43930 Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 

1The 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). 

2For purposes of this proposed exemption, 

references to section 406 of ERISA should be read, 

mechanical, or other technological 

collection techniques or other forms of 

information technology, e.g., permitting 

electronic submissions of responses. 

III. Current Actions: At this time, the 

Department of Labor is requesting 

clearance to conduct three surveys of 

about 2,800 UI recipients for the 

National Longitudinal Study of 

Unemployment Insurance Recipients 

(NLS–UI). 

Type of review: New information 

collection request. 

OMB Control Number: 1205–0NEW. 

Affected Public: UI benefit recipients 

in two states who filed to receive a first 

payment during 2013. 

Frequency: Three interviews. 

Total Responses: 5,694 (1,898 per 

three survey waves). 

Average Time per Response: 25 

minutes. 

Estimated Total Burden Hours: 2,372 

hours. 

Average Annual Other Burden Cost: 

$0. 

Comments submitted in response to 

this request will be summarized and/or 

included in the request for Office of 

Management and Budget approval; they 

will also become a matter of public 

record. 

James H. Moore, Jr., 

Deputy Assistant Secretary for Policy, U.S. 

Department of Labor. 

[FR Doc. 2013–17523 Filed 7–19–13; 8:45 am] 

BILLING CODE 4510–23–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Proposed Exemptions From Certain 

Prohibited Transaction Restrictions 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of Proposed Exemptions. 

SUMMARY: This document contains 

notices of pendency before the 

Department of Labor (the Department) of 

proposed exemptions from certain of the 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act) and/or 

the Internal Revenue Code of 1986 (the 

Code). This notice includes the 

following proposed exemptions: D– 

11506, UBS AG and Its Current and 

Future Affiliates and Subsidiaries 

(collectively, UBS or the Applicant); D– 

11742 thru D–11746, The ABB Inc. Cash 

Balance Pension Plan (the Cash Balance 

Plan); the Cash Balance Pension Plan for 

Certain Represented Employees of ABB 

Inc. (the Union Cash Balance Plan); the 

Pension Plan for Employees of the 

Process Analytics Division of ABB Inc. 

Represented by the Laborer’s 

International Union of North America 

(AFL–CIO), Local No. 1304 (the Process 

Analytics Plan); the Pension Plan of 

Fischer & Porter Company (the Fisher & 

Porter Plan); and the ABB Inc. Pension 

Plan (UE 625 & 626) (the UE 625 & 626 

Plan) (each a Plan, and collectively, the 

Plans); and D–11767, D–11768 and D– 

11769, American International Group, 

Inc. Incentive Savings Plan (the Savings 

Plan), American General Agents’ & 

Managers’ Thrift Plan (the Thrift Plan), 

and Chartis Insurance Company— 

Puerto Rico Capital Growth Plan (the 

Chartis Plan)(collectively, the Plans). 

DATES: All interested persons are invited 

to submit written comments or requests 

for a hearing on the pending 

exemptions, unless otherwise stated in 

the Notice of Proposed Exemption, 

within 45 days from the date of 

publication of this Federal Register 

Notice. 

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 exemption and the 

manner in which the person would be 

adversely affected by the exemption. A 

request for a hearing must also state the 

issues to be addressed and include a 

general description of the evidence to be 

presented at the hearing. 

All written comments and requests for 

a hearing (at least three copies) should 

be sent to the Employee Benefits 

Security Administration (EBSA), Office 

of Exemption Determinations, Room N– 

5700, U.S. Department of Labor, 200 

Constitution Avenue NW., Washington, 

DC 20210. Attention: Application No., 

stated in each Notice of Proposed 

Exemption. Interested persons are also 

invited to submit comments and/or 

hearing requests to EBSA via email or 

FAX. Any such comments or requests 

should be sent either by email to: 

moffitt.betty@dol.gov, or by FAX to 

(202) 219–0204 by the end of the 

scheduled comment period. The 

applications for exemption and the 

comments received will be available for 

public inspection in the Public 

Documents Room of the Employee 

Benefits Security Administration, U.S. 

Department of Labor, Room N–1513, 

200 Constitution Avenue NW., 

Washington, DC 20210. 

Warning: All comments will be made 

available to the public. Do not include any 

personally identifiable information (such as 

Social Security number, 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. 

SUPPLEMENTARY INFORMATION: 

Notice to Interested Persons 

Notice of the proposed exemptions 

will be provided to all interested 

persons in the manner agreed upon by 

the applicant and the Department 

within 15 days of the date of publication 

in the Federal Register. Such notice 

shall include a copy of the notice of 

proposed exemption as published in the 

Federal Register and shall inform 

interested persons of their right to 

comment and to request a hearing 

(where appropriate). 

The proposed exemptions were 

requested in applications filed pursuant 

to section 408(a) of the Act and/or 

section 4975(c)(2) of the Code, and in 

accordance with procedures set forth in 

29 CFR Part 2570, Subpart B (76 FR 

66637, 66644, October 27, 2011).1

Effective December 31, 1978, section 

102 of Reorganization Plan No. 4 of 

1978, 5 U.S.C. App. 1 (1996), transferred 

the authority of the Secretary of the 

Treasury to issue exemptions of the type 

requested to the Secretary of Labor. 

Therefore, these notices of proposed 

exemption are issued solely by the 

Department. 

The applications contain 

representations with regard to the 

proposed exemptions which are 

summarized below. Interested persons 

are referred to the applications on file 

with the Department for a complete 

statement of the facts and 

representations. 

UBS AG and Its Current and Future 

Affiliates and Subsidiaries 

(Collectively, UBS or the Applicant) 

Located in New York, New York 

[Application No. D–11506] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA or the 

Act) and section 4975(c)(2) of the 

Internal Revenue Code of 1986, as 

amended (the Code), and in accordance 

with the procedures set forth in 29 CFR 

Part 2570, Subpart B (76 FR 66637, 

66644, October 27, 2011).2


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 43931 

unless otherwise specified, to refer to the 

corresponding provisions of section 4975 of the 

Code. 

3This proposed exemption does not address tax 

issues. The Department has been informed by the 

Internal Revenue Service and the Department of the 

Treasury that they are considering providing 

limited relief from the requirements of sections 

72(t)(4), 401(a)(9), and 4974 of the Code with 

respect to retirement plans that hold Auction Rate 

Securities. The Department has also been informed 

by the Internal Revenue Service that if Auction Rate 

Securities are purchased from a Plan in a 

transaction described in sections I and III at a price 

that exceeds the fair market value of those 

securities, then the excess value would be treated 

as a contribution for purposes of applying 

applicable contribution and deduction limits under 

sections 219, 404, 408, and 415 of the Code. 

4The Department notes that the Act’s general 

standards of fiduciary conduct also would apply to 

the transactions described herein. In this regard, 

section 404 requires, among other things, that a 

fiduciary discharge his duties respecting a plan 

solely in the interest of the plan’s participants and 

beneficiaries and in a prudent manner. 

Accordingly, a plan fiduciary must act prudently 

with respect to, among other things, the decision to 

sell the Auction Rate Security to UBS for the par 

value of the Auction Rate Security, plus any 

accrued but unpaid interest or dividends. The 

Department further emphasizes that it expects Plan 

fiduciaries, prior to entering into any of the 

proposed transactions, to fully understand the risks 

associated with this type of transaction following 

disclosure by UBS of all relevant information. 

Section I. Sales of Auction Rate 

Securities From Plans to UBS: Unrelated 

to a Settlement Agreement 

If the proposed exemption is granted, 

the restrictions of section 406(a)(1)(A) 

and (D) and section 406(b)(1) and (2) of 

the Act and the taxes imposed by 

section 4975 of the Code, by reason of 

section 4975(c)(1)(A), (D), and (E) of the 

Code, shall not apply, effective February 

1, 2008, to the sale by a Plan (as defined 

in section V(e)) of an Auction Rate 

Security (as defined in section V(c)) to 

UBS, where such sale (an Unrelated 

Sale) is unrelated to, and not made in 

connection with, a Settlement 

Agreement (as defined in section V(f)), 

provided that the conditions set forth in 

Section II have been met. 

Section II. Conditions Applicable to 

Transactions Described in Section I 

(a) The Plan acquired the Auction 

Rate Security in connection with 

brokerage or advisory services provided 

by UBS; 

(b) The last auction for the Auction 

Rate Security was unsuccessful; 

(c) Except in the case of a Plan 

sponsored by UBS for its own 

employees (a UBS Plan), the Unrelated 

Sale is made pursuant to a written offer 

by UBS (the Unrelated Offer) containing 

all of the material terms of the Unrelated 

Sale, including, but not limited to, the 

most recent rate information for the 

Auction Rate Security (if reliable 

information is available). Either the 

Unrelated Offer or other materials 

available to the Plan provide the 

identity and par value of the Auction 

Rate Security. Notwithstanding the 

foregoing, in the case of a pooled fund 

maintained or advised by UBS, this 

condition shall be deemed met to the 

extent each Plan invested in the pooled 

fund (other than a UBS Plan) receives 

written notice regarding the Unrelated 

Sale, where such notice contains the 

material terms of the Unrelated Sale 

(including, but not limited to, the 

material terms described in the 

preceding sentence); 

(d) The Unrelated Sale is for no 

consideration other than cash payment 

against prompt delivery of the Auction 

Rate Security; 

(e) The sales price for the Auction 

Rate Security is equal to the par value 

of the Auction Rate Security, plus any 

accrued but unpaid interest or 

dividends; 3

(f) The Plan does not waive any rights 

or claims in connection with the 

Unrelated Sale; 

(g) The decision to accept the 

Unrelated Offer or retain the Auction 

Rate Security is made by a Plan 

fiduciary or Plan participant or 

beneficial owner of an individual 

retirement account (an IRA, as described 

in section V(e) below) who is 

independent (as defined in section V(d)) 

of UBS. Notwithstanding the foregoing: 

(1) In the case of an IRA, which is 

beneficially owned by an employee, 

officer, director or partner of UBS, or a 

relative of any such persons, the 

decision to accept the Unrelated Offer or 

retain the Auction Rate Security may be 

made by such employee, officer, 

director or partner; or (2) in the case of 

a UBS Plan or a pooled fund maintained 

or advised by UBS, the decision to 

accept the Unrelated Offer may be made 

by UBS after UBS has determined that 

such purchase is in the best interest of 

the UBS Plan or pooled fund; 4

(h) Except in the case of a UBS Plan 

or a pooled fund maintained or advised 

by UBS, neither UBS nor any affiliate 

exercises investment discretion or 

renders investment advice within the 

meaning of 29 CFR 2510.3–21(c) with 

respect to the decision to accept the 

Unrelated Offer or retain the Auction 

Rate Security; 

(i) The Plan does not pay any 

commissions or transaction costs with 

respect to the Unrelated Sale; 

(j) The Unrelated Sale is not part of an 

arrangement, agreement or 

understanding designed to benefit a 

party in interest to the Plan; 

(k) UBS and its affiliates, as 

applicable, maintain, or cause to be 

maintained, for a period of six (6) years 

from the date of the Unrelated Sale, 

such records as are necessary to enable 

the persons described below in 

paragraph (l)(1), to determine whether 

the conditions of this exemption, if 

granted, have been met, except that— 

(1) No party in interest with respect 

to a Plan which engages in an Unrelated 

Sale, other than UBS and its affiliates, 

as applicable, shall be subject to a civil 

penalty under section 502(i) of the Act 

or the taxes imposed by section 4975(a) 

and (b) of the Code, if such records are 

not maintained, or not available for 

examination, as required, below, by 

paragraph (l)(1); and 

(2) A separate prohibited transaction 

shall not be considered to have occurred 

solely because, due to circumstances 

beyond the control of UBS or its 

affiliates, as applicable, such records are 

lost or destroyed prior to the end of the 

six-year period; 

(l)(1) Except as provided below in 

paragraph (l)(2), and notwithstanding 

any provisions of subsections (a)(2) and 

(b) of section 504 of the Act, the records 

referred to above in paragraph (k) are 

unconditionally available at their 

customary location for examination 

during normal business hours by— 

(A) Any duly authorized employee or 

representative of the Department, the 

Internal Revenue Service, or the U.S. 

Securities and Exchange Commission; 

or 

(B) Any fiduciary of any Plan, 

including any IRA owner, that engages 

in a Sale, or any duly authorized 

employee or representative of such 

fiduciary; or 

(C) Any employer of participants and 

beneficiaries and any employee 

organization whose members are 

covered by a Plan that engages in the 

Unrelated Sale, or any authorized 

employee or representative of these 

entities; 

(2) None of the persons described 

above in paragraph (l)(1)(B)–(C) shall be 

authorized to examine trade secrets of 

UBS, or commercial or financial 

information which is privileged or 

confidential; and 

(3) Should UBS refuse to disclose 

information on the basis that such 

information is exempt from disclosure, 

UBS 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. 


tkelley on DSK3SPTVN1PROD with NOTICES
43932 Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 

Section III. Sales of Auction Rate 

Securities From Plans to UBS: Related 

to a Settlement Agreement 

If the proposed exemption is granted, 

the restrictions of section 406(a)(1)(A) 

and (D) and section 406(b)(1) and (2) of 

ERISA and the taxes imposed by section 

4975 of the Code, by reason of section 

4975(c)(1)(A), (D) and (E) of the Code, 

shall not apply, effective February 1, 

2008, to the following transactions: (a) 

The acquisition by a Plan, as described 

in section V(e), of certain rights issued 

to owners of Auction Rate Securities by 

UBS AG (ARS Rights) in connection 

with a Settlement Agreement, (b) the 

sale of an Auction Rate Security to UBS 

pursuant to such ARS Rights, where 

such sale (a Settlement Sale) is related 

to, and made in connection with, a 

Settlement Agreement, and (c) the sale 

of an Auction Rate Security to UBS 

where such sale is made pursuant to 

Section 15 of the Texas Settlement 

Agreement (the Section 15 Texas 

Settlement Sale), provided that the 

conditions set forth in Section IV below 

are met. 

Section IV. Conditions Applicable to 

Transactions Described in Section III 

(a) The terms and delivery of the offer 

of ARS Rights (the ARS Rights Offer) are 

consistent with the requirements set 

forth in the Settlement Agreement; 

(b) UBS sends notice of the ARS 

Rights Offer to the Plans, including an 

explanatory cover letter and prospectus 

for the ARS Rights under the Securities 

Act of 1933 (the Securities Act), as 

amended. Notwithstanding the above, 

notice is not required to be sent to the 

underlying investors in pooled funds 

maintained or advised by UBS (but shall 

be provided to the pooled funds); 

(c) Under the terms of the ARS Rights 

Offer, over certain periods of time 

described below (the Exercise Periods), 

Eligible Customers who accept the ARS 

Rights Offer are entitled to put (i.e., 

sell), for par value (plus accrued but 

unpaid interest or dividends), any of 

their Auction Rate Securities to UBS at 

a time of their choosing, and UBS is 

entitled to call any of those Auction 

Rate Securities at any time, for par value 

(plus accrued but unpaid interest or 

dividends). 

(d) Eligible Customers holding ARS 

Rights who validly accept the ARS 

Rights Offer will grant to UBS the sole 

discretion and right to sell or otherwise 

dispose of, and/or enter orders in the 

auction process with respect to, the 

Eligible Customers’ eligible Auction 

Rate Securities on their behalf until the 

expiration date of the related ARS Right, 

without prior notification, so long as the 

Eligible Customers receive a payment of 

par plus accrued but unpaid interest or 

dividends upon any sale or disposition; 

(e) Plans pay no commissions or 

transaction costs in connection with the 

acquisition of ARS Rights; 

(f) In the case of a UBS Plan or pooled 

fund advised by UBS, the decision to 

accept the ARS Rights Offer and any 

subsequent decision to put Auction Rate 

Securities to UBS or, under the Texas 

Settlement, sell the Auction Rate 

Securities to UBS, may be made by UBS 

after UBS has determined that such 

transaction is in the best interest of the 

UBS Plan or pooled fund. 

(g) In the case of an IRA owned by an 

employee, officer, director or partner of 

UBS or a relative of any such persons, 

the IRA owner makes an independent 

determination whether to accept the 

ARS Rights Offer and any subsequent 

decision to put Auction Rate Securities 

to UBS or, under the Texas Settlement, 

sell the Auction Rate Securities to UBS; 

(h) In the case of Plans not described 

in paragraph IV(f) or IV(g) above, a 

person independent of UBS makes the 

determination whether to accept the 

ARS Rights Offer and any subsequent 

decision to put Auction Rate Securities 

to UBS during the applicable Exercise 

Period or, under the Texas Settlement, 

sell the Auction Rate Securities to UBS, 

except with respect to permitted calls 

under the ARS Rights, consistent with a 

registration statement under the 

Securities Act, as amended (the 

Registration Statement); 

(i) The ARS Rights Offer, or other 

documents available to the Plan, 

specifically describe, among other 

things: 

(1) How a Plan may determine: the 

Auction Rate Securities held by the Plan 

with UBS, the purchase dates for the 

Auction Rate Securities, and (if reliable 

information is available) the most recent 

rate information for the Auction Rate 

Securities; 

(2) The number of shares and par 

value of the Auction Rate Securities 

available for purchase under the ARS 

Rights Offer; 

(3) The background of the ARS Rights 

Offer; 

(4) That participating in the ARS 

Rights Offer will not result in or 

constitute a waiver of any claim of the 

tendering Plan; 

(5) The methods and timing by which 

Plans may accept the ARS Rights Offer; 

(6) The purchase dates, or the manner 

of determining the purchase dates, for 

Auction Rate Securities tendered 

pursuant to the ARS Rights Offer; 

(7) The timing for acceptance by UBS 

of tendered Auction Rate Securities; 

(8) The timing of payment for Auction 

Rate Securities accepted by UBS for 

payment; 

(9) The expiration date of the ARS 

Rights Offer; 

(10) The fact that UBS may make 

purchases of Auction Rate Securities 

outside of the ARS Rights Offer and may 

otherwise buy, sell, hold or seek to 

restructure, redeem or otherwise 

dispose of the Auction Rate Securities; 

(11) A description of the risk factors 

relating to the ARS Rights Offer as UBS 

deems appropriate; 

(12) How to obtain additional 

information concerning the ARS Rights 

Offer; and 

(13) The manner in which 

information concerning material 

amendments or changes to the ARS 

Rights Offer will be communicated to 

affected Plans; 

(j) The terms of any Settlement Sale 

or Section 15 Texas Settlement Sale are 

consistent with the requirements set 

forth in the applicable Settlement 

Agreement and, where applicable, the 

terms set forth in the ARS Rights 

prospectus. 

(k) All of the conditions in Section II 

have been met with respect to the ARS 

Rights Offer; and 

(l) All of the conditions in Section 15 

of the Texas Settlement Agreement have 

been met with respect to any Section 15 

Texas Settlement Sale. 

Section V. Definitions 

For purposes of this proposed 

exemption: 

(a) The term affiliate means: Any 

person directly or indirectly, through 

one or more intermediaries, controlling, 

controlled by, or under common control 

with such other person; 

(b) The term control means: The 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual; 

(c) The term Auction Rate Security 

means a security that: 

(1) Is either a debt instrument 

(generally with a long-term nominal 

maturity) or preferred stock; and 

(2) Has an interest rate or dividend 

that is reset at specific intervals through 

a Dutch Auction process; 

(d) A person is independent of UBS 

if the person is: 

(1) Not UBS or an affiliate; and (2) not 

a relative (as defined in ERISA section 

3(15)) of the party engaging in the 

transaction; 

(e) The term Plan means: An 

individual retirement account or similar 

account described in section 

4975(e)(1)(B) through (F) of the Code (an 

IRA); an employee benefit plan as 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 43933 

5The Department notes that Prohibited 

Transaction Exemption 80–26 (45 FR 28545 (April 

29, 1980), as most recently amended at 71 FR 17917 

(April 7, 2006)) permits interest-free loans or other 

extensions of credit from a party in interest to a 

plan if, among other things, the proceeds of the loan 

or extension of credit are used only: (1) For the 

payment of ordinary operating expenses of the plan, 

including the payment of benefits in accordance 

with the terms of the plan and periodic premiums 

under an insurance or annuity contract, or (2) for 

a purpose incidental to the ordinary operation of 

the plan. 

6The relief contained in this proposed exemption 

does not extend to the fiduciary provisions of 

section 404 of the Act. 

7 Individual or charitable account holders with 

less than $1 million in total in their UBS accounts 

on a marketing household basis as of August 8, 

2008, received Series A–1 and/or A–2 ARS Rights. 

The Exercise Period for Series A–1 and A–2 began 

October 31, 2008, and ended January 4, 2011. 

Individual or charitable holders with $1 million 

or more in total for their UBS accounts on a 

marketing household basis as of August 8, 2008; all 

government entity holders; and small business 

holders with less than $10 million in total in their 

UBS accounts on a marketing household basis and 

total balance sheet assets of less than $50 million 

as of August 8, 2008, received Series B–1 and/or B– 

2 ARS Rights. The Exercise Period for Series B–1 

and B–2 ARS Rights began January 2, 2009, and 

ended January 4, 2011. 

Eligible Customers not eligible for Series A–1 

and/or A–2 or Series B–1 and/or B–2 ARS Rights 

received Series C–1 and/or C–2 ARS Rights. The 

Exercise Period for Series C–1 and C–2 ARS Rights 

began June 30, 2010, and ended July 2, 2012. 

8The Applicant confirms that with respect to the 

SEC, New York and Massachusetts Settlements, 

notices were sent during the weeks of October 8 and 

13, 2008. The Applicant notes that the Texas 

Settlement has varying notification requirements, 

which were complied with. 

9The Applicant states that, as of this date, no 

pooled funds subject to ERISA and maintained by 

UBS have been involved in a Settlement. 

defined in section 3(3) of ERISA; or an 

entity holding plan assets within the 

meaning of 29 CFR 2510.3–101, as 

modified by ERISA section 3(42); and 

(f) The term Settlement Agreement 

means: A written legal settlement 

agreement involving UBS and a U.S. 

state or federal authority (a Settlement) 

that provides for the purchase of an 

Auction Rate Security by UBS from a 

Plan and/or the issuance of ARS Rights. 

DATES: Effective Date: If granted, this 

proposed exemption will be effective as 

of February 1, 2008. 

Summary of Facts and Representations 

1. UBS AG (UBS or the Applicant) is 

a financial services corporation with 

headquarters located in Zurich, 

Switzerland. UBS has banking divisions 

and subsidiaries around the world, 

including in the United States, with its 

United States headquarters located in 

New York, New York and Stamford, 

Connecticut. 

2. The Applicant describes Auction 

Rate Securities (or ARS) and the 

arrangement by which ARS are bought 

and sold as follows. ARS are securities 

(issued as debt or preferred stock) with 

an interest rate or dividend that is reset 

at periodic intervals pursuant to a 

process called a Dutch Auction. 

Investors submit orders to buy, hold, or 

sell a specific ARS to a broker-dealer 

selected by the entity that issued the 

ARS. The broker-dealers, in turn, submit 

all of these orders to an auction agent. 

The auction agent’s functions include 

collecting orders from all participating 

broker-dealers by the auction deadline, 

determining the amount of securities 

available for sale, and organizing the 

bids to determine the winning bid. If 

there are any buy orders placed into the 

auction at a specific rate, the auction 

agent accepts bids with the lowest rate 

above any applicable minimum rate and 

then successively higher rates up to the 

maximum applicable rate, until all sell 

orders and orders that are treated as sell 

orders are filled. Bids below any 

applicable minimum rate or above the 

applicable maximum rate are rejected. 

After determining the clearing rate for 

all of the securities at auction, the 

auction agent allocates the ARS 

available for sale to the participating 

broker-dealers based on the orders they 

submitted. If there are multiple bids at 

the clearing rate, the auction agent will 

allocate securities among the bidders at 

such rate on a pro-rata basis. 

3. The Applicant states that, under a 

typical Dutch Auction process, UBS is 

permitted, but not obligated, to submit 

orders in auctions for its own account 

either as a bidder or a seller and 

routinely does so in the auction rate 

securities market in its sole discretion. 

UBS may place one or more bids in an 

auction for its own account to acquire 

ARS for its inventory, to prevent: (a) A 

failed auction (i.e., an event where there 

are insufficient clearing bids which 

would result in the auction rate being 

set at a specified rate, resulting in no 

ARS being sold through the auction 

process); or (b) an auction from clearing 

at a rate that UBS believes does not 

reflect the market for the particular ARS 

being auctioned. 

4. The Applicant states that for many 

ARS, UBS has been appointed by the 

issuer of the securities to serve as a 

dealer in the auction and is paid by the 

issuer for its services. That agreement 

provides that UBS will receive from the 

issuer auction dealer fees based on the 

principal amount of the securities 

placed through UBS. 

5. The Applicant states further that 

UBS may share a portion of the auction 

rate dealer fees it receives from the 

issuer with other broker-dealers that 

submit orders through UBS, for those 

orders that UBS successfully places in 

the auctions. Similarly, with respect to 

ARS for which broker-dealers other than 

UBS act as dealer, such other brokerdealers may share auction dealer fees 

with UBS for orders submitted by UBS. 

6. Since February 2008, the Applicant 

represents that the significant majority 

of auctions have been unsuccessful. 

According to the Applicant, the current 

state of the ARS market remains 

illiquid. As a result, Plans holding ARS 

may not have sufficient liquidity to 

make benefit payments, mandatory 

payments and withdrawals and expense 

payments when due.5

7. The Applicant represents that, in 

certain instances, UBS may have 

previously advised or otherwise caused 

a Plan to acquire and hold an Auction 

Rate Security.6 In connection with 

UBS’s role in the acquisition and 

holding of ARS by various UBS clients, 

including the Plans, UBS entered into 

Settlement Agreements with certain 

U.S. states and federal authorities (as 

described below), and UBS requests 

exemptive relief for three categories of 

ARS transactions: (a) Where UBS is 

required under a Settlement Agreement 

to send to Plans a written offer to 

acquire the ARS (i.e., a Settlement Sale); 

(b) where, under Section 15 of the Texas 

Settlement, UBS is required to purchase 

Auction Rate Securities from certain 

specified categories of holders who 

contact UBS (i.e., a Section 15 Texas 

Settlement Sale); and (c) where UBS 

initiates an ARS sale by sending to a 

Plan a written offer to acquire the ARS, 

notwithstanding that such offer is not 

required under a Settlement Agreement 

(i.e., an Unrelated Sale). 

8. The Applicant states that, pursuant 

to the Settlements, UBS offered the ARS 

Rights to designated customers who 

bought certain ARS from UBS (i.e., the 

Eligible Customers).7 The ARS Rights 

were issued by UBS AG pursuant to the 

Registration Statement, and notice 8 of 

the ARS Rights Offer, consisting of an 

explanatory cover letter and a 

prospectus, was sent to such Eligible 

Customers. However, notice was not 

required to be sent to the underlying 

investors of pooled funds maintained or 

advised by UBS (but was required to be 

provided to the pooled funds).9

9. The Applicant states that the 

Registration Statement described above 

complies with applicable securities 

laws, and the Registration Statement, 

including the Prospectus and the 

accompanying cover letter, included 

disclosure of, or a fair and adequate 

summary of, the ARS Rights. In 

addition, the Registration Statement and 

accompanying documents explained 

what Eligible Customers had to do to 

participate in the ARS Rights Offer and 


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10The Applicant represents that UBS extended 

the Offer Period to December 19, 2008. 

11The Applicant notes that not every ARS holder 

who was eligible for the ARS Rights Offer accepted 

such offer. Additional ARS positions with a par 

value of approximately $57 million were eligible for 

the ARS Rights Offer but the holders of the rights 

did not accept such offer. The Applicant states that 

UBS has no way of knowing how much of the 

foregoing $57 million in ARS remains outstanding 

because the positions are not held at UBS. The 

Applicant believes that a majority of those positions 

were repurchased by other firms and/or redeemed 

by the issuer. Similarly, the Applicant states that it 

does not know the dollar value of outstanding ARS 

that are eligible for repurchase under the Texas 

Settlement. UBS is not obligated to repurchase any 

further ARS relating to the ARS Rights Offering. 

However, UBS is obligated to repurchase eligible 

ARS under the Texas Settlement up to a total of 

$200 million of which $161,550,000 has been spent 

to date. 

12The Applicant explains that a handful of 

unrelated sales have occurred with written offers to 

buy at par value and pursuant to a settlement 

agreement; however, none of these sales involved 

a Plan or an IRA. In addition, the Applicant states 

that UBS may facilitate sales of ARS in the market 

as agent for clients at their request. 

it informed them of the relevant terms 

of the Settlement Agreement and other 

material terms regarding their rights. 

10. The Applicant states that 

information concerning material 

amendments or changes to the ARS 

Rights or Registration Statement was 

promptly disseminated to Eligible 

Customers, and such information was 

also made available by means of a tollfree telephone number. In connection 

with determining whether an Eligible 

Customer wished to accept the ARS 

Rights during the Offer Period or put the 

ARS to UBS during the Exercise Period, 

there may have been communications 

from time to time between such 

customer and UBS in that regard. The 

Applicant states that in addition to the 

purchase of ARS pursuant to the ARS 

Rights Offer, UBS may have purchased 

ARS from its customers outside the ARS 

Rights Offer at times and on terms other 

than those provided in such offer. 

11. The Applicant represents that 

Eligible Customers had from October 7, 

2008 to November 14, 2008 (the Offer 

Period) to decide whether to accept the 

ARS Rights, unless the Offer Period was 

extended at the discretion of UBS.10 In 

the case of the Texas Settlement, eligible 

holders were entitled to sell their 

Auction Rate Securities to UBS until the 

agreed upon dollar amount in that 

settlement had been spent. In the case 

of any Eligible Customer that is a pooled 

fund advised by UBS or a Plan 

sponsored by UBS for its own 

employees, the decision to accept the 

ARS Rights Offer and any subsequent 

decision to put ARS to UBS during the 

Offer Period (or, under the Texas 

Settlement, sell the Auction Rate 

Securities to UBS) may have been made 

by UBS after UBS determined that such 

purchase was in the best interest of the 

UBS Plan or pooled fund. In the case of 

an IRA owned by an employee, officer, 

director or partner of UBS, or a relative 

of any such persons, the IRA owner was 

required to make an independent 

determination whether to accept the 

ARS Rights Offer and any subsequent 

decision to put ARS to UBS during the 

Offer Period (or, under the Texas 

Settlement, sell the Auction Rate 

Securities to UBS). Other than with 

respect to such IRAs, a pooled fund 

advised by UBS, or a Plan sponsored by 

UBS for its own employees, a person 

independent of UBS was required to 

make the determination whether to 

accept the ARS Rights Offer and any 

subsequent decision to put ARS to UBS 

during the applicable Exercise Period 

(or, under the Texas Settlement, sell the 

Auction Rate Securities to UBS), except 

with respect to permitted calls under 

the ARS Rights, consistent with the 

Registration Statement. 

12. The Applicant states that all 

Eligible Customers who accepted the 

ARS Rights Offer must have custodied 

their ARS with UBS. To the extent that 

an Eligible Customer had moved its 

accounts from UBS, the Eligible 

Customer was required to transfer its 

ARS to an account with UBS but such 

account did not bear a custody fee. 

13. Under the terms of the ARS 

Rights, during the appropriate Exercise 

Period (as defined above), Eligible 

Customers who accepted the ARS Rights 

Offer were entitled to put, for par value 

(plus accrued but unpaid interest or 

dividends), any of their ARS to UBS, 

and UBS was entitled to call any of 

those ARS, for par value (plus accrued 

but unpaid interest or dividends). 

14. Under Section 15 of the Texas 

Settlement, UBS was also required to 

purchase Auction Rate Securities from 

certain additional categories of Auction 

Rate Securities holders, if they 

contacted UBS. The Applicant 

represents that no written offer was 

required under that Settlement, 

although the Settlement offer was 

publicized by Texas. 

15. The Applicant states that there 

were Settlements involving UBS and the 

following federal and state authorities: 

The SEC, New York, Massachusetts and 

Texas. The Applicant states that since 

August 2008, UBS has purchased ARS 

in the amount of $18,047,380,000 

pursuant to the SEC Settlement (and the 

New York and Massachusetts 

Settlements, which tracked the SEC 

Settlement) and $161,550,000 pursuant 

to the Texas Settlement.11 The 

Applicant explains that while there 

should be no future purchases under the 

SEC settlement, UBS expects there will 

be such purchases under the Texas 

Settlement because it requires UBS to 

continue to buy from Eligible Customers 

under the Settlement until it has spent 

$200 million, which it has not done yet. 

Accordingly, the Applicant is requesting 

prospective relief for such future 

Settlement Sales and Section 15 

Settlement Sales and retroactive relief 

for Settlement Sales and Section 15 

Settlement Sales that have already 

occurred. 

16. With respect to Unrelated Sales, 

the Applicant states that to the best of 

its knowledge, as of December 10, 2012, 

no Unrelated Sale to a Plan has 

occurred.12 However, the Applicant 

states that retroactive relief (and 

prospective relief) is necessary in the 

event that a sale of ARS by a Plan to 

UBS has occurred, or will occur, outside 

the Settlement process. 

17. The Applicant states that the 

Settlement Sales, Section 15 Texas 

Settlement Sales and Unrelated Sales 

(hereinafter, each, a Covered Sale) are in 

the interests of Plans. In this regard, the 

Applicant states that the Covered Sales 

permit Plans to normalize Plan 

investments. The Applicant represents 

that each Covered Sale has been and 

will be for no consideration other than 

cash payment against prompt delivery 

of the ARS, and such cash has equaled, 

and will equal, the par value of the ARS, 

plus any accrued but unpaid interest or 

dividends. The Applicant represents 

further that Plans have not paid, and 

will not pay, any commissions or 

transaction costs with respect to any 

Covered Sale. 

18. The Applicant represents that the 

proposed exemption is protective of the 

Plans. The Applicant states that, except 

in the case of a Plan sponsored by UBS 

for its own employees (i.e., a UBS Plan), 

each Covered Sale has been made, and 

will be made, pursuant to a written offer 

(i.e., pursuant to an Unrelated Offer, an 

ARS Rights Offer, or a Settlement offer 

made under Section 15 of the Texas 

Settlement Agreement; together, an 

Offer). The Applicant states further that, 

with limited exceptions, the decision to 

accept the Offer or retain the ARS has 

been made, and will be made, by a Plan 

fiduciary or Plan participant or IRA 

owner who is independent of UBS. 

Additionally, each Offer has been 

delivered, and will be delivered, in a 

manner designed to alert a Plan 

fiduciary that UBS intends to purchase 

ARS from the Plan. Offers made in 

connection with an Unrelated Sale have 

described, and will describe, the 

material terms of the Unrelated Sale, 


tkelley on DSK3SPTVN1PROD with NOTICES
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13The Applicant states that while there may have 

been, or may be, communication between a Plan 

and UBS subsequent to an Offer, such 

communication has not involved, and will not 

involve, advice regarding whether the Plan should 

accept the Offer. 

14For purposes of this proposed exemption, 

references to the provisions of Title I of the Act, 

unless otherwise specified, refer also to the 

corresponding provisions of the Code. 

including the most recent rate 

information for the ARS (if reliable 

information is available). Either the 

Offer or other materials available to the 

Plan have provided, and will provide, 

the identity and par value of the ARS. 

Offers made in connection with a 

Settlement Agreement specifically 

include, among other things: The 

background of the Offer; the method and 

timing by which a Plan may accept the 

Offer; the expiration date of the Offer; a 

description of certain risk factors 

relating to the Offer; how to obtain 

additional information concerning the 

Offer; and the manner in which 

information concerning material 

amendments or changes to the Offer will 

be communicated to affected Plans. The 

Applicant states that, except in the case 

of a UBS Plan or a pooled fund advised 

by UBS, neither UBS nor any affiliate 

has exercised, or will exercise, 

investment discretion, or has rendered, 

or will render, investment advice with 

respect to a Plan’s decision to accept the 

Offer or retain the ARS. In the case of 

a UBS Plan or a pooled fund maintained 

or advised by UBS, the decision to 

engage in a Covered Sale has been 

made, and may be made, by UBS after 

UBS has determined that such purchase 

is in the best interest of the UBS Plan 

or pooled fund. The Applicant 

represents further that Plans have not 

waived, and will not waive, any rights 

or claims in connection with any 

Covered Sale except where permitted 

under a Section 15 Texas Settlement 

Sale.13

19. The Applicant represents that the 

proposed exemption, if granted, would 

be administratively feasible. In this 

regard, the Applicant notes that each 

Covered Sale has occurred, and will 

occur, at the par value of the affected 

ARS, plus any accrued but unpaid 

interest or dividends, and such value is 

readily ascertainable. The Applicant 

represents further that UBS has 

maintained, and will maintain, the 

records necessary to enable the 

Department and Plan fiduciaries, among 

others, to determine whether the 

conditions of this exemption, if granted, 

have been met. 

20. In summary, the Applicant 

represents that the transactions 

described herein satisfy the statutory 

criteria of section 408(a) of the Act 

because, among other things: 

(a) Except in the case of a UBS Plan 

or a Section 15 Texas Settlement Sale, 

each Covered Sale has been made and 

shall be made pursuant to a written 

Offer; 

(b) Each Covered Sale has been and 

shall be for no consideration other than 

cash payment against prompt delivery 

of the ARS; 

(c) The amount of each Covered Sale 

has equaled and shall equal the par 

value of the ARS, plus any accrued but 

unpaid interest or dividends; 

(d) No Plan has waived nor shall 

waive any rights or claims in connection 

with any Covered Sale except as 

permitted under a Section 15 Texas 

Settlement Sale; 

(e) Except in the case of a UBS Plan 

or a pooled fund maintained or advised 

by UBS: 

(1) The decision to accept an Offer or 

retain the ARS has been made and shall 

be made by a Plan fiduciary or Plan 

participant or IRA owner who is 

independent of UBS; and 

(2) neither UBS nor any affiliate has 

exercised or shall exercise investment 

discretion or render investment advice 

within the meaning of 29 CFR 2510.3– 

21(c) with respect to the decision to 

accept the Offer or retain the ARS 

except with respect to permitted calls 

under the ARS Rights, consistent with 

the Registration Statement; 

(f) Plans have not paid and shall not 

pay any commissions or transaction 

costs with respect to any Covered Sale; 

(g) A Covered Sale has not been and 

shall not be part of an arrangement, 

agreement or understanding designed to 

benefit a party in interest to the affected 

Plan; and 

(h) UBS has made available and shall 

make available in connection with an 

Unrelated Sale the material terms of the 

Unrelated Sale, including the most 

recent rate information for the ARS (if 

reliable information is available), and 

the identity and par value of the ARS. 

Notice to Interested Persons 

The Applicant represents that the 

potentially interested participants and 

beneficiaries cannot all be identified 

and therefore the only practical means 

of notifying such participants and 

beneficiaries of this proposed 

exemption is by the publication of this 

notice in the Federal Register. 

Comments and requests for a hearing 

must be received by the Department no 

later than 30 days from the date of 

publication of this notice of proposed 

exemption 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. 

FOR FURTHER INFORMATION CONTACT: 

Anna Mpras Vaughan of the 

Department, telephone (202) 693–8565. 

(This is not a toll-free number.) 

The ABB Inc. Cash Balance Pension 

Plan (the Cash Balance Plan); the Cash 

Balance Pension Plan for Certain 

Represented Employees of ABB Inc. 

(the Union Cash Balance Plan); the 

Pension Plan for Employees of the 

Process Analytics Division of ABB Inc. 

Represented by the Laborer’s 

International Union of North America 

(AFL–CIO), Local No. 1304 (the Process 

Analytics Plan); the Pension Plan of 

Fischer & Porter Company (the Fisher & 

Porter Plan); and the ABB Inc. Pension 

Plan (UE 625 & 626) (the UE 625 & 626 

Plan) (each a Plan, and collectively, the 

Plans) Located in Cary, NC. 

[Application Nos. D–11742 thru D–11746 

respectively] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA or the 

Act), and section 4975(c)(2) of the 

Internal Revenue Code of 1986, as 

amended (the Code), and in accordance 

with the procedures set forth in 29 CFR 

Part 2570, Subpart B (76 FR 66637, 

66644, October 27, 2011).14 If the 

exemption is granted, the restrictions of 

sections 406(a)(1)(A) and 406(b)(1) and 

(b)(2) of the Act and the sanctions 

resulting from the application of section 

4975(c)(1)(A) and (E) of the Code, shall 

not apply, to the in-kind contribution 

(the Contribution) of certain U.S. 

Treasury Bills (the Securities) to the 

Plans by ABB Inc., a party in interest 

with respect to the Plans, on September 

14, 2012, provided that the following 

conditions are satisfied: 

(a) The fair market value of the 

Securities was determined by ABB Inc. 

based on the closing price of the 

Securities on the date of Contribution 

(the Contribution Date) as quoted by 

Bloomberg L.P., an independent third 

party in the business of providing 

financial data; 

(b) The Securities represented less 

than 12% of the assets of any Plan; 

(c) The terms of the Contribution were 

no less favorable to the Plans than those 


tkelley on DSK3SPTVN1PROD with NOTICES
43936 Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 

15The ABB group of related companies operates 

in approximately 100 countries and employs 

145,000 worldwide. 

negotiated at arm’s length under similar 

circumstances between unrelated 

parties; 

(d) The Plans paid no commissions, 

costs or fees with respect to the 

Contribution; and 

(e) ABB Inc. reviewed the 

methodology used to value the 

Securities and ensured that the Plans 

received the fair market value of the 

Securities. 

DATES: Effective Date: If granted, this 

proposed exemption will be effective as 

of September 14, 2012. 

Summary of Facts and Representations 

Parties to the Covered Transaction 

1. ABB Inc. is the U.S. subsidiary of 

Asea Brown Boveri Ltd. (ABB), a 

multinational corporation operating 

primarily in robotics, power, and 

automation technologies, headquartered 

in Zurich, Switzerland.15 ABB Inc. is 

headquartered in Cary, North Carolina 

and employs approximately 20,000 

individuals in the U.S. ABB Inc.’s five 

main divisions include: power products, 

power systems, discrete automation and 

motion, low voltage products, and 

process automation. ABB Inc. provides 

or has provided a retirement benefit to 

its employees through the following 

defined benefit plans: 

A. The Cash Balance Plan, which is 

ABB Inc.’s largest Plan, is a cash balance 

plan that was established on January 1, 

1992. The Cash Balance Plan covers 

eligible employees of ABB Inc., ABB 

Treasury Center USA, and Kuhlman 

Electric Corporation. As of December 

31, 2011, the Cash Balance Plan was 

frozen to new participants and benefit 

accruals. ABB Inc. states that, for the 

plan year beginning January 1, 2012, the 

Cash Balance Plan had an Adjusted 

Funding Target Attainment Percentage 

(AFTAP) of 112.29%. Further, as of 

April 30, 2012, the Cash Balance Plan 

had assets of $820,244,694, and, as of 

June 16, 2012, the Plan had 16,263 

participants and beneficiaries. 

B. The Union Cash Balance Plan, 

established on July 1, 1999, is a singleemployer cash balance plan providing 

pension benefits for eligible 

collectively-bargained employees of 

ABB Jefferson City. ABB Inc. states that, 

for the plan year beginning January 1, 

2012, the Union Balance Cash Plan had 

an AFTAP of 113.72%. Further, as of 

April 30, 2012, the Union Cash Balance 

Plan had assets of $40,040,132, and, as 

of June 26, 2012, the Union Cash 

Balance Plan had 697 participants and 

beneficiaries. 

C. The Process Analytics Plan is a 

defined benefit plan established on 

February 1, 1984. It covers eligible 

collectively-bargained employees who 

are employed at the ABB Inc. plant in 

Lewisburg, West Virginia. ABB Inc. 

states that, as of the plan year beginning 

January 1, 2012, the Process Analytics 

Plan had an AFTAP of 120.39%. 

Further, as of April 30, 2012, the Plan 

had assets of $7,660,258 and, as of June 

26, 2012, the Plan had 161 participants 

and beneficiaries. 

D. The Fischer & Porter Plan is a 

defined benefit plan that was 

established on January 1, 1947. It covers 

certain collectively bargained 

employees working at the ABB Inc. 

location in Warminster, Pennsylvania. 

ABB Inc. states that, as of the plan year 

beginning January 1, 2012, the Fischer 

& Porter Plan had an AFTAP of 

114.16%. Further, as of April 30, 2010, 

the Fischer & Porter Plan had assets of 

$57,762,579, and, as of June 26, 2012, 

the Plan had 1,466 participants and 

beneficiaries. 

E. The UE 625 & 626 Plan is a defined 

benefit plan that was established on 

September 15, 1984. It covers certain 

eligible employees represented under a 

collective bargaining agreement by the 

United Electrical, Radio and Machine 

Workers of America (UE). The UE 625 

& 626 Plan had an AFTAP of 121.70% 

as of January 1, 2012. Further, as of 

April 30, 2012, the UE 625 & 626 Plan 

had assets of $18,854,815, and, as of 

June 26, 2012, the Plan had 221 

participants and beneficiaries. 

2. The assets of the Plans are held in 

the ABB Inc. Master Trust (the Master 

Trust) for which the Bank of NY Mellon 

serves as the trustee. The ABB Inc. 

Pension Review Committee (PRC) has 

investment discretion over the assets of 

the Plans including those additional 

assets that would be covered by the 

proposed exemption, if granted. ABB 

Inc. maintains a risk management 

committee (the Pension and Risk 

Management Committee), comprised of 

two to three employees, that advises the 

PRC regarding the investment of the 

assets in the Master Trust. However, the 

PRC is the entity responsible for 

implementing investment decisions on 

behalf of ABB Inc. Towers Watson (the 

Actuary), a Delaware corporation, serves 

as the actuary for each of the Plans. 

Contribution of the Securities 

3. ABB Inc. represents that each of the 

Plans has had an AFTAP equal to or in 

excess of 100% each year since 2010. In 

addition, ABB Inc. states that on June 1, 

2012, the PRC increased the Master 

Trust’s cash target allocation from 10% 

to 20% for a period of 6 months due to 

recent volatility in the equity markets. 

ABB Inc. notes that the PRC determined 

that it was prudent to increase the cash 

target allocation to provide flexibility in 

the event that changes in the Master 

Trust’s investments needed to be made. 

Furthermore, ABB Inc. desired to 

contribute additional cash and cash 

equivalents to the Master Trust, as 

described below, which would affect the 

amount of plan assets allocated to cash. 

4. ABB Inc. represents that it sought 

to make a contribution (the 

Contribution) of Treasury Bills (the 

Securities) to the Master Trust as part of 

its long-term approach to having wellfunded pension plans. According to 

ABB Inc., no additional contributions 

were required to be made to the Plans 

in 2012. ABB Inc. states that the 

decision regarding which Plans would 

be funded by the Contribution was 

based on a number of factors, including 

the Plans’ funded status and projected 

normal costs. Furthermore, the 

Contributions would be well in excess 

of the minimum contribution 

requirements of the Plans. 

5. ABB Inc. states that it determined 

to make the Contribution in the form of 

Treasury Bills, because a contribution of 

cash-equivalent securities will garner 

more favorable accounting treatment 

than cash when used to fund ABB Inc.’s 

pension liabilities. ABB Inc. explains 

that the contribution was reported on 

ABB Inc.’s financial statements under 

U.S. accounting standards as a use of 

cash from investing activities and was 

disclosed in the notes to the financial 

statements. According to ABB Inc., this 

will allow the company to avoid 

burdening current year gross cash flows 

that would occur if ABB Inc. 

contributed cash. ABB Inc. states that, 

consequentially, readers of their 

financial statements will be able to 

better distinguish between current 

operational performance of ABB Inc. 

from a significantly higher than normal 

Plan contribution event, and any 

potential negative impact of the 

Contribution on ABB Inc.’s cost of 

capital will be limited. 

6. ABB Inc. states that, in order to 

effect the Contribution, it purchased 

Treasury Bills in two separate 

acquisitions. On June 7, 2012, ABB Inc. 

acquired Treasury Bills in the maturity 

amount of $14,100,000 with an effective 

yield of 0.086%. On June 19, 2012, ABB 

Inc. acquired additional Treasury Bills 

in the maturity amount of $4,025,000 

with an effective yield of 0.089%. Both 

purchases occurred over-the-counter 

and from unrelated parties. The 

purchased Treasury Bills were placed in 

an ABB Inc. account at Credit Suisse 

Securities (Credit Suisse). The total 


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16According to ABB Inc., on December 12, 2012, 

Credit Suisse provided ABB Inc. with a computer 

screenshot of the closing price of the Securities on 

September 14, 2012, as reported by Bloomberg L.P., 

which displayed a closing price of 99.997563: 

0.00027 less than what Credit Suisse previously 

reported. The resulting revised Contribution Date 

value was $49 less than the amount originally 

calculated. To ensure that the Plans were 

adequately protected with respect to the 

Contribution, ABB Inc. contributed $49, plus 

interest calculated at 8% from the date of 

contribution up to the date such interest was paid 

to the Plans. 

The Department is not offering its view whether 

ABB Inc.’s use of the original closing price for the 

Securities in fulfillment of its funding, reporting 

and disclosure obligations comports with its duties 

under section 404(a) of the Act, which requires, 

among other things, that a fiduciary discharge its 

duties with respect to a plan solely in the interest 

of the Plans’ participants and beneficiaries, and in 

a prudent fashion. 

17All asset values are based on fair market value 

data as of April 30, 2012. 

18ABB Inc. notes that the projected funding 

valuation results prepared by the Actuary and ABB 

Inc.’s allocation decisions were made prior to the 

passage of the Moving Ahead for Progress in the 

21st Century Act (MAP–21), legislation enacted on 

July 6, 2012, that, among other things, changed the 

interest rate that pension plans use to measure their 

liabilities thereby impacting the Plans’ 2012 

funding results. After the passage of MAP–21, the 

amounts allocated to the Plans were not needed to 

increase the AFTAP above 100%. 

value of the Securities at their fourmonth maturity date on September 27, 

2012 was $18,125,000. 

7. On September 14, 2012, based on 

the recommendation of the Pension and 

Risk Management Committee, the PRC 

voted to contribute the Securities to the 

Plans, and the Securities were 

contributed on the same date. Credit 

Suisse notified ABB Inc. that the 

September 14, 2012 closing price for 

Treasury Bills maturing as of September 

27, 2012, as reported in Bloomberg L.P. 

pricing services, was 99.9978333. Based 

on this pricing information, ABB Inc. 

calculated the value of the Securities on 

the date of Contribution (the 

Contribution Date) as $18,124,607 

($18,125,000 maturity value x 

99.9978333 closing price).16

8. Upon their receipt by the Master 

Trust, the Securities, valued at 

$18,124,607, were allocated as follows: 

Plan 

Allocation of 

face value of 

securities 

Allocation of 

FMV of 

securities 

Percentage of 

total 

contribution 

Total plan 

assets 17

Contribution 

as % of plan 

assets 

Cash Balance Plan .............................................................. $14,100,000 14,099,695 77.79 820,244,694 1.72 

Process Analytics Plan ........................................................ 600,000 599,987 3.31 7,660,258 7.83 

UE 625 & 626 Plan .............................................................. 2,200,000 2,199,952 12.14 18,854,815 11.67 

Fisher & Porter Plan ............................................................ 725,000 724,984 4.00 57,762,579 1.26 

Union Cash Balance Plan .................................................... 500,000 499,989 2.76 40,040,132 1.25 

Totals ............................................................................ 18,125,000 18,124,607 100 944,562,478 1.92 

ABB Inc. states that it allocated the face 

value of the Securities among the Plans 

based on preliminary 2012 funding 

valuation projections prepared by the 

Actuary. ABB Inc. states that the 

amounts allocated to the Union Cash 

Balance, the Process Analytics Plan, the 

UE 625 & 626 Plan, and the Fischer & 

Porter Plan were the amounts needed to 

increase each Plan’s projected 1/1/2012 

AFTAP above 100%.18 The Securities 

matured two weeks later, on September 

27, 2012, at $18,125,000. 

9. ABB Inc. represents that the 

Contribution did not produce a material 

change in the AFTAP for any Plan, as 

each Plan’s AFTAP exceeded 100% 

irrespective of the Contribution. ABB 

Inc. states that following the 

Contribution the funding status of the 

Plans increased as follows: 

Plan 

Estimated AFTAP 

without discounted 

securities 

contribution 

AFTAP with 

discounted 

securities 

contribution 

Increase in 

AFTAP due to 

securities 

contribution 

Cash Balance Plan .................................................................................................... 110.44 112.29 1.85 

Process Analytics Plan .............................................................................................. 112.35 113.72 1.37 

UE 625 & 626 Plan .................................................................................................... 111.74 120.39 8.65 

Fisher & Porter Plan .................................................................................................. 109.09 121.70 12.61 

Union Cash Balance Plan ......................................................................................... 112.78 114.16 1.38 

Request for Exemptive Relief 

10. ABB Inc. requests exemptive relief 

for the Contribution, which represents 

an in-kind contribution to the Plans 

from ABB Inc., a party in interest with 

respect to the Plans. In this regard, ABB 

Inc. states that the PRC, which is a 

fiduciary with respect to the Plans, 

caused a sale or exchange between a 

party in interest and the Plans 

prohibited by section 406(a)(1)(A) of the 

Act. Furthermore, ABB Inc. states that 

the Contribution violated sections 

406(b)(1) and (2) of the Act. In this 

regard, ABB Inc. explains that the PRC, 

as a fiduciary with respect to the Plans, 

dealt with the assets of the Plans in its 

own interest or its own account in 

violation of 406(b)(1) of the Act and 

acted in a capacity where its interests 

were adverse to the interests of the 

Plans and the interests of the 

participants and beneficiaries of the 

Plans in violation of 406(b)(2) of the 

Act. 

Statutory Findings 

11. ABB Inc. represents that the 

Contribution was administratively 

feasible because it was a one-time 

transaction that requires no further 

action by the Department. 

12. ABB Inc. represents that the 

Contribution was in the interests of the 

Plans and their participants and 

beneficiaries because the Contribution, 

as allocated amongst the Plans, was in 

excess of the minimum required 

contribution for each of the Plans. In 

this regard, ABB Inc. notes that it was 

not required to make any contributions 

to the Plans for the 2012 Plan Year. 

Furthermore, each of the Plans had 

higher AFTAPs as a result of the 

Contribution. As illustrated in the above 

table, the increases ranged from 1.37% 

for the Process Analytics Plan to 12.61% 

for the Fischer & Porter Plan. ABB Inc. 

emphasizes that, absent the 


tkelley on DSK3SPTVN1PROD with NOTICES
43938 Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 

19For purposes of this proposed exemption, 

references to specific provisions of Title I of the 

Act, unless otherwise specified, refer also to the 

corresponding provisions of the Code. 

20 It is represented that the fiduciaries of the 

Chartis Plan have not made an election, under 

section 1022(i)(2) of the Act, whereby such 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. 

Further, it is represented that jurisdiction under 

Title II of the Act does not apply to the Chartis Plan. 

Accordingly, the Department, herein, is not 

providing any relief from the prohibitions, as set 

forth in Title II of the Act, in connection with the 

acquisition and holding of the Warrants by the 

Chartis Plan. 

Contribution, these increases would not 

have occurred. 

13. ABB Inc. states that the 

Contribution was protective of the Plans 

and of their participants and 

beneficiaries because the Securities are 

cash equivalents with a readily 

ascertainable fair market value, which 

are guaranteed by the U.S. Treasury. 

According to ABB Inc., it determined 

the value of the Securities as of the date 

of the Contribution based on an 

independent, third party source in the 

business of providing financial data, 

and the PRC ensured that the Plans 

received the full fair market value of the 

Securities. Furthermore, ABB Inc. 

determined that the fair market value of 

the Securities was unlikely to fluctuate 

to any significant degree such that the 

Contribution posed little risk of abuse or 

loss that would affect the Plans’ 

participants or beneficiaries. 

Moreover, ABB Inc. states that the 

Securities were purchased from 

unrelated third parties and matured 

within two weeks of the Contribution 

Date. ABB Inc. states further that the 

Plans paid no fees, commissions or costs 

in connection with the Contribution. 

Finally, ABB Inc. represents that, had 

the Plans needed to sell the Securities 

prior to their maturity, ABB Inc. would 

have covered all transaction costs 

associated with such sale. 

Summary 

14. In summary, ABB Inc. represents 

that the Contribution satisfied the 

statutory requirements for an exemption 

under section 408(a) of the Act because: 

(a) The fair market value of the 

Securities was determined by ABB Inc. 

based on the closing price of the 

Securities on the Contribution Date as 

quoted by Bloomberg L.P., an 

independent third party in the business 

of providing financial data; 

(b) The Securities represented less 

than 12% of the assets of any Plan; 

(c) The terms of the Contribution were 

no less favorable to the Plans than those 

negotiated at arm’s length under similar 

circumstances between unrelated 

parties; 

(d) The Plans paid no commissions, 

costs or fees with respect to the 

Contribution; and 

(e) The PRC reviewed the 

methodology used to value the 

Securities and ensured that the Plans 

received the fair market value of the 

Securities. 

Notice to Interested Persons 

Notice of the proposed exemption 

will be provided to all interested 

persons in the manner agreed upon by 

ABB Inc. and the Department within 15 

days of the date of publication in the 

Federal Register. Such notice will 

contain a copy of the notice of proposed 

exemption, 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 to 

request a hearing with respect to the 

pending exemption. Written comments 

and hearing requests are due within 45 

days of the publication of the notice of 

proposed exemption 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. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Jennifer Erin Brown of the Department 

at (202) 693–8352. (This is not a toll-free 

number.) 

American International Group, Inc. 

Incentive Savings Plan (the Savings 

Plan), American General Agents’ & 

Managers’ Thrift Plan (the Thrift Plan), 

and Chartis Insurance Company— 

Puerto Rico Capital Growth Plan (the 

Chartis Plan) (collectively, the Plans) 

Located in New York, NY and Puerto 

Rico 

[Application Nos. D–11767, D–11768, and D– 

11769] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the Act 

and section 4975(c)(2) of the Code, and 

in accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (76 

FR 46637, 66644, October 27, 2011). 

Section I. Transactions 

If the proposed exemption is granted: 

(a) The restrictions of sections 

406(a)(1)(A), 406(a)(1)(E), 406(a)(2), 

406(b)(1), 406(b)(2) and 407(a) 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,19 shall not apply for the 

ten-year period, effective January 19, 

2011 through January 19, 2021, to: 

(1) The acquisition by the Savings 

Plan and the Thrift Plan of certain 

warrant rights (the Warrants) from 

American International Group, Inc. 

(AIG), a party in interest with respect to 

the Savings Plan and the Thrift Plan; 

and 

(2) The holding of the Warrants by the 

Savings Plan and the Thrift Plan. 

(b) The restrictions of sections 

406(a)(1)(A), 406(a)(1)(E), 406(a)(2), 

406(b)(1), 406(b)(2) and 407(a) of the 

Act 20 shall not apply to: 

(1) The acquisition by the Chartis Plan 

of the Warrants from AIG, a party in 

interest with respect to the Chartis Plan; 

and 

(2) The holding of the Warrants by the 

Plans. 

Section II. Conditions 

The relief provided in this proposed 

exemption is conditioned upon 

adherence to the material facts and 

representations set forth in the 

application file, and upon compliance 

with the conditions, as set forth herein. 

(a) All decisions regarding the holding 

and sale of the Warrants have been and 

will be made by the Plans’ participants; 

(b) The Plans’ acquisition of the 

Warrants resulted from an independent 

act of AIG as a corporate entity, and 

without any participation on the part of 

the Plans; 

(c) The acquisition of the Warrants by 

the Plans occurred in connection with a 

recapitalization plan approved by the 

Board of Directors of AIG, in which all 

holders of AIG common stock, including 

the Plans, were treated exactly the same; 

(d) All holders of AIG common stock, 

including the Plans, were issued the 

same proportionate number of Warrants 

based on the number of shares of AIG 

common stock held by such 

shareholder; 

(e) The acquisition of the Warrants by 

the Plans was made in a manner that 

was consistent with provisions of each 

such Plan for the individually-directed 

investment of participant accounts; 

(f) The Plans did not pay any fees or 

commissions in connection with the 

acquisition of the Warrants; 

(g) The Plans did not pay, nor will the 

Plans pay, any fees or commissions in 

connection with the holding of the 

Warrants; 

(h) The Plans did not pay, nor will the 

Plans pay, any brokerage fees or 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 43939 

21Mercer and Banco Popular are together referred 

to herein as the ‘‘Trustees.’’ 

commissions to any broker affiliated 

with AIG, Chartis, or the Trustees in 

connection with the sale of the 

Warrants; and 

(i) AIG will provide annual written 

notices to all participants in the Plans 

holding Warrants to remind them to sell 

their Warrants before such Warrants 

expire on January 19, 2021. 

DATES: Effective Date: This proposed 

exemption, if granted, will be effective 

for the period commencing January 19, 

2011 through January 19, 2021. 

Summary of Facts and 

Represenatations 

1. AIG, a Delaware corporation with 

its headquarters in New York, NY, 

operates in over 90 countries across the 

world, including Puerto Rico and the 

Virgin Islands. As a holding company 

with subsidiaries, AIG engages 

primarily in a broad range of insurance 

and insurance-related activities. Among 

the wholly owned subsidiaries of AIG is 

Chartis Insurance Company (Chartis), 

which is headquartered in San Juan, 

Puerto Rico. 

2. AIG sponsors the Savings Plan and 

the Thrift Plan, which are individuallydirected, defined contribution plans that 

are intended to satisfy the requirements 

of section 401(a) of the Code and section 

404(c) of the Act. As of December 31, 

2011, the Savings Plan had 39,192 

participants and $2,783,237,363 in 

assets, of which $8,177,958.39 were 

invested in AIG common stock, 

representing 0.29% of such Plan’s total 

assets. As of December 31, 2011, the 

Thrift Plan had 2,462 participants and 

$74,443,107 in assets, of which 

$483,035.01 were invested in AIG 

common stock, representing 0.65% of 

the assets of such Plan. The directed 

trustee of the Savings Plan and the 

Thrift Plan is Mercer Trust Company 

(Mercer), a New Hampshire limited 

purpose bank. 

3. The Chartis Plan, which is 

sponsored by Chartis, is an 

individually-directed, defined 

contribution plan that is intended to 

satisfy the requirements of Code section 

401(a), although it has not elected to be 

subject to the qualification requirements 

of the Code and section 404(c) of the 

Act. The Chartis Plan is also intended 

to comply with the requirements of 

sections 1165(a) and (e) of the Puerto 

Rico Internal Revenue Code of 1994, as 

amended. As of December 31, 2011, the 

Chartis Plan had 234 participants and 

held $8,269,051 in total assets, of which 

$13,283.74 were invested in AIG 

common stock, representing 0.16% of 

the assets of such Plan. The directed 

trustee of the Chartis Plan is Banco 

Popular De Puerto Rico 21 (Banco 

Popular), which is organized and exists 

under the laws of the Commonwealth of 

Puerto Rico. 

4. In 2008, the U.S. Government 

provided significant financial assistance 

to AIG. In connection with this 

assistance, AIG issued preferred stock to 

a trust which held such stock for the 

sole benefit of the U.S. Department of 

the Treasury (Treasury). The preferred 

stock entitled Treasury to approximately 

79.8% of the voting power in AIG. 

On September 30, 2010, a blueprint 

was announced for the eventual exit of 

the U.S. Government from its 

investment in AIG. In this regard, on 

December 8, 2010, AIG announced that 

it had entered into a recapitalization 

agreement with Treasury. On January 

14, 2011, the recapitalization plan was 

completed. As part of the plan, the 

preferred stock previously held by 

Treasury in the trust was exchanged for 

approximately 1.655 billion shares of 

AIG common stock. This resulted in 

Treasury holding approximately 92% of 

AIG’s common stock. 

5. In addition, AIG declared a 

‘‘warrant dividend’’ on shares of AIG 

common stock outstanding on January 

13, 2011 (the Record Date). Holders of 

AIG common stock on the Record Date 

received .533933 Warrants for each 

share of common stock. Each Warrant 

entitles the holder to purchase one share 

of AIG common stock at a strike price 

of $45 per share. The Warrants, like AIG 

common stock, are tradable on the New 

York Stock Exchange (NYSE) under the 

ticker symbol ‘‘AIGWS.’’ The Warrants 

expire on January 21, 2021, if not sold 

or exercised. 

The AIG Warrants were distributed at 

the close of business on January 19, 

2011 to AIG common shareholders of 

record, including the Plans, as of the 

Record Date. The participants in the 

Plans were notified by AIG of the 

Warrant distribution through several 

written communications. The Warrants 

were distributed to 12,384 participants 

in the Savings Plan, 902 participants in 

the Thrift Plan, and to 39 participants in 

the Chartis Plan. The Plans did not 

incur any fees or commissions in 

connection with the acquisition of the 

Warrants, nor are the Plans incurring 

any fees or commissions in connection 

with the holding of such Warrants. 

6. Until May 4, 2009, the Plans 

permitted participants to invest in the 

AIG Stock Fund, which held primarily 

AIG common stock. The AIG Stock 

Fund was closed to new investors as of 

May 4, 2009, with existing investors 

able to transfer out at any time. In other 

words, participants of the Plans were no 

longer able to purchase shares of AIG 

common stock as part of their 

investment options. As of the Record 

Date, the AIG Stock Fund held 424,787 

shares of AIG common stock or 0.026% 

of shares of outstanding AIG common 

stock. As a result of such stock holdings, 

the AIG Stock Fund was issued 

approximately 226,808 Warrants on 

January 19, 2011. 

7. Between January 19, 2011 and 

February 13, 2011, the Warrants were 

held on behalf of the Plans in the AIG 

Stock Fund. During this period, a unit 

in the AIG Stock Fund consisted of: (a) 

An interest in AIG common stock held 

by the AIG Stock Fund; (b) an interest 

in the Warrants held by such Fund; and 

(c) an interest in the cash vehicle held 

by such Fund. The AIG Stock Fund 

units were indivisible, therefore, any 

redemption by a participant in the Plans 

of an AIG Stock Fund unit during this 

period resulted in the receipt of cash by 

the participant representing the 

participant’s interest in the Warrants 

and the cash vehicle, in addition to 

either AIG common stock or cash in lieu 

thereof, at the participant’s election. 

8. On February 15, 2011, all the 

Warrants remaining in the AIG Stock 

Fund (222,226.901) were moved into a 

newly-created fund (the AIG Warrant 

Fund). The AIG Warrant Fund, like the 

AIG Stock Fund, is a frozen fund. As of 

March 6, 2013, the AIG Warrant Fund 

held Warrants on behalf of 9,179 

Savings Plan participants, 689 Thrift 

Plan participants, and 25 Chartis Plan 

participants. While participants in the 

Plans may sell the Warrants held on 

their behalf in the AIG Warrant Fund, 

they may not exercise such Warrants, 

unlike other Warrant holders. According 

to AIG, the costs and administrative 

complexities required to allow 

participants to exercise the Warrants 

would be extraordinary. For instance, 

AIG represents that the exercise could 

have violated an amendment in each 

Plan preventing participants from 

investing their future contributions in 

AIG common stock. In addition, AIG 

states that such an exercise could be 

problematic to implement within a 

401(k) account. In this regard, AIG 

explains that it would be required to 

receive cash in an exchange for AIG 

common stock. Because the Plans do not 

offer cash-only holding accounts, if such 

accounts were created, participants 

would need to be counseled and guided, 

as to how to generate sufficient fund 

balances to affect the Warrant exercise. 

Further, AIG explains that participants 

in the Plans would be paying cash to 


tkelley on DSK3SPTVN1PROD with NOTICES
43940 Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 

22The applicant represents that a $0.023 

commission per Warrant traded is paid to State 

Street Global Markets (State Street). State Street is 

the executed broker for both of the Trustees, Mercer 

and Banco Popular. 

their sponsors, which concerned AIG’s 

counsel. 

Finally, AIG notes that a system 

would have to be established with the 

Plans in order for AIG to send shares of 

AIG common stock to the Plans’ 

Trustees. This system, according to AIG 

and Mercer, would have cost ‘‘several 

hundred thousand dollars’’ over the life 

of the Warrants. Thus, in light of the fact 

that only approximately one-third of the 

participants would be affected and the 

cost and difficulty in making such a 

system work, AIG decided that it was 

not an appropriate use of the Plans’ 

assets for participants in the Plans to 

have the ability to exercise the 

Warrants. 

10. To remind participants in the 

Plans to sell their Warrants before the 

ten year holding period which expires 

on January 19, 2021, AIG will provide 

annual written notices to all 

participants in the Plans who hold 

Warrants. Such sales are being 

conducted on the open market in blind 

transactions. In connection with the 

sales of the Warrants, no commissions 

or fees will be paid to brokers who are 

affiliated with AIG, Chartis or the Plans’ 

Trustees.22

11. AIG notes that the Plans’ 

acquisition and holding of the Warrants 

constitute prohibited transactions in 

violation of the Act. In this regard, 

section 406(a)(1)(A) of the Act prohibits 

the sale or exchange of property 

between a plan and a party in interest. 

AIG is a party in interest with respect 

to each of the Savings Plan and Thrift 

Plan as an employer any of whose 

employees are covered by such Plans, as 

described under section 3(14)(C) of the 

Act. AIG is also a party in interest with 

respect to the Chartis Plan as an owner 

of 50% or more of the voting stock of 

Chartis, as described under section 

3(14)(E) of the Act. Therefore, the 

acquisition of the Warrants by the Plans 

resulted in a prohibited sale or an 

exchange of property between the Plans 

and AIG. 

The Warrants are also ‘‘employer 

securities’’ within the meaning of 

section 407(d)(1) of the Act because they 

are securities issued by an employer of 

employees covered by the Plans, or by 

an affiliate of such employer. Section 

407(a)(1)(A) of the Act prohibits a plan 

from acquiring or holding ‘‘any 

employer security’’ which is not a 

‘‘qualifying employer security.’’ The 

Warrants are not qualifying employer 

securities, as defined under section 

407(d)(5) of the Act, because they are 

not (a) stock, (b) marketable obligations, 

or (c) interests in a publicly traded 

partnership. Therefore, the Plans’ 

acquisition and holding of the Warrants 

violate section 407(a)(1)(A) of the Act. 

Further, section 406(a)(2) of the Act 

prohibits a fiduciary with investment 

discretion from permitting a plan to 

hold employer securities in violation of 

section 407(a) of the Act. The Trustees, 

which are fiduciaries, accepted the 

Warrants on behalf of the Plans in 

violation of section 406(a)(2) of the Act. 

Section 406(b)(1) of the Act prohibits 

a plan fiduciary from dealing with the 

assets of a plan in his own interest or 

own account. Section 406(b)(2) of the 

Act prohibits a fiduciary from acting in 

any transaction involving the plan on 

behalf of a party whose interests are 

adverse to interests of the plan or the 

interests of the plan’s participants or 

beneficiaries. Accordingly, the Trustees’ 

decision to have the Plans acquire and 

hold the Warrants violated section 

406(b)(1) and (b)(2) of the Act. 

12. Accordingly, AIG is requesting a 

retroactive individual exemption from 

the prohibited transaction provisions 

described above for the acquisition and 

holding of the Warrants by the Plans. 

AIG represents that such an exemption 

would be administratively feasible 

because participants in the Plans would 

be able to dispose of their Warrants at 

their discretion and as such, no 

oversight would be required by the 

Department. Additionally, AIG explains 

that the exemption would be protective 

of the participants in the Plans because 

the issuance of the Warrants was the 

result of an independent act of AIG 

acting as a corporate entity, without any 

participation on the part of the Plans. 

Moreover, the issuance of the Warrants 

was part of a recapitalization that was 

negotiated by AIG and Treasury. 

Finally, AIG represents that the 

proposed exemption would be in the 

interest of the Plans because it permits 

the acquisition and holding of the 

Warrants. 

13. In summary, AIG represents that 

the transactions satisfied or will satisfy 

the statutory criteria for an exemption 

under section 408(a) of the Act, because: 

(a) All decisions regarding the holding 

and sale of the Warrants have been and 

will be made by the Plans’ participants; 

(b) the Plan’s acquisition of the 

Warrants resulted from an independent 

act of AIG as a corporate entity, and 

without any participation of the Plans; 

(c) the acquisition of the Warrants by 

the Plans occurred in connection with a 

recapitalization plan approved by the 

Board of Directors of AIG, in which all 

holders of AIG common stock, including 

the Plans, were treated exactly the same; 

(d) all holders of AIG common stock, 

including the Plans, were issued the 

same proportionate number of Warrants 

based on the number of shares of AIG 

common stock held by such 

shareholders; (e) the acquisition of the 

Warrants by the Plans was made in a 

manner that was consistent with the 

provisions of each such Plan for 

individually-directed investment of 

participant accounts; (f) the Plans did 

not pay any fees or commissions in 

connection with the acquisition of the 

Warrants; (g) the Plans did not pay, nor 

will the Plans pay, any fees or 

commissions in connection with the 

holding of the Warrants; (h) the Plans 

did not pay, nor will the Plans pay, any 

brokerage fees or commissions to any 

broker affiliated with AIG, Chartis or the 

Trustees in connection with the sale of 

the Warrants; and (i) AIG will provide 

annual written notices to all 

participants in the Plans holding 

Warrants to remind them to sell their 

Warrants before such Warrants expire 

on January 19, 2021. 

Notice to Interested Persons 

The persons who may be interested in 

the publication in the Federal Register 

of the Notice of Proposed Exemption 

(the Notice) include all individuals who 

are participants in the Plans who 

received the Warrants. It is represented 

that all such interested persons will be 

notified of the publication of the Notice 

by first class mail, to each such 

interested person’s last known address 

within fifteen (15) days of publication of 

the Notice in the Federal Register. Such 

mailing will contain a copy of the 

Notice, as it appears in the Federal 

Register on the date of publication, plus 

a copy of the Supplemental Statement, 

as required, pursuant to 29 CFR 

2570.43(b)(2), which will advise all 

interested persons of their right to 

comment and to request a hearing. All 

written comments and/or requests for a 

hearing must be received by the 

Department from interested persons 

within 45 days of the publication of this 

proposed exemption 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. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Asrar Ahmed of the Department at (202) 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 78, No. 140 / Monday, July 22, 2013 / Notices 43941 

693–8557. (This is not a toll-free 

number.) 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

4975(c)(2) of the Code does not relieve 

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions of the Act and/or the Code, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of the Act, which, among other things, 

require a fiduciary to discharge his 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

section 404(a)(1)(b) of the Act; nor does 

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) Before an exemption may be 

granted under section 408(a) of the Act 

and/or section 4975(c)(2) of the Code, 

the Department must find that the 

exemption is administratively feasible, 

in the interests of the plan and of its 

participants and beneficiaries, and 

protective of the rights of participants 

and beneficiaries of the plan; 

(3) The proposed exemptions, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction; and 

(4) The proposed exemptions, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in each 

application are true and complete, and 

that each application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC, this 12th day of 

July 2013. 

Lyssa E. Hall, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2013–17498 Filed 7–19–13; 8:45 am] 

BILLING CODE 4510–29–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

Sunshine Act; Notice of Agency 

Meeting 

TIME AND DATE: 10:00 a.m., Thursday, 

July 25, 2013 

PLACE: Board Room, 7th Floor, Room 

7047, 1775 Duke Street (All visitors 

must use Diagonal Road Entrance), 

Alexandria, VA 22314–3428 

STATUS: Open 

MATTERS TO BE CONSIDERED: 

1. Interpretive Ruling and Policy 

Statement, Minority Credit Union 

Preservation Program. 

2. Board Briefing—Interagency 

Proposal, Joint Diversity Standards for 

Regulated Entities. 

3. NCUA’s Rules and Regulations, 

Electronic Filing of Financial Reports. 

4. Request from San Francisco FCU to 

Expand its Community Charter 

Boundaries. 

5. Quarterly Insurance Fund Report. 

6. 2013 Temporary Corporate Credit 

Union Stabilization Fund Assessment. 

7. Reprogramming of NCUA’s 

Operating Budget for 2013. 

FOR FURTHER INFORMATION CONTACT: 

Mary Rupp, Secretary of the Board, 

Telephone: 703–518–6304 

Mary Rupp, 

Secretary of the Board. 

[FR Doc. 2013–17651 Filed 7–18–13; 4:15 pm] 

BILLING CODE 7535–01–P 

NATIONAL SCIENCE FOUNDATION 

Agency Information Collection 

Activities: Comment Request 

AGENCY: National Science Foundation. 

ACTION: Submission for OMB Review; 

Comment Request. 

SUMMARY: The National Science 

Foundation (NSF) has submitted the 

following information collection 

requirement to OMB for review and 

clearance under the Paperwork 

Reduction Act of 1995, Public Law 104– 

13. This is the second notice for public 

comment; the first was published in the 

Federal Register at 78 FR 23598, and no 

comments were received. NSF is 

forwarding the proposed renewal 

submission to the Office of Management 

and Budget (OMB) for clearance 

simultaneously with the publication of 

this second notice. The full submission 

may be found at: http:// 

www.reginfo.gov/public/do/PRAMain. 

Comments regarding (a) whether the 

collection of information is necessary 

for the proper performance of the 

functions f the agency, including 

whether the information will have 

practical utility; (b) the accuracy of the 

agency’s estimate of burden including 

the validity of the methodology and 

assumptions used; (c) ways to enhance 

the quality, utility and clarity of the 

information to be collected; (d) ways to 

minimize the burden of the collection of 

information on those who are to 

respond, including through the use of 

appropriate automated, electronic, 

mechanical, or other technological 

collection techniques or other forms of 

information technology should be 

addressed to: Office of Information and 

Regulatory Affairs of OMB, Attention: 

Desk Officer for National Science 

Foundation, 725—17th Street NW. 

Room 10235, Washington, DC 20503, 

and to Suzanne H. Plimpton, Reports 

Clearance Officer, National Science 

Foundation, 4201 Wilson Boulevard, 

Suite 1265, Arlington, Virginia 22230 or 

send email to splimpto@nsf.gov. 

Comments regarding these information 

collections are best assured of having 

their full effect if received within 30 

days of this notification. Copies of the 

submission(s) may be obtained by 

calling 703–292–7556. 

NSF may not conduct or sponsor a 

collection of information unless the 

collection of information displays a 

currently valid OMB control number 

and the agency informs potential 

persons who are to respond to the 

collection of information that such 

persons are not required to respond to 

the collection of information unless it 

displays a currently valid OMB control 

number. 

SUPPLEMENTARY INFORMATION: Title of 

Collection: International Cover Page 

Addendum 

OMB Control No.: 3145–0205. 

Abstract: The Office of International 

Science and Engineering within the 

Office of the NSF Director will use the 

International Cover Page Addendum. 

Principal Investigators submitting 

proposals to this Office will be asked to 

complete an electronic version of the 

International Cover Page Addendum. 

The Addendum requests foreign 

counterpart investigator/host 

information and participant 

demographics not requested elsewhere 

in NSF proposal documents. 

The information gathered with the 

International Cover Page Addendum 

serves four purposes. The first is to 

enable proposal assignment to the 

program officer responsible for activity 

with the primary countries involved. No 

current component of a standard NSF 

proposal requests this information. (The 

international cooperative activities box 


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