[Federal Register Volume 75, Number 49 (Monday, March 15, 2010)]
[Notices]
[Pages 12305-12310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-5536]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Application Nos. and Proposed Exemptions; D-11500, Carle 
Foundation Hospital & Affiliates Pension Plan; and Barclays California 
Corporation (Barcal); et al.

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 (ERISA or 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

[[Page 12306]]

(EBSA), Office of Exemption Determinations, Room N-5700, 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: 
``[email protected]'', 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.
    Warning: If you submit written comments or hearing requests, do not 
include any personally-identifiable or confidential business 
information that you do not want to be publicly-disclosed. All comments 
and hearing requests are posted on the Internet exactly as they are 
received, and they can be retrieved by most Internet search engines. 
The Department will make no deletions, modifications or redactions to 
the comments or hearing requests received, as they are public records.

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.

Carle Foundation Hospital & Affiliates Pension Plan; Located in Urbana, 
Illinois

[Application No. D-11500]

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, 32847, August 10, 1990).
    If the proposed exemption is granted, the restrictions in section 
406(a)(1)(A) and (D) and section 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), (D), and (E) of the Code, 
shall not apply to the sale of a certain limited partnership interest 
(the LPI) by the Carle Foundation Hospital & Affiliates Pension Plan 
(the Plan) to Carle Foundation Hospital (the Employer), a party in 
interest with respect to the Plan, provided that the following 
conditions are satisfied:
    (a) The sale is a one-time transaction for cash;
    (b) The terms and conditions of the sale are at least as favorable 
to the Plan as those that the Plan could obtain in an arm's length 
transaction with an unrelated third party;
    (c) The sales price is the greater of: (1) The fair market value of 
the LPI as of the date of the sale, as determined by a qualified, 
independent appraiser, or (2) the Plan's total capital contributions as 
of the date of the sale, plus imputed earnings (calculated based upon 
the applicable one-month Treasury bill rates) from the date of the 
Plan's acquisition of the LPI to the date of the sale;
    (d) The Plan pays no commissions, fees, or other expenses in 
connection with the sale; and
    (e) The Plan fiduciaries review and approve the methodology used by 
the qualified, independent appraiser, ensure that such methodology is 
properly applied in determining the fair market value of the LPI, and 
also determine whether it is prudent to go forward with the proposed 
transaction.

Summary of Facts and Representations

    1. The Carle Foundation Hospital & Affiliates Pension Plan (the 
Plan) is a money purchase pension plan sponsored by Carle Foundation 
Hospital (the Employer), who is located in Urbana, Illinois. The Plan 
had approximately 2,361 participants and beneficiaries, as of November 
13, 2009, and total net assets of approximately $54,499,485, as of the 
same date. First Busey Trust & Investment Co. is the Plan's directed 
trustee.
    The Plan historically did not allow participant-directed 
investments. Since the Plan's initial investment in the subject limited 
partnership interest (LPI), the Employer determined that it would be 
appropriate and in the best interests of the participants and 
beneficiaries to make the Plan a participant-directed plan under 
section 404(c) of the Act. Thus, the Plan was restructured to permit 
participant direction, effective March 1, 2008. In order to finalize 
this conversion to a participant-directed plan, the Plan must liquidate 
the LPI.
    2. The LPI is an interest in the Pantheon USA Fund VII, L.P. (the 
Fund). The Fund is a limited partnership that invests in private equity 
funds (i.e., a ``fund of funds''). The Fund's objective is to generate 
superior, risk-adjusted returns for its investors through a diversified 
portfolio of leveraged buyout, venture capital, and special situation 
funds. According to the applicant, the Plan made a $1,500,000 
commitment to the Fund in December 2006.\1\ As of September 14, 2009, 
the Plan's capital contributions to the Fund totaled $457,500.\2\
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    \1\ The Department expresses no opinion herein as to whether the 
acquisition and holding of the LPI by the Plan meets the 
requirements of Part 4 in Title I of the Act.
    \2\ According to the applicant, the Employer has made a 
$15,000,000 commitment to the Fund, with capital contributions to 
the Fund totaling $4,575,000, as of September 14, 2009. It is 
represented that the decision to purchase an interest in the Fund on 
behalf of the Plan was a decision made independently of the 
Employer's decision to purchase its own interest in the Fund; thus, 
according to the applicant, there was no agreement, arrangement, or 
understanding that the Plan's investment would be a means of 
enabling the Employer or any other Plan fiduciary to invest in the 
Fund or otherwise use the Plan's assets in a manner designed to 
benefit such fiduciary.
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    Pantheon Ventures, Inc. (Pantheon) is the Fund's investment 
adviser. It is represented that the fees charged by the Fund are based 
on a percentage of the capital commitment made by investors to the 
Fund; the Plan is currently paying a fee of 0.75%. The terms of the 
Fund provide that the Fund will continue for thirteen years from the 
date of its first investment, which was made in May 2006, and may be 
extended for up to three additional years. Furthermore, the Plan may 
not sell or otherwise transfer its LPI to another investor without the 
written consent of Pantheon (acting as

[[Page 12307]]

manager of the Fund's General Partner, PUSA VII GP, LLC).
    The Plan's investment adviser, Summit Strategies Group (Summit), 
consulted with Pantheon, and communicated information regarding the 
limited secondary market for the LPI to the Employer. Therefore, the 
Employer proposes to purchase the LPI from the Plan.\3\ However, the 
Carle Pension Plan Administrative Committee (the Plan Committee) will 
make the ultimate determination whether or not to sell the Plan's LPI 
to the Employer; the Plan Committee is a named fiduciary of the Plan, 
along with the Employer's Board of Directors, which monitors the Plan 
Committee.
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    \3\ Because the Fund was closed to new investors as of June 29, 
2007, Pantheon would need to grant a special waiver of the required 
$10 million commitment to any unrelated purchaser who is not already 
invested in the Fund. Pantheon has expressed a strong preference 
that the purchaser of the Plan's LPI be an investor already invested 
in the Fund. Summit has not identified any investors, other than the 
Employer, whose stated investment goals would be consistent with 
purchasing the Plan's LPI without a discount. The Department notes 
that no relief is being provided in this proposed exemption beyond 
the Plan's sale of the LPI to the Employer for any additional 
prohibited transactions, if any, that may have occurred as a result 
of co-investing in the same Fund by the Plan and the Employer.
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    3. The LPI was appraised for the Plan Committee by Andrew S. Ward, 
Managing Director, and Mark F. Fournier, Director, of Stout Risius 
Ross, Inc. (SRR), consistent with the standards of Financial Accounting 
Standard (FAS) 157, Fair Value Measurements, which is effective for 
financial statements issued for fiscal years beginning after November 
15, 2007.\4\ The applicant represents that SRR is a qualified, 
independent appraiser located in Chicago, Illinois. SRR is a financial 
advisory firm that specializes in investment banking, valuation and 
financial opinions, and dispute advisory and forensic services. SRR 
represents that it has considerable experience providing valuation 
opinions of private equity funds, hedge funds, and similar private 
companies. It is represented that SRR is not related to, and has no 
interest in, the Employer or an affiliate thereof and that less than 1% 
of SRR's gross annual income is derived from the Employer or an 
affiliate thereof.
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    \4\ FAS 157 provides guidance for measuring the fair value of 
assets and liabilities, including hard-to-value alternative 
investments.
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    SRR's valuation report of September 11, 2009 states that the 
principal sources of information used to estimate the fair market value 
of the LPI included, but were not limited to:
     The Fund's Limited Partnership Agreement, dated April 28, 
2006;
     The Fund's financial statements for the year ended 
December 31, 2008, audited by PriceWaterhouseCoopers;
     The Fund's Investment Adviser's Report for the quarter 
ending March 31, 2009;
     The Fund's Private Placement Memorandum, dated March 2006;
     Discussions with Pantheon representatives concerning the 
assets and liabilities held by the Partnership; and
     Public information regarding market evidence of lack of 
control and lack of marketability discounts.
    Regarding SRR's valuation methodology, the report states that 
several valuation approaches were considered, including a Market 
Approach, an Income Approach, and an Asset Approach. SRR relied 
primarily on a Market Approach, a valuation technique whereby the value 
of the subject company is calculated based on the prices of actual 
transactions for similar companies. These observations make it possible 
to determine the value of shares that have no active market. This can 
be accomplished via either the Guideline Public Company Method or the 
Merger and Acquisition Method. SRR used the Guideline Public Company 
Method, a valuation technique whereby the value of a company is 
estimated by comparing it to similar public companies. SRR states that 
if the Fund were publicly traded, a Marketable, Non-controlling 
Interest Value of Equity in the Fund as a whole was estimated to be 
$440,000,000. They then calculated the Plan's 0.07% interest in the 
Fund ($440,000,000 x 0.0007 = $308,000) and subtracted a 20% discount 
for lack of marketability ($308,000 x 0.20 = $62,000) to arrive at a 
fair market value of $246,000 for the LPI ($308,000 - $62,000 = 
$246,000), as of August 31, 2009.
    4. The Employer proposes to pay the Plan the greater of: (1) The 
fair market value of the LPI as of the date of the sale, as determined 
by SRR, or (2) the Plan's total capital contributions, as of the date 
of the sale, plus imputed earnings (based upon the applicable one-month 
Treasury bill rates) from the date of the Plan's acquisition of the LPI 
to the date of the sale. As of September 14, 2009, the Plan's capital 
contributions totaled $457,500 and imputed earnings were calculated to 
be $9,241. These amounts will be updated to reflect any additional 
capital contributions made to the Fund and earnings through the date of 
the actual sale.
    The applicant represents that the sale of the Plan's LPI to the 
Employer is in the best interests of the Plan because it will enable 
the Plan to recoup its investment in the LPI, as well as realize a 
reasonable gain on investment. In addition, the continued holding of 
the LPI by the Plan following its conversion to a participant-directed 
Plan imposes a significant recordkeeping burden on the Plan.
    The sale of the LPI will be a one-time transaction for cash, and 
the Plan will incur no fees, commissions, or other expenses in 
connection with the sale. The Plan Committee will review and approve 
the methodology used by SRR and ensure that such methodology is 
properly applied in determining the fair market value of the LPI. The 
Plan Committee will also make the decision whether or not to proceed 
with the proposed sale of the LPI to the Employer; if the Plan 
Committee decides to proceed, it will have SRR update its valuation of 
the LPI as of the date of the sale.
    The Employer is bearing the costs of the exemption application, the 
appraisal of the LPI, and notification of interested persons.
    5. In summary, the applicant represents that the proposed 
transaction satisfies the statutory criteria for an exemption under 
section 408(a) of the Act for the following reasons: (a) The sale will 
be a one-time transaction for cash; (b) the terms and conditions of the 
sale will be at least as favorable to the Plan as those that the Plan 
could obtain in an arm's length transaction with an unrelated third 
party; (c) the sales price will be the greater of: (1) The fair market 
value of the LPI as of the date of the sale, as determined by a 
qualified, independent appraiser, or (2) the Plan's total capital 
contributions as of the date of the sale, plus imputed earnings 
(calculated based upon the applicable one-month Treasury bill rates) 
from the date of the Plan's acquisition of the LPI to the date of the 
sale; (d) the Plan will pay no commissions, fees, or other expenses in 
connection with the sale; and (e) the Plan Committee will review and 
approve the methodology used by SRR, ensure that such methodology is 
properly applied in determining the fair market value of the LPI, and 
also determine whether it is prudent to go forward with the proposed 
transaction.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department, 
telephone (202) 693-8557. (This is not a toll-free number.)

[[Page 12308]]

Barclays California Corporation (Barcal); Located in San Francisco, 
California

Exemption Application Number D-11527

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, as amended (the Code), and in accordance with the 
procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 
32847, August 10, 1990).\5\
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    \5\ For purposes of this proposed exemption, references to 
section 406 of ERISA should be read to refer as well to the 
corresponding provisions of section 4975 of the Code.
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    If the proposed exemption is granted, the restrictions of sections 
406(a), 406(b)(1) and (b)(2) of the Act, section 8477(c)(2) of the 
Federal Employees' Retirement System Act of 1986, as amended (FERSA), 
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 September 4, 2008, to the cash sales (the Sales) 
by the Barclays Global Investors ``Money Market Fund'' and ``Cash 
Equivalent Fund II,'' which are short-term collective investment funds 
(STIFs) managed or maintained by Barclays Global Investors, N.A. (BGI), 
of certain short-term debt instruments (the Notes) to Barcal, provided 
that the following conditions are met:
    (a) The Sales were one-time transactions for cash payment made on a 
delivery versus payment (i.e., same day) basis in the amount described 
in paragraph (b);
    (b) The STIFs received an amount equal to the greater of:
    (1) The amortized cost (including accrued and unpaid interest) of 
the Notes, determined as of the dates of the Sales, or
    (2) The fair market value (including accrued and unpaid interest) 
of the Notes, determined by an independent third party source;
    (c) The STIFs did not bear any commissions, transaction costs or 
other expenses in connection with the Sales;
    (d) The terms and conditions of the Sales were at least as 
favorable to the STIFs as those available in an arm's-length 
transaction with an unrelated party.
    (e) BGI, as fiduciary of the STIFs, determined that the Sales were 
in the best interest of the STIFs and any employee benefit plans (the 
Plans) invested in the STIFs as of the dates of the Sales.
    (f) BGI took all appropriate actions necessary to safeguard the 
interests of the STIFs and any Plans invested in the STIFs in 
connection with the Sales.
    (g) If the exercise of any of Barcal's rights, claims, or causes of 
action in connection with its ownership of the Notes results in Barcal 
recovering from the issuer of the Notes, or from any third party, an 
aggregate amount that is more than the sum of:
    (1) The purchase price paid for such Notes by Barcal; and
    (2) The interest due on the notes from and after the date Barcal 
purchased the Notes from the STIFs,
    Barcal will refund such excess amount promptly to the STIFs (after 
deducting all reasonable expenses incurred in connection with the 
recovery).
    (h) BGI maintains, or causes to be maintained, for a period of six 
(6) years from the date of any covered transaction such records as are 
necessary to enable the persons described below in paragraph (i)(1), to 
determine whether the conditions of this exemption have been met, 
except that--
    (1) No party in interest with respect to a Plan which engages in 
the covered transactions, other than BGI and its affiliates, shall be 
subject to a civil penalty under section 502(i) of the Act or the taxes 
imposed by section 4975(a) and (b) of the Code, if such records are not 
maintained, or not available for examination, as required, below, by 
paragraph (i)(1);
    (2) A separate prohibited transaction shall not be considered to 
have occurred solely because due to circumstances beyond the control of 
BGI, such records are lost or destroyed prior to the end of the six-
year period.
    (i)(1) Except as provided, below, in paragraph (i)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to, above, in paragraph (h) are 
unconditionally available at their customary location for examination 
during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or the Securities and 
Exchange Commission; or
    (B) Any fiduciary of any Plan that engages in the covered 
transactions, or any duly authorized employee or representative of such 
fiduciary; or
    (C) Any employer of participants and beneficiaries and any employee 
organization whose members are covered by a Plan that engages in the 
covered transactions, or any authorized employee or representative of 
these entities; or
    (D) Any participant or beneficiary of a Plan that engages in a 
covered transaction, or duly authorized employee or representative of 
such participant or beneficiary;
    (2) None of the persons described, above, in paragraph (i)(1)(B)-
(D) shall be authorized to examine trade secrets of BGI, or commercial 
or financial information which is privileged or confidential; and
    (3) Should BGI refuse to disclose information on the basis that 
such information is exempt from disclosure, BGI shall, by the close of 
the thirtieth (30th) day following the request, provide a written 
notice advising that person of the reasons for the refusal and that the 
Department may request such information.
    Effective Date: This proposed exemption, if granted, will be 
effective September 4, 2008.

Summary of Facts and Representations

    1. BGI is a national banking association headquartered in San 
Francisco, California. BGI serves as fiduciary investment manager for 
employee benefit plans invested in separately managed accounts and 
pooled funds. BGI also manages certain assets for the Federal Thrift 
Savings Plan established pursuant to the provisions of FERSA. As of 
June 2008, BGI and its worldwide investment advisory affiliates had 
over $1.9 trillion in assets under management. BGI is a wholly owned 
subsidiary of Barcal, and an indirect majority-owned subsidiary of 
Barclays Bank PLC, a British bank.\6\
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    \6\ As of December 1, 2009, BGI became a wholly-owned subsidiary 
of BlackRock, Inc.
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    2. The pooled funds managed or maintained by BGI include short-term 
collective investment funds (STIFs). The STIFs generally invest in 
short-term investments of high quality and low risk, with the goal of 
protecting capital while securing a return better than a relevant 
benchmark, such as three-month LIBOR. STIF investments include cash, as 
well as bank notes, corporate notes, government bills and other 
relatively safe short-term debt instruments. Employee benefit plans, 
including the Federal Thrift Savings Plan (collectively, the Plans), 
may invest in the STIFs.
    3. STIFs managed or maintained by BGI purchased notes issued by a 
structured investment vehicle (SIV) called Whistlejacket Capital Ltd. 
(Whistlejacket).\7\ SIVs are off-balance-

[[Page 12309]]

sheet vehicles that issue short and medium-term debt to finance their 
purchase of longer-term assets, including collateralized debt 
obligations. Many SIVs, including Whistlejacket, have lost significant 
value in the current credit crisis because the value of their 
underlying assets has dropped and investors who have bought their 
short-term debt have left the market. Whistlejacket is not managed or 
sponsored by or affiliated with Barcal or BGI or any of their 
affiliates (collectively, the Applicant).
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    \7\ In June 2007, Whistlejacket Capital, LLC, White Pine Corp. 
Ltd., and White Pine Finance, LLC merged into Whistlejacket. The 
applicant requests that the exemption proposed herein apply to the 
purchase by Barcal of securities issued by Whistlejacket or any of 
the merged entities or their predecessors.
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    4. In February 2008, the market value of Whistlejacket's assets 
less its senior liabilities fell to less than half the amount of its 
capital, which triggered the appointment of a receiver on February 11, 
2008. On February 12, 2008, two nationally-recognized statistical 
rating organizations downgraded short-term senior debt instruments 
issued by Whistlejacket (the Notes). On February 21, 2008, 
Whistlejacket began defaulting on the Notes. The Notes have dropped 
significantly in value.
    5. In September 2008, Barcal purchased the Notes from the STIFs to 
eliminate the negative impact of the Notes on the STIFs' net asset 
value. As consideration for the Notes, Barcal paid the greater of: (a) 
The amortized cost (including accrued and unpaid interest) of the 
Notes, as of the dates of the Sales, or (b) the fair market value 
(including accrued and unpaid interest) of the Notes, as of the dates 
of the Sales, determined by an independent third party source. The 
Sales were on a ``delivery versus payment'' (i.e., same day) basis in 
immediately available United States dollars. The STIFs incurred no 
commission or transaction costs in connection with the Sales. BGI 
represents that it determined that the Sales were in the best interest 
of the STIFs and any employee benefit plans (the Plans) invested in the 
STIFs, and that it took all appropriate actions necessary to safeguard 
the interests of the STIFs and the Plans. BGI represents that it will 
maintain all the records necessary to explain the transactions 
described herein for at least six years, and will make those records 
available to the Department and to the named fiduciary of each affected 
Plan.
    6. The Applicant represents that there were three Notes purchased 
by Barcal from two different STIFs. On September 19, 2008, Barcal 
purchased $15,000,000 of White Pine Finance LLC debt, CUSIP 96432XKD4 
from the Money Market Fund, with an acquisition price of 99.99961824. 
The maturity date on the Note was September 26, 2008. There were no 
bids in the market for these securities, and the Applicant's internal 
committee which prices those assets which cannot otherwise be priced 
estimated a fair market value for the Note of 93.0539. The Receiver for 
the Issuer of the Note, which is unrelated to Barcal, valued the Note 
at 95.1225.
    The second STIF that was involved was Cash Equivalent Fund II 
(CEFII). On September 4, 2008, Barcal purchased $40,000,000 of 
Whistlejacket Capital, LLC debt, CUSIP 96335WFT5, from CEFII, with an 
acquisition price of 99.9997822. The maturity date on the Note was 
September 8, 2008. There were no bids in the market for these 
securities, and the Applicant's internal committee which prices those 
assets which cannot otherwise be priced estimated a fair market value 
for the Note of 93.5312. The Receiver for the Issuer of the Note, which 
is unrelated to Barcal, valued the Note at 96.2597.
    On September 19, 2008, Barcal purchased $135,000,000 of White Pine 
Finance LLC debt, CUSIP 96432XKD4, from CEFII, with an acquisition 
price of 99.99961824. The maturity date on the Note was September 26, 
2008. There were no bids in the market for these securities, and the 
Applicant's internal committee which prices those assets which cannot 
otherwise be priced estimated a fair market value for the Note of 
93.0539. The Receiver for the Issuer of the Note, which is unrelated to 
Barcal, valued the Note at 95.1225.
    With respect to all three purchases, the Applicant represents that 
the price paid by Barcal was the amortized cost of the Note plus 
accrued interest. The Applicant represents that all three Sales took 
place within a week of the maturity date of the Notes because, within 
the judgment of BGI, the timing of the Sales maximized the value for 
the STIFs and did not result in the STIFs holding a defaulted Note.
    7. The Applicant represents that if the exercise of any of Barcal's 
rights, claims, or causes of action in connection with its ownership of 
the Notes results in Barcal recovering from the issuer of the Notes, or 
from any third party, an aggregate amount that is more than the sum of:
    (1) The purchase price paid for such Notes by Barcal; and
    (2) The interest due on the Notes from and after the date Barcal 
purchased the Notes from the STIFs,

Barcal will refund such excess amount promptly to the STIFs (after 
deducting all reasonable expenses incurred in connection with the 
recovery).
    8. In summary, the Applicant represents that the transactions 
satisfied the statutory criteria of section 408(a) of the Act, section 
4975(c)(2) of the Code and section 8477(c)(3) of FERSA because: (a) 
Each Sale was a one-time transaction for cash; (b) with respect to all 
three Sales, the price paid by Barcal was the amortized cost of the 
Note plus accrued interest, which was greater than the fair market 
value of the Note as determined by the Receiver for the issuer of the 
Note; (c) no STIF paid any commissions or other transaction expenses 
with respect to the Sales; (d) BGI took all appropriate actions 
necessary to safeguard the interests of the STIFs and any Plans 
invested in the STIFs in connection with the Sales; (e) the terms and 
conditions of the Sales were at least as favorable to the STIFs as 
those available in an arm's-length transaction with an unrelated party; 
(f) BGI determined that the Sales were in the best interest of the 
STIFs and any Plans invested in the STIFs as of the dates of the Sales; 
(g) BGI will maintain all the records necessary to explain the 
transactions described herein for at least six years, and will make 
those records available to the Department and to the named fiduciary of 
each affected Plan; and (h) Barcal will promptly refund to the STIFs 
any amount recovered from the issuer of the Notes or any third party in 
connection with the exercise of any rights, claims or causes of action 
resulting from its ownership of the Notes, if such amounts are in 
excess of:
    (1) The purchase price paid for such Notes by Barcal; and
    (2) The interest due on the Notes from and after the date Barcal 
purchased the Notes from the STIFs.

Notice to Interested Persons

    The Applicant represents that because one of the STIFs was a sweep 
vehicle in which investing Plans changed over time, hundreds of Plans 
would need to be notified, at great additional expense to the 
Applicant, despite the fact that all the details of the Sales were 
disclosed in the STIFs' financial statements which were made available 
to all Plan clients at the end of the year of the transactions. 
Therefore, the only practical means of notifying participants and 
beneficiaries of such Plans of this proposed exemption is by the 
publication of this notice in the Federal Register. Comments and 
requests for a hearing must be received by the Department not later 
than 30 days from the date of publication of this notice of proposed 
exemption in the Federal Register.

[[Page 12310]]


FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
telephone (202) 693-8546. (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 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 9th day of March 2010.
 Ivan Strasfeld,
 Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2010-5536 Filed 3-12-10; 8:45 am]
BILLING CODE 4510-29-P