[Federal Register Volume 81, Number 202 (Wednesday, October 19, 2016)]
[Notices]
[Pages 72114-72123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25279]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Exemptions From Certain Prohibited Transaction Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code). 
This notice includes the following: 2016-03, The Michael T. Sewell, 
M.D., P.S.C. Profit Sharing Plan, D-11813; 2016-04, Plumbers' Pension 
Fund, Local 130, U.A., D-11822; 2016-05, Sears Holdings 401(k) Savings 
Plan and the Sears Holdings Puerto Rico Savings Plan, D-11846 and D-
11847; 2016-06, Sears Holdings 401(k) Savings Plan and the Sears 
Holdings Puerto Rico Savings Plan, D-11851 and D-11852; 2016-07, 
Liberty Media 401(k) Savings Plan, D-11858; 2016-08, Baxter 
International Inc., D-11866; and 2016-09, Sears Holdings 401(k) Savings 
Plan and the Sears Holdings Puerto Rico Savings Plan, D-11871 and D-
11872.

SUPPLEMENTARY INFORMATION: A notice was published in the Federal 
Register of the pendency before the Department of a proposal to grant 
such exemption. The notice set forth a summary of facts and 
representations contained in the application for exemption and referred 
interested persons to the application for a complete statement of the 
facts and representations. The application has been available for 
public inspection at the Department in Washington, DC. The notice also 
invited interested persons to submit comments on the requested 
exemption to the Department. In addition the notice stated that any 
interested person might submit a written request that a public hearing 
be held (where appropriate). The applicant has represented that it has 
complied with the requirements of the notification to interested 
persons. No requests for a hearing were received by the Department. 
Public comments were received by the Department as described in the 
granted exemption.
    The notice of proposed exemption was issued and the exemption is 
being granted solely by the Department because, 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 proposed to the Secretary of Labor.

Statutory Findings

    In accordance with section 408(a) of the Act and/or section 
4975(c)(2) of the Code and the procedures set forth in 29 CFR part 
2570, subpart B (76 FR 66637, 66644, October 27, 2011) \1\ and based 
upon the entire record, the Department makes the following findings:
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    \1\ The Department has considered exemption applications 
received prior to December 27, 2011 under the exemption procedures 
set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 
10, 1990).
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    (a) The exemption is administratively feasible;
    (b) The exemption is in the interests of the plan and its 
participants and beneficiaries; and
    (c) The exemption is protective of the rights of the participants 
and beneficiaries of the plan.

[[Page 72115]]

The Michael T. Sewell, M.D., P.S.C. Profit Sharing Plan (the Plan), 
Located in Bardstown, Kentucky

[Prohibited Transaction Exemption 2016-03; Exemption Application No. D-
11813]

Exemption

    The restrictions of 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, by reason of section 4975(c)(1)(A), (D) 
and (E) of the Code,\2\ shall not apply to the cash sale (the Sale) by 
the individually-directed account (the Account) in the Plan of Michael 
T. Sewell, M.D. (Dr. Sewell) of a parcel of unimproved real property 
(the Property), to Dr. Sewell, a party in interest with respect to the 
Plan; provided that the following conditions are satisfied:
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    \2\ For purposes of this exemption, references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
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    (a) The Sale is a one-time transaction for cash;
    (b) The sales price for the Property is the greater of: $916,501; 
or the sum of the fair market value of the Property, as established by 
a qualified independent appraiser, and the fair market value of timber 
on the Property, as determined by a qualified independent timber 
appraiser, in separate, updated appraisals reports on the date of the 
Sale;
    (c) The Account pays no real estate fees or commissions in 
connection with the Sale;
    (d) The terms of the Sale are no less favorable to the Account than 
the terms the Account would receive under similar circumstances in an 
arm's length transaction with an unrelated party; and
    (e) Michael T. Sewell, M.D., P.S.C. bears 100% of the costs of 
obtaining this exemption.

Written Comments

    In the notice of proposed exemption (the Notice), the Department 
invited all interested persons to submit written comments and/or 
requests for a public hearing within 30 days of the publication, on 
April 28, 2016, of the Notice in the Federal Register. All comments 
were due by May 28, 2016. During the comment period, the Department 
received no comments or hearing requests from interested persons.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Exemption Application No. D-11813), including all 
supplemental submissions received by the Department, is available for 
public inspection in the Public Disclosure Room of the Employee 
Benefits Security Administration, Room N-1515, U.S. Department of 
Labor, 200 Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice published in the Federal Register on April 28, 2016 at 81 FR 
25433.

FOR FURTHER INFORMATION CONTACT: Mrs. Blessed Chuksorji-Keefe of the 
Department, telephone (202) 693-8567. (This is not a toll-free number.)

Plumbers' Pension Fund, Local 130, U.A. (the Plan, or the Applicant), 
Located in Chicago, IL

[Prohibited Transaction Exemption 2016-04; Exemption Application No. D-
11822]

Exemption

    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 (E) of the Code,\3\ shall not 
apply to the proposed sale (the Sale) of two commercial buildings (the 
Properties), by the Plan to the Plumbers' Pension Fund, Local 130, U.A. 
(the Union), a party in interest with respect to the Plan, provided 
that the following conditions are satisfied:
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    \3\ For purposes of this exemption, references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
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    (a) The Sale is a one-time transaction for cash;
    (b) The price paid by the Union to the Plan is equal to the greater 
of: (1) $1,640,000, or (2) the fair market value of the Properties, as 
determined by a qualified independent appraiser (the Independent 
Appraiser) as of the date of the Sale;
    (c) The Plan does not pay any appraisal fees, real estate fees, 
commissions, costs or other expenses in connection with the Sale;
    (d) The Plan trustees appointed by the Union (the Union Trustees) 
recuse themselves from: (1) Discussions and voting with respect to the 
Plan's decision to enter into the Sale; and (2) all aspects of the 
selection and engagement of the Independent Appraiser for the purposes 
of determining the fair market value of the Properties on the date of 
the Sale;
    (e) The Plan trustees appointed by the employer associations (the 
Employer Trustees), who have no interest in the Sale: (1) Determine, 
among other things, whether it is in the interest of the Plan to 
proceed with the Sale; (2) review and approve the methodology used by 
the Independent Appraiser in the independent appraisal report (the 
Appraisal Report) that is being relied upon; and (3) ensure that such 
methodology is applied by the Independent Appraiser in determining the 
fair market value of the Properties on the date of the Sale; and
    (f) The Sale is not part of an agreement, arrangement, or 
understanding designed to benefit the Union.

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption, published on April 28, 2016, at 81 FR 
25435. All comments and requests for a hearing were due by May 28, 
2016.
    During the comment period, the Department received one written 
comment and no requests for a public hearing. In a comment letter, 
dated May 19, 2016, a Plan participant suggests that the Sale price of 
the Properties be no less than the average of three different 
appraisals of the Properties, rather than based on a single appraisal. 
The commenter asserts that this is the standard practice for bids and 
should be used in this exemption because it is fair and equitable.
    The Department acknowledges the participant's comment, but wishes 
to emphasize that the procedures (the Procedures) governing the filing 
and the processing of administrative exemptions from the prohibited 
transaction provisions of the Act, as amended, and the Code, as 
amended, (29 CFR 2570, October 27, 2011), do not require that an 
applicant obtain multiple appraisals of a property from different 
qualified independent appraisers. Specifically, section 2570.34(c)(4) 
of the Procedures refers to the preparation of a single appraisal 
report for a property by a qualified independent appraiser, who is 
acting solely on behalf of the affected plan. Moreover, section 
2570.34(c)(4) of the Procedures describes the content of such appraisal 
report in subparagraphs (i)-(iii).
    Accordingly, in the exemption request under consideration, the 
Department is of the view that the Independent Appraiser of the 
Properties has fulfilled the requirements mandated by Section 
2570.34(c) of the Procedures.
    In addition, the Department notes that the Sale is subject to 
several conditions that are meant to protect the Plan and

[[Page 72116]]

its participants and beneficiaries. In this regard, the Independent 
Appraiser will render an updated appraisal of the Properties, as of the 
date of the Sale. In addition, the price paid by the Union to the Plan 
will be equal to the greater of: (1) $1,640,000, or (2) the fair market 
value of the Properties, as determined by the Independent Appraiser as 
of the date of the Sale. Further, the Employer Trustees, who have no 
interest in the Sale, will review and approve the methodology used by 
the Independent Appraiser, and will ensure that such methodology is 
properly applied.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Application No. D-11822), including all supplemental 
submissions received by the Department, is available for public 
inspection in the Public Disclosure Room of the Employee Benefits 
Security Administration, Room N-1515, U.S. Department of Labor, 200 
Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice of Proposed Exemption published on April 28, 2016, at 81 FR 
25435.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department, 
telephone (202) 693-8456. (This is not a toll-free number.)

Sears Holdings 401(k) Savings Plan (the Savings Plan) and the Sears 
Holdings Puerto Rico Savings Plan (the PR Plan) (Collectively, the 
Plans), Located in Hoffman Estates, IL

[Prohibited Transaction Exemption 2016-05; Exemption Application Nos. 
D-11846 and D-11847]

Exemption

Section I. Covered Transactions
    (a) The restrictions of sections 406(a)(1)(E), 406(a)(2), 
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act and the sanctions 
resulting from the application of section 4975 of the Code, by reason 
of section 4975(c)(1)(E) of the Code,\4\ shall not apply to the 
acquisition and holding by the Savings Plan of certain subscription 
rights (the Rights) to purchase shares of common stock (the SC Stock) 
in Sears Canada Inc. (Sears Canada) in connection with an offering (the 
Offering) by Sears Holdings Corporation (Holdings) of shares of SC 
Stock, provided that the conditions as set forth, below, in Section II 
of this exemption were satisfied for the duration of the acquisition 
and holding; and
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    \4\ For purposes of this exemption, unless indicated otherwise, 
references to section 406 of the Act should be read to refer as well 
to the corresponding provisions of section 4975 of the Code.
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    (b) The restrictions of sections 406(a)(1)(E), 406(a)(2), 
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act \5\ shall not apply 
to the acquisition and holding of the Rights by the PR Plan in 
connection with the Offering of the SC Stock by Holdings, provided that 
the conditions as set forth in Section II of this exemption were 
satisfied for the duration of the acquisition and holding.
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    \5\ The Applicant represents that there is no jurisdiction under 
Title II of the Act with respect to the PR Plan. Accordingly, the 
Department is not providing any exemptive relief from section 
4975(c)(1)(E) of the Code for the acquisition and holding of the 
Rights by the PR Plan.
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Section II. Conditions for Relief
    (a) The receipt of the Rights by the Plans occurred in connection 
with the Offering, in which all shareholders of the common stock of 
Holdings (Holdings Stock), including the Plans, were treated in the 
same manner;
    (b) The acquisition of the Rights by the Plans resulted from an 
independent act of Holdings, as a corporate entity;
    (c) Each shareholder of Holdings Stock, including each of the 
Plans, received the same proportionate number of Rights based on the 
number of shares of Holdings Stock held by each such shareholder;
    (d) All decisions with regard to the holding and disposition of the 
Rights by the Plans were made by a qualified independent fiduciary (the 
Independent Fiduciary) within the meaning of 29 CFR 2570.31(j); \6\
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    \6\ 29 CFR 2570.31(j) defines a ``qualified independent 
fiduciary,'' in relevant part, to mean ``any individual or entity 
with appropriate training, experience, and facilities to act on 
behalf of the plan regarding the exemption transaction in accordance 
with the fiduciary duties and responsibilities prescribed by ERISA, 
that is independent of and unrelated to any party in interest 
engaging in the exemption transaction and its affiliates;'' in 
general, a fiduciary is presumed to be independent ``if the revenues 
it receives or is projected to receive, within the current federal 
income tax year from parties in interest (and their affiliates) 
[with respect] to the transaction are not more than 2% of such 
fiduciary's annual revenues based upon its prior income tax year. 
Although the presumption does not apply when the aforementioned 
percentage exceeds 2%, a fiduciary nonetheless may be considered 
independent based upon other facts and circumstances provided that 
it receives or is projected to receive revenues that are not more 
than 5% within the current federal income tax year from parties in 
interest (and their affiliates) [with respect] to the transaction 
based upon its prior income tax year.''
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    (e) The Independent Fiduciary determined that it would be in the 
interest of the Plans to sell all of the Rights received in the 
Offering by the Plans in blind transactions on the NASDAQ Global Select 
Market;
    (f) No brokerage fees, commissions, subscription fees, or other 
charges were paid by the Plans with respect to the acquisition and 
holding of the Rights, or were paid to any affiliate of Holdings, Sears 
Canada, or the Independent Fiduciary, with respect to the sale of the 
Rights.
Section III. Definitions
    (a) The term ``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 person;
    (2) Any officer, director, partner, employee, or relative, as 
defined in section 3(15) of the Act, of such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (b) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    Effective Date: This exemption is effective for the period 
beginning October 16, 2014, and ending November 7, 2014 (the Offering 
Period).

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption (the Notice), published on May 12, 2016, 
at 81 FR 29705. All comments and requests for hearing were due by July 
3, 2016. During the comment period, the Department received two 
comments from interested persons and no requests for a public hearing. 
A Savings Plan participant submitted a written comment and Holdings 
requested a clarification to the Notice. Furthermore, during the 
comment period, the Department received several phone inquiries that 
generally concerned matters outside the scope of the exemption.
Participant's Comment
    In his comment letter of June 20, 2016, the participant represents 
that he is a Holdings' shareholder, who held a balance in the Savings 
Plan at the time of the Offering.\7\ The participant states that ``it 
appears I did not benefit from

[[Page 72117]]

[the Offering] as I should have'' because the price of Holdings Stock 
decreased following the Offering. The participant inquires whether the 
exemption should reverse this loss.
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    \7\ The participant also submitted the same comment to the 
Department in D-11851 and D-11852, involving the Sears Notes 
Offering, 81 FR 29709 (May 12, 2016); and in D-11871 and D-11873, 
involving the Seritage Growth Offering, 81 FR 29713 (May 12, 2016).
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    In response to the participant's comment, Holdings explains that 
while there have been fluctuations in the price of Holdings Stock 
during the relevant period, the Independent Fiduciary's decision to 
sell the Rights generated a positive gain for the Sears Holdings 401(k) 
Savings Plan Master Trust Stock Fund (the Stock Fund), of $200,557.36, 
net of fees and expenses. According to Holdings, changes in the value 
of a publicly-traded company's stock occur due to many factors, 
including the company's performance. Depending on the measurement 
period used, Holdings represents that it is possible that a 
contemporaneous decline in the price of Holdings Stock negated the 
positive gain for the Stock Fund. However, according to Holdings, the 
performance of Holdings Stock around the time of the Offering was 
beyond the control of the Plans and the Independent Fiduciary, and it 
was independent of any actions such fiduciary took with respect to the 
Rights received by the Plans.
    Holdings also represents that it made the decision to commence the 
Offering, which was a corporate decision, and this decision was not 
fiduciary in nature. Further, Holdings states that no shareholder, 
including the Plans, had the ability to prevent the Offering. 
Therefore, the only decision presented to the shareholders, including 
the Plans' fiduciaries, was how to dispose of the Rights that were 
distributed during the Offering. Holdings represents that the 
Independent Fiduciary's decision to sell the Rights resulted in a 
significant deposit in the Stock Fund.
Holdings' Comment
    The Applicant states that it originally requested relief from the 
restrictions of sections 406(a)(1)(A), 406(a)(1)(E), 406(a)(2), 
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act in the exemption 
application. However, the Applicant notes that the Department decided 
not to provide exemptive relief from section 406(a)(1)(A) of the Act in 
the Notice.
    The Applicant believes the Plans' acquisition of the Rights to 
purchase Sears Canada Stock did not involve a prohibited ``sale or 
exchange, or leasing, of any property between the plan and a party in 
interest,'' as described in section 406(a)(1)(A) of the Act. The 
Applicant states that it provided the Rights automatically to all of 
its shareholders, including the Plans, in a manner similar to a stock 
dividend. The Applicant also points out that the Department has 
clarified that it ``does not view an acquisition of stock by means of a 
stock dividend or stock split as a prohibited transaction,'' in the 
Preamble to Final Regulation, Fiduciary Responsibility; Statutory 
Exemption for Certain Acquisitions, Sales, or Leases of Property, 45 FR 
51194, 51196 (August 1, 1980). Therefore, the Applicant does not 
believe an exemption from section 406(a)(1)(A) is required in the 
subject case. Sears Holdings requests confirmation that the Department 
shares this view.
    In response, the Department concurs that exemptive relief from 
section 406(a)(1)(A) of the Act is not applicable to the Plans' 
acquisition of the Rights.
Technical Correction
    Section III(c) of the proposed exemption is redesignated as Section 
III(b) of this exemption.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Application Nos. D-11846 and D-11847), including all 
supplemental submissions received by the Department, is available for 
public inspection in the Public Disclosure Room of the Employee 
Benefits Security Administration, Room N-1515, U.S. Department of 
Labor, 200 Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on May 12, 2016, at 81 FR 
29705.

FOR FURTHER INFORMATION CONTACT: Mr. Scott Ness of the Department, 
telephone (202) 693-8561. (This is not a toll-free number.)

Sears Holdings 401(k) Savings Plan (the Savings Plan) and the Sears 
Holdings Puerto Rico Savings Plan (the PR Plan) (Collectively, the 
Plans), Located in Hoffman Estates, IL

[Prohibited Transaction Exemption 2016-06; Exemption Application Nos. 
D-11851 and D-11852]

Exemption

Section I. Covered Transactions
    (a) The restrictions of sections 406(a)(1)(E), 406(a)(2), 
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act and the sanctions 
resulting from the application of section 4975 of the Code, by reason 
of section 4975(c)(1)(E) of the Code,\8\ shall not apply to the 
acquisition and holding of certain subscription rights (the Rights) 
issued by Sears Holdings Corporation (Holdings) by the Savings Plan in 
connection with an offering (the Offering) by Holdings of unsecured 
obligations issued by Holdings (Notes) and warrants to purchase the 
common stock of Holdings (Warrants)(together referred to as Units), 
provided that the conditions as set forth, below, in Section II of this 
exemption were satisfied for the duration of the acquisition and 
holding; and
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    \8\ For purposes of this exemption, unless indicated otherwise, 
references to section 406 of the Act should be read to refer as well 
to the corresponding provisions of section 4975 of the Code.
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    (b) The restrictions of sections 406(a)(1)(E), 406(a)(2), 
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act \9\ shall not apply 
to the acquisition and holding of the Rights by the PR Plan in 
connection with the Offering of the Units by Holdings, provided that 
the conditions as set forth in Section II of this exemption were 
satisfied for the duration of the acquisition and holding.
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    \9\ The Applicant represents that there is no jurisdiction under 
Title II of the Act with respect to the PR Plan. Accordingly, the 
Department is not providing any exemptive relief from section 
4975(c)(1)(E) of the Code for the acquisition and holding of the 
Rights by the PR Plan.
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Section II. Conditions for Relief
    (a) The receipt of the Rights by the Plans occurred in connection 
with the Offering, in which all shareholders of the common stock of 
Holdings (Holdings Stock), including the Plans, were treated in the 
same manner;
    (b) The acquisition of the Rights by the Plans resulted from an 
independent act of Holdings, as a corporate entity;
    (c) Each shareholder of Holdings Stock, including each of the 
Plans, received the same proportionate number of Rights based on the 
number of shares of Holdings Stock held by each such shareholder;
    (d) All decisions with regard to the holding and disposition of the 
Rights by the Plans were made by a qualified independent fiduciary (the 
Independent Fiduciary) within the meaning of 29 CFR 2570.31(j); \10\
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    \10\ 29 CFR 2570.31(j) defines a ``qualified independent 
fiduciary,'' in relevant part, to mean ``any individual or entity 
with appropriate training, experience, and facilities to act on 
behalf of the plan regarding the exemption transaction in accordance 
with the fiduciary duties and responsibilities prescribed by ERISA, 
that is independent of and unrelated to any party in interest 
engaging in the exemption transaction and its affiliates;'' in 
general, a fiduciary is presumed to be independent ``if the revenues 
it receives or is projected to receive, within the current federal 
income tax year from parties in interest (and their affiliates) 
[with respect] to the transaction are not more than 2% of such 
fiduciary's annual revenues based upon its prior income tax year. 
Although the presumption does not apply when the aforementioned 
percentage exceeds 2%, a fiduciary nonetheless may be considered 
independent based upon other facts and circumstances provided that 
it receives or is projected to receive revenues that are not more 
than 5% within the current federal income tax year from parties in 
interest (and their affiliates) [with respect] to the transaction 
based upon its prior income tax year.''

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[[Page 72118]]

    (e) The Independent Fiduciary determined that it would be in the 
interest of the Plans to sell all of the Rights received in the 
Offering by the Plans in blind transactions on the NASDAQ Global Select 
Market;
    (f) No brokerage fees, commissions, subscription fees, or other 
charges were paid by the Plans with respect to the acquisition and 
holding of the Rights, or were paid to any affiliate of Holdings or the 
Independent Fiduciary, with respect to the sale of the Rights.
Section III. Definitions
    (a) The term ``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 person;
    (2) Any officer, director, partner, employee, or relative, as 
defined in section 3(15) of the Act, of such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (b) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    Effective Date: This exemption is effective for the period 
beginning October 30, 2014, and ending November 18, 2014 (the Offering 
Period).

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption (the Notice), published on May 12, 2016, 
at 81 FR 29709. All comments and requests for hearing were due by July 
3, 2016. During the comment period, the Department received two 
comments from interested persons and no requests for a public hearing. 
A Savings Plan participant submitted a written comment, and Holdings 
requested a clarification to the Notice. Furthermore, during the 
comment period, the Department received several phone inquiries that 
generally concerned matters outside the scope of the exemption.
Participant's Comment
    In his comment letter of June 20, 2016, the participant represents 
that he is a Holdings' shareholder, who held a balance in the Savings 
Plan at the time of the Offering.\11\ The participant states that ``it 
appears I did not benefit from [the Offering] as I should have'' 
because the price of Holdings Stock decreased following the Offering. 
The participant inquires whether the exemption should reverse this 
loss.
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    \11\ The participant also submitted the same comment to the 
Department in D-11846 and D-11847, involving the Sears Canada 
Offering, 81 FR 29705 (May 12, 2016); and in D-11871 and D-11873, 
involving the Seritage Growth Offering, 81 FR 29713 (May 12, 2016).
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    In response to the participant's comment, Holdings explains that 
while there have been fluctuations in the price of Holdings Stock 
during the relevant period, the Independent Fiduciary's decision to 
sell the Rights generated a positive gain for the Sears Holdings 401(k) 
Savings Plan Master Trust Stock Fund (the Stock Fund), of 
$3,637,509.54, net of fees and expenses. According to Holdings, changes 
in the value of a publicly-traded company's stock occur due to many 
factors, including the company's performance. Depending on the 
measurement period used, Holdings represents that it is possible that a 
contemporaneous decline in the price of Holdings Stock negated the 
positive gain for the Stock Fund. However, according to Holdings, the 
performance of Holdings Stock around the time of the Offering was 
beyond the control of the Plans and the Independent Fiduciary, and it 
was independent of any actions such fiduciary took with respect to the 
Rights received by the Plans.
    Holdings also represents that it made the decision to commence the 
Offering, which was a corporate decision, and this decision was not 
fiduciary in nature. Further, Holdings states that no shareholder, 
including the Plans, had the ability to prevent the Offering. 
Therefore, the only decision presented to the shareholders, including 
the Plans' fiduciaries, was how to dispose of the Rights that were 
distributed during the Offering. Holdings represents that the 
Independent Fiduciary's decision to sell the Rights resulted in a 
significant deposit in the Stock Fund.
Holdings' Comment
    The Applicant states that it originally requested relief from the 
restrictions of sections 406(a)(1)(A), 406(a)(1)(E), 406(a)(2), 
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act in the exemption 
application. However, the Applicant notes that the Department decided 
not to provide exemptive relief from section 406(a)(1)(A) of the Act in 
the Notice.
    The Applicant believes the Plans' acquisition of the Rights to 
purchase Sears Notes and Warrants did not involve a prohibited ``sale 
or exchange, or leasing, of any property between the plan and a party 
in interest,'' as described in section 406(a)(1)(A) of the Act. The 
Applicant states that it provided the Rights automatically to all of 
its shareholders, including the Plans, in a manner similar to a stock 
dividend. The Applicant also points out that the Department has 
clarified that it ``does not view an acquisition of stock by means of a 
stock dividend or stock split as a prohibited transaction,'' in the 
Preamble to Final Regulation, Fiduciary Responsibility; Statutory 
Exemption for Certain Acquisitions, Sales, or Leases of Property, 45 FR 
51194, 51196 (August 1, 1980). Therefore, the Applicant does not 
believe an exemption from section 406(a)(1)(A) is required in the 
subject case. Sears Holdings requests confirmation that the Department 
shares this view.
    In response, the Department concurs that exemptive relief from 
section 406(a)(1)(A) of the Act is not applicable to the Plans' 
acquisition of the Rights.
Technical Correction
    Section III(c) of the proposed exemption is redesignated as Section 
III(b) of this exemption.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Application Nos. D-11851 and D-11852), including all 
supplemental submissions received by the Department, is available for 
public inspection in the Public Disclosure Room of the Employee 
Benefits Security Administration, Room N-1515, U.S. Department of 
Labor, 200 Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on May 12, 2016, at 81 FR 
29709.

FOR FURTHER INFORMATION CONTACT: Mr. Erin Hesse of the Department, 
telephone (202) 693-8546. (This is not a toll-free number.)

Liberty Media 401(k) Savings Plan (the Plan), Located in Englewood, CO

[Prohibited Transaction Exemption 2016-07; Exemption Application No. D-
11858]

Exemption

Section I. Covered Transactions
    The restrictions of sections 406(a)(1)(E), 406(a)(2), and 
407(a)(1)(A)

[[Page 72119]]

of the Act shall not apply to: (1) The acquisition by the Plan of 
certain stock subscription rights (the Rights) to purchase shares of 
Liberty Broadband Series C common stock (LB Series C Stock), in 
connection with a rights offering (the Rights Offering) held by Liberty 
Broadband Corporation (Liberty Broadband), a party in interest with 
respect to the Plan; and (2) the holding of the Rights by the Plan 
during the subscription period of the Rights Offering, provided that 
the conditions described in Section II below have been met.
Section II. Conditions for Relief
    (a) The Plan's acquisition of the Rights resulted solely from an 
independent corporate act of Liberty Broadband;
    (b) All holders of Liberty Broadband Series A common stock and 
Liberty Broadband Series C common stock (collectively, the LB Stock), 
including the Plan, were issued the same proportionate number of Rights 
based on the number of shares of LB Stock held by each such 
shareholder;
    (c) For purposes of the Rights Offering, all holders of LB Stock, 
including the Plan, were treated in a like manner;
    (d) The acquisition of the Rights by the Plan was made in a manner 
that was consistent with provisions of the Plan for the individually-
directed investment of participant accounts;
    (e) The Liberty Media 401(k) Savings Plan Administrative Committee 
(the Committee) directed the Plan trustee to sell the Rights on the 
NASDAQ Global Select Market, in accordance with Plan provisions that 
precluded the Plan from acquiring additional shares of LB Stock;
    (f) The Committee did not exercise any discretion with respect to 
the acquisition and holding of the Rights; and
    (g) The Plan did not pay any fees or commissions in connection with 
the acquisition or holding of the Rights, and did not pay any 
commissions to Liberty Broadband, Liberty Media Corporation, 
TruePosition, Inc., or any affiliates of the foregoing in connection 
with the sale of the Rights.
    Effective Date: This exemption is effective for the period 
beginning on December 15, 2014, the date that the Plan received the 
Rights, until December 17, 2014, the date the Rights were sold by the 
Plan on the NASDAQ Global Select Market.

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption, published on April 28, 2016, at 81 FR 
25438. Liberty Media completed delivery of the notice of proposed 
exemption and accompanying notice to interested persons on May 3, 2016. 
However, the Department determined that certain elements of the notice 
of proposed exemption as published in the Federal Register were omitted 
from the materials sent to interested persons. Liberty Media 
represented, under penalty of perjury, that a corrected version of the 
notice of proposed exemption was provided to all interested persons on 
May 27, 2016. All comments and requests for hearing were due under the 
corrected version of the notice by June 26, 2016, 30 days following the 
date on which Liberty Media certified delivery was completed. During 
the comment period, the Department received no comments and no requests 
for a hearing from interested persons. Accordingly, after giving full 
consideration to the entire record, the Department has decided to grant 
the exemption. The complete application file (Application No. D-11858), 
including all supplemental submissions received by the Department, is 
available for public inspection in the Public Disclosure Room of the 
Employee Benefits Security Administration, Room N-1515, U.S. Department 
of Labor, 200 Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on April 28, 2016, at 81 FR 
25438.

FOR FURTHER INFORMATION CONTACT: Mr. Scott Ness of the Department, 
telephone (202) 693-8561. (This is not a toll-free number.)

Baxter International Inc. (Baxter or the Applicant), Located in 
Deerfield, IL

[Prohibited Transaction Exemption 2016-08; Exemption Application No. D-
11866]

Exemption

Section I. Transaction
    The restrictions of sections 406(a)(1)(A) and (D) and sections 
406(b)(1) and (2) of ERISA and sections 4975(c)(1)(A), (D), and (E) of 
the Code \12\ shall not apply to the contribution of publicly traded 
common stock of Baxalta (the Contributed Stock) by Baxter (the 
Contribution) to the Baxter International Inc. and Subsidiaries Pension 
Plan (the Plan), provided:
---------------------------------------------------------------------------

    \12\ For purposes of this exemption, references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (a) Fiduciary Counselors Inc. (the Independent Fiduciary) will 
represent the interests of the Plan, the participants, and 
beneficiaries with respect to the Contribution, including but not 
limited to, taking the following actions:
    (i) Determining whether the Contribution is in the interests of the 
Plan and of its participants and beneficiaries, and is protective of 
the rights of participants and beneficiaries of the Plan;
    (ii) Determining whether and on what terms the Contribution should 
be accepted by the Plan;
    (iii) If the Contribution is accepted by the Plan, establishing and 
administering the process (subject to such modifications as the 
Independent Fiduciary may make from time to time) for liquidating the 
Contributed Stock, as is prudent under the circumstances;
    (iv) Determining the fair market value of the Contributed Stock as 
of the date of the Contribution;
    (v) Monitoring the Contribution and holding of Contributed Stock on 
a continuing basis and taking all appropriate actions necessary to 
safeguard the interests of the Plan; and
    (vi) If the Contribution is accepted by the Plan, voting proxies 
and responding to tender offers with respect to the Contributed Stock 
held by the Plan;
    (b) Solely for purposes of determining the Plan's minimum funding 
requirements (as determined under section 412 of the Code), adjusted 
funding target attainment percentage (AFTAP) (as determined under 
Treas. Reg. section 1.436-1(j)(1)), and funding target attainment 
percentage (as determined under section 430(d)(2) of the Code), the 
Plan's actuary (the Actuary) will not count as a contribution to the 
Plan any shares of Contributed Stock that have not been liquidated;
    (c) For purposes of determining the amount of any Contribution, the 
Contributed Stock shall be deemed contributed only at the time it is 
sold, equal to the lesser of: (1) The proceeds from the sale of such 
Contributed Stock; or (2) the value of such Contributed Stock on the 
date of the initial contribution as determined by the Independent 
Fiduciary;
    (d) The Contributed Stock represents no more than 20% of the fair 
market value of the total assets of the Plan at the time it is 
contributed to the Plan;
    (e) The Plan pays no commissions, costs, or other expenses in 
connection with the Contribution, holding, or subsequent sale of the 
Contributed

[[Page 72120]]

Stock, and any such expenses paid by Baxter will not be treated as a 
contribution to the Plan;
    (f) Baxter makes cash contributions to the Plan to the extent that 
the cumulative proceeds from the sale of the Contributed Stock at each 
contribution due date (determined under section 303(j) of ERISA) are 
less than the cumulative cash contributions Baxter would have been 
required to make to the Plan, in the absence of the Contribution. Such 
cash contributions shall be made until all of the Contributed Stock is 
sold by the Plan; and
    (g) Baxter contributes to the Plan cash amounts needed for the Plan 
to attain an AFTAP (determined under Treas. Reg. section 1.436-1(j)(1)) 
of at least 80% as of the first day of each plan year during which the 
Plan holds Contributed Stock, as determined by the Actuary, without 
taking into account any unsold Contributed Stock as of April 1 of the 
plan year.
    Effective Date: This exemption is effective as of May 9, 2016, the 
date the Contribution was received by the Plan.

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption, published on April 28, 2016, at 81 FR 
25441. All comments and requests for hearing were due by June 3, 2016. 
During the comment period, the Department received one substantive 
written comment, one substantive phone comment, and a variety of 
written and telephonic inquiries requesting information outside the 
scope of the proposed exemption. The Department did not receive any 
requests for a hearing from interested persons. A description of the 
comments and the Applicant's responses is below.
Participant Comments and Applicant's Responses
    Among other things, the commenter expressed concern about exposing 
participants to additional risk from holding Baxalta stock in a 
transaction intended to benefit Baxter. The Applicant responds that 
participants in the Plan will not be subject to any additional risk 
from holding Baxalta stock because the value of the Baxalta stock at 
the time of the contribution was approximately $700 million, and the 
plan subsequently sold the stock for approximately $760 million, under 
the direction of the Independent Fiduciary. Accordingly, the Applicant 
represents that this transaction added about $760 million in cash to 
the pension plan. Furthermore, the Applicant notes that if Baxter had 
sold the stock and then put the cash into the Plan, it would have been 
required to pay taxes on the proceeds of the sale, which would have 
reduced the amount available to be contributed to the plan by 
approximately $266 million. Putting the stock into the Plan first and 
then selling the stock under the supervision of the Independent 
Fiduciary yielded significantly more money for the Plan and its 
participants.
    The commenter also stated that the contribution of the Baxalta 
Stock would exceed the Plan's allocation for large cap stocks. In 
response, the Applicant explains that the Baxter Investment Committee 
has amended the investment policy to permit the 24% target allocation 
to be exceeded temporarily to allow the plan to accept the contribution 
of the Baxalta stock, which as described above was sold by the plan 
shortly after the contribution. Thereafter, the proceeds from the sale 
of the Baxalta stock will be invested in accordance with the investment 
policy.
    Finally, the commenter expressed concern about potential IRS 
challenges to the transaction and litigation risk to the Plan from 
Baxalta shareholders if the stock price was depressed as a result of 
this transaction. The Applicant notes that prior to seeking this 
individual exemption, Baxter obtained a ruling from the IRS that 
specifically allows it to contribute the Baxalta stock to the Plan (a 
copy of which was also provided to the Department as part of the 
application process) on a tax-free basis. The Applicant further 
explains that, if for any reason there were an IRS challenge, it would 
be Baxter's responsibility to respond to the IRS challenge, and it 
would not affect the funding of the Plan. Similarly, according to the 
Applicant, there is very little risk of litigation from Baxalta 
shareholders because during the spin-off, shareholders were made aware 
that such a disposition of Baxalta stock was possible and the 
Independent Fiduciary who has been retained to sell the Baxalta stock 
on behalf of the Plan is required under the terms of its agreement to 
sell the stock in such a manner as to minimize the impact of the sales 
on the market for Baxalta shares.
    The Department received one other comment from a plan participant 
who inquired into Baxter's financial ability to continue funding the 
Plan after spinning off half the company into Baxalta. The Applicant 
represents that Baxter does not anticipate that the spin-off of Baxalta 
will reduce Baxter's financial ability to continue funding the Plan. 
Although Baxter is now a smaller company, the Plan is also slightly 
smaller, because the portion of the Plan that benefits Baxalta 
employees was transferred to Baxalta, and Baxalta is responsible for 
funding that portion of the Plan (a new and distinct plan) after the 
spin-off. Finally, the Applicant states that the proposed exemption, if 
approved, would allow Baxter to make a one-time contribution to the 
plan of approximately $760 million. This contribution increased the 
assets of the Plan by over 20%, significantly improving the funded 
status of the Plan. The Applicant explains that this means that 
Baxter's cost of funding the Plan in the future will be reduced.
Applicant's Comment
    The Applicant also submitted the Final Report from the Independent 
Fiduciary (the Final Report), detailing the Contribution and subsequent 
liquidation of the Baxalta Stock. Fiduciary Counselors represents that 
on May 9, 2016, State Street, the Plan's trustee, received the Baxalta 
Contribution from Baxter. The Final Report provides that, while the 
Baxalta Contribution skewed the Large Cap weighting above the targeted 
24.0%, this was a temporary deviation and the allocation will return to 
pre-Baxalta Contribution levels once the Baxalta Stock is sold. 
Fiduciary Counselors started liquidating the Baxalta Stock on May 10, 
2016, and completed the liquidation on June 2, 2016. The Plan realized 
$762,118,481.31 in gross proceeds. The Plan incurred $188,070.01 of 
fees and expenses as part of the liquidation program, with a net gain 
to the Plan of $761,930,411.30. Baxter reimbursed the Plan for such 
fees and expenses as well as additional portfolio accounting fees 
($208.33), custody fees ($2,879.49), and trading fees ($203.00) for a 
total reimbursement to the Plan of $191,360.83.
    After giving full consideration to the entire record, including all 
comments from interested persons and the responses from the Applicant, 
the Department has decided to grant the exemption, as described above. 
The complete application file (Application No. D-11866) is available 
for public inspection in the Public Disclosure Room of the Employee 
Benefits Security Administration, Room N-1515, U.S. Department of 
Labor, 200 Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on April 28, 2016, at 81 FR 
25441.

[[Page 72121]]


FOR FURTHER INFORMATION CONTACT: Mr. Erin S. Hesse of the Department, 
telephone (202) 693-8546. (This is not a toll-free number.)

Sears Holdings 401(k) Savings Plan (the Savings Plan) and the Sears 
Holdings Puerto Rico Savings Plan (the PR Plan) (Together, the Plans), 
Located in Hoffman Estates, IL

[Prohibited Transaction Exemption 2016-09; Exemption Application Nos. 
D-11871 and D-11872, respectively]

Exemption

Section I. Transactions
    The restrictions of sections 406(a)(1)(E), 406(a)(2), 406(b)(1), 
406(b)(2), and 407(a)(1)(A) of the Act and the sanctions resulting from 
the application of section 4975 of the Code, by reason of section 
4975(c)(1)(E) of the Code,\13\ shall not apply, effective for the 
period beginning June 11, 2015, and ending July 2, 2015, to the 
acquisition and holding by the Savings Plan of certain subscription 
rights (the Rights) to purchase shares of common stock (Seritage Growth 
Stock) in Seritage Growth Properties (Seritage Growth), in connection 
with an offering (the Offering) by Sears Holdings Corporation (Holdings 
or the Applicant) of Seritage Growth Stock, provided that the 
conditions, as set forth below, were satisfied for the duration of the 
acquisition and holding; and
---------------------------------------------------------------------------

    \13\ For purposes of this exemption, references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (b) The restrictions of sections 406(a)(1)(E), 406(a)(2), 
406(b)(1), 406(b)(2), and 407(a)(1)(A) of the Act \14\ shall not apply, 
effective for the period beginning June 11, 2015, and ending July 2, 
2015, to the acquisition and holding of the Rights by the PR Plan in 
connection with the Offering of Seritage Growth Stock by Holdings, 
provided that the conditions, as set forth below, were satisfied for 
the duration of the acquisition and holding.
---------------------------------------------------------------------------

    \14\ The Applicant represents that there is no jurisdiction 
under Title II of the Act with respect to the PR Plan because the PR 
Plan fiduciaries have not made an election under section 1022(i)(2) 
of the Act, whereby the PR Plan would be treated as a trust created 
and organized in the United States for purposes of tax qualification 
under section 401(a) of the Code. Accordingly, the Department is not 
providing exemptive relief from section 4975(c)(1)(E) of the Code 
for the acquisition and holding of the Rights by the PR Plan.
---------------------------------------------------------------------------

Section II. Conditions
    (a) The receipt of the Rights by the Plans occurred in connection 
with the Offering, in which all shareholders of the common stock of 
Holdings (Holdings Stock), including the Plans, were treated in the 
same manner;
    (b) The acquisition of the Rights by the Plans resulted solely from 
an independent act of Holdings, as a corporate entity;
    (c) Each shareholder of Holdings Stock, including each of the 
Plans, received the same proportionate number of Rights based on the 
number of shares of Holdings Stock held by each such shareholder;
    (d) All decisions with regard to the holding and disposition of the 
Rights by the Plans were made by a qualified independent fiduciary (the 
Independent Fiduciary) within the meaning of 29 CFR 2570.31(j); \15\
---------------------------------------------------------------------------

    \15\ 29 CFR 2570.31(j) defines a ``qualified independent 
fiduciary,'' in relevant part, to mean ``any individual or entity 
with appropriate training, experience, and facilities to act on 
behalf of the plan regarding the exemption transaction in accordance 
with the fiduciary duties and responsibilities prescribed under the 
Act, that is independent of and unrelated to any party in interest 
engaging in the exemption transaction and its affiliates;'' in 
general, a fiduciary is presumed to be independent ``if the revenues 
it receives or is projected to receive, within the current federal 
income tax year from parties in interest (and their affiliates) 
[with respect] to the transaction are not more than 2% of such 
fiduciary's annual revenues based upon its prior income tax year. 
Although the presumption does not apply when the aforementioned 
percentage exceeds 2%, a fiduciary nonetheless may be considered 
independent based upon other facts and circumstances provided that 
it receives or is projected to receive revenues that are not more 
than 5% within the current federal income tax year from parties in 
interest (and their affiliates) [with respect] to the transaction 
based upon its prior income tax year.''
---------------------------------------------------------------------------

    (e) The Independent Fiduciary determined that it would be in the 
interest of the Plans to sell all of the Rights received in the 
Offering by the Plans in blind transactions on the New York Stock 
Exchange; and
    (f) No brokerage fees, commissions, subscription fees, or other 
charges were paid by the Plans with respect to the acquisition and 
holding of the Rights; or were paid to any affiliate of the Independent 
Fiduciary or Holdings, in connection with the sale of the Rights.
    Effective Date: This exemption is effective for the Offering 
period, beginning June 11, 2015, and ending July 2, 2015.

Written Comments

    In the notice of proposed exemption (the Notice), the Department 
invited all interested persons to submit written comments within 52 
days of the publication, on May 12, 2016, of the Notice in the Federal 
Register. All comments were due by July 3, 2016. During the comment 
period, the Department received three comments from interested persons 
and no requests for a public hearing. Two Savings Plan participants 
submitted written comments. One participant supported the granting of 
the exemption, while the other did not. The third comment, which was 
submitted by the Applicant, requests several minor revisions and 
clarifications to the Notice.
    Following is a discussion of the comment received by the Department 
from the objecting participant, and the one submitted by the Applicant. 
Also presented are the responses made by the Applicant to the 
participant's comment, as well as the Department's responses to the 
Applicant's comment.
Participant's Comment
    In his comment letter of June 20, 2016, the participant represents 
that he is a Holdings' shareholder, who held a balance in the Savings 
Plan at the time of the Offering.\16\ The participant states that ``it 
appears I did not benefit from [the Offering] as I should have'' 
because the price of Seritage Growth Stock decreased following the 
Offering. The participant inquires whether the exemption should reverse 
this loss.
---------------------------------------------------------------------------

    \16\ The participant also submitted the same comment to the 
Department in D-11851 and D-11852, involving the Sears Notes 
Offering, 81 FR 29709 (May 12, 2016); and in D-11846 and D-11847 
involving the Sears Canada Offering, 81 FR 29705 (May 12, 2016).
---------------------------------------------------------------------------

    In response to the participant's comment, the Applicant explains 
that while there have been fluctuations in the price of Holdings Stock 
during the relevant period, the Independent Fiduciary's decision to 
sell the Rights generated a positive gain for the Sears Holdings 401(k) 
Savings Plan Master Trust Stock Fund (the Stock Fund), of 
$4,106,921.19, net of fees and expenses. According to the Applicant, 
changes in the value of a publicly-traded company's stock occur due to 
many factors, including the company's performance. Depending on the 
measurement period used, the Applicant represents that it is possible 
that a contemporaneous decline in the price of Holdings Stock negated 
the positive gain for the Stock Fund. However, according to the 
Applicant, the performance of Holdings Stock around the time of the 
Offering was beyond the control of the Plans and the Independent 
Fiduciary. It was also independent of any actions such fiduciary took 
with respect to the Rights received by the Plans.
    The Applicant also represents that Holdings made the decision to 
commence the Offering, which was a corporate decision, and was not 
fiduciary in nature. Further, the Applicant explains that no 
shareholder, including the Plans, had the ability to

[[Page 72122]]

prevent the Offering. Therefore, the only decision presented to the 
shareholders, including the Plans' fiduciaries, was how to dispose of 
the Rights that were distributed during the Offering. Because the 
Independent Fiduciary decided to sell the Rights, the Applicant 
represents that this event resulted in a significant deposit in the 
Stock Fund.
Applicant's Comment
    1. Scope of Exemptive Relief. The Applicant states that it 
originally requested relief from the restrictions of sections 
406(a)(1)(A), 406(a)(1)(E), 406(a)(2), 406(b)(1), 406(b)(2), and 
407(a)(1)(A) of the Act in the exemption application. However, the 
Applicant explains that the Department decided not to provide exemptive 
relief from section 406(a)(1)(A) of the Act in the Notice.
    The Applicant believes the Plans' acquisition of the Rights to 
purchase Seritage Growth Stock did not involve a prohibited ``sale or 
exchange, or leasing, of any property between the plan and a party in 
interest,'' as described in section 406(a)(1)(A) of the Act. The 
Applicant states that it provided the Rights automatically to all of 
its shareholders, including the Plans, in a manner similar to a stock 
dividend. The Applicant also points out that the Department has 
clarified that it ``does not view an acquisition of stock by means of a 
stock dividend or stock split as a prohibited transaction,'' in the 
Preamble to Final Regulation, Fiduciary Responsibility; Statutory 
Exemption for Certain Acquisitions, Sales, or Leases of Property, 45 FR 
51194, 51196 (August 1, 1980). Therefore, the Applicant does not 
believe an exemption from section 406(a)(1)(A) is required in the 
subject case. Therefore, the Applicant requests confirmation that the 
Department shares this view.
    The Department concurs that exemptive relief from section 
406(a)(1)(A) of the Act is not applicable to the Plans' acquisition of 
the Rights and that the scope of relief set forth in Section I of the 
proposed exemption, and this exemption, is appropriate for the 
transactions covered herein.
    2. Purchase of Units in Stock Funds. Page 29714 of the Notice 
states that the Plans allow participants to ``purchase units in certain 
stock funds which invest in Holdings Stock.'' The Applicant wishes to 
clarify that only one investment option in the Plans exists for the 
purpose of investment in Holdings Stock. The Stock Fund is held in the 
Sears Holdings 401(k) Savings Plan Master Trust, and participants in 
both the Savings Plan and the PR Plan own Holdings Stock through this 
one Stock Fund.
    The Department notes this clarification to the Notice.
    3. Entities Adopting the Savings Plan. Page 29714 of the Notice 
states that ``Sears, Roebuck and Co. (Sears Roebuck) and all of its 
wholly-owned (direct and indirect) subsidiaries (except Lands' End Inc. 
(Lands' End), Sears de Puerto Rico, Inc., Kmart Holding Corporation 
(Kmart), and its wholly-owned (direct and indirect) subsidiaries 
(excluding employees residing in Puerto Rico), and Sears Holdings 
Management Corporation, with respect to certain employees, have adopted 
the Savings Plan and are employers under such plan.'' The Applicant 
clarifies that Kmart Holding Corporation and its wholly-owned 
subsidiaries have adopted the Savings Plan and are employers under such 
plan (excluding employees residing in Puerto Rico). Also, the Applicant 
clarifies that employees of Sears de Puerto Rico, Inc. who reside in 
the United States participate in the Savings Plan.
    The Department notes this clarification to the Notice.
    4. PR Plan and Holdings Stock. Page 29715 of the Notice states that 
the PR Plan held ``39,782,55'' shares as of the record date. The 
Applicant clarifies that the number of shares held by the PR Plan has a 
misplaced decimal mark and should be revised to ``39,782.55'' shares.
    The Department notes this clarification to the Notice.
    5. Holdings Description. Page 29715 of the Notice states that 
Holdings ``is a retail merchant with full-line and specialty retail 
stores in,'' among other places, Canada. The Applicant points out that 
in October and November of 2014, Holdings entered into a series of 
transactions, including a rights offering, to de-consolidate Sears 
Canada Inc. As a result of these transactions, Sears Holdings no longer 
maintains a controlling interest in Sears Canada Inc. and no longer 
itself, maintains stores in Canada.
    The Department notes this clarification to the Notice.
    6. Role of the Independent Fiduciary. Page 29716 of the Notice 
states that the Plans' Independent Fiduciary, Evercore Trust Company 
N.A., conducted a due diligence process evaluating the rights offering, 
including discussions and correspondence, that enabled it ``to improve 
certain elements related to the Offering.'' The Applicant explains 
that, in pertinent part, Evercore's Independent Fiduciary Report states 
that its due diligence process enabled it to ``better understand a 
number of important elements related to the Rights Offering.''
    The Department notes this clarification to the Notice.
    Accordingly, after giving full consideration to the entire record, 
the Department has decided to grant the exemption. The complete 
application file (Exemption Application Nos. D-11871 and D-11872) and 
the written comments are available for public inspection in the Public 
Disclosure Room of the Employee Benefits Security Administration, Room 
N-1515, U.S. Department of Labor, 200 Constitution Avenue NW., 
Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice published in the Federal Register on May 12, 2016 at 81 FR 
29713.

FOR FURTHER INFORMATION CONTACT: Ms. Blessed Chuksorji-Keefe of the 
Department, telephone (202) 693-8567. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the 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) These exemptions are supplemental to and not in derogation of, 
any other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of these exemptions is subject to the express 
condition that the material facts and representations contained in the 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.


[[Page 72123]]


    Signed at Washington, DC, this 14th day of October 2016.
Lyssa E. Hall,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2016-25279 Filed 10-18-16; 8:45 am]
 BILLING CODE 4510-29-P