[Federal Register Volume 79, Number 157 (Thursday, August 14, 2014)]
[Notices]
[Pages 47674-47683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-19212]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application No. D-11730]


Notice of Proposed Amendment to PTE 2012-10, Involving 
Renaissance Technologies, LLC (Renaissance or the Applicant) Located in 
New York, New York

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Proposed amendment to exemption.

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SUMMARY: This document contains a notice of pendency before the 
Department of Labor (the Department) of a proposed amendment to an 
individual exemption from certain prohibited transaction restrictions 
of the Employee Retirement Income Security Act of 1974, as amended 
(ERISA or the Act), and the Internal Revenue Code of 1986, as amended 
(the Code). The proposed amendment, if granted, would amend Prohibited 
Transaction Exemption (PTE) 2012-10 in order to allow for the 
investment by employees of Renaissance participating in the Renaissance 
Technologies, LLC 401(k) Plan, through such employees' 401(k) plan 
accounts, in certain proprietary funds managed by Renaissance.

DATES: Effective Date: This proposed amendment, if granted, would be 
effective as of the earlier of the date of publication in the Federal 
Register of such grant of amendment or October 1, 2014.

DATES: Written comments and hearing requests are due within 33 days of 
the publication of the notice of proposed amendment in the Federal 
Register. All comments will be made available to the public.

ADDRESSES: 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 proposed 
exemption and the manner in which the person would be adversely 
affected by the exemption, if granted. 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. All written comments 
and requests for a public hearing concerning the proposed exemption 
should be sent to the Office of Exemption Determinations, Employee 
Benefits Security Administration, Room N-5700, U.S. Department of 
Labor, 200 Constitution Avenue NW., Washington DC 20210, Attention: 
Application No. D-11730.

[[Page 47675]]

Interested persons are also invited to submit comments and/or hearing 
requests to EBSA via email or FAX. Any such comments or requests should 
be sent either by email to: [email protected], or by FAX to (202) 
219-0204 by the end of the scheduled comment period. The application 
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-1515, 200 
Constitution Avenue NW., Washington, DC 20210. Comments and hearing 
requests will also be available online at www.regulations.gov and 
www.dol.gov/ebsa , at no charge.
    Warning: If you submit written comments or hearing requests, do not 
include any personally identifiable information (such as name, address, 
or other contact information) or confidential business information that 
you do not want publicly disclosed. All comments and hearing requests 
may be posted on the Internet and can be retrieved by most Internet 
search engines.

FOR FURTHER INFORMATION CONTACT: Jennifer Erin Brown, Office of 
Exemption Determinations, Employee Benefits Security Administration, 
U.S. Department of Labor, telephone (202) 693-8352. (This is not a 
toll-free number).

SUPPLEMENTARY INFORMATION: Renaissance is seeking to amend PTE 2012-10 
(77 FR 23756, April 20, 2012) in order to allow for the investment in 
certain proprietary funds managed by Renaissance (the Medallion Funds), 
through certain feeder funds (the New Medallion Vehicles), by employees 
of Renaissance participating in the Renaissance Technologies, LLC 
401(k) Plan (the 401(k) Plan), through such employees' 401(k) plan 
accounts (the 401(k) Accounts). PTE 2012-10 provides exemptive relief 
from sections 406(a)(1)(A) and 406(a)(1)(D) of the Act and sections 
4975(c)(1)(A) and (D) of the Code for (1) the direct or indirect 
acquisition by the IRA of an employee or an owner permitted to invest 
in the Medallion Funds following the termination of their Renaissance 
employment (each, a Participant) or the spouse (Spouse) of such 
Participant, of an interest in a Medallion Fund through such IRA's 
acquisition of an interest in a New Medallion Vehicle; (2) the 
acquisition of an additional interest by the IRA in a New Medallion 
Vehicle; and (3) the redemption of all or a portion of a Participant's 
or Spouse's IRA's interest in a New Medallion Vehicle.
    The proposed amendment to PTE 2012-10 has been requested by 
Renaissance pursuant to 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 (76 FR 66637, 66644, October 27, 2011). 
Effective December 31, 1978, section 102 of the Reorganization Plan No. 
4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the 
Secretary of the Treasury to issue administrative exemptions under 
section 4975(c)(2) of the Code to the Secretary of Labor. Accordingly, 
this notice of proposed amendment is being issued solely by the 
Department.

Summary of Facts and Representations \1\
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    \1\ The Summary of Facts and Representations (the Summary) is 
based on the Applicant's representations and does not reflect the 
views of the Department, unless indicated otherwise.
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Background

    1. Renaissance Technologies, LLC (together with its affiliates is 
referred to as Renaissance, or the Applicant) submitted a request that 
Prohibited Transaction Exemption (PTE) 2012-10 (77 FR 23756, April 20, 
2012) be amended. As described in further detail below, PTE 2012-10 is 
an exemption previously granted to Renaissance that provides relief 
from certain prohibited transaction provisions of ERISA for 
transactions arising in connection with the investment by individual 
retirement accounts (IRAs) owned by Renaissance's employees, certain 
Renaissance owners, and the spouses of such employees and owners (IRA 
Holders), in six privately offered collective investment vehicles 
managed by Renaissance. Unless otherwise noted, the facts and 
representations of PTE 2012-10 are incorporated herein.\2\
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    \2\ The Applicant represents that, to the best of its knowledge, 
Renaissance has complied with all applicable conditions of PTE 2012-
10.
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    2. Renaissance is an investment adviser registered with the SEC and 
a commodity pool operator and commodity trading advisor registered with 
the CFTC. The firm was founded in 1982 and is headquartered in New York 
City, and its research and trading activities are conducted from its 
office in East Setauket, New York. Renaissance implements quantitative 
investment strategies on behalf of its clients, employing quantitative 
analysis, specifically, mathematical and statistical methods, to 
uncover technical indicators with predictive value. This analysis is 
used to construct proprietary computer models which use publicly 
available financial data to identify and implement trading decisions 
electronically. Renaissance's quantitative analysis and trading 
activities are applied to mature, highly liquid, publicly-traded 
instruments in both U.S. and foreign markets.
    3. The Applicant represents that it has approximately 295 
employees, about 100 of whom are owners of Renaissance. According to 
the Applicant, many of Renaissance's employees are specialists with 
non-financial backgrounds, including mathematicians, physicists, 
astrophysicists, and statisticians. Additionally, Renaissance 
represents that over one third of its 200 employees at its main office 
have Ph.D.s.
    4. Renaissance is the investment manager of fifteen privately 
offered U.S. and non-U.S. collective investment vehicles (the Funds) 
with aggregate net assets under management as of March 31, 2013, of 
approximately $24 billion, comprised of nine proprietary funds (the 
Proprietary Funds) and six non-proprietary funds (the non-Proprietary 
Funds). The Proprietary Funds are comprised almost exclusively of 
assets of Renaissance and its owners and employees, and include, among 
others, six privately offered collective investment vehicles called the 
``Medallion Funds'' and the feeder fund known as ``Kaleidoscope.'' 
According to the Applicant, none of the assets of any Proprietary Fund 
qualify as ``plan assets'' of any ``benefit plan investor,'' as those 
terms are defined in section 3(42) of the Act and 29 CFR 2510.3-101.
    5. Renaissance's non-Proprietary Funds consist primarily of assets 
of clients, such as foundations, private and public-sector pension 
funds, financial institutions, and high net worth individuals, as well 
as a small amount of proprietary assets. As of March 31, 2013, the 
breakdown of aggregate assets under management between the Proprietary 
Funds and the non-Proprietary Funds is $12.7 billion and $11.3 billion, 
respectively. With respect to the Proprietary Funds, the Applicant 
states that the Medallion Funds represent approximately $10.3 billion 
of the Proprietary Funds' $12.7 billion in assets under management, as 
of March 31, 2013.
    6. Renaissance explains that the Medallion Funds are organized in a 
``master-feeder'' structure, with investors owning shares of a ``feeder 
fund'' that invests directly in one or more ``master funds,'' generally 
organized as such for tax or other regulatory reasons. There are six 
Medallion feeder funds (the Medallion

[[Page 47676]]

FFs), each of which is intended for investors who meet certain criteria 
specific to that Medallion FF concerning that investor's residency 
(U.S. or non-U.S.) and regulatory status under the U.S. federal 
securities laws. All equity interests in each Medallion FF are owned by 
the investors in that Medallion FF, and, as described below, also by 
Renaissance (in certain Medallion FFs).
    7. The Applicant states that the Medallion FFs all have the same 
investment objectives and trading strategies and currently do, and 
will, invest and trade together through the same master trading 
vehicles that were formed solely for that purpose, known as the 
``Medallion Master Funds.'' All investment capital in each Medallion FF 
(minus a small amount necessary to pay expenses at the Medallion FF 
level) is re-invested in the Medallion Master Funds where all 
investment and trading activities occur. The Medallion Master Funds and 
the Medallion FFs are organized as either limited partnerships or 
corporations, and all equity interests in the Medallion Master Funds 
are owned collectively and directly by one or more of the Medallion 
FFs, and indirectly, primarily by Renaissance, owners of Renaissance, 
and Renaissance's employees. All investors in the Medallion FFs (as 
well as the other Proprietary Funds and non-Proprietary Funds) must, 
among other things, meet the entry requirements established under the 
U.S. federal securities laws for admission.\3\ Further, the Medallion 
Funds are audited annually by a nationally-recognized accounting firm.
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    \3\ The Medallion FFs currently operate under the exemptions set 
forth in sections 3(c)(7), 3(c)(1), or 6(b) of the 1940 Act, and 
Rule 506 of Regulation D under the Securities Act of 1933, as 
amended (the 1933 Act).
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    8. According to the Applicant, the Medallion Funds invest and trade 
in various types of financial instruments as determined by Renaissance, 
including, without limitation: (a) equity securities and related 
instruments, such as common and preferred stocks, ADRs, options, 
warrants, convertible securities and swaps and other derivatives 
relating to equity securities, (b) futures contracts (and options 
thereon) and forward contract transactions, and (c) fixed income 
securities and related derivatives, including U.S. and non-U.S. 
government issued (and U.S. government agency guaranteed) securities, 
mortgage-related securities and derivatives and credit default swaps.
    9. The Applicant states that the risk of investing in the Medallion 
Funds results from a variety of factors, including the volatility in 
the various markets for financial instruments that the Funds trade in, 
the use of leverage (which can exacerbate both profits and losses), and 
the uncertainty of governmental actions around the world and their 
impact on the interconnected global financial markets (e.g., actions of 
central banks that affect interest rates in various currencies). 
However, the Applicant observes that these risks are mitigated by 
several factors, including the Medallion Funds' broad investment 
diversification, the liquidity of most of the instruments the Funds 
trade, the quarterly liquidity afforded to each investor, and the 
success that Renaissance has achieved in trading the various Medallion 
Funds that have resulted in average annual returns (before management 
fees and performance allocations) of 71.88% over the twenty year period 
from January 1994 to December 2013.
    10. One of the nine Proprietary Funds maintained by Renaissance is 
Kaleidoscope, a Delaware limited liability company, established 
exclusively as a ``perk'' to Renaissance's employees who do not meet 
the financial qualification requirements under the U.S. federal 
securities laws for eligibility to invest in any of the other eight 
Proprietary Funds.\4\ Kaleidoscope is a ``fund-of-funds'' that 
currently invests in the Medallion Funds through one of the Medallion 
FFs, known as ``Medallion RMP,'' in addition to the other Proprietary 
Funds. Further, as Kaleidoscope only invests in the Proprietary Funds, 
it invests indirectly in the instruments and transactions that such 
Funds invest in directly. Kaleidoscope is also audited annually by a 
nationally-recognized accounting firm.
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    \4\ Kaleidoscope currently operates under the exemption set 
forth in section 3(c)(1) of the 1940 Act and Rule 506 of Regulation 
D under the 1933 Act.
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PTE 2012-10

    11. In seeking PTE 2012-10, Renaissance represented that many of 
its employees were unhappy with the investment options offered under 
the 401(k) defined contribution plan previously maintained by 
Renaissance (the Old 401(k) Plan), and they expressed an interest in 
investing their retirement assets in the Medallion Funds or in another 
investment vehicle managed by Renaissance in order to take advantage of 
such Funds' record of investment performance.
    12. According to the Applicant, Renaissance determined that the 
best opportunity for its employees and certain owners of Renaissance 
(Participants) to invest their retirement assets in the Medallion Funds 
was by terminating the Old 401(k) Plan and permitting such investment 
through the IRAs of such individuals. Furthermore, Renaissance 
determined that spouses of Participants (Spouses) would be allowed to 
invest through their IRAs to the extent such investment is allowed 
under investment guidelines governing the Medallion Funds.
    13. Therefore, in order to facilitate investment by Participants 
and their Spouses in the Medallion Funds, Renaissance created a group 
of new feeder funds that would only accept investment from the IRAs of 
such individuals. Specifically, Renaissance created ``New Medallion 
FF,'' ``New Medallion FF RMPRF,'' and ``New Kaleidoscope,'' referred to 
collectively as the ``New Medallion Vehicles,'' designed solely to 
channel the investment of Participants' and Spouses' IRAs into the 
Medallion Funds. Renaissance also created two other feeder funds 
designed to facilitate the investment by IRAs into other of 
Renaissance's Proprietary Funds (the non-Medallion Funds).
    14. New Medallion FF is organized as a Bermuda Limited Partnership 
that elects to be treated as a corporation for US Federal Income Tax 
purposes, and invests directly in the Medallion Funds. New Medallion FF 
is available only to IRAs maintained by IRA Holders who meet the same 
investor qualifications as those investing in the Medallion Funds. New 
Kaleidoscope is a new fund-of-funds that is available only to IRAs 
maintained by IRA Holders that do not meet the investor qualifications 
to invest directly in the New Medallion FF. New Kaleidoscope is 
organized as a Delaware limited liability company, and invests in the 
Medallion Funds through New Medallion FF RMPRF, a Bermuda Limited 
Partnership that will elect to be treated as a corporation for US 
Federal Income Tax purposes.\5\ In addition, New Kaleidoscope will 
invest in the two other newly established feeder funds which are 
designed to facilitate investment in the non-Medallion Funds.
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    \5\ New Medallion FF and New Medallion FF RMPRF are structurally 
identical, save for the securities law qualifications for investors' 
admittance. Furthermore, New Medallion FF accepts direct IRA 
investment, whereas New Medallion FF RMPRF only accepts investment 
by New Kaleidoscope, and thus has no direct investment by IRAs.
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    In connection with the investment by IRA Holders in the Medallion 
Funds, through the New Medallion Vehicles, absolutely no management 
fees or other

[[Page 47677]]

fees or profit participations in the form of performance allocations or 
otherwise, direct or indirect, are charged to or imposed on the IRAs of 
such Participants and Spouses.\6\
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    \6\ The Applicant notes further that no management fees or 
profit participations of any kind are charged to IRAs investing in 
the two new feeder funds designed to facilitate the investment into 
the non-Medallion Funds.
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    15. Effective January 1, 2012, PTE 2012-10 provides relief from 
section 406(a)(1)(A) and (D) of the Act and the sanctions resulting 
from the application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) and (D) of the Code, for the direct or indirect 
acquisition by a Participant's IRA of an interest in a Medallion Fund 
through such IRA's acquisition of an interest in a New Medallion 
Vehicle, the acquisition of an additional interest by a Participant's 
IRA in a New Medallion Vehicle, and the redemption of all or a portion 
of a Participant's IRA's interest in a New Medallion Vehicle. PTE 2012-
10 also provides relief from the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) and (D) of the Code, for the direct or indirect 
acquisition by a Spouse's IRA of an interest in a Medallion Fund 
through such IRA's acquisition of an interest in a New Medallion 
Vehicle, the acquisition of an additional interest by a Spouse's IRA in 
a New Medallion Vehicle, and the redemption of all or a portion of a 
Spouse's IRA's interest in a New Medallion Vehicle.
    16. The Applicant is seeking to amend PTE 2012-10 in order to allow 
for the investment in the New Medallion Vehicles by employees of 
Renaissance participating in the new Renaissance Technologies, LLC 
401(k) Plan (the 401(k) Plan), through such employees' 401(k) plan 
accounts (the 401(k) Accounts). In addition, such amendment, if 
granted, would modify certain definitional terms to more accurately 
incorporate the broadened scope of relief now sought by the Applicant.

The New 401(k) Plan

    17. Renaissance represents that it established the 401(k) Plan, 
effective December 16, 2011, in order to replace the Old 401(k) 
Plan.\7\ The Applicant states that the 401(k) Plan is a preapproved 
volume submitter 401(k) profit sharing plan sponsored by the Lincoln 
Trust Company (Lincoln, or the Trustee) that received a favorable 
opinion letter dated July 1, 2011.\8\ The 401(k) Plan is administered 
by a five-person committee (the Committee), appointed by the Board of 
Directors of Renaissance, that has authority to designate investment 
alternatives under the 401(k) Plan. Renaissance has, pursuant to the 
terms of the 401(k) Plan, the duty and responsibility to appoint, 
monitor and remove the Trustee, the Committee, and any investment 
manager performing services to the 401(k) Plan.
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    \7\ Renaissance terminated the Old 401(k) Plan in late 2010 and 
distributed its assets to participants by December 31, 2010.
    \8\ The Applicant states that the 401(k) Plan provides for 
compensation deferrals, matching contributions, and discretionary 
profit-sharing contributions. In addition, the 401(k) Plan provides 
that compensation deferrals may be made as ``traditional'' pre-tax 
401(k) contributions, Roth 401(k) contributions or a combination of 
both. Separate accounts are maintained for each Participant with 
respect to his or her traditional 401(k) contributions, Roth 401(k) 
contributions, allocated employer matching and non-elective 
contributions, and rollover contributions.
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    18. According to the Applicant, the 401(k) Plan currently offers 
the following designated investment alternatives: Thirty-five mutual 
funds representing six different asset classes, each of which is 
registered under the 1940 Act, as well as investments in the non-
Medallion Funds, which are neither parties in interest nor disqualified 
persons to the IRAs or the 401(k) Plan.\9\ The Applicant states that 
employees of Renaissance participating in the 401(k) Plan (401(k) 
Account Holders) have access to internet Web sites describing the 
various mutual fund alternatives and receive disclosure materials from 
Renaissance regarding the non-Medallion Funds. The Applicant represents 
that the 401(k) Plan is structured and administered so that it is 
intended to comply with Section 404(c) of ERISA and the regulations 
thereunder.
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    \9\ No exemptive relief was provided in PTE 2012-10 for the 
IRAs' acquisition of interests in the non-Medallion Funds, because 
the Applicant represented that neither of such Funds were a party in 
interest and/or disqualified person with respect to the IRAs.
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    19. The Applicant represents that each 401(k) Account Holder has 
sole and complete investment discretion over his or her account 
balances in the 401(k) Plan. If a 401(k) Account Holder fails to 
provide an investment direction, the default investment fund for his/
her account is the Gabelli U.S. Treasury Money Market Fund, an open-end 
fund with the investment objective of high current income consistent 
with the preservation of principal and liquidity which it seeks to 
achieve by investing exclusively in U.S. Treasury obligations that have 
remaining maturities of 397 days or less. All investments are held in 
trust in an ``omnibus account'' maintained by the Trustee for interests 
of each investment alternative available under the 401(k) Plan. 401(k) 
Account Holders' purchase and sale directions are aggregated so that 
the Trustee may make a single transaction in that investment 
alternative that reflects all outstanding 401(k) Account Holder 
directions with respect to that investment alternative. 401(k) Account 
Holders' individual holdings in the investment alternatives are 
reflected through 401(k) Account Holder-level accounting by the 
Trustee, and communicated through 401(k) Account Holders' statements 
which are available online at all times and mailed or emailed to 401(k) 
Account Holders on a quarterly basis.

Making New Medallion Vehicles Available to 401(k) Account Holders

    20. The Applicant represents that subsequent to the establishment 
of the 401(k) Plan in December, 2011, numerous 401(k) Account Holders 
expressed an interest in investing in New Medallion Vehicles through 
the 401(k) Plan alongside their IRA investments. According to the 
Applicant, 401(k) Account Holders desired the ability to invest in the 
New Medallion Vehicles for three main reasons. First, since 401(k) 
Account Holders may contribute to the 401(k) Plan through periodic 
compensation deferrals, they are able to ``dollar-cost average'' into 
investment alternatives by making investments at different prices. 
Second, and unlike IRAs, the 401(k) Plan permits 401(k) Account Holders 
to access amounts in their accounts in certain prescribed circumstances 
through loans or hardship withdrawals. Finally, newly hired, younger 
401(k) Account Holders may not have IRAs attributable to personal 
savings or a rollover from a prior employer's plan, so the 401(k) Plan 
may represent their only opportunity to invest in New Medallion 
Vehicles through a tax-advantaged retirement vehicle.
    21. The Applicant states that purchases by 401(k) Accounts of 
interests in the Funds will be allowed quarterly and are purchased and 
redeemed at net asset value in accordance with Renaissance's valuation 
policy and pursuant to the definition of fair market value provided in 
the proposed amendment, if granted. Interests in New Medallion Vehicles 
are purchased at net asset value as of the first business day of each 
calendar quarter and held by the Trustee of the 401(k) Plan in an 
``omnibus account,'' as described above. As such, the Trustee 
aggregates Participants' purchase and sale directions so that it makes 
a single

[[Page 47678]]

transaction in that investment alternative that reflects all 
outstanding Participant directions with respect to that investment 
alternative.
    22. According to Renaissance, because 401(k) Account Holders' 
compensation deferrals are withheld and transferred to the 401(k) Plan 
for each payroll period, but investments in New Medallion Vehicles may 
only be made as of the first day of each calendar quarter, the 401(k) 
Plan will provide a procedure under which compensation deferrals will 
be held in a ``waiting fund'' invested in the money market default 
investment fund maintained under the 401(k) Plan (presently the Gabelli 
U.S. Treasury Money Market Fund) pending investment in a New Medallion 
Vehicle pursuant to a 401(k) Account Holder's investment direction. 
Approximately 2 or 3 days before the end of the month preceding each 
calendar quarter end, the amounts in the waiting fund are submitted to 
Renaissance for the purchase of interests in the Funds, and such 
purchases will close as of the first business day of the new quarter.
    23. Redemptions are also allowed quarterly. The Applicant states 
that 401(k) Account Holders must request redemptions on the Lincoln 
Trust Web site as of the 47th day before the quarter end. Redemptions 
of interests in New Medallion Vehicles are always made in cash. Upon 
redemption of an interest, the cash proceeds will be credited to the 
Participant's 401(k) Account, and invested in whichever of the 401(k) 
Plan's other investment alternatives that the Participant directs. 
Redemptions are closed as of the final day of each calendar quarter.
    24. If the New Medallion Vehicles were designated investment 
alternatives of the 401(k) Plan, the Trustee would, pursuant to 
Participants' directions, acquire, hold and dispose of interests in New 
Medallion Vehicles, through an ``omnibus account'' as described 
above.\10\
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    \10\ In PTE 2012-10, Renaissance stated that it did not choose 
to offer the New Medallion Vehicles as investments options to the 
Old 401(k) Plan, in part because there may have been issues under 
section 404(c) of the Act in connection with Participants' ability 
to reallocate their investments among the different investment 
options in the Old 401(k) Plan and section 401(a)(4) of the Code in 
connection with Participant's financial qualifications and the 
exclusion of certain Plan participants as a result of those 
restrictions. Finally, the Applicant stated that they wanted to give 
Participants the opportunity to take advantage of certain tax rules 
in 2010 applicable to Roth IRA conversions. However, the Applicant 
states that these concerns have been addressed through legal 
analysis and pro forma testing, and it can now offer investments in 
the New Medallion Vehicles to 401(k) Account Holders and remain in 
compliance with these statutory provisions and the regulations 
thereunder. The Department expresses no opinion herein regarding the 
applicant's compliance under section 404(c) of the Act or section 
401(a) of the Code.
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Requested Amendment of PTE 2012-10

    25. The Applicant states that Renaissance's ownership interests in 
the Medallion Master Funds are in excess of 50%, which causes the 
Medallion Master Funds to be parties in interest with respect to the 
401(k) Plan within the meaning of Section 3(14)(G) of the Act.
    26. Furthermore, because the only permitted investors in the New 
Medallion Vehicles are ``benefit plan investors,'' as defined in 
section 3(42) of the Act, 25% or more of the equity interests in each 
New Medallion Vehicle will be held by such benefit plan investors. 
Thus, investment by benefit plan investors in a New Medallion Vehicle 
would be deemed ``significant'' for purposes of section 3(42) of the 
Act and 29 CFR 2510.3-101. Each New Medallion Vehicle would be deemed 
to hold ``plan assets'' under the Act, and each investor therein would 
own an undivided interest in the assets of each New Medallion Vehicle 
in which it invests. Additionally, because the assets of the New 
Medallion Vehicles consist solely of (or in the case of New 
Kaleidoscope, include) interests in the Medallion Master Funds, once 
the Trustee acquires an Interest in a New Medallion Vehicle on behalf 
of the 401(k) Plan, the Medallion Master Funds, and, possibly, any 
employees, officers, directors, and 10% owners of such Funds will 
become parties in interest under section 3(14)(G) and (H) of the Act 
with respect to the 401(k) Plan.\11\
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    \11\ As the sponsor of the 401(k) Plan, Renaissance is already a 
party in interest under section 3(14)(A) and (C) of the Act.
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    27. As a result, according to the Applicant, the indirect 
acquisition by the 401(k) Plan of an interest in a Medallion Master 
Fund through the acquisition of an interest in a New Medallion Vehicle 
would be a prohibited transaction, pursuant to Section 406(a)(1)(A) and 
(D) of ERISA. Redemptions of interests in a New Medallion Vehicle by 
the 401(k) Plan would constitute additional prohibited transactions 
pursuant to Sections 406(a)(1)(A) and (D) of ERISA.
    28. Accordingly, the Applicant requests that PTE 2012-10 be amended 
to provide additional exemptive relief from the restrictions of section 
406(a)(1)(A) and (D) of the Act and the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) and (D) of the Code, for the (a) direct or indirect 
acquisition by a 401(k) Account of an interest in a Medallion Fund 
through such 401(k) Account's acquisition of an interest in a New 
Medallion Vehicle, and (b) redemption of all or a portion of a 401(k) 
Account's interest in a New Medallion Vehicle.\12\
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    \12\ The Applicant does not believe relief from section 
406(b)(1) or (2) of the Act and/or section 4975(c)(1)(E) or (F) of 
the Code is necessary in connection with the covered transactions, 
because, according to Renaissance, neither it nor any 401(k) Holder 
will be using any of its authority, control or responsibility as a 
fiduciary to benefit itself or a person in which it has an interest 
which may affect the exercise of its best judgment as a fiduciary. 
The Department notes that regulation 29 CFR 2550.408b-2(e)(2) 
provides that a fiduciary does not engage in an act described in 
section 406(b)(1) of the Act if the fiduciary does not use any of 
the authority, control, or responsibility that makes him a fiduciary 
to cause a plan to pay additional fees for a service furnished by 
such fiduciary or to pay a fee for a service furnished by a person 
in which the fiduciary has an interest that may affect the exercise 
of his judgment as a fiduciary. It is also the Department's view 
that, generally, a fiduciary's decision to retain itself or an 
affiliate service provider who does not charge fees of any kind for 
the provision of services will not involve an adversity of interests 
as contemplated by section 406(b)(2) of the Act. As described in PTE 
2012-10, absolutely no management fees or other fees or profit 
participations in the form of performance allocations or otherwise, 
direct or indirect, are charged to IRAs or 401(k) Accounts that 
invest in the New Medallion Vehicles. Accordingly, the decision to 
offer the Medallion Funds as investments under the 401(k) Plan to 
401(k) Account Holders, or to invest the 401(k) Plan's assets in the 
Medallion Funds, which are managed by Renaissance, through the New 
Medallion Vehicles would not appear, in itself, to raise issues 
under section 406(b)(1) or (b)(2) of the Act.
---------------------------------------------------------------------------

The Other Renaissance Managed RF Funds

    29. The Applicant requests that this proposed amendment to PTE 
2012-10, if granted, contain terms that are defined differently than 
such terms are defined in PTE 2012-10. Specifically, the Applicant 
states that Renaissance desires to modify the definition of New 
Kaleidoscope in Section IV(k) of PTE 2012-10 in order to describe 
additional Proprietary Funds available as investments to IRA Holders 
and 401(k) Account Holders. The Applicant states further that New 
Kaleidoscope is defined as an investment vehicle that invests in three 
specific funds: New Medallion FF and ``New RIEF/RIFF.'' \13\
---------------------------------------------------------------------------

    \13\ New RIEF/RIFF were created by Renaissance to facilitate 
investment by IRA Holders in the non-Medallion Funds.
---------------------------------------------------------------------------

    30. Renaissance now desires a broader definition of New 
Kaleidoscope to include other Renaissance-managed collective investment 
vehicles (together with New RIEF/RIFF, the ``Other Renaissance Managed 
RF Funds''). The Applicant represents further that the Other 
Renaissance Managed RF Funds would: (i) Offer a fee-free series of 
interests for investments by IRA Holders and 401(k) Account Holders 
(similarly

[[Page 47679]]

to New RIEF/RIFF); (ii) be exempt from registration under federal 
securities laws and fully compliant with the various federal securities 
laws and other applicable regulatory requirements; and (iii) not 
constitute parties in interest or disqualified persons with respect to 
any IRA Holder or 401(k) Plan.
    31. Therefore, the Applicant requests that the definition of New 
Kaleidoscope found in Section IV(k) of PTE 2012-10 be amended and re-
designated as Section V(k), and a definition of ``Other Renaissance 
Managed RF Fund'' be added in Section V(n), as follows:

    (k) The term ``New Kaleidoscope'' means Renaissance Kaleidoscope 
RF Fund LLC, the Delaware limited liability company established by 
Renaissance in order to facilitate investment by IRA Holders and 
401(k) Plan participants who are not ``Accredited Investors'' under 
the 1933 Act in the Medallion Fund RF L.P. and Other Renaissance 
Managed RF Funds that are not parties in interest or disqualified 
persons, as applicable, to the IRA Holders' IRAs or to the New 
401(k) Plan.
    (n) The term ``Other Renaissance Managed RF Fund'' means an RF 
Series of any Renaissance-sponsored Fund, other than a Medallion 
Fund or Kaleidoscope Fund, that is a private investment vehicle 
established in compliance with the various federal securities laws 
and other applicable regulatory requirements and for which 
Renaissance is the investment manager, as well as the investment 
manager of any master trading vehicles that may be utilized by such 
a fund to invest and trade its assets.

    32. According to the Applicant, because the Other Renaissance 
Managed RF Funds will not constitute parties in interest or 
disqualified persons to the IRAs or the 401(k) Plan, Renaissance is not 
requesting an extension of the exemptive relief provided in PTE 2012-10 
to such entities. However, the Applicant desires to more accurately 
define ``New Kaleidoscope'' so that the proposed amendment, if granted, 
provides relief for investments made in the Medallion Funds indirectly 
through New Kaleidoscope.

Valuation Policies

    33. The Applicant represents that the valuation of all interests in 
New Medallion Vehicles and the Other Renaissance Managed RF Funds will 
be made under the same Renaissance valuation policy as has been used to 
value interests in the New Medallion Vehicles pursuant to PTE 2012-10, 
with certain non-substantive clarifying changes designed for the sake 
of more accuracy in the description of the rules.\14\ Accordingly, the 
Applicant represents that an acquisition or redemption of an IRA's or 
401(k) Account's interest in a New Medallion Vehicle is made for fair 
market value, determined as follows:


    \14\ The Applicant maintains that, when these changes were made, 
Renaissance specifically took into account the determination of fair 
market value provided in PTE 2012-10 and, accordingly, only made 
changes that did not alter the substantive provisions of such 
policy.
---------------------------------------------------------------------------

    (1) Equity securities are valued at the consolidated or 
composite closing price, or, in the case of over-the-counter equity 
securities, the last sale price provided by unaffiliated, third-
party market data providers. If no price of such equity security was 
reported on that date, the market value will be the last reported 
price on the most recent date for which a price is available, and 
will reflect a discount if such date occurred more than 30 days 
before;
    (2) Fixed income securities are valued at the ``bid'' price of 
such securities at the close of business on the relevant valuation 
date. These prices are determined (i) where available, on the basis 
of prices provided by independent pricing services that determine 
valuations based on market transactions for comparable securities; 
and (ii) in certain cases where independent pricing services are not 
available, on the basis of quotes obtained from multiple independent 
providers that are either U.S.-registered or foreign broker-dealers, 
which are registered and subject to the laws of their respective 
jurisdiction, or banks;
    (3) Options are valued at the mean between the current 
independent best ``bid'' price and the current independent best 
``asked'' price from the exchanges on which they are listed or, 
where such prices are not available, are valued on the basis of 
pricing data obtained from unaffiliated, third-party market data 
providers at their fair value in accordance with Fair Value Pricing 
Practices by the Renaissance Valuation Committee, which utilizes a 
set of defined rules and an independent review process; and
    (4) If current market quotations are not readily available for 
any investments, such investments are valued at their fair value by 
the Renaissance Valuation Committee in accordance with Fair Value 
Pricing Practices.\15\
---------------------------------------------------------------------------

    \15\ The Applicant represents that, at present, a maximum of 
0.006% of Medallion's assets may be characterized as ``hard to 
value'' so as to require valuation by the Renaissance Valuation 
Committee, which is in line with the Medallion Funds' historical 
experience.
---------------------------------------------------------------------------

Statutory Findings

    34. According to the Applicant, the proposed amendment to PTE 2012-
10 is administratively feasible because the Applicant has already been 
granted relief under PTE 2012-10 for the acquisition and redemption of 
interests in the New Medallion Vehicles by the IRAs of Participants and 
their Spouses, and the acquisition of interests in the New Medallion 
Vehicles by 401(k) Accounts would similarly be consummated at the 
discretion of the 401(k) Account Holders and regulated by certain 
provisions of the 1940 Act and the 1933 Act, as described above.
    35. The Applicant represents that the proposed amendment is in the 
interest of the 401(k) Plan and 401(k) Account Holders and their 
beneficiaries because 401(k) Account Holders would have the ability to 
invest retirement assets in the New Medallion Vehicles in the event 
that they do not otherwise have IRAs, and increase the value of their 
retirement assets in a meaningful way through investment of tax-
advantaged 401(k) deferrals in the Medallion Funds.
    36. The Applicant represents that the proposed amendment is 
protective of the interests of the 401(k) Account Holders because all 
transactions would be required to be effected at the sole direction of 
401(k) Account Holders. Moreover, the Applicant represents that 
Renaissance will not endorse or recommend that 401(k) Account Holders 
direct any of their 401(k) Account's investments into the New Medallion 
Vehicles, nor provide any financial or employment-related incentive for 
doing so.
    37. In addition, Renaissance represents that prior to and during an 
investment in the New Medallion Vehicles, 401(k) Account Holders will 
receive written disclosures allowing them to make informed decisions 
regarding any determination to invest in (or redeem) Interests in the 
Funds. These disclosures consist of the Fund's Private Placement 
Memorandum and Exhibits thereto and periodic and annual reports. 
Renaissance points out that 401(k) Account Holders are generally 
comprised of a highly educated cadre of professionals, approximately 90 
of whom have Ph.D.'s in disciplines such as mathematics, physics, and 
statistics.
    38. Renaissance represents also that no management fees or other 
compensation or profit participations in the form of performance 
allocations or otherwise, direct or indirect, will be charged to or 
imposed on the 401(k) Plan or any 401(k) Account with respect to 
investments in the New Medallion Vehicles.\16\ In addition, no 
affiliate of

[[Page 47680]]

Renaissance will receive any consideration, direct or indirect, as a 
result of such investments made through the 401(k) Plan and there will 
be no compensatory benefit to any owner, director, officer or employee 
of Renaissance by reason of a 401(k) Account Holder directing an 
investment in the New Medallion Vehicles through their 401(k) Account.
---------------------------------------------------------------------------

    \16\ Renaissance notes that certain operating expenses of the 
New Medallion Vehicles payable to third parties will be paid from 
the assets of the New Medallion Vehicles, but nothing in the manner 
of management fees or performance allocations, direct or indirect, 
will accrue to the Renaissance or any affiliate or Renaissance. 
Additionally, the underlying Funds in which the New Medallion 
Vehicles invest will incur substantial obligations to pay third 
party brokerage commissions, option premiums, and other transaction 
costs, regardless of whether the Funds realize any profits. Such 
expenses, as noted in certain of the Funds' ``Private Offering 
Memoranda,'' are significantly higher than those incurred by most 
other investment programs, due to the highly active nature of 
Renaissance's trading programs.
---------------------------------------------------------------------------

    39. The Applicant states that the only permitted investors in the 
New Medallion Vehicles are (A) IRA Holders and (B) the 401(k) Plan.\17\ 
Moreover, the Applicant notes that each 401(k) Account Holder who 
wishes to direct investment of any amounts in his or her 401(k) Account 
into a New Medallion Vehicle must satisfy the Federal securities law 
and other regulatory-based investor qualifications applicable to all 
investors in such New Medallion Vehicle.
---------------------------------------------------------------------------

    \17\ The Applicant notes that, in limited circumstances, 
Renaissance may invest in Series RF of each New Medallion Vehicle in 
order to comply with rule 3(c)(7) of the 1940 Act, which requires 
each New Medallion Vehicle to have at least $25 million in capital. 
Thus, in the event that a New Medallion Vehicle is unable to meet 
its $25 million minimum capital requirement, Renaissance would 
invest its own capital to the extent necessary to make up any 
difference between that Fund's investor contributions and $25 
million.
---------------------------------------------------------------------------

    40. Finally, the Applicant emphasizes that allowing investment in 
the New Medallion Vehicles through the 401(k) Plan would not increase 
any 401(k) Account Holder's aggregate exposure to the Medallion Funds. 
According to the Applicant, the Medallion Funds have for a number of 
years imposed an aggregate limit on the amount of capital that the 
Medallion Funds can accept. As a result, each Renaissance employee from 
the President to the lowest-paid employee, has a permitted ``Investment 
Allocation'' in the Medallion Funds that is based on his or her 
compensation level, and, if applicable, an employee's ownership 
interest in Renaissance itself, and is adjusted at the beginning of 
each semi-annual period (January 1 and July 1 of each year).\18\
---------------------------------------------------------------------------

    \18\ Renaissance also permits an employee to share his or her 
Investment Allocation with certain family members. Thus, a Spouse 
could invest his or her IRA in New Medallion FF or in New 
Kaleidoscope to the extent of the remainder of such IRA Holder's 
Investment Allocation.
---------------------------------------------------------------------------

    The Applicant explains that, if the proposed amendment is granted, 
each Participant's ``Investment Allocation'' would limit the combined 
amount he or she is permitted to invest in the Medallion Funds via his 
or her personal account, IRA (including his or her Spouse's IRA), and 
401(k) Account (in the case of the latter two, via the New Medallion 
Vehicles).
    The Applicant states that, assuming that a 401(k) Account Holder 
has fully utilized his or her current Investment Allocation, he or she 
would have to reduce the amount of his or her direct investments or IRA 
investments in the foregoing funds in order to direct any investment in 
a New Medallion Vehicle through the 401(k) Plan.

Notice to Interested Persons

    Notice of the proposed amendment will be given to interested 
persons within three days of the publication of the notice of proposed 
amendment in the Federal Register. The notice will be given to 
interested persons who are current employees by electronic mail, with 
receipt of delivery requested (or its equivalent), and to other 
interested persons by overnight mail with proof of delivery required. 
Such notice will contain a copy of the notice of proposed exemption 
published in the Federal Register at 77 FR 3038 (January 20, 2012) and 
notice of final grant of Prohibited Transaction Exemption (PTE) 2012-10 
published in the Federal Register at 77 FR 23756 (April 20, 2012), this 
notice of proposed amendment, as published in the Federal Register, and 
a supplemental statement, as required pursuant to 29 CFR 2570.43(a)(2). 
The supplemental statement will inform interested persons of their 
right to comment on and/or to request a hearing with respect to the 
pending amendment. Written comments and hearing requests are due within 
33 days of the publication of the notice of proposed amendment in the 
Federal Register. All comments will be made available to the public.
    Warning: Do not include any personally identifiable information 
(such as name, address, or other contact information) or confidential 
business information that you do not want publicly disclosed. All 
comments may be posted on the Internet and can be retrieved by most 
Internet search engines.

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 amendment to exemption, 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 amendment to exemption, if granted, will be 
subject to the express condition that the material facts and 
representations contained in the application are true and complete, and 
that the application accurately describes all material terms of the 
transaction which is the subject of the amendment to exemption.

Proposed Amendment to Exemption

    Based on the facts and representations set forth in the 
application, the Department is considering granting the following 
amendment to Prohibited Transaction Exemption 2012-10 (77 FR 23756) 
under the authority of section 408(a) of the Employee Retirement Income 
Security Act of 1974, as amended, (ERISA) 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 (76 FR 
66637, 66644, October 27, 2011).\19\
---------------------------------------------------------------------------

    \19\ For purposes of this proposed amendment, references to the 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

Section I. Covered Transactions Involving Certain IRAs Subject to Title 
I and Title II of ERISA

    The restrictions of section 406(a)(1)(A) and (D) of the Act and the 
sanctions resulting from the application

[[Page 47681]]

of section 4975 of the Code, by reason of section 4975(c)(1)(A) and (D) 
of the Code, shall not apply to:
    (a) The direct or indirect acquisition by a Participant's IRA of an 
interest in a Medallion Fund through such IRA's acquisition of an 
interest in a New Medallion Vehicle;
    (b) The acquisition of an additional interest by a Participant's 
IRA in a New Medallion Vehicle; and
    (c) The redemption of all or a portion of a Participant's IRA's 
interest in a New Medallion Vehicle.
    This proposed amendment, if granted, is subject to the general 
conditions set forth below in Section IV.

Section II. Covered Transactions Involving Certain IRAs Subject to 
Title II of ERISA Only

    The sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) and (D) of the Code, shall not 
apply to:
    (a) The direct or indirect acquisition by a Spouse's IRA of an 
interest in a Medallion Fund through such IRA's acquisition of an 
interest in a New Medallion Vehicle; \20\
---------------------------------------------------------------------------

    \20\ Pursuant to 29 CFR 2510.3-2(d), the Spouses' IRAs are not 
within the jurisdiction of Title I of the Act. However, there is 
jurisdiction under Title II of the Act pursuant to section 4975 of 
the Code.
---------------------------------------------------------------------------

    (b) The acquisition of an additional interest by a Spouse's IRA in 
a New Medallion Vehicle; and
    (c) The redemption of all or a portion of a Spouse's IRA's interest 
in a New Medallion Vehicle.
    This proposed amendment, if granted, is subject to the general 
conditions set forth below in Section IV.

Section III. Covered Transactions Involving Certain 401(k) Accounts

    The restrictions of section 406(a)(1)(A) and (D) of the Act and the 
sanctions resulting from the application of section 4975 of the Code, 
by reason of section 4975(c)(1)(A) and (D) of the Code, shall not apply 
to:
    (a) The direct or indirect acquisition by a 401(k) Account of an 
interest in a Medallion Fund through such 401(k) Account's acquisition 
of an interest in a New Medallion Vehicle; and
    (b) The redemption of all or a portion of a 401(k) Account's 
interest in a New Medallion Vehicle.
    This proposed amendment, if granted, is subject to the general 
conditions set forth below in Section IV.

Section IV. General Conditions

    (a) An IRA's acquisition of an interest in a New Medallion Vehicle 
is made at the specific direction of its IRA Holder, and a 401(k) 
Account's acquisition of an interest in a New Medallion Vehicle is made 
at the specific direction of its 401(k) Account Holder.
    (b) Renaissance renders no investment advice (within the meaning of 
29 CFR 2510.3-21(c)) to IRA Holders or 401(k) Account Holders 
concerning a potential acquisition or redemption of an interest in a 
New Medallion Vehicle and does not engage in marketing activities or 
offer employment-related incentives of any kind intended to cause IRA 
Holders or 401(k) Account Holders to consider such acquisition or 
redemption.
    (c) An interest in a New Medallion Vehicle is only available to IRA 
Holders or 401(k) Account Holders who satisfy the securities-based 
laws, and other regulatory-based investor qualifications, applicable to 
all investors in such New Medallion Vehicle.
    (d) No commissions, sales charges, or other fees (including 
management fees) or profit participations in the form of performance 
allocations or otherwise, direct or indirect, are assessed against an 
IRA or 401(k) Account in connection with its acquisition and holding of 
an interest in a New Medallion Vehicle.
    (e) An IRA or 401(k) Account pays no more and receives no less for 
its particular interest in any of the New Medallion Vehicles than it 
would in an arm's length transaction with an unrelated party.
    (f) An IRA's or 401(k) Account's interest in a New Medallion 
Vehicle is redeemable, in whole or in part, without the payment of any 
redemption fee or penalty, no less frequently than on a quarterly basis 
upon no less than 10 days advance written notice by the IRA or 401(k) 
account, except in the case of New Kaleidoscope, for which 45 days' 
notice is required.
    (g) An acquisition or redemption of an IRA's or 401(k) Account's 
interest in a New Medallion Vehicle is made for fair market value, 
determined as follows:
    (1) Equity securities are valued at the consolidated or composite 
closing price, or, in the case of over-the-counter equity securities, 
the last sale price provided by unaffiliated, third-party market data 
providers. If no price of such equity security was reported on that 
date, the market value will be the last reported price on the most 
recent date for which a price is available, and will reflect a discount 
if such date occurred more than thirty days before;
    (2) Fixed income securities are valued at the ``bid'' price of such 
securities at the close of business on the relevant valuation date. 
These prices are determined (i) where available, on the basis of prices 
provided by independent pricing services that determine valuations 
based on market transactions for comparable securities; and (ii) in 
certain cases where independent pricing services are not available, on 
the basis of quotes obtained from multiple independent providers that 
are either U.S.-registered or foreign broker-dealers, which are 
registered and subject to the laws of their respective jurisdiction, or 
banks;
    (3) Options are valued at the mean between the current independent 
best ``bid'' price and the current independent best ``asked'' price 
from the exchanges on which they are listed or, where such prices are 
not available, are valued on the basis of pricing data obtained from 
unaffiliated, third-party market data providers at their fair value in 
accordance with Fair Value Pricing Practices by the Renaissance 
Valuation Committee, which utilizes a set of defined rules and an 
independent review process; and
    (4) If current market quotations are not readily available for any 
investments, such investments are valued at their fair value by the 
Renaissance Valuation Committee in accordance with Fair Value Pricing 
Practices.
    (h) Redemption of an IRA's or 401(k) Account's interest in a New 
Medallion Vehicle, in whole or in part, is made for cash.
    (i) In the event that a redemption of any portion of an interest in 
a New Medallion Vehicle held by an IRA or 401(k) Account becomes 
necessary as the result of a reduction of the Investment Allocation 
applicable to a Participant, then, at such IRA Holder's or 401(k) 
Account Holder's election, the redemption may first be made of such 
individual's taxable investments in the Medallion Funds (if any) prior 
to his or her IRA's or 401(k) Account's interest in a New Medallion 
Vehicle.
    (j) With respect to the investment by Participants in the New 
Medallion Vehicles through IRAs, Renaissance acknowledges that such 
investments may constitute investments by a ``pension plan'' within the 
meaning of section 3(2) of the Act, and the Applicant represents that, 
with respect to such investments, it will comply with all applicable 
requirements of Title I of the Act.
    (k) Renaissance does not use the IRAs' or 401(k) Accounts' 
investments in the Funds in any of their marketing activities or 
publicity materials for the Funds.
    (l) In advance of the initial investment by an IRA or 401(k) 
Account in a New Medallion Vehicle, the IRA Holder or 401(k) Account 
Holder receives:
    (1) A copy of the notice of proposed exemption published in the 
Federal

[[Page 47682]]

Register at 77 FR 3038 (January 20, 2012) and notice of final grant of 
Prohibited Transaction Exemption (PTE) 2012-10 published in the Federal 
Register at 77 FR 23756 (April 20, 2012), this proposed amendment and 
the final amendment, if granted, following the publication of such 
final amendment in the Federal Register;
    (2) A private offering memorandum (with all related exhibits) 
describing the relevant investment vehicles, including its investment 
objectives, risks, conflicts, operating expenses and redemption and 
valuation policies, and any IRA Holder or 401(k) Account Holder whose 
IRA or 401(k) Account owns an interest in a New Medallion Vehicle 
receives the same disclosures and information provided to other 
investors with respect to the Fund in which he or she invests; and
    (3) Following receipt of the information described in (1) and (2), 
above, an IRA Holder or 401(k) Account Holder will receive, in a timely 
manner, all reasonably available relevant information as such IRA 
Holder or 401(k) Account Holder may request.
    (m) On an on-going basis, Renaissance provides each IRA Holder or 
401(k) Account Holder whose IRA or 401(k) Account owns an interest in a 
New Medallion Vehicle with the following information:
    (1) Unaudited performance reports at the end of each month; and
    (2) Audited annual financial statements following the end of each 
calendar year.
    (n) Prior to the acquisition by an IRA or 401(k) Account of an 
interest in a New Medallion Vehicle, and the corresponding indirect 
acquisition of an interest in a Medallion Master Fund, Other 
Renaissance Managed RF Fund, or any other Fund made through such 
acquisition of an interest in a New Medallion Vehicle, Renaissance or 
the applicable New Medallion Vehicle manager (the New Medallion Vehicle 
Manager) with respect to any such acquisition:
    (1) Agrees to submit to the jurisdiction of the federal and state 
courts located in the State of New York;
    (2) Agrees to appoint an agent for service of process for the New 
Medallion Vehicle, the Other Renaissance Managed RF Fund, and any other 
Funds described in this Section IV(n), in the United States (the 
Process Agent);
    (3) Consents to service of process on the Process Agent; and
    (4) Agrees that any enforcement by an IRA Holder or 401(k) Account 
Holder of his or her rights pursuant to this proposed amendment, if 
granted, will at the option of such IRA Holder or 401(k) Account 
Holder, occur exclusively in the United States courts.
    (o) Renaissance maintains, or causes to be maintained, for a period 
of six years from the date of any covered transaction, such records as 
are necessary to enable the persons described in paragraph (p)(1) below 
to determine whether the conditions of this proposed amendment, if 
granted, have been met, provided that (1) a separate prohibited 
transaction will not be considered to have occurred if, due to 
circumstances beyond the control of Renaissance, the records are lost 
or destroyed prior to the end of the six-year period, and (2) no party 
in interest or disqualified person other than Renaissance 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 are not available for examination as required by 
paragraph (p)(1) below.
    (p)(1) Except as provided below in paragraph (p)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to above in paragraph (o) 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, the Commodity Futures Trading 
Commission (CFTC), or the U.S. Securities and Exchange Commission 
(SEC), and
    (B) Any IRA Holder or 401(k) Account Holder or any duly authorized 
representative or beneficiary of an IRA or 401(k) Account; and
    (2) None of the persons described above in paragraph (p)(1)(B) 
shall be authorized to examine trade secrets of Renaissance, or 
commercial or financial information which is privileged or 
confidential, and should Renaissance refuse to disclose information on 
the basis that such information is exempt from disclosure, Renaissance 
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.

Section V. Definitions

    For purposes of this proposed amendment:
    (a) The term ``Renaissance'' means Renaissance Technologies, LLC, 
and its affiliates.
    (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 such entity (for purposes of this paragraph, the term ``control'' 
means the power to exercise a controlling influence over the management 
or policies of a person other than an individual); and
    (2) Any officer of, director of, or partner in such person.
    (c) The term ``Fair Value Pricing Policies'' means the Official 
Pricing Policy established in good faith by the Renaissance Valuation 
Committee for valuing an instrument, which is subject to the approval 
of the Renaissance Technologies LLC Board of Directors.
    (d) The term ``Fund'' or ``Funds'' means, individually or 
collectively, the nine privately offered U.S. and non-U.S. collective 
investment vehicles managed by Renaissance, comprised almost 
exclusively of assets of Renaissance and its owners and employees (the 
Proprietary Funds) and the six privately offered U.S. and non-U.S. 
collective investment vehicles, consisting primarily of assets of 
clients of Renaissance (the non-Proprietary Funds).
    (e) The term ``Investment Allocation'' means the permitted 
investment allocation limit in the Medallion Funds applicable to a 
Renaissance employee, which such employee and his or her Spouse may 
utilize to make investments in a Medallion FF or Kaleidoscope, or in an 
applicable New Medallion Vehicle.
    (f) The term ``IRA'' means an ``individual retirement account'' as 
defined under section 408(a) of the Code that is beneficially owned by 
an IRA Holder or a ``Roth IRA'' as defined under section 408A of the 
Code that is beneficially owned by an IRA Holder.
    (g) The term ``IRA Holder'' means a Participant, or the Spouse of a 
Participant, who is eligible to invest in a New Medallion Vehicle 
through his or her IRA.
    (h) The term ``Kaleidoscope'' means Renaissance Kaleidoscope Fund 
LLC, a Delaware limited liability company established by Renaissance to 
facilitate the investment in the Proprietary Funds by employees of 
Renaissance who are not Accredited Investors under the Securities Act 
of 1933, as amended (the 1933 Act) or otherwise do not meet the 
financial requirements to invest in such Proprietary Funds.
    (i) The term ``Medallion Funds'' means the six Proprietary Funds of 
Renaissance that are organized in a ``master-feeder'' investment 
structure. The Medallion Funds are comprised of six feeder funds 
(Medallion FFs), each

[[Page 47683]]

designed for a different type of investor, that engage in their 
investment and trading activities only through certain master funds and 
their subsidiaries (the Medallion Master Funds).
    (j) The term ``New Medallion Vehicle'' or ``New Medallion 
Vehicles'' means, individually or collectively, New Medallion FF, New 
Medallion FF RMPRF, and New Kaleidoscope.
    (k) The term ``New Kaleidoscope'' means Renaissance Kaleidoscope RF 
Fund LLC, the Delaware limited liability company established by 
Renaissance in order to facilitate investment, by IRA Holders and 
401(k) Plan participants who are not ``Accredited Investors'' under the 
1933 Act, in the Medallion Fund RF L.P. and Other Renaissance Managed 
RF Funds that are not parties in interest, or other disqualified 
persons, as applicable, to the IRA Holders' IRAs or to the New 401(k) 
Plan.
    (l) The term ``New Medallion FF'' means Medallion Fund RF LP, the 
Bermuda Limited Partnership that is treated as a corporation for US 
Federal Income Tax purposes, established by Renaissance in order to 
facilitate an investment by an IRA Holder who is a ``Qualified 
Purchaser'' or ``Knowledgeable Employee'' under the Investment Company 
Act of 1940, as amended (the 1940 Act) in the Medallion Master Funds, 
through his or her IRA.
    (m) The term ``New Medallion FF RMPRF'' means Medallion RMPRF Fund 
LP, the Bermuda Limited Partnership that is treated as a corporation 
for US Federal Income Tax purposes established by Renaissance in order 
to facilitate the investment by IRA Holders who are neither Qualified 
Purchasers nor ``Knowledgeable Employees'' as defined in the 1940 Act, 
but who are Accredited Investors, in the Medallion Master Funds, 
through their IRAs.
    (n) The term ``Other Renaissance Managed RF Fund'' means an RF 
Series of any Renaissance-sponsored Fund, other than a Medallion Fund 
or Kaleidoscope Fund, that is a private investment vehicle established 
in compliance with the various federal securities laws and other 
applicable regulatory requirements and for which Renaissance is the 
investment manager, as well as the investment manager of any master 
trading vehicles that may be utilized by such a fund to invest and 
trade its assets.
    (o) The term ``Participant'' means a person who is either an 
employee or a Permitted Owner of Renaissance at the time of such 
individual's investment in the New Medallion Vehicles.
    (p) The term ``Permitted Owners'' means the eight individuals 
permitted to invest in the Medallion Funds following the termination of 
their Renaissance employment, comprised of three Renaissance 
``founders,'' and five former employees who are current owners of 
Renaissance.
    (q) The term ``Renaissance Valuation Committee,'' or ``RVC,'' means 
the committee, established by Renaissance in 2008, that oversees and 
monitors the valuation process, and establishes the methods of, and 
procedures for, valuing various instruments traded by Renaissance, 
composed of high-level Renaissance employees who also may be Fund 
investors.
    (r) The term ``Spouse'' means a person who is (1) married to a 
Participant, or (2) to the extent not prohibited by applicable law, in 
a civil union or similar marriage-equivalent institution established 
pursuant to State law of the State where the Participant resides (or 
otherwise recognized by the State where the Participant resides) with a 
Participant.
    (s) The term ``401(k) Account'' means the plan account established 
and maintained for the benefit of a participant in the Renaissance 
Technologies LLC 401(k) Plan.
    (t) The term ``401(k) Account Holder'' means a participant in the 
Renaissance Technologies LLC 401(k) Plan who is eligible to invest in a 
New Medallion Vehicle through his or her 401(k) Account.

Section VI. Effective Date

    This proposed amendment, if granted, would be effective as of the 
earlier of the date of publication in the Federal Register of such 
grant of amendment or October 1, 2014.

    Signed at Washington, DC, this 8th day of August, 2014.
Lyssa Hall,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2014-19212 Filed 8-13-14; 8:45 am]
BILLING CODE 4510-29-P