ALN LOOP

FRANcIs .1 GALLAGHER

ACeEPT GOSUNE

MALCOLM RAMEY

JOHN I.4ACIETT JR

THOMAS WEBB

GREGORY ALEXANDER

CARL BRUGGEMAN

ROBERT CLAYTON JR

MARC GERTNER

GEORGE PICKNELL

DONALD MEWI4ORT JR

EDWIN EMEREON

JAMES TUSCHMAN

JAMES WHITE JR

BARTON WAGENMAN

ROt.F SCHEIDEL

JOHN HAYWARD

WIWAM GOSLINE

NORMAN HARTSEL

WILLIAM HEYW000 Il

FRANCiS MCDANIEL JR

THOMAS PLETZ

JOHN BURSON

THOMAS WEBB JR

ROBERT AI%IACH

DAVID WICKLUNO

GARY DIESNG

JOHN MaAY

Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

450 5th Street N.W

Washington D.C 20549

Re Request for NoAction Letter Relating to The Northwestern

Ohio Building and Construction Trades Foundation

Section 3a2 of the Securities Act of 1933

Sections 3a4 and 3a5 of the Securities Exchange

Act of 1934

Section 12h and Rule 12h1a of the Securities

Exchange Act of 1934

Sections 3c5 and 3c11 of the Investment Company

Act of 1940

Section 202a11 of the Investment Advisers Act of 1940

Our File No N1575/16191

Ladies and Gentlemen

The Northwestern Ohio Building and Construction Trades Council

the "puncil is confederation of local building and__construction

tLades unions whic reprisent buiIg anE lotion tradesmen

working in northwestern Ohio The local unions are affiliates of

members of the AFLCIO Building Trades Department The Northwestern

Ohio Council of Construction Employers the Emplo is

confederation of employers engaged in the buil ng and construction

industry in the same geographic area

The Council and the Employers on behalf of the local unions

and employers associations within their respective groups desire to

establish construction industry investment program foee4toL.

the pyee pension benefi ns which they or their

cosponsor collec Plans Our firm has been retained as

//

SHUMAKER LOOP KjMDRICK

NORTH COURTHOUSE SQUARE 1000 JACXS6 TOLEDO OHIO 43624

OWIO WATERMAN

419 24142Ot VIVIAN FOLI

JOSEPH RIDEOUT

GEORGE LCHAPMAN

DENNIS WITHEREU

KEVIN GRAHAM

.\ JOHN BARRON

_.jCKG.FYNES

\\J TI4OTHY McCARTHY

SECURITIES AtL t--- -RINEE BIPNBALJKI

AM BONINI

October 2-7 83 TN ANN LA.NZINGER

KR.HIGH

rsr jQQ HAEL SANOERSON

0I% LJJ N.SALES

MS HAEI McGOWAN

ELLEN PISANELLJ

03 SQUILLANTE

OFFI.E OF APL1 GORYtLOOGE

REOBTS SE1IVICES

ASL.W000MAN

GREGORY .1 SrSIBLEY

OF COUNSEL

CHARLES SCHARFY

SWIFT CORWIN

JOHN STRAUB

S.­
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page

special counsel by the Council and the Employers to assist in

establishing the program

In brief foundation will be established pursuant to

written agreement amElans wo want to participate in the

foundation draft of the foundations organizational agreement is

attached as Exhibit to this letter The foundation will be

administered by gsxd pf Tzustees The trustees will be directed to

establish an investment plan to allow the Plans to invest in

construction period mortgage loans The foundation will contact lending

institutions in northwestern Ohio to learn of the availability of

participations in mortgage loans and pass this information along to its

member Plans Each individual Plan will determine whether to

participate in the proposed loan and the extent of its participation

This decision will be communicated to the foundation which will

tabulate the responses and inform the lending inst to the

ag ate amount ich the Plans to nv Aseparate trust will

be esta sed for eac endjig transaction The Plans participating in

mortgage will establish this trust with the foundation acting as

trustee draft of the trust agreement is attached as Exhibit to

this letter The Plans will transfer th yes

which will forward un to the lending institution The foundation

merely as

conduit through which the Plans and lending institutions can communicate

to indicate mutual interest in participating in mortgage loans

We respectfully request that you advise us that the Staff of

the Securities and Exchange Commission the Commission will not

recommend that the Commission take any enforcement action if the program

is organized and operated in the mariner set forth in this letter

without registering the fudaUon the

individualrusts as investment companies under the

Act T194O the Investm

Company Ct re ance upon the exclusions fro

t1efinirion of an -invest company set fojn

Sections 3c5 anIjjIJTflTiYof the Inystmeitnt

Company Act

without registering the interests in the

trusts as securities under Section 21 of the

Securities Act of 1933 the 1933 Act in reliance

upon the exemption from the registration provisions

set forth in Section 3a2 of the 1933 Act

without registering the interests in the

trusts as securities under Section 12g of the
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page

Securities Exchange Act of 1934 the 1934 Act in

the event that the statutory minimums specified in

that section are exceeded in reliance upon the

exemption from the registration provisions set forth

in Rule 12h1a adopted under that act

without registering either the foundation

or the trusts as brokerdealers under the 1934 Act

in reliance upon an exemption from the definitions

of broker and dealer set forth in Sections 3a4

and 3a5 of the 1934 Act and

without registering the foundation or the

trusts as investment advisers under the Investment

Advisers Act in reliance upon an exemption from the

definition of investment adviser set forth in

Section 202a11 of the Investment Advisers Act

DESCRIPTION OF PROPOSED OPERATIONS

As noted above the Council and the Employers desire to

develop an investment vehicle for the employee pension benefit plans

maintained by their respective members The Plans are all qualified

under Section 401 of the Internal Revenue Code of 1954 as amended the

Code and comply with the requirements of the Labor Management

Relations Act of 1947 as amended 29 U.S.C.A S141 et seq 1973 and

Supp 1983 the LMRA and the Employee Retirement Income Security

Act of 1974 29 U.S.C.A UOO1 et seq 1975 and Supp 1983 ERISA

Under the program the Council and the Employers will

establish foundation to be known as The Northwestern Ohio Building and

Construction Trades Foundation the Foundation The Foundation will

be notforprofit unincorporated association organized under and

governed by the laws of Ohio and will be qualified under Section 401 of

the Code The Foundation will provide that any employee benefit plan

qualified under Section 401 of the Code and cosponsored by the Council

or any local union affiliated with it or the Employers or any employer

affiliated with it may elect to participate in the Foundation if

collective investment of the Plans funds is not prohibited by the

instrument judgment decree or order creating the Plan The

Foundation will be administered by Board of Trustees the Trustees

Every Plan participating in the Foundation shall be entitled to two

Trustees on the Foundations Board one appointed by the union

cosponsor of the Plan and the other by the employer cosponsor of the

Plan
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page

The Foundation will allow the Plans to focus portion of

their funds on investments that would benefit both their members and the

local community Rather than investing in anonymous corporations or

other more traditional investment media the Plans hope to encourage new

construction within their jurisdictions and create jobs for their

members By creating an umbrella organization such as the Foundation

the Plans can contribute to the financing of larger number of

projects and involve themselves in more extensive projects The Plans

can also achieve the expertise and the economies of scale Inherent in

larger investments Additionally the Foundation viii allow the Plans

to minimize their investment risk by providing diversification among

types and locations of available investnents that they could not

individually obtain

The Foundation will approach every bank savings and loan

association and insurance company in the northwestern Ohio area and ask

that they allow the Foundations members the opportunity to participate

in all construction period mortgage loans made by them All such

participations shall be made in accordance with documents prepared by

the Foundation unless the participating Plans agree to use the

paperwork of the lending institution

Upon receiving information from lending institutions regarding

an appropriate loan the Foundation shall pass on this information to

the individual Plans Each individual Plan through its trustees or

other investment manager shall then determine if it desires to

participate in the specific loan opportunity and ifso the amount of

its participation The Plans would relay their decisions to the

Foundation which would in turn inform the lending institution of

re ate amount of participation desired The par atm Plans

reement with the Foundation as trustee and

imesnt to Foundation The oun at on will collect the

investments of the Plans aid immediately forward to the lending

institution each investment received The lending institution will hold

all funds contributed to it in certain specified investments until it

receives all funds and the loan transaction is closed

Income of the Trust would be paid to the Foundation as

trustee and would be immediately distributed to the Plans participating

in that trust The Foundation will thus not hold Plan funds for any

length of time but merely serve as conduit for payment and

distribution thereby greatly simplifying the recordkeeping and

accounting obligations of the lending institutions The Foundation will

not have discretion over the investment management or disposition of

Trust assets other than as related to the Foundations reserves

described below atd will render no investment advice to the Plans
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Conission

October 27 1983

Page

The Foundation will incur limited amount of general

administrative expenses in the nature of postage photocopying and

other operational expenses as well as legal and accounting expenses

These expenses will be attributable to or allocated between the

individual Trusts as determined by vote of the Foundations Board of

Trustees The Foundations expenses will be reimbursed from reserve

established by the Foundation from fees collected from the mortgage

borrower through the lending institution at the time the Trusts acquire

their respective participation interests These fees will be in the

amount of expenses as estimated by the Board Any excess reserves will

be distributed to the Plans and any additional expenses shall be

reimbursed from the assets of the Trust or Trusts responsible for the

expenses all as determined by the Trustees The Foundation reserves

would be deposited with one or more banks or savings and loan

institutions maintaining an office in Lucas County Ohio and invested

by the Foundation as specified in the individual trust agreements

The loan transactions proposed to be entered into through the

Foundation may fund projeØts which will be built by employers whose

employees are covered by the Plans These investments would be

prohibited by the terms of ERISA absent an exemption from Section 406 of

that act class exemption has been adopted by the Department of Labor

the Department and the Internal Revenue Service the Service for

transactions similar in nature to those described here Under

Prohibited Transaction Exemption 761B PTE 761B loans which

observe the following conditions may be made by an employee benefit plan

to an employer who has employees covered by the plan only

construction period loans may be made and commitment for permanent

financing must have been made by someone other than the plan before the

loan can be made the decision to make the loan must be made by an

independent bank or insurance company which meets the requirements of

Section 338 of ERISA or by savings and loan association subject to

regulation by the Federal Home Loan Bank Board pursuant to its sole

discretionary authority or control regarding management of plan assets

the bank insurance company or savings and loan association must

commonly make such loans on similar terms and conditions from its own

funds and the loan must satisfy their qualifications established for

the review of such loans innnediately after making the loan the

aggregate amount of investments including loans of an individual plan

in any one employer participating in the plan cannot exceed ten percent

of the fair market value of the plans assets and the aggregate amount

of investments of the plan in loans to all its participating employers

cannot exceed thirtyfive percent of the plans fair market value and

certain records of the plan must be retained and made available to

specified individuals including plan participants and beneficiaries

for six years from the date of the loan
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page

The program as herein described does not fall within

PTE 761B because the trustees of the Plans which may not include

bank insurance company or savings and loan association will make the

investment decisions on behalf of the Plans The Foundation has filed

an application with the Department for an administrative exemption under

ERISA Section 408a based on the criteria of PTE 761B For

purposes of its response to this letter the Staff may assume that such

ruling will be received

STATUTORY PROVISIONS AND ANALYSIS

Based upon the facts set forth above it is our opinion that

the actions of the proposed Foundation and the purchase of interests in

the individual Trusts by the Plans may be accomplished without

registration of the Foundation or the Trusts as investment companies

under the Investment Company Act registration of interests in the

Trusts as securities under the 1933 Act registration of interests

in the Trusts as securities under the 1934 Act registration of the

Foundation or the Trusts as brokerdealers under the 1934 Act and

registration of the Foundation or the Trusts as investment advisers

under the Investment Advisers Act

Investment Company Act of 1940

The purchase of participations in construction period mortgage

loans may constitute the acquisition of security Even if the

participations are viewed as securities the Foundation does not fall

within the definition of investment company at Section 3a1 of the

Investment Company Act as it will not engage in the business of

investing in securities but will merely acquire such securities on

behalf of each Trust in its capacity as trustee and passively hold them

on behalf of the Trusts It could be argued however that each Trust

will engage in the business of owning holding securities

having value exceeding 40 per centum of the value of such

issuers total assets Investment Company Act Section 3a3

Section 3c provides various exemptions from the definition

of investment company In particular companies meeting the following

criteria are not within the definition of investment company

Aiiy person who is not engaged in the

business of issuing redeemable securities

faceamount certificates of the installment type or

periodic payment plan certificates and who is

primarily engaged in one or more of the following

businesses purchasing or otherwise
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Coimnission

October 27 1983

Page

acquiring mortgages and other liens on and interests

in real estate

11 Any employees stock bonus pension or

profitsharing trust which meets the requirements

for qualification under Section 401 of the Internal

Revenue Code of 1954

Section 3c5C Tb1.arivill hold equity interests

jn the Trusts which will not be redeems wa

or liquidation Trust Interests in the Trusts will not be made

available to the publE but only to those PlaiTich

partIcipate in the Trust through their involvement with the Foundat1oj

The Trusts will be acqu.rine interests inreai tate as

they will in loans- secured ya mortgage upon real

property See Home Say ngs an oan Association 1981 Fed Sec Rep

CCH 76704 avail Oct 16 1980 The actions of the Trusts will

thus fall within the plain language of Section 3c5C

Section 3c11 The employee benefit plans underlying

the Trusts and the Foundation are excluded from the definition of an

investment company by the first clause of Section 3c11 of the

Investment Company Act

The individual Trusts themselves can be viewed as single non

collective trusts consisting of the assets of and established at1 the

instance of benefit plans maintained by related companies As

explained in Communications Workers of America supra trust which is

established and controlled by an employer or employers and/or by union

representing its or their employees need not be subject to registration

Related companies refers generally to parent corporation

and group of subsidiary corporations BankTrusteed Pension and

ProfitSharing Plans 197374 Fed Sec Rep CCH 1179768 avail

Apr 18 1974 or employers whose employees participate in trust

sponsored by the union of the employees Communications Workers of

America 1980 Fed Sec Rep CCH 76321 avail Jan 27 1980

See Scripps available January 1983 Although we are not aware

of any instance where trust of trusts has qualified as

noncollective trust the Staff has stated that such situation is

possible See Communications Workers of America supra The Staff has

also indicated its willingness to consider the applicability of the

first clause of Section 3c11 to different groups of companies on

casebycase basis BankTrusteed Pension and ProfitSharing Plans

supra
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page

under the Investment Company Act since because of the direct interest

of the sponsors in the welfare of their members/employees imposing the

protections of the Investment Company Act is unnecessary See also

Part IVB1d of Commission Release No 336188 Fed Sec Rep

CCII 1051 Feb 1980 In the present situation several unions

will join together with group of employers to establish the Trusts

This can only enhance the protections to be gained from having plan

sponsors who are interested in the beneficiaries welfare

The Plans are related in the sense that they have voluntarily

banded together to pursue coon investment goal to the benefit of

their members and employees The sponsoring employers and unions can

also be seen to be related by their geographic location and the fact

that they all work in some aspect of the construction industry The

Foundation as trustee of the Trusts will be qualified under Section 401

of the Code will have no investment discretion and will not be able to

sell investment services to other benefit plans The Plans will

maintain responsibility for each Trusts performance through their power

to terminate their participation in the Trust

We are therefore of the opinion that assuming the Trusts fall

within Section 3a of the Investment Company Act the Trusts will be

exempt from registration as an investment company by the provisions of

either Section 3c5 or Section 3c11 as explained above

Securities Act of 1933

Interests in the Trusts to be held by the Plans could be

deemed to be securities as defined in Section 21 of the 1933 Act

Section 3a2 exempts the following from the registration provisions

of that act

any interest or participation in single

trust fund which interest or participa

tion is issued in connection with stock bonus

pension or profitsharing plan which meets the

requirements for qualification under Section 401 of

the Internal Revenue Code of 1954 other than

any plan the contributions under

which are held in single trust fund maintained by

bank for single employer and under which

an amount in excess of the employers contribution

is allocated to the purchase of securities

issued by the employer or by any company directly or

indirectly controlling controlled by or under

coion control with the employer iiwhich covers

employees some or all of whom are employees within
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page

the meaning of Section 401c1 of such Code or

iiiwhich is plan funded by an annuity contract

described in Section 403b of such Code

The Staff stated in Communications Workers of America supra

that the first clause of Section 3c11 of the Investment Company Act

and the words single trustfund in--Section 3a2 of the 1933

Act describe the same type of trust As indicated above the Trusts

will fall within the first clause of Section 3c11 of the Investment

Company Act The Plans underlying eachirust will_acquire interests or

participations in the Trust which interests or participations will be

issued in connection witht Section 401 employee benefit plan

No interest in the Trust is expected to be issued in

connection with or held by any plan which covers employees some or all

of which are employees within the meaning of Section 401c1 of the

Code or any plan funded by an annuity contract described in

Section 403b of the Code None of the Trust funds will be used for

direct investment by members of the public and none of the funds is

presently expected 2to

include assets of any Keogh plans or Individual

Retirement Accounts To the extent that single trust fund is created

for single employer it will not be maintained by bank but by the

Foundation and in any event the Foundation will not cause that trust

fund to invest an amount in excess of the employers contribution for

the purchase of securities issued by the employer or by any company

directly or indirectly controlling controlled by or under common

control with the employer

It is thus our opinion that assuming the interests of the

Plans in the Trusts are securities under Section 21 of the 1933 Act

the interests will be exempted from the registration requirements of

that act by the provisions of Section 3a2 as explained above

If however at some point in the future the Trust -elects to

commingle the assets of Keogh plans with the Trust assets interests or

participations offered or sold to Keogh plans or any other plans not

covered by the exemption provided by Section 3a2 of the 1933 Act

will be registered pursuant to the 1933 Act unless an exemption from

such registration is then available This approach is consistent with

that noted in Part IIB2 of Commission Release No 336281 Fed

Sec Rep CCII 1052 Jan 15 1981
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page 10

Securities Exchange Act of 1934 Registration of Securities

Section 12g of the 1934 Act requires issuers with assets

exceeding $1000000 and class of equity security other than an

exempted security held of record by 500 or more persons and who meet

the other conditions specified therein to register the class of

security with the Commission

Rule 12h1a formerly Rule 12h2a promulgated under

Section 12h of the 1934 Act exempts from the requirements of

Section 12g

Any interest or participation in an employee stock

bonus stock purchase profitsharing pension

retirement incentive thrift savings or similar

plan which is not transferable by the holder except

in the event of death or mental incompetency or any

security issued to fund such plans

Assuming that Section 12g could apply to the Trusts the

Trusts are excluded from the provisions of Section 12g by

Rule 12h1a as the language of Rule 12h1a is equivalent to that

contained in Section 3a2 of the 1933 Act exempting interests in

single trust fund issued In connection with stock bonus pension or

profitsharing plan qualified under Section 401 of the Code The Trusts

can be seen as pension or retirement plans maintained by group of

related companies and interests in the Trusts issued to the Plans will

not be transferable by the Plans

Thus we are of the opinion that interests or participations

in the Trusts should not be required to be registered under the

provisions of Section 12g1 of the 1934 Act

Securities Exchange Act of 1934 Registration as BrokerDealer

Section 3a4 of the 1934 Act provides The term broker

means any person engaged in the business of effecting transactions in

securities for the account of others but does not include bank

Section 3a5 of the 1934 Act provides

The term dealer means any person engaged in the

business of buying and selling securities for his

own account through broker or otherwise but does

not include bank or any person insofar as be buys

or sells securities for his own account either
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page 11

individually or in some fiduciary capacity but not

as part of regular business

Section 15a1 of the 1934 Act provides in part

It shall be unlawful for any broker or dealer

to make use of the mails or any means or

instrumentality of interstate commerce to effect any

transactions in or to induce or attempt to induce

the purchase or sale of any security other than an

exempted security or commercial paper bankers

acceptances or commercial bills unless such broker

or dealer is registered in accordance with

subsection of this section

It might be argued that either or both the Foundation and the

individual Trusts would have to register as brokers or dealers The

individual Trusts however will not be engaging in the business of

effecting transactions in securities either for their own account or on

behalf of their participating Plans As indicated above each Trust

will enter into only single transaction the purchase of

participation in mortgage loan and will dissolve upon the completion

of that transaction Funds held as reserves by the Trusts may be

invested by the Foundation as trustee in exempt securities i.e

couercial paper bankers acceptances commercial bills obligations

issued or guaranteed by the United States and notes not having

maturity exceeding nine months To the extent that Trust would invest

in nonexempt securities these investments would be made only through

brokerdealer registered under the 1934 Act The Trusts will hold any

securities acquired for investment and will not purchase with the

intent to distribute these securities

We are also of the opinion that the Foundation need not

register as broker or dealer The Foundation will not be acquiring

securities on its own behalf As it will be acting merely as conduit

to facilitate the collective purchase of participations by the Plans it

will not actually effect transactions for the accounts of others See

Digital Equipment Corp 1979 Fed Sec Rep CCH 81931 avail

Oct 1978 The Foundation will hold no funds other than reserves

for its expenses and have only minimal investment responsibility It

will merely act in an administrative capacity to collect the

contributions of the Plans and deliver the collected contributions to

the institution selling the mortgage participation interests to the

Trusts The Foundation will act only on the Plans behalf and will not

solicit additional customers or otherwise seek to act on behalf of

anyone other than the Plans The Foundation will have no significant
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page 12

assets and will not sponsor analyze or recommend any loan

participation proposals The Foundation through the members of its

Board of Trustees is already subject to coon law and contractual

fiduciary duties to the Plans and to the requirements of ERISA and the

LMRA Finally the Foundation will not undertake any sales or

promotional efforts and will receive no compensation from the Plans for

any actions taken by it on behalf of the Trusts but would receive only

reimbursement for expenses incurred in performing its ministerial

functions

When all of these factors are taken together it becomes

evident that neither the Trusts nor the Foundation need to be registered

as brokerdealer Requiring registration would serve merely to

increase the regulatory burden and expense upon the Foundation and its

member Plans while duplicating the regulating effect of bodies already

charged with oversight responsibilities including the Plans themselves

Investment Advisers Act of 1940

Section 202a11 of the Investment Advisers Act defines an

investment adviser as

any person who for compensation engages in the

business of advising others either directly or

through publications or writings as to the value of

securities or as to the advisability of investing

in purchasing or selling securities or who for

compensation and as part of regular business

issues or promulgates analysis or reports concerning

securities

In our opinion neither the Trusts nor the Foundation will

fall within the definition of investment adviser Assuming that the

Plans will be purchasing securities as defined in Section 202a18

of the Investment Advisers Act through the Trusts It could be argued

that the Foundation will be in the business of advising others namely

the Plans as to the advisability of investing in purchasing or

selling securities close analysis of the Foundations

responsibilities however makes it clear that the Plans have sole

responsibility for making investments and that the Foundation provides

no advisory services to the Plans The Foundation merely transmits

information from the lenders to the Plans and receives instructions

from the Plans concerning the amount the Plans want to invest The

Foundation thus has no part in the investment decisions of the Plans

The Trusts are merely the vehicles through which

participations are purchased and have no separate existence or function
Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

October 27 1983

Page 13

apart from holding their particular participations The Trusts will

therefore play no role in the investment decisions of the Plans

REQUESTED NOACTION POSITION

Based upon the foregoing facts statutes and releases the

prior noaction positions taken by the Coission Staff and our

analysis of the policy considerations and statutes involved we

respectfully request that the Staff advise us that it will not recommend

to the Commission that any action be taken under the 1933 Act or 1934

Act regarding the proposed operations of the Foundation and the Trusts

as summarized in this letter

We ask that you forward an enclosed copy of this letter to the

Office of Chief Counsel for the Division of Investment Management for

confirmation that the Foundation and the Trusts need not be registered

as an investment company under the Investment Company Act or as an

investment adviser under the Investment Advisers Act as explained

above

Please contact the undersigned if you have any questions

Very truly yours

By

GLC/sjs

Attachments

Enclosures

cc Marc Gertner Esq

SHUMAKER LOOP KENDRICK
SHUMAKER LOOP KENDRCK

NORTH COURTHOUOE SQUARE i1Cj JACXSON T0LEO OHIO 43C24

ALL LGDP DAvD .TEWAN -flCI3 Gi __ 419 241-4201 VVIAN OK GJ_ __ J3S ZUT MALCO.M PA.i GEORGE I. C-.APMAN O-I AC.ET /. Al DNNS TEELL TMOH4AS WESB KEV rI

CARL

GREGBCEMA ALJR .Y-N BA JACK FYES

ROBERT j.rrO 1IMOTHY M.CARfl-fY

W.APC I3 RENEE B3AcM GEOCEA.P1CKNELL

DO.A.0 MY-iQ1 JP LYMAN SlTZER

EOWIH E.1ESON ALETA ONIHI W4ZMuSC-.AN November 30 1983 JUDANZP.JGER

BARTC iiACN4AN MICHAEL SANDERSCN

ROLF SKDEI GARY SALES OHH i.i.AfNPD MCHAEL McGOWAN

1LLIA I- GOSiNF MARY EL.LEN PISMNELL Re The orthwest Ohio iuilding and DAVDG.S0JILLANTE

WILLAM 4EW.000 GREGO2 LODGE

FrW.ICIS McANEL jn Construction Trades ouncation JANET E.CATIJN

.R

Our File No N1575/16191

GREGORY

PCMSHIBLEY

R0EPT t.1 AP-4 tiAVID wcw OF COuNSEL

GAIY P. CH.RLE SCKAPFY JN MacKAl WiT CN JOl-iNC SRAi3

Ms KarEn Burgess

Division of M.rket Regulation

Securities and Exchange CnmnLision

450 5th Strt

Uashirgtcn D.C 20549

Dear Ms uress

BFtsed ou our conversations concerning our noaction request on behalf of

the cboveaptiond Foundation the Foundation we hereby submit revised

request than the Staff of the SecurIties and Exchange Cotizission the Ccis

sion dcvie us that it will not recoriend that the Commicion take any enforce

ment action concerning tha actions of the Foundation without registering the

Foundation as brokerdealer under the Securities Echane Act of 1934 the 1934

Act

This letter will suppier-ient the factual rpreser.t-ations contained ir our

letter of Octcber 27 1983 addressed to the Office of Chia Counsel Division of

Corporation Finance

In particular we repesent that the employee pesinn benefit plans the

Plans maintained by the participants ifl the Foundation range in size from

$2000000 to $30000000 in total assets with the combined assets of the Plans

exceeding $811000000 The mortgage investments to be entered into by each

transac.tior tr1t established by the Foundation will amount to between $2000000

and $5000000

The Foundation has also determined to reduce its involvement in each

trausiction trust whiic still providing the lending imtitutions with an adinis

tratively convenient program orignaily contplated each participatng Piar

was to fc7ard funds to the ord of the Foundation which would take pnssessicr

of the frds cccuuIate them in Lransaation trust account until the tiansaction

trust was fully funded ruid deliver tho funds to the Jt.nding institution in luap

sum on bctalf of the cru Incci..e of the trust as to delivcred in lump sut

to the Foundatc-n chih -onld distr.but the funds lo the Plns
14s Karen Burgess

November 30 1983

Page

The Foundation now proposes to collect the investments to he m.ide by

each individual Plan in the form of checks or federal funds drafts made payable to

the lending institution Any income of the trust would be allocated among the

various participating Plans by the lending institution which would prepare checks

to the individual Plans These checks would be delivered to the Foundaticn which

would distrIbute these checks to the individual Plans The lending institution

would continue to pay directly to the Foundation the loan fee which is to be

charged the borrower for expenses incurred by the Foundation This administrative

procedure would provide maximum protecticn of the funds of the Plans by minimizing

the opportunity for and effect of any misapprcpriation of funds by the Foundation

At the same time funds of the transctioa trusts could be conveniently and

efficiently transferred to the lending institution with minimum of involvement

by the lending institution

In modifying the transaction as proposed the Foundation seeks to comply

with the mandate contained within Section 404a1A of the Employee Petirement

Income Security Act of 1974 ERISA that each Plan qualified thereunder must

minimize the expenses which are to be charged against Plan participants

29 U.S.C.A 1104a1A 1975 Sea Marshall Wilson Mo 376373 E.D

Tenn 1977 payment of unreasonable amounts or for unnecessary expenses violates

Section 404a of ERISA

By utilizing the Foundation as trustee for each of the transaction

trusts the Foundation expects to save approximately $5000 per transaction trust

over the cost of utilizing bank trustee for each trust This would result in

substantial savings to the Plans over the life of the Foundation e.g if the

Foundation formed ten transaction trusts over the next two years savings of

over $50000 could be realized by the Plans We believe that the protections

afforded by the provisions of ERISA and state common and contract law when

combined with the essentially connercial nonsecurities nature of these

shortterm mortgage loan transactions would provide comfort to the Staff

concerning the protections provided by the brokerdealer registration provIsions

Please contact the undersigned if you have any questions

Ver truly yours

SHUMAKER LOOP KENDRICK

By

Mark High

UiIsj

cc John Gorman

Division of Corporate Finance

Securities and Exchange Commission

Iarc Gertner Esq

George Chapman Esq
SHUMAKER LOOP KENDRICK

NORTH COURTHOUSE SOUARE 1000 JACKSON TOLEDO OHIO 43624

ALAN LOOP DAVID WATERMAN

PPANCISJ GALLAGHER 49 241-4201 VIViAN FOLK

ROBERT GOSLINE JOSEPH RIDEOuT

MA.COLM RAMEY GEORGE CHAPMAN

JOHN HACKETT JR DENNIS WITHEREU

THOMAS WEBB KEVIN GRAHAM

GREGORY ALEXANDER JOHN SARRON CARL BRLJGGEMAN JACK FYNES

ROBERT CLAYTON JR TIMOTHY MCCARTHY

MARC GEPTNER RENEE BIRNBAUM

GEORGE PICKNELL JOHN INGLIS

DONALD MEWNORT JR LYMAN SelTZER

EDWIN EMERSON ALETA BONINI

JAMES M.TUSCIMAN March 12 1984 JUDH ANN LANZINGER

BARTON WAGENMAN MICHAEL SANDERSON

ROLF SCHEIDEL GARY SALES

JOHN HAYWARD MICHAEL MCGOWAN

WILLIAM GOSUNE MARY ELLEN PSANEUJ

NORMAN NARTSEL DID SOUILLANTE

WILLIAM P4EYW000 GREGORY LODGE

FRANCIS MCDANIEL JR JANET CATLIN

THOMAS PLETZ PHILIP CHUBB

JOHN BJRSON THOMAS W000MAN THOMAS WEBB JR GREGORY Si-IIBLEY

ROBERT ANSPACH

DAVID WICKLUND OR COUNSEL

GARY DIESING CHARLES SCHARFY

JOHN MhcAY SWIFT CORWIN

JOHN STRAUB

Mr Thomas Harmon

Division of Investment Management

Securities and Exchange Commission

450 5th Street

Washington D.C 20549

Re The Northwest Ohio Building and

Construction Trades Foundation

Our File No N1575/16191

Dear Mr Harmon

Based on our conversations on behalf of the abovecaptioned

foundation the Foundation we hereby submit additional factual

representations These representations are for your use in responding

to our request that the Staff of the Securities and Exchange Commission

the Commission advise us that it will not recommend that the

Commission take enforcement action concerning the actions of the

Foundation or the Trusts to be created thereunder without registering

the Foundation or the Trusts as investment companies under the

Investment Company Act of 1940 the Investment Company Act and

without registering the Foundation or the Trusts as investment advisers

under the Investment Advisers Act of 1940 the Investment Advisers

Act

This letter will supplement our letters of October 27 1983

addressed to the Office of Chief Counsel Division of Corporation

Finance and of November 30 1983 addressed to Ms Karen Burgess

Division of Market Regulation

On the question of whether the Foundation will be providing

investment advice we confirm that the Foundation will contact all banks

and savings and loan associations located within the geographic area

served by the Foundation and request that those financial institutions

provide the Foundation with information concerning all construction

III
 
Mr Thomas Harmon

March 12 1984

Page

mortgage loan opportunities which they desire to offer participations

In The Foundation shall transmit to all participating pension plans

the Plans all materials received from all cooperating banks and

savings and loan associations It is then the responsibility of the

individual Plans to determine whether that particular Plan desires to

participate In any given loan The Foundation will not screen in any

way any proposals brought to it and the individuals representing the

Plans will take all proposals presented to them back to their respective

Plans for decision

The Foundation has determined to dispense with the holding of

any reserve funds either on its behalf or on behalf of the Individual

Trusts Instead all loan participation fees collected from the

borrowers at the time that the loan is made will be immediately

distributed through the Foundation directly to the Plans who are members

of that particular Trust Any expenses incurred by the Foundation will

then be assessed to and paid by the individual Plans Under this

design the Foundation will not hold any funds In reserve and thus have

no investment responsibilities relating to the reserves

I_ussions y.rf tb_the United States Department of Labor

concernig_the structure of the Fouiidptipn it was established that

Tisyillng acquire more than 50% participatirm fn any individual

construction ba This limitation is in addition to the limitations

place upon each Plan for purposes of the exemption from certain

provisions of ERISA requested of the Department of Labor as described

in our letter to the Division of Corporation Finance dated October 27

1983 This limitation on the size of the investments which Trust may

make will npffcf the ability of the Trust to effect enforcefiU

ridocuments including foreclosure on the mortgage in the event

cft.I occurrence of nt of default under the loan documaliiti

Finally as we related to you in our telephone conversation of

March 1984 the administrative functions of the Foundation will be

performed by Northwestern Ohio Administrators Inc an Ohio

notforprofit corporation Arthur Young Company will serve as

accountants to the Foundation and it is anticipated that this firm will

serve as Its legal counsel The accountants will annually review the

finances of the Foundation and the Trusts which have been in existence

during that year The Foundation will either distribute copies of this

report or prepare an annual review based on this report to be

distributed to the Plans In either case the information provided will

be clearly identified as factual information prepared by the

Foundations accountants and will not be presented as providing any

indication concerning future investment possibilities or projected

investment results

Based on the foregoing we are of the opinion that r.ither the

Foundation nor the Trusts will fall within the definition of investment
Mr Thomas Harmon

March 12 1984

Page

adviser contained in Section 202a11 of the Investment Advisers Act

and that the Foundation and the Trusts will be exempted from the

definition of investment company contained in Section 3a of the

Investment Company Act by the provisions of Section 3c5C of that

Act

We trust these representations will assist you in your review

process We appreciate the time and attention which you and your

colleagues have given to our letter request If you have any further

questions or concerns please contact the undersigned

Very truly yours

SHUMAKER LOOP KENDRICK

By

Mark High

MRH/sjs

cc John Gorman

Division of Corporation Finance

Karen Burgess

Division of Market Regulation

Marc Gertner Esq

George Chapman Esq
2D 984

Our Ref No 83373CC

Northwestern Ohio Building

Construction Trades

RESPONSE OF flE OFFICE OF CHIEF CJNSEL Foundation

DIVISION OF INES1ENT MAAGEME File No 1323

The Northwestern Ohio Building and Construction Trades Council

confederation of local building and construction trades unions represent

ing building and construction tradenen working in northwestern Ohio and

the Northwestern Ohio Council of Construction flnployers confederation

of employers in the same industry in the same geograMc area propose to

establish foundation for the benefit of the employee pension benefit

plans they or their members sponsor The foundation notforprofit

unincorporated association organized and governed by the laws of Ohio

would be administered by board of trustees Every plan participating in

the foundation would be entitled to two trustees on the foundations board

one appointed by the union cosponsor of the plan the other by the employer

cosponsor of the plan Thp1ans iiuld invest construction pericd

mQrtgg loans throqgh the medium rf trut created pursuant to trist

designating the foundation as trustee trust would never ac

quirenore trian 5U% participation th construction period itortgage loan

bujyrticipation it wouldJxld u1d enable the foundation as trustee

for trust to forecthe mortgag securing the loan in the event of

default

We would not recommend that the Commission take any enforcement

action under the Investment Company Act of 1940 or the Investment advisers

Act of 1940 against the foundation or the trusts if they proceed with their

proposal without registering as either investment companies or investment

advisers Our position is based on the facts and representations in your

letters and exhibits of October 27 1983 November 30 1983 and March 12

1984 and upon the statements made by Mark High and Marc Gertner of your firm

to Thomas Harman of the staff on January 25 February February 27

March 29 and April 1984 We will first discuss with respect to the

foundation and then to trust the applicability of the Investment Company

Act and then the Advisers Act

Section 3a of the Investment Company Act defines an investxnent

companyTM in pertinent part as any issuer which is or holds itself out as

being engaged primarily in the business of investing reinvesting or trad

ing in securities or is engaged or proposes to engage in the business of

investing reinvesting owning holding or trading in securities and owns

or proposes to acquire investment securities having value exceeding 40 per

centum of the value of such issuers total assets exclusive of Government

securities and cash items on an unconsolidated basis Section 2a 22

defines TMissuerTM as every person who issues or proposes to issue any secur

ity or has outstanding any security which it has issued
Because the foundation would not issue any security or interest to

anyone it would not be an issuer as defined by section 2a22 and there

fore it would not be an investment ccinpany as defined by section 3a

Eaci trust however would issue uity interests to various plarE and

thus would an issuer oreoveth trust woulJld assetsconsisting

oley oLrticpa4orE in cortruct Ion idrvrtgage J.Q.-A_CVnstruc

tiin period oan loan secured on an

ed construction1roject The definition of the term security in

setibiF2 36 the Investment Carpany Act thcles any note or par

ticipation in any note Atruction period nortgage.loan or any

paticiptHon .in udig 1nn m1i fh fr..j 44nH frr

ofjisecirity ctained in section 2a36 trust thus ild appear

to be an investTint caipany subject to thcwestnæAtjgj ex

Section 3c 5C of the Investment Canpany Act in pertinent part

excepts fran the definition of investment canpany any person who is not

engaged in the business of issuing redenable securities and who is prisnar

ily engaged in purdiasing or otherwise auiring nortgages and other liens

on and interests in real estate The participation interests in cons truc

tion period prgage loan he by truct would be an interest in real estate

whereeth loan is fully secured by real prcierty andtheparicion

nterests held by the trust are sufficient to give the foundation asE�stee

for the trust th.gbt by itself to foreclose the nortgage secri thIÆæ

iiie event of default MIC Mortgage Corporation pub avail August 1Ig741

BecaUse it is repreØi that eaci loan would be tui.ly securdbyreal prcperty

interests heIda trust would give the foundation

astrustee for the trust the tight by itself to foreclose the nr�

secur4g the loan in the event of default it appears that trust would be

pry eraged in zdiasir or otherwise uiriri nrrtgaqes and othr

liep on r1 interests r1-estate trust would not appear to be isiuing

redeenable securities within the meanirg of section 3c5 because

plans interest in trust would not be redeenable except un the plan

witFrawal fran the trust or liquidation of the trust and because witndrawal

fran trust would be conditioned upxI plans loss of exetpt or qualified

status iider the Internal Recenue Code of 1954 Accordingly trust would be

excepted fran the Investment Canpany Act pursuant to section 3c

Section 202a11 of the Mvisers Act in part defines an inestnent

a3viser as

any person who for canpensation engages in the business

of vising others either directly or through publications

or writings as to the value of securities or as to the

visability of investing in purthasing or selling securities

or who for canpensation and as part of regular business

issues or pranulgates analyses or rerts concerning securities
Because the foundation intends to contact lending institutions in northwestern

Ohio to learn of the availability of participations in mortgage loans and

pass this information along to the plans question exists as to whether

the foundation would be issuing or proim.ilgating analyses or reports con

cerning securities

The foundation intends to approach every bank savings and loan

association and insurance company in the northwestern Ohio area and ask

that they provide the foundation with information concerning all con

struction period mortgage loan opportunities in which they desire to

offer participations The foundation would not sponsor screen analyze

or recommend any loan participation opportunities Each individual plan

through its trustees or other investment manager would determine whether to

participate in specific loan opportunity and if it does the amount of

its participation The foundation would transmit to all participating plans

all materials received from all cooperating financial institutions The

information the foundation transmits would be prepared by the various lending

institutions and would be so identified

In Texas Newsletter pub avail January 23 1984 we stated that

no action would be reconended to the Canmission if newsletter without

registering under the Advisers Act printed information about securities

where any such information about security would be prepared by the issuer

of the security and would be presented as an advertisement for the security

Because the foundation would distribute only information about

participation in construction period mortgage loan prepared by the

cooperating financial institution issuing the participation identify

such information as having been prepared by the cooperating financial

institution and transmit all information given to the foundation

without commenting on screening or evaluating the information in any

manner we would not consider the foundation to be engaged in the business

of issuing or promulgating analyses or reports concerning securities

Thus we would not regard the foundations proposed service to bring the

foundation within the definition of investment adviser contained in section

202a 11 of the Advisers Act

Because trusts sole function would be to hold participations in

particular construction period mortgage loan selected by the plans partici

pating in the trust trust would neither be engaged in the business of

advising others about the value of securities or the advisability of invest

ing in securities nor issuing or promulgating analyses or reports concerning

securities as part of regular business Accordingly trust would not

be an investment adviser as defined by section 202a 11 of the Advisers

Act
We understand that the Division of Corporation Finance and the

Division of Market Regulation will be writing separately to address

the issues you have raised regarding the Securities Act of 1933 and

the Securities Exchange Act of 1934

470omas Harinan

Attorney/vi ser