica
Bank to Client Plans to rebate the Munder fees takes place on the 15th
of the next month or the next business day if the fifteenth is not a
business day.
Depending on the management agreement between Comerica Bank and the
Client Plan, the charge to Client Plans for Comerica Bank management
fees or other fees occurs monthly, quarterly, semi-annually or
annually, as appropriate, on the 15th day of the month (or the next
business day, if later) after the fee calculation period and
concurrently with the Munder fee rebate for the prior month. The
Applicant states that the phrase ``after the fee calculation period''
means the Comerica management fees are paid in arrears.
Comerica represents that for Client Plans for which some or all of
the management fees are invoiced to the plan sponsor, Comerica has and
continues to utilize an automated billing system. The automated fee
calculation system calculates the Munder fee rebate for each such
Client Plan on the last day of each month and transfers the rebate to
each Client Plan on 15th day of the next month (or the next business
day, if later). The automated billing system invoices Comerica
management fees to the plan sponsor no later than the third to the last
business day of the month after the end of the monthly, quarterly,
semi-annual or annual fee calculation period. If a portion of the
Comerica Bank management fees are charged directly to the Client Plan,
the charge is made on the third to the last day of the month after the
fee calculation period, and in no event before the posting of the
Munder fee rebate for the prior month. The Applicant provides the
following example. If Comerica charges its trust management fee
monthly, then it earns its fee for January and is paid on February 15.
The automated system calculates the appropriate cash rebate for Munder
fees for January on January 31 and pays it to the trust account no
later than February 15. If the trust account pays its management fee
quarterly, then it would pay Comerica's management fees for January
through March on April 15. The rebates of the Munder fees nevertheless
proceed monthly on February 15, March 15 and April 15.
16. Comerica Bank prefers the method it uses for rebating Munder
fees because it permits the Client Plans to confirm that the fees paid
to Comerica Bank are in accordance with its fee agreement, and Comerica
Bank desires to avoid the expense of changing its data processing
systems to calculate a credit of the Munder fees against the Comerica
Bank management fees. Comerica represents that the Client Plans in many
cases receive an advantage by the rebating method because they receive
their rebates in advance of paying the Comerica Bank management fee,
but in no case does a Client Plan receive its appropriate rebate later
than the time at which it pays Comerica Bank's management fees.
Moreover, Client Plans whose sponsors pay the management fees are in a
better position under Comerica Bank's rebate program, since the Client
Plans receive a greater return on their investments in Munder Funds.\6\
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\6\ To the extent that the Department of the Treasury determines
that this arrangement should be deemed a contribution by an employer
to a Client Plan of the rebated fees, the transaction must be
examined under the applicable provisions of the Code, including
sections 401(a)(4), 404 and 415.
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17. Comerica represents that it has established a system of
internal controls to ensure the proper rebating of Munder investment
management fees to clients. The calculation of asset management fees
and rebate of Munder fees is an automated function of the computer
program that controls the rebates and is accomplished with minimal
human
[[Page 54809]]
intervention. The asset management fee and Munder rebate calculation
logic is coded into the computer program. Thus, once the calculation
logic is confirmed as producing the intended rebates, the opportunity
for error in the rebate calculation method is nil. Access to the
computer application files in which the computer program is maintained
is strictly controlled, and any changes must be reviewed by authorized
personnel in both the Trust Systems Department and the Information
Systems Department. In addition, Comerica states that its Information
Technology audit group performs periodic internal audits of the
controls over all mainframe computer system changes, including changes
to the program that controls the Munder fee rebates. The Comerica Bank
Trust Operations group maintains a computer spreadsheet of the
investment management fee rates applicable to each trust asset. Each
month a review is conducted to ensure the system rate and the
spreadsheet rate are the same. Munder's fees charged to the Munder
Funds are extracted from the Funds' published prospectuses, and once
entered into the computer files are also protected from unauthorized
access. All data changes are reviewed and approved by appropriate
personnel in the Trust Operations Department. Comerica Bank Trust
Operations handles the actual transfer of cash used for fee rebates
from a Munder account to a Comerica account. It performs a monthly
reconciliation between cash received from Munder and rebates calculated
by the computer system. Comerica Bank Trust Operations performs a
quarterly review of Munder fees/rebates and Munder reviews the results
of this self-audit. Additionally, Comerica Bank Institutional Trust and
Private Banking management receive reports of the results and conduct
an independent review.
Comerica Bank's internal audit department performs annual reviews
of fee income reconciliation including Munder fee rebates. In the event
an error is made in the rebating of fees to the Client Plans, Comerica
asserts that it will correct the error and conduct further audits to
determine whether the error occurred with respect to other Client
Accounts. With respect to any shortfall in rebated fees to a Client
Plan, Comerica Bank will make a cash payment to the Client Plan equal
to the amount of the error with interest computed on the same yield as
that paid by the Client Plan's money market fund or the Federal Funds
rate if no money market fund is used for the period involved. Any
excess rebates made to a Client Plan will be corrected, to the extent
possible, by an appropriate reduction of cash rebate to the Client Plan
during the next payment period.
18. Comerica Bank represents that the independent fiduciary of each
Client Plan who approves the investment of assets in the Munder Funds
receives full and detailed disclosure of information concerning the
fees paid by the Funds, including the investment advisory fees of
Munder Capital Management and fees paid for shareholder services to
Comerica Bank both before the authorization of the investments by the
independent fiduciary and at least 30 days before any increase in the
fees.\7\ In the event that Comerica Bank provides an additional service
to a Fund for which a fee is charged or there is an increase in the
amount of fees paid by the Funds to Comerica Bank for any services
resulting from a decrease in the number or kinds of services performed
by Comerica Bank, it will provide thirty day's advance written notice
of the such additional services or fee increase, provide written notice
to the independent fiduciaries explaining the nature and the amount of
the additional services for which a fee will be charged or the nature
and the amount of the increase in fees from the affected Munder Fund.
Such notice will be made separate from the Munder Fund prospectuses and
will be accompanied by a Termination Form. The independent fiduciary
will also receive full written disclosure in a Munder Fund prospectus
of any increase in the rate of fees charged by Munder Capital
Management for investment advisory services even though such fees will
be rebated to the Client Plans.
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\7\ With respect to increases in fees, the Department notes that
an increase in the amount of a fee for an existing Secondary Service
(other than through an increase in the value of the underlying
assets in the Funds) or the imposition of a fee for a newly
established Secondary Service shall be considered an increase in the
rate of such fees. However, in the event a Secondary Service fee has
already been described in writing to the Second Fiduciary and the
Second Fiduciary has provided authorization for the fee, and such
fee was temporarily waived, no further action by Comerica would be
required in order for Comerica to receive such fee at a later time.
Thus, for example, no further disclosure would be necessary if
Comerica had received authorization for a fee for custodial services
from Plan investors and subsequently determined to waive the fee for
a period of time in order to attract new investors but later charged
the fee.
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19. Any authorizations by an independent fiduciary regarding the
investment of a Client Plan's assets in a Fund and the fees to be paid
to Munder and Comerica Bank, including any future increases in rates of
fees for Secondary Services, are or will be terminable at will by the
independent fiduciary, without penalty to the Client Plan, upon receipt
by Comerica Bank of written notice of termination. Comerica states that
a termination form expressly providing an election to terminate the
authorization will be supplied to the independent fiduciary upon
initial authorization. Instructions on the use of the Termination Form
will be supplied to the independent fiduciary no less than annually.
The instructions for the termination form include the following
information:
(a) The authorization is terminable at will by the Client Plan,
without penalty to the Client Plan, upon receipt by Comerica Bank of
written notice from the independent fiduciary; and
(b) Failure to return the form will result in continued
authorization of Comerica Bank to engage in the subject transactions on
behalf of the Client Plan.
(c) Additional Termination Forms are available at any time from
Comerica Bank upon request.
The Termination Form may be used to notify Comerica Bank in writing
to effect a termination by selling the shares of the Funds held by the
Client Plan requesting such termination within one business day
following receipt by Comerica Bank of the form. Comerica states that
if, due to circumstances beyond its control, the sale cannot be
executed within one business day, it will complete the sale within the
next business day.
20. Comerica represents that any disclosure of information
regarding a proposed increase in the rate of any fees for Secondary
Services will be accompanied by an additional Termination Form with
instructions on the use of the form as described above. Therefore, the
independent fiduciary will have prior notice of the proposed increase
and an opportunity to withdraw from the Funds in advance of the date
the increase becomes effective. Although the independent fiduciary will
also have notice of any increase in the rates of fees charged by Munder
to the Funds for investment advisory services, through an updated
prospectus or otherwise, such notice will not be accompanied by a
Termination Form since all increases in investment advisory fees will
be rebated by Comerica Bank to the Client Plans and will be subject to
an annual reauthorization as described above.
21. Comerica states that the independent fiduciary always receives
a current prospectus for each Munder Fund and a written statement
giving full disclosure of the fee structure prior to any investment in
the Funds. The disclosure statement explains why
[[Page 54810]]
Comerica believes that the investment of assets of the Client Plan in
the Fund is appropriate. The disclosure statement also describes any
limitations on Comerica with respect to which Client Plan assets may be
invested in shares of the Munder Funds and the nature of such
limitations.\8\ Comerica provides further that the independent
fiduciary receives an updated prospectus for each Fund at least
annually and annual financial reports for each Fund. Comerica Bank also
provides monthly reports to the independent fiduciary of all
transactions engaged in by the Client Plan, including purchases and
sales of Fund shares.
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\8\ See section II(d) of PTE 77-4 requires, in pertinent part,
that an independent plan fiduciary receive a current prospectus
issued by the investment company and a full and detailed written
disclosure of the investment advisory and other fees charged to or
paid by the plan and the investment company, including a discussion
of whether there are any limitations on the fiduciary/investment
adviser with respect to which plan assets may be invested in shares
of the investment company and, if so, the nature of such
limitations.
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22. In summary, Comerica represents that the transactions described
above satisfy the statutory criteria of section 408(a) of the Act and
section 4975(c)(2) of the Code because: (a) The Funds provide the
Client Plans with a more effective investment vehicle than collective
investment funds maintained by Comerica Bank without any increase in
investment management, advisory or similar fees paid to Comerica; (b)
Comerica Bank's automated system of fee rebates and its controls and
auditing procedures for protecting the system and periodically
verifying the accuracy of rebates to Client Plans will insure that the
proper rebates are credited to the Client Plans; (c) with respect to
any investments in a Fund by the Client Plans and the payment of any
fees by the Fund to Comerica Bank for services, an independent
fiduciary receives full written disclosure of information concerning
the Fund, including a current prospectus and a statement describing the
fee structure, and authorizes in writing the investment of the Client
Plan's assets in the Munder Fund and the fees paid by the Fund to
Comerica Bank; (d) any authorizations made by a Client Plan regarding
investments in a Fund and fees paid to Munder, or any increases in the
rates of fees for secondary services which are retained by Comerica
Bank, are or will be terminable at will by the Client Plan, without
penalty to the Client Plan, upon receipt by Comerica Bank of written
notice of termination from the independent fiduciary; (e) no
commissions or redemption fees are paid by the Client Plan in
connection with either the acquisition or sale of Fund shares; (f)
Comerica Bank does not receive any fees payable pursuant to Rule 12b-1
under the 1940 Act in connection with transactions in Fund shares for
Client Plans; and (g) all dealing between the Client Plans, the Funds
and Comerica Bank, are on a basis which is at least as favorable to the
Client Plans as such dealings are with other shareholders of the Munder
Funds.
Notice to Interested Persons
Notice of the proposed exemption shall be given to all Second
Fiduciaries of Client Plans that are currently invested in the Funds,
as of the date the notice of the proposed exemption is published in the
Federal Register, where Comerica Bank provides services to the Funds
and receives fees that would be covered by the exemption, if granted.
Notice to interested persons shall be provided by first class mail
within fifteen (15) days following publication of the proposed
exemption in the Federal Register. Such notice shall include a copy of
the notice of proposed exemption as published in the Federal Register
and a supplemental statement (see 29 CFR 2570.43(b)(2)) which informs
all interested persons of their right to comment on and/or request a
hearing with respect to the proposed exemption. Comments and requests
for a public hearing are due within forty-five (45) days following
publication of the proposed exemption in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Ms. Wendy McColough of the Department,
telephone (202) 693-8561. This is not a toll-free number.
Linda Ann Smith, M.D. Profit Sharing Plan and Trust (the Plan), Located
in Albuquerque, NM
[Application No. D-11223]
Proposed Exemption
The Department is considering granting an exemption under the
authority of section 408(a) of the Act and section 4975(c)(2) of the
Code and in accordance with the procedures set forth in 29 CFR Part
2570, Subpart B (55 FR 32836, August 10, 1990).\9\ If the exemption is
granted, 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 proposed exchange of an unimproved tract of
land located in Nathrop, Colorado (Lot 154), which is owned by the Plan
and allocated to the individually-directed account (the Account) in the
Plan of Linda Ann Smith, M.D., for one unimproved tract of land (Lot
85) located in San Pedro Creek Estates, New Mexico, which is owned
jointly by Dr. Smith, and her spouse, Mr. Harold G. Field (the
Applicants).
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\9\ For purposes of this proposed exemption, references to
specific provisions of the Title I of Act, unless otherwise
specified, refer also to the corresponding provisions of the Code.
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This proposed exemption is subject to the following conditions:
(a) The exchange of Lot 154 by the Account for Lot 85 owned by the
Applicants is a one-time transaction.
(b) The fair market value of Lot 154 and Lot 85 is determined by
qualified, independent appraisers, who will update their appraisal
reports at the time the exchange is consummated.
(c) For purposes of the exchange, Lot 85 has a fair market value
that is more than the fair market value of Lot 154.
(d) The terms and conditions of the exchange are at least as
favorable to the Account as those obtainable in an arm's length
transaction with an unrelated party.
(e) The exchange does not involve more than 25 percent of the
Account's assets.
(f) Dr. Smith is the only participant in the Plan whose Account is
affected by the exchange and she desires that the transaction be
consummated.
(g) The Account does not pay any real estate fees or commissions in
conjunction with the exchange.
Summary of Facts and Representations
1. Dr. Smith, a surgeon, is the sole practitioner in the Linda Ann
Smith, M.D., LLC (the Employer). Her medical practice, which employs
three full-time employees and four part-time employees, is located in
Albuquerque, New Mexico.
2. The Plan is a profit sharing plan that was established by the
Employer, effective February 1, 1993, for the benefit of Dr. Smith's
employees. As of December 31, 2003, which is the date the most recent
financial information is available, the Plan had 3 participants and
assets having an aggregate fair market value of $946,888. Of this
total, the Account had total assets of approximately of $847,393.
3. The trustee of the Plan (the Trustee) is Harold G. Field, the
husband of Dr. Smith. Mr. Field does not have an individually-directed
account in the Plan. Pursuant to provisions of the Plan, each
participant has the right to direct investments under the Plan for his
or her own respective account. In such instances, the investments are
[[Page 54811]]
earmarked for the accounts of the participants directing such
investments.
4. Among the assets in Dr. Smith's Account in the Plan is Lot 154.
Lot 154 is an unimproved parcel of land located at 3 Mesa Antero
Subdivision Nathrop, Colorado. Lot 154, which consists of approximately
3.7 acres, was acquired by the Account in 1996 for investment purposes
from an unrelated third party. The Account paid $29,007.90 for Lot 154.
The consideration was paid in cash. Lot 154 is also located in close
proximity to another property, which is jointly owned by the
Applicants. Since the time of acquisition, the only expenses associated
with the Account's ownership of Lot 154 have been real estate taxes,
totaling $6,682.58. These expenses have been paid by the Applicants.
5. Lot 154 has been appraised by Ms. Judee Nuechter, CRA, a
qualified, independent appraiser. Ms. Nuechter is affiliated with the
real estate appraisal firm of Mountain Appraisal Associates, Inc. of
Salida, Colorado. In an appraisal report dated November 5, 2003, Ms.
Nuechter placed the fair market value of a fee simple interest in Lot
154 at $160,000 as of November 24, 2003 on an ``as is'' basis. In
valuing Lot 154, Ms. Nuechter utilized the Sales Comparison Approach
because she believed this method would yield the most reliable
indication of fair market value since other valuation methods were not
applicable to the unimproved vacant lots in the subject neighborhood.
6. In addition, on June 9, 2004, Ms. Nuechter assessed the unique
value of Lot 154 since the Applicants own a lot adjacent to the subject
lot. According to Ms. Nuechter, the value of each lot is separate from
any other lot because each lot is considered a single family
residential site. Ownership of an individual lot or parcel is
considered a separate unit, which is unable to be combined for building
purposes, and neither lot impacts the value of the other, regardless of
lot ownership of record. Ms. Nuechter explained that each lot located
within vicinity of Lot 154 is valued as a single parcel that offers the
same amenities and potential for development only as a single family
residential site. Therefore, Ms. Nuechter concludes that ownership of
an adjacent parcel would have no impact on the valuation of other
parcels within Lot 154's vicinity. On the basis of Ms. Nuechter's
appraisal, Lot 154 currently represents approximately 19% of the
Account's assets.
7. Lot 85 is presently owned jointly by the Applicants. This
unimproved parcel of land is located in San Pedro Creek Estates, New
Mexico, approximately 25 miles northeast of Albuquerque in the
foothills of the Sandia Mountains. Lot 85, which consists of about 10
acres of land, was acquired in March 27, 1997 by the Applicants for
investment purposes. The seller was the Campbell Farming Corporation,
an unrelated third party and the original developer of the subdivision.
The Applicants paid $98,268 in cash for Lot 85. Since 1997, all
expenses associated with Lot 85 have been paid by the Applicants. These
costs have included $450 for a septic tank, $1,200 for a transformer,
and $4,456.19 in real estate taxes.
8. Lot 85 has been appraised by Mr. Darrell Ratchner, SRA, a
qualified, independent appraiser, who is affiliated with the appraisal
firm of Darrell Ratchner & Associate of Salida, Colorado. In an
appraisal report dated August 23, 2003, Mr. Ratchner placed the fair
market value of a fee simple interest in Lot 85 at $175,000 also as of
August 23, 2003. In valuing Lot 85, Mr. Ratchner utilized the Sales
Comparison Approach. Mr. Ratchner noted that sales of vacant sites in
the subject subdivision where Lot 85 is located have continued at a
steady pace, with modest price increases over the past several years.
According to Mr. Ratchner, Lot 85's good access, topography, location
and vegetation all support a market estimate near the mid to upper end
of the range.
9. Because the Applicants own a parcel of real property adjacent to
Lot 154, they wish to avoid engaging in a future prohibited transaction
by inadvertently using Lot 154. Therefore, the Applicant's legal
representative has suggested that the Applicant's exchange the
aforementioned unimproved real estate property (i.e., Lot 154) for Lot
85, which is owned by the Account in a like-kind exchange under section
1031 of the Code.\10\ Thus, the Applicants have requested an
administrative exemption from the Department to exchange Lot 85 for Lot
154. Following the exchange, Lot 154 will represent approximately 21%
of the Account's assets.
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\10\ Section 1031 of the Code, which covers like-kind exchanges
(i.e., 1031 Exchanges), refers to the exchange of business or
investment property solely for business or investment property of a
like-kind. No gain or loss is recognized under section 1031 of the
Code. If, as part of a 1031 Exchange, one also receives other
property or money, gain is recognized to the extent of the other
property and money received, but a loss is not recognized. Section
1031 of the Code does not apply to exchanges of inventory, stocks,
bonds, notes, other securities or evidence of indebtedness, or
certain other assets. Properties eligible for a 1031 Exchange are of
the same nature or character, even if they differ in grade or
quality. Personal property of a like-class are permissible for the
purpose of a 1031 Exchange. The terms concerning the subject 1031
Exchange are listed in the exchange agreement.
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10. The exchange will be a one-time transaction between the
Applicants and the Account. For purposes of the exchange, the fair
market value of Lot 154 and Lot 85 will be updated on the date of the
transaction by the independent appraisers who previously valued the
properties. Moreover, the Account will not be required to pay any real
estate fees or commissions in connection with the transaction.
11. In summary, it is represented that the proposed transaction
will satisfy the statutory requirement for an exemption under section
408(a) of the Act because:
(a) The exchange of Lot 154 by the Account for Lot 85 owned by the
Applicants will be a one-time transaction.
(b) The fair market value of Lot 154 and Lot 85 will be determined
by qualified, independent appraisers who will update their appraisal
reports at the time the exchange is consummated.
(c) For purposes of the exchange, Lot 85 will have a fair market
value that will be more than the fair market value of Lot 154.
(d) The terms and conditions of the exchange will be at least as
favorable to the Account as those obtainable in an arm's length
transaction with an unrelated party.
(e) The exchange will not involve more than 25 percent of the
Account's assets.
(f) Dr. Smith is the only participant in the Plan whose Account
will be affected by the exchange and she desires that the transaction
be consummated.
(g) The Account will not pay any real estate fees or commissions in
conjunction with the exchange.
Notice To Interested Persons
Because Dr. Smith is the only participant in the Plan whose Account
will be affected by the proposed transaction, it has been determined
that there is no need to distribute the notice of proposed exemption to
interested persons. Therefore, comments and requests for a hearing are
due 30 days after publication of the notice of pendency in the Federal
Register.
FOR FURTHER INFORMATION CONTACT: Mr. Arjumand A. Ansari of the
Department at (202) 693-8566. (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
[[Page 54812]]
a fiduciary or other party in interest or disqualified person from
certain other provisions of the Act and/or the Code, including any
prohibited transaction 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) Before an exemption may be granted under section 408(a) of the
Act and/or section 4975(c)(2) of the Code, the Department must find
that the exemption is administratively feasible, in the interests of
the plan and of its participants and beneficiaries, and protective of
the rights of participants and beneficiaries of the plan;
(3) The proposed exemptions, if granted, will be supplemental to,
and not in derogation of, any other provisions of the Act and/or the
Code, including statutory or administrative exemptions and transitional
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
(4) The proposed exemptions, if granted, will be subject to the
express condition that the material facts and representations contained
in each application are true and complete, and that each application
accurately describes all material terms of the transaction which is the
subject of the exemption.
Signed at Washington, DC, this 7th day of September, 2004.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. 04-20537 Filed 9-9-04; 8:45 am]
BILLING CODE 4510-29-P
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