[Federal Register Volume 88, Number 155 (Monday, August 14, 2023)]
[Notices]
[Pages 55078-55080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17317]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2023-18; Exemption Application No. D-
12023]


Exemption From Certain Prohibited Transaction Restrictions 
Involving the Liberty Media 401(k) Savings Plan and the Liberty Media 
401(k) Savings Plan Trust Located in Englewood, Colorado

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of exemption.

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SUMMARY: This document contains a notice of an exemption 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). The exemption permits: the Liberty Media 
401(k) Savings Plan's (the Plan) acquisition of certain stock 
subscription rights (the Rights) to purchase shares of the Series C 
Liberty SiriusXM common stock (the Series C Liberty SiriusXM Stock), in 
connection with a rights offering (the Rights Offering) by Liberty 
Media Corporation (the Applicant or LMC); and the Plan's holding of the 
Rights during the subscription period of the Rights Offering.

DATES: This exemption will be in effect from May 18, 2020, the date 
that the Plan received the Rights, through June 5, 2020, the last date 
the Rights were sold on the NASDAQ.

FOR FURTHER INFORMATION CONTACT: Mr. Frank Gonzalez of the Department 
at (202) 693-8553. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: The Applicant requested an exemption 
pursuant to ERISA section 408(a) and supplemented the request with 
certain additional information (collectively, this information is 
referred to as the Exemption Application).\1\ On February 9, 2023, the 
Department published a notice of proposed exemption in the Federal 
Register at 88 FR 8469 (the Proposed Exemption).
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    \1\ The procedures for requesting an exemption are set forth in 
29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).
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    Based on the record, the Department has determined to grant the 
proposed exemption. This exemption provides only the relief specified 
herein. It provides no relief from violations of any law other than the 
prohibited transaction provisions of ERISA, as expressly stated herein.
    The Department makes the requisite findings under ERISA section 
408(a) based on the Applicants' adherence to all the conditions of the 
exemption. Accordingly, affected parties should be aware that the 
conditions incorporated in this exemption are, taken individually and 
as a whole, necessary for the Department to grant the relief requested 
by the Applicants. Absent these conditions, the Department would not 
have granted this exemption.

Background

    LMC sponsors the Plan, which is a defined contribution plan. The 
Plan is administrated by a committee (the Administrative Committee), 
and Fidelity Management Trust Company (Trustee or Fidelity) serves as 
the Plan's trustee. Plan participants can direct the investment of 
their Plan accounts into one of 27 investment alternatives, and these 
alternatives include LMC's issued securities. As of May 13, 2020, the 
Plan held a total of $7,186,824 in Series C Liberty SiriusXM Stock 
shares, which represented 6 percent of the Plan's total assets.
    On May 15, 2020, LMC conducted the Rights Offering with holders of 
shares of Series C Liberty SiriusXM Stock. The Series A, B, or C 
Liberty SiriusXM Stock is LMC's stock that is intended to track and 
reflect the separate economic performance of the business, assets, and 
liabilities of Sirius XM Holdings. Under the Rights Offering, each 
holder of Series A Liberty SiriusXM Stock, Series B Liberty SiriusXM 
Stock, and Series C Liberty SiriusXM Stock received 0.0939 of a Right 
for each share of Series A Liberty SiriusXM Stock, Series B Liberty 
SiriusXM Stock, and Series C Liberty SiriusXM Stock held on May 13, 
2020, which is the record date (rounded up to the nearest whole 
Right(s)). Each Right entitled the holder to purchase one share of 
Series C Liberty SiriusXM Stock at a subscription price of $25.47, 
which was equal to an approximate 20% discount to the volume weighted 
average trading price of Series C Liberty SiriusXM Stock for the three-
day trading period ending on and including May 9, 2020.

[[Page 55079]]

    The Rights Offering for 231,861,714 shares of Series C Liberty 
SiriusXM Stock commenced on May 18, 2020, and remained open until June 
5, 2020. The market closing price for each share of Series C Liberty 
SiriusXM Stock was $32.59 on May 18, 2020 and $38.88 on June 5, 2020.
    In connection with the Rights Offering, Plan participants were 
notified of the Rights Offering and the procedure for instructing 
Fidelity of the participant's desires with respect to the Rights. Plan 
participants received the following documents: (a) Questions and 
Answers, which explained the Rights issuance and participant's option 
to exercise or sell the Rights attributable to the employer securities 
allocated to the participant's Plan account; (b) the Rights Offering 
Instructions, which explained the steps required for participants to 
exercise or sell the Rights; \2\ and (c) the Prospectus (within LMC's 
Form S-3 as filed with the Securities and Exchange Commission on May 
14, 2020), which was made available to all shareholders explaining the 
Rights Offering.
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    \2\ All involved Plan participants were notified in advance of 
the procedure for instructing Fidelity of the participants' desires 
with respect to the Rights.
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    Under the terms of both the Plan and the Trust, the Trustee passed 
through its right to vote or act on LMC's securities to the Plan's 
participants. Each Plan participant was given the opportunity to decide 
whether to exercise or sell the Rights that were attributable to the 
shares of employer securities allocated to each participant's account. 
Due to securities law restrictions, certain Plan participants who were 
reporting persons under Rule 16(b) of the Securities Exchange Act of 
1934 (Rule 16(b)) did not have the right to instruct Fidelity to either 
sell or exercise the Rights credited to their Plan accounts, and 
Fidelity sold the Rights credited to these Rule 16(b) participant 
accounts, along with the Rights of other participants who did not elect 
to sell or exercise the Rights credited to their accounts, during the 
last few days of the Rights Offering period.\3\
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    \3\ Rule 16(b) requires an officer, director, or any shareholder 
holding more than 10% of the outstanding shares of a publicly traded 
company to disgorge any profit made on a purchase and sale, or sale 
and purchase, of the company's stock within any period of less than 
six months.
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    The Plan established two temporary investment funds to accommodate 
the Rights. The first fund, the ``Rights Holding Fund,'' was a separate 
fund established to hold the Rights when they were issued. Rights were 
credited to participants' accounts based on their respective holdings 
of Series C Liberty SiriusXM Stock as of May 13, 2020. The second fund, 
the ``Rights Receivable Fund,'' received the Series C Liberty SiriusXM 
Stock shares following the exercise of the Rights on June 5, 2020 (the 
last day of the Rights Offering period), as the Plan participants 
directed. Plan participants ended up exercising 3,219 rights. In 
addition, on or about June 2 through June 5, 2020, Fidelity sold 17,808 
unexercised Rights on the NASDAQ Global Market (the NASDAQ) on behalf 
of Plan participants in blind transactions for an average price of 
$11.79 per Right for a total price $209,956.32. The proceeds from the 
sales were allocated proportionally to the relevant participants' 
accounts. Thus, all unexercised Rights were sold by Fidelity, and no 
Rights expired.
    Lastly, if a Plan participant wanted to sell the Rights allocated 
to that participant's account, such individual was required to contact 
Fidelity (including through Fidelity's website for the Plan), and 
specify the whole percentage of the Rights that participant desired to 
sell. The selling period for participants ran from May 26, 2020, 
through June 1, 2020. At the directions of Plan participants, Fidelity 
sold a total of 1,506 Rights (rounded to the nearest whole Right). LMC 
represents that it filed the Exemption Application after the last day 
of the Rights Offering period to provide current information.
    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
Proposed Exemption. The Department did not receive any written 
comments, and it did not receive any requests for a public hearing.
    The complete application file (D-12023) 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, please refer to the notice of 
proposed exemption published in the Federal Register on February 9, 
2022, at 88 FR 8469.

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 ERISA section 408(a) does not relieve a fiduciary or other party 
in interest from certain requirements of other ERISA provisions, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
ERISA section 404, which, among other things, require a fiduciary to 
discharge his or her duties respecting the plan solely in the interest 
of the plan's participants and beneficiaries and in a prudent fashion 
in accordance with ERISA section 404(a)(1)(B).
    (2) As required by ERISA section 408(a), the Department hereby 
finds that the exemption is (1) administratively feasible, (2) in the 
interests of affected plans and of their participants and 
beneficiaries, and (3) protective of the rights of participants and 
beneficiaries of such plans;
    (3) The exemption is supplemental to, and not in derogation of, any 
other ERISA provisions, 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 determining whether the transaction is in fact a 
prohibited transaction; and
    (4) The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describe all material terms of the transaction 
that are the subject of the exemption.
    Accordingly, the following exemption is granted under the authority 
of ERISA Section 408(a) and in accordance with the procedures set forth 
in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).

Exemption

Section I. Covered Transactions

    The restrictions of ERISA sections 406(a)(1)(E), 406(a)(2), and 
407(a)(1)(A) shall not apply, to:
    (a) The acquisition by the Liberty Media 401(k) Savings Plan's (the 
Plan) of certain stock subscription rights (the Rights), pursuant to a 
stock right offering (the Offering) by Liberty Media Corporation (LMC) 
to purchase shares of Series C Liberty SiriusXM common stock; and
    (b) The holding of the Rights by the Plan during the subscription 
period of the Offering, provided the conditions set forth below in 
Section II are satisfied.

Section II. Conditions

    (a) The Plan's acquisition of the Rights resulted solely from an 
independent corporate act of LMC's Board of Directors;
    (b) All holders of Series A, Series B, or Series C Liberty SiriusXM 
common stock, including the Plan, were issued the same proportionate 
number of Rights based on the number of shares of

[[Page 55080]]

the Series A, B, or C Liberty SiriusXM Stock held by each such 
shareholder;
    (c) For purposes of the Rights Offering, all holders of Series A, 
B, or C Liberty SiriusXM Stock, including the Plan, were treated in a 
like manner, with two exceptions:
    (1) The oversubscription option available under the Rights Offering 
was not available to participants in the Plan; and
    (2) Certain participants deemed to be reporting persons under Rule 
16(b) of the Securities Exchange Act of 1934 (Rule 16(b)) with respect 
to LMC did not have the right to instruct Fidelity to either sell or 
exercise the Rights credited to their Plan accounts;
    (d) The acquisition of the Rights by the Plan 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 
did not exercise any discretion with respect to the acquisition, 
holding or sale of the Rights by the Plan;
    (f) The Plan fiduciary or fiduciaries responsible for overseeing 
the Plan's participation in the Rights offering prudently and loyally 
determined on behalf of the Plan that: (1) the Plan's acquisition, 
holding and sale of the Rights could proceed on the terms established 
by such fiduciaries, and (2) the Plan's participants received all they 
were entitled to under the Rights arrangement (i.e., the Participants 
got at least the fair market value for the exercise and sales of the 
Rights);
    (g) Each Plan participant made an independent decision whether to 
liquidate his or her account assets in the Rights Holding Fund to 
purchase additional shares of Series C Liberty SiriusXM common stock at 
a discount;
    (h) The Plan did not pay any fees or commissions to LMC and/or its 
affiliates in connection with the acquisition, holding, or sale of the 
Rights;
    (i) The Plan did not pay any fees in connection with the exemption 
request; and
    (j) All material facts and representations set forth in the Summary 
of Facts and Representations are true and accurate.
    Effective Date: This exemption will be in effect from May 18, 2020, 
the date that the Plan received the Rights, through June 5, 2020, the 
last date the Rights were sold on the NASDAQ.

    Signed at Washington, DC, this 7th day of August 2023.
George Christopher Cosby,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2023-17317 Filed 8-11-23; 8:45 am]
BILLING CODE 4510-29-P