Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70495 

5Among the numerous individual exemptions 

cited by the Applicant’s comment in support of its 

suggested revision to Section II(b)(6) of the Notice 

governing the refund of excess proceeds received 

from the Sale of the Notes were PTE 2011–07 (see 

Section I(i)); PTE 2009–27 (see Condition (g)); and 

PTE 2008–12 (see Condition (f)). 

6The face interest rates for the various Notes that 

were the subject of the Sale transaction covered by 

this exemption are displayed in a chart contained 

in the Notice, which is located at the conclusion of 

Representation 15 near the top of page 34266 of the 

June 13, 2011 issue of the Federal Register. 

4. In its written comment, the 

Applicant also noted that Section 

II(b)(6) of the Notice provides that FRC 

must refund to the Funds any amounts 

that FRC may recover from the issuer of 

the Notes or any third party that is in 

excess of the sum of the Sale price paid 

by FRC for the Notes plus any interest 

on such Sale price paid from September 

10, 2010 to September 14, 2010, 

inclusive, made by FRC to the Funds. 

The Applicant pointed out, however, 

that the corresponding conditions for 

relief found in a number of recent 

individual exemptions covering 

substantially similar sale transactions 

required the refund of any amounts 

recovered in excess of the applicable 

purchase price plus interest through the 

date of recovery.5 The Applicant also 

noted that, in these corresponding 

conditions, the applicable interest rate 

credited to the purchase price correlated 

to an interest rate that was tied to the 

purchased securities. Therefore, the 

Applicant opined that the content of 

Section II(b)(6) of the Grant should not 

differ in substance from the 

corresponding conditions for exemptive 

relief found in recent, similar 

exemptions. For the foregoing reasons, 

the Applicant requested in its comment 

that Section II(b)(6) be amended in the 

Grant to require the refund to the Funds 

of any amounts that FRC may receive in 

excess of (i) the Sale proceeds paid for 

the Notes by FRC, plus (ii) interest on 

such Sale price paid for the Notes from 

and after September 10, 2010, 

determined at the face interest rate for 

the applicable Note.6 Accordingly, after 

due consideration, the Department 

concurs with the Applicant’s comment, 

and has determined to amend the text 

of Section II(b)(6) in the Grant to read 

as follows: 

‘‘(6) If the exercise of any of FRC’s rights, 

claims, or causes of action in connection 

with its ownership of the Notes results in 

recovering from the issuer of the Notes, or 

any third party, an aggregate amount that is 

in excess of the sum of (i) The Sale price paid 

for the Notes by FRC; and (ii) interest on such 

Sale price paid for the Notes from and after 

September 10, 2010, determined at the face 

interest rate for the applicable Note, then 

FRC will refund such excess amount 

promptly to the Funds (after deducting all 

reasonable expenses incurred in connection 

with the recovery);’’ 

5. In its comment, the Applicant also 

requested that the Department amend 

and correct certain language contained 

in the first sentence of the second 

paragraph of Representation 12 of the 

‘‘Summary of Facts and 

Representations’’ section of the Notice 

(which is located in the first column of 

page 34265 of the aforementioned issue 

of the Federal Register) and in the third 

sentence of Representation 15 of the 

Notice (located in the third column of 

page 34265) concerning the formula to 

be used to compute the price of the 

Notes in the event of their sale to RTC. 

Specifically, the Applicant noted in its 

comment that the Revised CSAs did not 

contain a new provision stipulating the 

formula for determining such a sale 

price; rather, the Independent Fiduciary 

negotiated this formulaic price for the 

Notes within a separate term sheet prior 

to the consummation of the Sale. 

Accordingly, the Department has 

corrected the text of the Notice by 

deleting the words ‘‘to include a new 

provision in each of the Revised CSAs 

stipulating’’ that appears after the word 

‘‘Funds’’ in the first sentence of the 

second paragraph of Representation 12; 

similarly, the text of the Notice is 

further corrected by deleting the words 

‘‘Revised CSAs with each of the Funds’’ 

that appears in the parenthetical clause 

of the third sentence of Representation 

15 and substituting in lieu thereof the 

words ‘‘term sheet negotiated by the 

Independent Fiduciary’’. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption, refer to the text of the Notice 

that begins at 76 FR 34261 (June 13, 

2011). 

FOR FURTHER INFORMATION CONTACT: Mr. 

Mark Judge of the Department at (202) 

693–8550 (This is not a toll-free 

number). 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

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

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of the Act, which among other things 

require a fiduciary to discharge his 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

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

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) This exemption is supplemental to 

and not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transactional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction; and 

(3) The availability of this exemption 

is subject to the express condition that 

the material facts and representations 

contained in the application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC, this 7th day of 

November 2011. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2011–29234 Filed 11–10–11; 8:45 am] 

BILLING CODE 4510–29–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–11637 HSBC–North America (U.S.) 

Tax Reduction Investment Plan; D– 

11679 Sammons Enterprises, Inc. 

Employee Stock Ownership ESOP; and 

D–11683 First Federal Bancshares of 

Arkansas, Inc. Employees’ Savings and 

Profit Sharing Plan. 

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 

mstockstill on DSK4VPTVN1PROD with NOTICES

70496 Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 

1For 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. 

2American Depository Shares permit investment 

in foreign securities to trade on markets in the 

United States without many of the complications 

that would otherwise arise from such cross-border 

and cross-currency transactions. 

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: If you submit written 

comments or hearing requests, do not 

include any personally-identifiable or 

confidential business information that 

you do not want to be publiclydisclosed. All comments and hearing 

requests are posted on the Internet 

exactly as they are received, and they 

can be retrieved by most Internet search 

engines. The Department will make no 

deletions, modifications or redactions to 

the comments or hearing requests 

received, as they are public records. 

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 (55 FR 

32836, 32847, August 10, 1990). 

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. 

HSBC–North America (U.S.) Tax 

Reduction Investment Plan (the Plan), 

Located in Mettawa, Illinois, 

[Application No. D–11637]. 

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 

(55 FR 32836, 32847, August 10, 1990). 

Section I: Transactions 

If the proposed exemption is granted, 

effective March 2, 2009, the restrictions 

of sections 406(a)(1)(A) and 406(a)(1)(E), 

406(a)(2), 406(b)(1), 406(b)(2), and 

407(a)(1)(A) of the Act and the sanctions 

resulting from the application of section 

4975 of the Code, by reason of section 

4975(c)(1)(A) and 4975(c)(1)(E) of the 

Code,1 shall not apply: 

(1) To the acquisition of certain rights 

(the ADS Rights) by the Plan in 

connection with an offering (the 

Offering) of shares of stock (the Stock) 

in HSBC Holding, plc (Holdings) by 

Holdings, a party in interest with 

respect to the Plan, 

(2) To the holding of the ADS Rights 

received by the Plan during the 

subscription period of the Offering; 

provided that the conditions as set forth 

in section II of this proposed exemption 

were satisfied; 

Section II: Conditions 

The relief provided in this exemption 

is conditioned upon adherence to the 

material facts and representations 

described, herein, and as set forth in the 

application file and upon compliance 

with the conditions, as set forth in this 

proposed exemption. 

(1) The receipt by the Plan of the ADS 

Rights occurred in connection with the 

Offering made available by Holdings on 

the same terms to all shareholders, such 

as the Plan, of American Depository 

Shares 2 (the HSBC ADS) which 

represent the Stock of Holdings; 

(2) The acquisition of the ADS Rights 

by the Plan resulted from an 

independent act of Holdings, as a 

corporate entity, and all holders of the 

ADS Rights, including the Plan, were 

treated in the same manner with respect 

to the acquisition of such rights; 

(3) All holders of the ADS Rights, 

such as the Plan, received the same 

proportionate number of such rights 

based on the number of HSBC ADS 

held; and 

(4) All decisions regarding the ADS 

Rights made by the Plan were made by 

an independent, qualified fiduciary (the 

I/F) which: 

(a) Conducted a due diligence review 

of the Offering; 

(b) Determined whether or not to 

direct the Plan to vote in favor of the 

Offering; and 

(c) Evaluated a prudent strategy for 

disposition of the ADS Rights under the 

Offering that were allocated to the Plan. 

Effective Date: This proposed 

exemption, if granted, will be effective, 

on March 2, 2009, the date of the 

announcement of the Offering. 

Summary of Facts and Representations 

1. The Plan is a defined contribution 

profit sharing plan, for eligible 

employees of HSBC North America 

Holdings, Inc. (the Employer) and its 

subsidiaries. 

The Plan is qualified under section 

401(a) of the Code. In addition, the Plan 

contains a cash or deferred arrangement 

intended to qualify under section 401(k) 

of the Code. 

The Plan received a favorable 

determination letter, dated November 

14, 2008, from the Internal Revenue 

Service. Although the Plan has been 

amended since applying for the 

determination letter, the Plan 

administrator and counsel for the Plan 

believe that the Plan is designed and is 

currently being operated in compliance 

with the applicable requirements of the 

Code. 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70497 

3Based on the conversion of one HSBC ADS to 

five (5) shares of Stock of Holdings, the Plan held 

the equivalent of 10.3 million shares of the Stock 

of Holdings or less than 0.1% of the outstanding 

shares of Stock of Holdings. 

As of September 30, 2009, the Plan 

had approximately 44,000 participants. 

The fair market value of the total assets 

of the Plan, as of September 30, 2009, 

was $2.4 billion. 

2. The Plan provides for participant 

directed investment of contributions 

made to the Plan. Participants in the 

Plan may choose among investment 

options, including mutual funds 

managed by subsidiaries of the 

Employer and managed by Vanguard 

Fiduciary Trust Co. (Vanguard). 

Vanguard is the trustee of HSBC-North 

American (U.S.) Tax Reduction 

Investment Trust (the Trust) which 

holds the assets of the Plan. In addition, 

the Vanguard Group of Investment 

Companies is the record-keeper of the 

Plan. 

3. The application was filed on behalf 

of the Employer, a financial services 

company, which sponsors the Plan. The 

Employer, as an employer any of whose 

employees are covered by the Plan, is a 

party in interest with respect to the 

Plan, pursuant to section 3(14)(C) of the 

Act. 

It is represented that the Employer 

neither had nor exercised discretionary 

authority with respect to the ADS Rights 

acquired by the Plan pursuant to the 

Offering, and therefore, was not acting 

as fiduciary, as defined in section 3(21) 

of the Act. An administrative committee 

(the Committee) is the named fiduciary 

of the Plan with respect to daily 

administration of the Plan. The 

Committee, as a fiduciary of the Plan, is 

a party in interest with respect to the 

Plan, pursuant to section (3)(14)(A) of 

the Act. 

4. The Employer is a subsidiary of 

Holdings, a public limited liability 

company incorporated in England and 

Wales with operations worldwide. The 

Employer comprises all of the business 

interests of Holdings in the United 

States. As the parent of the Employer 

which sponsors the Plan, Holdings is a 

party in interest with respect to the 

Plan, pursuant to section 3(14)(E)of the 

Act. 

5. Holdings is the ultimate parent of 

the HSBC Group. The HSBC Group is 

not a separate legal entity, but rather the 

term, HSBC Group, is an informal 

collective reference to the legal entities 

wholly or partially owned by Holdings 

in Europe, Hong Kong, Asia Pacific, the 

Middle East, North America, and Latin 

America. The HSBC Group is not 

publicly traded on the London Stock 

Exchange (LSE) or any other stock 

exchange. 

6. The Stock of Holdings is traded on 

the LSE under the symbol HSBA. The 

Stock of Holdings is also traded on stock 

exchanges in Hong Kong, Paris, and 

Bermuda. 

In the United States, shares of HSBC 

ADS (each representing five (5) shares of 

the Stock of Holdings) are traded on the 

New York Stock Exchange (NYSE) 

under the symbol HBS. BNY Mellon, 

Inc. (BNY Mellon) is the depository 

bank that holds the Stock of Holdings in 

a custodial account and issues shares of 

HSBC ADS to investors in the United 

States. 

7. The shares of HSBC ADS are a 

permitted investment option under the 

terms of the Plan. In this regard, 

although employee contributions, as of 

March 28, 2003, may no longer be 

directed into the acquisition of shares of 

HSBC ADS, any shares of HSBC ADS 

acquired prior to March 28, 2003, may 

continue to be held in participant 

accounts in the Plan. 

The aggregate fair market value of the 

assets of the Plan invested in shares of 

HSBC ADS, as reflected in the Plan’s 

most recent annual report dated, 

December 31, 2008, is $98,679,000. The 

approximate percentage of the fair 

market value of the Plan’s total assets, 

as of December 31, 2008, that is 

represented by investments in shares of 

HSBC ADS is 4.9 percent (4.9%). 

8. On March 2, 2009, Holdings 

announced its decision, as a corporate 

entity and issuer of securities, to issue, 

in connection with the Offering, up to 

5,060,239,065 shares of Stock in the 

form of new ordinary shares, 

representing approximately 41.7 percent 

(41.7%) of the existing issued ordinary 

shares of Stock of Holdings, as of 

February 27, 2009, the last business day 

prior to the announcement of the 

Offering. It is represented that Holdings 

made this decision for the sole purpose 

of raising additional capital. An 

aggregate of 4,887,538,091 new ordinary 

shares of the Stock of Holdings were 

subscribed for in connection with the 

Offering. The gross proceeds from such 

subscriptions in connection with the 

Offering totaled £12,072,952,215.50. 

Completion of the Offering was 

conditional upon approval from the 

shareholders of the Stock of Holdings 

and upon approval from the 

shareholders of the HSBC ADS, such as 

the Plan. The Offering was approved in 

a meeting (the General Meeting) held in 

London on March 19, 2009. 

9. Under the terms of the Offering, all 

shareholders of the Stock of Holdings 

received certain rights (the Share Rights) 

to purchase, through the exercise of 

such Share Rights, the new ordinary 

shares of the Stock of Holdings being 

issued by Holdings in connection with 

the Offering. With respect to the Share 

Rights, under the terms of the Offering, 

five (5) Share Rights were issued for 

every twelve (12) shares of the Stock of 

Holdings, rounded down to the nearest 

whole number, held by each 

shareholder on March 13, 2009, (the 

Record Date). Each of the Share Rights 

permitted a shareholder of the Stock of 

Holdings to purchase one (1) additional 

share of such stock at 254 pence per 

share. 

In addition, under the terms of the 

Offering, all shareholders of the HSBC 

ADS, such as the Plan, received ADS 

Rights to purchase HSBC ADS. With 

respect to the ADS Rights, under the 

terms of the Offering, five (5) ADS 

Rights were issued for every twelve (12) 

shares of the HSBC ADS, rounded down 

to nearest whole number, held by each 

holder of such shares, including the 

Plan, on the Record Date. Each of the 

ADS Rights permitted a holder, such as 

the Plan, to purchase one (1) additional 

share of the HSBC ADS for an estimated 

price of $17.75 per each share. 

As of March 13, 2009, the Record 

Date, the Plan held 2,067,667 shares of 

the HSBC ADS 3 on behalf of 10,562 

participants and beneficiaries. 

Accordingly, based on a ratio of five (5) 

ADS Rights issued for every twelve (12) 

shares of the HSBC ADS held, rounded 

down to nearest whole number, on 

March 20, 2009, the Plan acquired 

861,527 ADS Rights. 

10. It is represented that there was no 

market for the ADS Rights acquired by 

the Plan, because the terms of the 

Offering stipulated that the ADS Rights 

were not transferrable and would not be 

admitted to trading on the NYSE or any 

other stock exchange. In order to sell the 

ADS Rights, holders of the ADS Rights, 

such as the Plan, had to convert their 

ADS Rights into Share Rights. The 

conversion ratio between the ADS 

Rights and the Share Rights was one to 

five (1:5). Therefore, it is represented 

that underlying the 861,527 ADS Rights 

acquired by the Plan in the Offering that 

there were 4,307,639 Share Rights. 

11. A market for the Share Rights did 

develop, and the Share Rights were 

listed on the LSE. In this regard, the 

Shares Rights began trading on the LSE 

on March 20, 2009, at 8 a.m. GMT. 

12. The Offering closed on March 31, 

2009, at 5 p.m. EST with respect to the 

ADS Rights. The Offering closed on 

April 3, 2009, at 11 a.m. BST with 

respect to the Share Rights. Pursuant to 

the terms of the Offering all unexercised 

rights expired and became worthless 

after the closing of the Offering. 

mstockstill on DSK4VPTVN1PROD with NOTICES

70498 Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 

4 It is represented that Evercore Trust 

subsequently acquired the business within BANA 

that performed the services as I/F with respect to 

the subject transactions. Norman Goldberg, the 

individual who supervised BANA’s work in 

connection with this matter and who signed the 

April 9, 2009, letter from BANA, is currently 

employed with Evercore Trust, as Managing 

Director. 

13. To avoid engaging in a prohibited 

transaction, it is represented that the 

Plan considered whether or not to 

accept the ADS Rights. In this regard, 

the ADS Rights were accepted, because 

refusing to accept such rights might 

constitute a breach of the Employer’s 

fiduciary duties to the Plan and to its 

participants and beneficiaries. 

14. Although the Plan provides for 

participant directed investment, the 

applicant represents that it was not 

practicable to initiate and implement a 

participant level ‘‘pass through’’ voting 

during the proxy vote for the General 

Meeting, relating to the approval of the 

Offering, nor was it practicable to 

initiate and implement a participant 

level ‘‘pass through’’ of the exercise or 

sale of the ADS Rights, due to the short 

duration of time between when such 

rights were acquired by the Plan and 

when such rights expired under the 

terms of the Offering. 

On March 12, 2009, the Employer first 

contacted U.S. Trust, Bank of America 

Private Wealth Management, acting on 

behalf of Bank of America, National 

Association (BANA),4 to discuss BANA 

serving as the I/F for the Plan with 

respect to the Offering. On March 13, 

2009, BANA issued an engagement 

agreement to the Employer to be 

retained as the I/F for the Plan with 

respect to the Offering. The Employer, 

as sponsor of the Plan and settlor of the 

Trust, amended section 6.5(i) of the 

Trust agreement, effective March 16, 

2009, to retain BANA, to act as 

investment manager and I/F on behalf of 

the Plan. 

15. BANA had sole authority to vote 

the shares of the HSBC ADS held under 

the Plan and to direct Vanguard to 

exercise or otherwise dispose of the 

ADS Rights acquired and held by the 

Trust, pursuant to the Offering. 

Specifically, BANA was responsible for: 

(i) Conducting a due diligence review of 

the Offering; (ii) determining whether or 

not to direct the Committee to vote in 

favor of the Offering at the General 

Meeting; and (iii) if the Offering were 

approved at the General Meeting to 

prudently evaluate a disposition 

strategy under the Offering for the ADS 

Rights that were allocated to the Plan. 

With regard to the responsibility of 

BANA to instruct Vanguard, the Trustee 

of the Trust, on how to vote at the 

General Meeting held on March 19, 

2009, it is represented that BANA 

performed an independent financial 

analysis of Holdings to determine the 

need for additional capital and the 

potential benefits of additional capital. 

BANA determined that Holdings 

appeared to be adequately capitalized, 

and that Holdings had taken steps to 

restructure its operations to better 

position itself for the future, in light of 

recent turmoil across a wide range of 

markets and industries, and in 

particular the financial services 

industry. Accordingly, it is represented 

that on March 16, 2009, BANA 

instructed Vanguard to vote the Plan’s 

shares of the HSBC ADS in favor of the 

Offering at the General Meeting. 

It is represented that on March 20, 

2009, the participants and beneficiaries 

in the Plan whose accounts held shares 

of the HSBC ADS received their pro rata 

share of the ADS Rights. In this regard, 

BANA was responsible for analyzing 

and recommending a course of action 

for such rights received by such 

accounts. 

As stated in the HSBC Rights Issue 

Prospectus (the Prospectus), issued by 

Holdings on March 17, 2009, 

shareholders of the HSBC ADS, 

including the Plan, were permitted to 

elect among the following three (3) 

options: (a) Exercise all or part of the 

ADS Rights for the purchase of shares of 

the HSBC ADS; (b) direct BNY Mellon 

to sell the Share Rights underlying the 

ADS Rights; (c) surrender the ADS 

Rights and receive Share Rights. 

Option (A) Exercise All or Part of the 

ADS Rights 

Under this option, a holder of the 

ADS Rights, including the Plan, could 

exercise all or only a part of the ADS 

Rights acquired in conjunction with the 

Offering and could purchase shares of 

HSBC ADS. In order to exercise the ADS 

Rights, a holder, such as the Plan, 

would have to deposit 110% of the 

subscription price for the HSBC ADS 

upon the exercise of each of the ADS 

Rights. The additional amount over and 

above the subscription price for the 

HSBC ADS was to increase the 

likelihood that the agent would have 

sufficient funds to pay the final 

subscription price for the HSBC ADS in 

light of a possible appreciation of 

Pounds Sterling against the U.S. dollar 

between the instruction date and the 

end of the subscription period, and to 

pay applicable United Kingdom stamp 

duty reserve taxes, and to pay any 

currency conversion expenses. It is 

represented that BANA understood that 

the Plan lacked available unallocated 

funds needed to exercise all of the ADS 

Rights. 

The Plan could surrender a portion of 

the ADS Rights to BNY Mellon and 

direct BNY Mellon to sell the Share 

Rights underlying such ADS Rights, in 

order for the Plan to raise sufficient 

funds to exercise its remaining ADS 

Rights. According to BANA, this 

transaction would have resulted in the 

Plan receiving Pounds Sterling from the 

sale of the Share Rights, which would 

then have had to be converted back into 

U.S. dollars in order for the Plan to 

purchase shares of the HSBC ADS 

through the exercise of the remaining 

ADS Rights. The conversion from 

Pounds Sterling to U.S. dollars would 

have had to have been executed at the 

then-prevailing exchange rate. In the 

opinion of BANA, given the volatility in 

the foreign exchange markets and the 

uncertainty in future exchange rates, 

there was no guarantee that the Plan 

would have been able to convert the 

proceeds from the sale of the Share 

Rights into sufficient funds to exercise 

the remaining ADS Rights. If the Plan 

had received insufficient funds to 

exercise the remaining ADS Rights, such 

rights would have been deemed to have 

been declined and would have lapsed. 

Accordingly, for the reasons 

summarized above, BANA determined 

that the Plan would not select Option 

(A). 

Option (B) Direct BNY Mellon To Sell 

the Share Rights Underlying the ADS 

Rights 

Under this option, HSBC established 

a process by which a holder of ADS 

Rights, including the Plan, could elect 

to liquidate such ADS Rights by 

directing BNY Mellon to attempt to sell 

the underlying Share Rights on the LSE. 

Unlike Option (A) above, under Option 

(B), the Plan was not required to deposit 

any funds in order for BNY Mellon to 

liquidate the Plan’s ADS Rights. 

Further, it is represented that BNY 

Mellon, as depository and as a premier 

trading firm that was familiar with the 

transaction, had appropriate trading 

accounts already in place to facilitate 

the trading, had the expertise and the 

processes in place to sell the Share 

Rights underlying the ADS Rights 

within the permitted time period. 

Notwithstanding the fact that there was 

some currency risk from the conversion 

of Pounds Sterling into U.S. dollars, 

according to the I/F, Option (B), offered 

the Plan an expedited, low cost, 

frictionless way to liquidate the Plan’s 

interests in the ADS Rights. In this 

regard, it is represented that under 

Option (B), the Plan did not have to pay 

any brokerage commissions in 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70499 

connection with the liquidation of its 

holding in ADS Rights. 

Option (C) Surrender ADS Rights and 

Receive Share Rights 

Under this option, a holder of ADS 

Rights, including the Plan, could elect 

to exchange such rights for the 

underlying Share Rights and to sell such 

Share Rights or exercise such Share 

Rights to purchase the Stock of Holdings 

on the LSE. To do so, the Plan would 

have had to direct BNY Mellon to cancel 

the ADS Rights and to deliver the 

underlying Share Rights to a brokerage 

account set up by the Plan at a firm in 

the United Kingdom that trades on the 

LSE. To surrender the ADS Rights and 

receive the underlying Share Rights, the 

Plan would have had to pay a 1.5% 

stamp tax. Finally, the Plan would have 

had to direct the broker to sell all of the 

Share Rights, or to exercise all of the 

Share Rights, or to sell sufficient Share 

Rights to generate the funds needed to 

exercise the Plan’s remaining Share 

Rights. To sell and/or exercise the Share 

Rights through a broker selected by 

BANA on behalf of the Plan, BANA 

would have had to negotiate the 

brokerage fees and other expenses that 

the Plan would have had to pay such 

broker for the sale and/or exercise of the 

Share Rights. Additionally, the Plan 

would have had to assume the risks and 

responsibilities attendant to the Share 

Rights, including effecting the exercise 

or sale of such rights. 

According to BANA, Option (C) 

presented a number of issues to the Plan 

that could have resulted in higher 

trading costs. As there was no market 

for the ADS Rights, the sale of such 

rights required conversion into the 

underlying Share Rights. The 

conversion of the ADS Rights and 

receipt of Share Rights would have 

required the Plan, rather than BNY 

Mellon, to sell the Share Rights and to 

receive the proceeds denominated in 

Pounds Sterling. In addition, the Plan 

would have had to effect a foreign 

exchange conversion at the thenprevailing exchange rate, repatriate the 

funds back into the U.S. (possibly 

paying any applicable taxes), and then 

either deposit the proceeds in 

participant accounts or use the proceeds 

to purchase shares of HSBC ADS on the 

NYSE. Furthermore, the Plan would 

have had to pay wire fees to move the 

proceeds back to the U.S. BANA points 

out that during this process, the share 

price of both the Stock of Holdings on 

the LSE and the share price of the HSBC 

ADS on the NYSE would be fluctuating 

and could possibly have moved against 

the Plan. Accordingly, BANA 

determined that the uncertainty of the 

stock markets and the foreign exchange 

markets, along with the costs associated 

with executing the different trades and 

repatriating the funds back to the U.S. 

and the uncertainty related to trade 

settlement and execution, might have 

resulted in higher trading costs to the 

Plan, and therefore, lower proceeds to 

Plan participants. For the foregoing 

reasons, BANA determined that Option 

(C) was not in the interest of the Plan. 

The applicant provided the following 

chart which compares the three (3) 

options, discussed above, and assesses 

the risks associated with each of the 

three (3) options: 

Risks 

Option (A) 

Exercise All or Part of the ADS 

Rights 

Option (B) 

Direct BNY Mellon to Sell the 

Share Rights Underlying the ADS 

Rights 

Option (C) 

Surrender ADS Rights and Receive Share Rights 

Plan Funding Risk: High Risk: Low Risk: High 

In order to exercise the ADS 

Rights, the Plan needed to deposit 110% of the 254 pence per 

share subscription price with 

BNY Mellon. 

The Plan lacked available 

unallocated funds needed to 

exercise the ADS Rights. To 

generate the necessary funds, 

the Plan would have had to direct BNY Mellon to sell a portion of the Plan’s ADS Rights 

(technically to sell the Share 

Rights underlying the ADS 

Rights) to raise sufficient cash 

to exercise its remaining ADS 

Rights. 

No funds were required for BNY 

Mellon to sell the ADS Rights 

(technically to sell the Share 

Rights underlying the ADS 

Rights) on the public market. 

The Plan lacked available 

unallocated funds needed to 

exercise the Share Rights it 

would receive after surrendering the ADS Rights, meaning the Plan’s most viable alternative would have been to sell 

the Share Rights it received. In 

order to exercise the Share 

Rights, the Plan would have 

had to first sell a portion of the 

Share Rights to raise sufficient 

cash to exercise the remaining 

rights. This would raise other 

risks as outlined herein. 

Operational Risks Risk: High Risk: Low Risk: High 

mstockstill on DSK4VPTVN1PROD with NOTICES

70500 Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 

Risks 

Option (A) 

Exercise All or Part of the ADS 

Rights 

Option (B) 

Direct BNY Mellon to Sell the 

Share Rights Underlying the ADS 

Rights 

Option (C) 

Surrender ADS Rights and Receive Share Rights 

In order to exercise the ADS 

Rights, the Plan would have 

had to first sell a portion of the 

ADS Rights (technically to sell 

the Share Rights underlying the 

ADS Rights) to raise sufficient 

funds to exercise its remaining 

ADS Rights. The uncertainty of 

the proceeds from this sale 

(due to constantly changing foreign exchange rates, a fluctuating price for the Share 

Rights, and uncertainty as to 

the timing of any such sale) 

made it impossible to accurately calculate the number of 

Share Rights to sell in order to 

raise sufficient proceeds to exercise the remaining ADS 

Rights. The Plan could have either raised insufficient funds, 

leaving it holding unexercised 

(and possibly unsellable) ADS 

Rights which would have 

lapsed; or would have ended 

up with excess cash. 

HSBC had established a process 

to liquidate ADS Rights through 

BNY Mellon. BNY Mellon is a 

premier trading firm that was familiar with the transaction, was 

well-suited to execute all options available to shareholders, 

and offered competitive fees. 

BNY Mellon also had appropriate trading accounts already 

in place to facilitate the trading. 

The Plan would have been responsible for selecting a broker 

to sell the Share Rights on the 

open market. To do so, the 

Plan would have had to set up 

a brokerage account at a firm in 

London that trades on the LSE. 

This would have entailed a 

number of risks, including the 

time to set up and verify an account and the lesser familiarity 

by the broker (compared with 

BNY Mellon) with the transaction. In addition, no other 

broker selected on behalf of the 

Plan was likely to have had the 

market access and the trading 

volume enjoyed by BNY Mellon. 

Timing Risks Risk: Moderate-High Risk: Low Risk: High 

The Plan received the ADS Rights 

on March 20, 2009. Under the 

terms of the Offering, the ADS 

Rights expired on March 31, 

2009 and the Share Rights expired on April 3, 2009. BANA 

had only 10 business days from 

the date on which the Prospectus describing the terms of 

the Offering was issued to 

evaluate the options available to 

the Plan, decide which of the 

options was in the best interest 

of the Plan’s participant and 

beneficiaries, and carry out its 

decision. 

It was understood that the Plan 

did not have cash available to 

exercise the ADS Rights and 

the Plan was not intending to 

sell other investments to raise 

sufficient cash. Because of the 

timing of the Offering, the Plan 

would have had to instruct BNY 

Mellon at the same time with 

respect to both the sale and the 

exercise of the ADS Rights; 

cash also had to be deposited 

at this time for the exercise of 

the ADS Rights. Even assuming the Plan could have immediately monetized (for deposit 

with BNY Mellon) its expected 

proceeds from the sale of the 

ADS Rights, Option (A) nonetheless presented moderate 

timing risk, because if insufficient funds were generated 

from the sale, there was not 

enough time to supplement the 

cash to ensure the remaining 

ADS Rights could be exercised. 

If the necessary funds were not 

generated in time the ADS 

Rights would have expired and 

likely become worthless. 

The Plan needed to direct BNY 

Mellon to sell the ADS Rights 

(technically, the Share Rights 

underlying the ADS Rights) before such rights expired. As the 

depository and a premier trading firm, BNY Mellon already 

had the expertise and processes in place to sell the ADS 

Rights within the permitted period. 

The Plan needed to convert the 

ADS Rights into Share Rights, 

set up brokerage accounts at a 

firm in London that trades on 

the LSE, and either sell all of 

the Share Rights or sell sufficient Share Rights to generate 

the funds needed to exercise 

the remaining rights. This option presented the greatest timing risks because any delay in 

setting up the brokerage accounts or executing the sales 

could have resulted in the ADS 

Rights expiring and becoming 

worthless. 

Trading Costs Risk: Low Risk: Low Risk: High 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70501 

5The applicant has not requested, nor is the 

Department, herein, providing any relief from 

section 406 of the Act with respect to decision to 

liquidate the Plan’s entire position of ADS Rights. 

6The applicant has not requested, nor is the 

Department, herein, providing any relief from 

section 406 of the Act with respect to the foreign 

exchange transaction in connection with the 

conversion from Pounds Sterling into U.S. dollars. 

7The responsible plan fiduciary must determine, 

consistent with its responsibilities under section 

404 of the Act, whether the Plan suffered any losses 

with respect to the liquidation of the ADS Rights 

and the conversion of the proceeds into US Dollars 

by BNY Mellon and takes appropriate action in 

light of the potential magnitude of the recovery and 

the risks and costs of pursuing legal action on 

behalf of the Plan. 

8 It is represented that on March 27, 2009, the 

Share Rights traded in a range of 132 pence to 162 

pence. On the same date, the HSBC ADS traded in 

a range of $28.26 to $29.02. At the close of trading 

on March 27, 2009, the Share Rights closed on the 

LSE at 147 pence, and the HSBC ADS closed on the 

NYSE at $28.47. 

Risks 

Option (A) 

Exercise All or Part of the ADS 

Rights 

Option (B) 

Direct BNY Mellon to Sell the 

Share Rights Underlying the ADS 

Rights 

Option (C) 

Surrender ADS Rights and Receive Share Rights 

This option presented low risk 

since the Plan would have incurred the same costs described in Option (B) in order to 

sell a portion of the ADS Rights 

(technically, the Share Rights 

underlying the ADS Rights) 

through BNY Mellon to raise 

sufficient cash to exercise its 

remaining ADS Rights. 

In order to exercise the remaining 

ADS Rights, the Plan needed to 

deposit 110% of the 254 pence 

per share subscription price 

with BNY Mellon. 110% of the 

subscription price needed to be 

deposited in order to cover possible exchange rate fluctuations, applicable United Kingdom stamp duty reserve taxes, 

and any currency conversion 

expenses. 

This option presented low risk 

since the Plan would not have 

had to pay brokerage commissions for the sale of the ADS 

Rights (technically, the Share 

Rights underlying the ADS 

Rights) through BNY Mellon. 

The Plan would have had to 

have paid an ADS depository 

fee of $0.02 per ADS Right, any 

applicable taxes, and any other 

applicable fees and expenses 

of BNY Mellon, as provided 

under the deposit agreement, 

pro rata to the holders of the 

ADS Rights who directed BNY 

Mellon to sell the ADS Rights. 

The Plan would have incurred an 

estimated 1.5% stamp tax to 

surrender the ADS Rights and 

receive the underlying Share 

Rights. In addition, BANA would 

have had to negotiate and the 

Plan would have had to pay 

brokerage fees for the sale or 

exercise of the Share Rights. 

Furthermore, the Plan would 

have had to pay wire fees to 

move the proceeds back to the 

U.S. This option presented the 

highest risk since it could have 

resulted in higher trading costs 

to the Plan with uncertainty related to trade settlement and 

execution, as well as requiring 

additional trades to convert any 

shares of Stock of Holdings acquired into HSBC ADS. 

Foreign Exchange Rates Risk: High Risk: Low Risk: Moderate 

Although certain foreign exchange 

rate risks were involved in all 

three options, this option presented the highest risk to the 

Plan since foreign exchange 

rate fluctuations could have 

prevented the Plan’s ability to 

exercise all of the ADS Rights. 

The Plan would have needed to 

sell a portion of the ADS Rights 

(technically, the Shares Rights 

underlying the ADS Rights) in 

order to generate the funds 

needed to exercise the remaining ADS Rights. If the funds 

generated were insufficient due 

to a change in foreign exchange rates, the Plan likely 

would not have had time to sell 

additional ADS Rights in order 

to generate the additional funds 

needed to exercise the remaining ADS Rights. 

BNY Mellon would need to convert the proceeds from the sale 

of the ADS Rights (technically, 

the Shares Rights underlying 

the ADS Rights) into U.S. dollars at the prevailing rate. The 

risk is low since the same conversion is needed to convert 

the proceeds under any of the 

three options into U.S. dollars. 

The extent of this risk varied depending on whether BANA decided to sell all of the Share 

Rights or sell a portion of the 

Share Rights to raise sufficient 

proceeds to execute the remaining Share Rights. The risk 

would have been similar to Option (A) had BANA decided to 

sell some of the Share Rights 

to exercise the remaining Share 

Rights. The risk would have 

been similar too or less than 

that in Option (B) had BANA 

decided to sell all of the Share 

Rights, as BANA would have 

controlled the timing of the sale. 

Accordingly, it is represented that for 

the reasons cited above, on March 23, 

2009, BANA chose Option (B), above, 

and instructed Vanguard, as Trustee, in 

turn to instruct BNY Mellon, as 

depository agent, to liquidate the entire 

position of ADS Rights 5 from the Plan 

and to convert the proceeds 6 received 

from such sale in Pounds Sterling into 

U.S. dollars.7 It is represented that the 

Share Rights underlying the Plan’s ADS 

Rights that BNY Mellon was directed to 

sell were aggregated by BNY Mellon 

with the Share Rights underlying other 

ADS Rights that BNY Mellon was 

directed to sell by other holders of ADS 

Rights. Based on information provided 

by BNY Mellon, the aggregated Share 

Rights underlying the ADS Rights were 

sold throughout the period beginning on 

March 27, 2009 and ending on April 3, 

2009, at an average price of 147 pence, 

after expenses.8 Accordingly, it is 

represented that the Plan received total 

net proceeds of $7,291,066.81, on April 

7, 2009, from the liquidation of the 

Plan’s ADS Rights. It is represented that 

the proceeds represented less than .5% 

of the fair market value of the total 

assets of the Plan determined, as of 

September 30, 2009. 

It is represented that the proceeds 

from the transactions were distributed, 

after accounting for the ADS 

depository’s fees paid to BNY Mellon of 

mstockstill on DSK4VPTVN1PROD with NOTICES

70502 Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 

9The applicant has not requested, nor is the 

Department, herein, providing any relief from 

section 406 of the Act for the receipt of depository’s 

fees by BNY Mellon in connection with the sale of 

the Share Rights underlying the ADS Rights. 

10OANDA uses innovative computer and 

financial technology to provide Internet-based forex 

trading and currency information services to 

everyone, from individuals to large corporations, 

from portfolio managers to financial institutions. 

OANDA is a market maker and a source for 

currency data. It has access to one of the world’s 

largest historical, high frequency, filtered currency 

databases. 

11The applicant has not requested, nor is the 

Department providing any relief for the receipt of 

fees by BNY Mellon with respect to the foreign 

exchange transaction in connection with the 

conversion from Pounds Sterling into U.S. dollars. 

12The applicant has not requested, nor is the 

Department, herein, providing any relief from 

section 406 of the Act with respect to receipt of any 

other applicable fees and expenses by BNY Mellon, 

as provided under the deposit agreement. 

up to $0.02 per each share of HSBC ADS 

and expenses, pro rata to the 

shareholders of the ADS Rights, 

including the Plan.9

With regard to expenses, in addition 

to the ADS depository fees, the Plan 

paid foreign exchange charges incurred 

by BNY Mellon with respect to the 

conversion of Pounds Sterling to U.S. 

dollars. It is represented that on March 

27, 2009, 1.4554 was the foreign 

exchange rate for converting Pounds 

Sterling to U. S. dollars. It is represented 

that this rate was obtained from 

OANDA 10 Corporation and reflects the 

average rate for converting Pounds 

Sterling into U.S. dollars on March 27, 

2009. The foreign exchange charges 

were allocated pro rata to all holders of 

ADS Rights who directed BNY Mellon 

to sell the Share Rights underlying the 

ADS Rights, and the Plan’s pro rata 

share of such foreign exchange charges 

were deducted from the final amount 

that the Plan received from the sale of 

such rights. It is represented that BANA 

does not have information as to the 

amount of such charges.11 Further, the 

Prospectus also indicated that holders of 

ADS Rights who directed BNY Mellon 

to sell the Share Rights underlying their 

ADS Rights would have to pay any 

applicable taxes, and any other 

applicable fees and expenses of BNY 

Mellon, as provided under the deposit 

agreement,12 with such fees and 

expenses allocated pro rata to all 

holders of ADS Rights who directed 

BNY Mellon to sell the Share Rights 

underlying their ADS Rights. It is 

represented that BANA does not have 

information on whether any such fees or 

expenses were applicable to the Share 

Rights underlying the ADS Rights sold 

by BNY Mellon on behalf of the Plan. 

16. The Employer has requested an 

exemption with respect to the 

transactions which are the subject of 

this proposed exemption. In this regard, 

relief has been requested: (a) for the 

acquisition of the ADS Rights by the 

Plan in connection with the Offering by 

Holdings, and (b) for the holding of the 

ADS Rights by the Plan during the 

subscription period of the Offering. It is 

represented that the ADS Rights 

acquired by the Plan satisfy the 

definition of ‘‘employer securities,’’ 

pursuant to section 407(d)(1) of the Act, 

but do not meet the definition of 

‘‘qualifying employer securities,’’ as set 

forth in section 407(d)(5) of the Act. 

Accordingly, the subject transactions 

constitute an acquisition and holding on 

behalf of a plan, of an employer security 

in violation of section 407(a) of the Act, 

for which the applicant has requested 

relief from sections 406(a)(1)(A) and 

406(a)(1)(E), 406(a)(2), and 407(a)(1)(A). 

The subject transactions also raise 

conflict of interest issues by fiduciaries 

of the Plan for which relief from the 

prohibitions of 406(b)(1) and 406(b)(2) 

of the Act is needed. 

17. It is represented that the subject 

transactions have already been 

consummated. In this regard, the Plan 

acquired the ADS Rights pursuant to the 

Offering on March 20, 2009, and held 

such rights pending the liquidation of 

such rights. It is represented that there 

was insufficient time between the date 

the Plan acquired the ADS Rights and 

the date such rights expired, to apply for 

and be granted an exemption. 

Accordingly, the Employer is seeking a 

retroactive exemption to be granted, 

effective as of March 2, 2009, the date 

that Holdings announced the Offering. 

18. The applicant represents that the 

proposed exemption is feasible. In this 

regard, it is represented that the subject 

transactions are customary for the 

industry involved, as evidenced by the 

fact that the Department has granted 

individual administrative exemptions 

under similar circumstances. Further, 

the Employer bore the costs of the 

application for exemption, and the cost 

of the fee payable to BANA, and will 

bear the cost of notifying interested 

persons of the publication of the 

proposed exemption. 

19. The applicant represents that the 

transactions which are the subject of 

this proposed exemption are in the 

interest of the Plan, because if the Plan 

had not participated in the Offering, 

those participants and beneficiaries 

whose accounts were invested in shares 

of HSBC ADS on the Record Date would 

not have received the benefit received 

by all other shareholders of the Stock of 

Holdings and shareholders of HSBC 

ADS. 

20. The applicant represents that the 

proposed exemption provides sufficient 

safeguards for the protection of the Plan 

and its participants and beneficiaries. In 

this regard, the interests of the 

participants and beneficiaries of the 

Plan were independently represented at 

all times during the subject transactions 

by BANA. Further, BANA concluded 

that the most prudent course of action 

that the Plan could take with respect to 

the disposition of the ADS Rights and 

the course of action that was in the best 

interest of the affected participants and 

beneficiaries was to liquidate the ADS 

Rights under Option (B). Further, it is 

represented that the report prepared by 

BANA confirms that the subject 

transactions were administrative 

feasible, in the interest of, and 

protective of the rights of the Plan and 

its participants and beneficiaries. 

21. In summary, the applicant 

represents that the subject transactions 

satisfy the statutory criteria of section 

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

of the Code because: 

(a) The receipt by the Plan of the ADS 

Rights occurred in connection with the 

Offering made available by Holdings on 

the same terms to all shareholders of the 

HSBC ADS, including the Plan; 

(b) The acquisition of the ADS Rights 

by the Plan resulted from an 

independent act of Holdings as a 

corporate entity, and all holders of the 

ADS Rights, including the Plan, were 

treated in the same manner with respect 

to the acquisition of such rights; 

(c) All shareholders of HSBC ADS, 

such as the Plan, received the same 

proportionate number of ADS Rights 

based on the number of shares of HSBC 

ADS held; and 

(d) All decisions regarding the 

disposition of the ADS Rights made on 

behalf of the Plan were made by BANA, 

acting as the I/F. 

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 participants and 

beneficiaries of the Plan whose accounts 

in the Plan held Stock. 

It is represented that each of these 

classes of interested persons will be 

notified of the publication of the Notice 

by first class mail, 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. 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70503 

13The applicant represents that, consistent with 

the requirements of the Act, including definitions 

of ‘‘adequate consideration’’ and ‘‘current value’’ 

found in Act sections 3(18) and 3(26), the value of 

the Sammons stock held by the ESOP is determined 

in good faith by the Plan’s trustee, GreatBanc Trust 

Company, based upon valuations by the Plan’s 

independent appraiser as required under Code 

section 401(a)(28)(C), and taking into account those 

factors determined to be relevant under Revenue 

Procedure 59–60 and the Department’s Proposed 

Regulation section 2510.3–18. The applicant 

represents that, consistent with its fiduciary 

responsibilities under ERISA, it will, as the ESOP’s 

independent trustee, continue to value the 

Sammons stock held by the ESOP in good faith 

based upon valuations performed by a qualified 

independent appraiser engaged by the Plan to 

ensure that all transactions are conducted at fair 

market value. The applicant further represents that 

Sammons regularly evaluates the performance of 

the qualified independent fiduciary under the terms 

of the ESOP Trust, and, as part of that evaluation, 

Sammons also regularly evaluates the performance 

of the ESOP’s independent appraiser which is 

engaged on behalf of the ESOP by the qualified 

independent fiduciary. 

14The Code provides for a maximum allocation 

of $30,000, adjusted annually for cost-of-living. For 

2011, the maximum allocation is $45,000. 

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. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Angelena C. Le Blanc of the Department, 

telephone (202) 693–8540. (This is not 

a toll-free number.) 

Sammons Enterprises, Inc. Employee 

Stock Ownership ESOP, (the ESOP), 

Located in Dallas, Texas, Application 

No. D–11679]. 

Proposed Exemption 

The Department of Labor (the 

Department) is considering granting an 

exemption under the authority of 

section 408(a) of the Act in accordance 

with procedures set forth in 29 CFR Part 

2570, Subpart B (55 FR 32836, 32847, 

August 10, 1990). If the proposed 

exemption is granted, the restrictions of 

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

and 406(b)(2) of the Act, and the 

sanctions resulting from the application 

of section 4975 of the Code, by reason 

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

the Code, shall not apply to the personal 

holding company consent dividend 

election (the Consent) with respect to 

Sammons Enterprises, Inc. (Sammons), 

by the trustee of the ESOP, provided 

that the following conditions are 

satisfied: 

(a) The trustee of the ESOP is an 

independent, qualified fiduciary (the 

I/F), acting on behalf of the ESOP, 

which determines prior to entering into 

the transaction that the transaction is 

feasible, in the interest of, and 

protective of the ESOP and the 

participants and beneficiaries of the 

ESOP; 

(b) Before the ESOP enters into the 

proposed transaction, the I/F reviews 

the transaction, and determines whether 

or not to approve the transaction, in 

accordance with the fiduciary 

provisions of the Act; 

(c) The I/F monitors compliance with 

the terms and conditions of this 

proposed exemption, as described 

herein, and ensures that such terms and 

conditions are at all times satisfied; 

(d) Sammons provides to the I/F, in a 

timely fashion, all information 

reasonably requested by the I/F to assist 

it in making its decision whether or not 

to approve the transaction; 

(e) The consent dividend will 

represent no more than two percent 

(2%) of the ESOP’s assets in any taxable 

year within the timeframe of the 

exemption proposed herein; 

(f) Shares of Sammons stock are held 

in an ESOP suspense account, and are 

allocated each year to each eligible 

ESOP participant at the maximum level 

permitted under the Code; 

(g) All of the requirements of section 

565 of the Code are met with respect to 

the Consent; and 

(h) All shareholders of Sammons are 

requested to consent to the dividend in 

the manner prescribed under section 

565 of the Code. 

Temporary Nature of Exemption: This 

exemption, if granted, will expire at the 

earlier of (i) the first day of the first 

fiscal year of Sammons next following 

the fiscal year in which falls the fifth 

anniversary of the date of grant of the 

exemption; and (ii) the first day upon 

which the ESOP fails to own at least 

99% of the issued and outstanding 

shares of Sammons. 

Summary of Facts and Representations 

1. Sammons Enterprises, Inc. 

(Sammons) is a multi-faceted, global 

holding corporation headquartered in 

Dallas, Texas that owns and operates 

businesses and manages an investment 

portfolio across a diverse range of 

industries. Sammons was founded by 

Charles A. Sammons in 1962. Its roots 

originate in Dallas, Texas, where Mr. 

Sammons began Reserve Life Insurance 

Company in 1938, providing the 

foundation for what has grown into 

Sammons. Beginning in the early 

1950’s, Mr. Sammons began to diversify 

Sammons’ operations, purchasing 

interests in the communications, 

industrial products distribution, 

insurance, travel and hospitality 

industries. Sammons has now 

concentrated its investments into three 

sectors—life insurance/annuities, 

equipment distribution, and hospitality 

and real estate. 

2. The Sammons Enterprises, Inc. 

Employee Stock Ownership ESOP (the 

ESOP) was originally established in 

1978 and, prior to 2010, had acquired 

approximately 4% of Sammons’ 

outstanding shares. Prior to his death in 

1988, almost all of Sammons’ 

outstanding shares, other than those 

owned by the ESOP, were owned by 

Charles A. Sammons. At the time of his 

death, Mr. Sammons’ shares passed to a 

charitable remainder trust with his 

widow Elaine D. Simmons as lifetime 

beneficiary. In 1997, Congress amended 

the Internal Revenue Code of 1986, as 

amended (the Code) to permit an ESOP 

and its related trust to be a beneficiary 

of a charitable remainder trust. This 

change in law allowed the ESOP to be 

named remainder beneficiary of the 

charitable trust established by Mr. 

Sammons. In January 2010, following 

the death of Mrs. Sammons, all of the 

Sammons shares held in the charitable 

remainder trust were transferred to the 

ESOP. The ESOP made no payment for 

the shares received from the charitable 

remainder trust. 

3. As a result of the transfer to the 

ESOP, it presently owns 99.997% of 

Sammons’ outstanding shares. The 

remaining 258 shares (representing 

.003% of Sammons’ outstanding shares) 

are owned by 12 individuals who are 

former Sammons employees and ESOP 

participants who received their shares 

as part of their ESOP distributions. 

4. As of December 31, 2010, the 

Sammons stock was valued by the 

ESOP’s independent appraiser at $512 

per share. The aggregate fair market 

value of the ESOP’s Sammons share 

holdings is $4,099,394,048.13 The ESOP 

had approximately 1,064 participants as 

of the end of the 2010 plan year. 

5. Although the ESOP is not 

leveraged, under a special structure 

established pursuant to section 664(g) of 

the Code, the shares acquired from the 

charitable remainder trust are held in an 

ESOP suspense account, and are 

currently allocated each year to each 

eligible ESOP participant at the 

maximum level permitted under Code 

section 664(g)(7), i.e., 25% of 

compensation (up to a maximum 

allocation of $45,000).14

6. The trustee of the ESOP trust is the 

applicant, GreatBanc Trust Company 

(GreatBanc). GreatBanc is nationally 

recognized as a highly skilled 

independent ERISA trustee specializing 

in ESOPs and ESOP transactions. 

GreatBanc’s management team and staff 

have an average of over 20 years’ 

experience in the financial services 

industry, and include legal and 

mstockstill on DSK4VPTVN1PROD with NOTICES

70504 Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 

15Over the years since its enactment, the PHCT 

rate has ranged as high as 85%. 

16The use of the term ‘‘virtually’’ both here and 

in representation 13, above, acknowledges the fact 

that the non-ESOP shareholders of Sammons might 

elect not to participate in the consent dividend 

process. These individuals currently hold .003% of 

Sammons’ outstanding shares, and would receive a 

de minimis dividend payment if they elect not to 

participate in the consent dividend process. 

regulatory experts and investment 

management professionals who hold the 

Chartered Financial Analyst 

designation. GreatBanc serves as trustee 

or independent fiduciary for over 200 

ESOPs and other qualified plans 

sponsored by both public and private 

companies, and has fiduciary 

responsibility for over $18 billion in 

plan assets. Fees received by GreatBanc 

for fiduciary services to the Sammons 

ESOP currently represent approximately 

3% of GreatBanc’s annual revenue. 

7. As a result of its closely held nature 

and the types of revenue generated by 

certain of its lines of business, Sammons 

is potentially subject each year to a set 

of federal tax rules referred to as 

‘‘personal holding company taxes’’ 

(PHCT). Although Sammons is a 

subchapter ‘‘C’’ corporation and pays its 

full share of corporate income taxes, the 

applicant represents that these PHCT 

rules can subject Sammons to a 

significant federal tax burden over and 

above that applied to most other 

companies. Given the ESOP’s almost 

complete ownership of Sammons, these 

additional taxes would operate to the 

direct detriment of the ESOP and its 

participants. 

8. The applicant represents that the 

pertinent sections of the Code were first 

adopted in 1934 at a time when federal 

corporate tax rules were substantially 

lower than individual tax rates. This 

rate differential prompted wealthy 

individuals to place their passive 

investments in controlled corporations, 

with the idea that ongoing investment 

earnings could grow and be reinvested 

in substantially greater amounts than if 

held directly by the individual investor. 

The PHCT rules seek to thwart this 

strategy by imposing an additional tax, 

at the highest individual tax rate, on the 

corporation’s ‘‘undistributed personal 

holding company income.’’ By thus 

equalizing corporate and individual tax 

rates, the incentive to place the 

individual’s investment portfolio in a 

corporate structure is removed. 

Currently, the PHCT rate is 15%, which 

equates to the top individual rate on 

capital gains and qualifying 

dividends.15 Because this special tax 

regime is designed to preclude tax 

arbitrage by the controlled corporations 

of individual investors, it only applies 

if 50% or more of a company’s stock is 

owned by five or fewer individuals. For 

this purpose, the ESOP is considered to 

be a single individual, notwithstanding 

its 1,604 participants, and thus the 50% 

ownership threshold is exceeded. 

9. According to the applicant, the 

PHCT only applies if the corporation 

earns over 60% of what is referred to as 

its ‘‘adjusted ordinary gross income’’ 

from sources such as interest, 

dividends, rents and royalties. Although 

these particular forms of income may be 

suggestive of purely passive 

investments, they are defined under the 

Code in such a way that income from 

actively conducted trades or businesses 

can fall within their purview. For 

example, one Sammons subsidiary 

actively rents and sells industrial 

equipment to businesses in various 

states. The subsidiary employs 

approximately 450 workers who service 

and maintain this equipment. Although 

this business is an active, operating 

venture, it generates rental income 

which is subject to being characterized 

as personal holding company income. 

According to the applicant, these tax 

rules not only potentially subject 

Sammons, and, indirectly, the ESOP, to 

a tax burden which has nothing to do 

with the original purpose for which the 

tax rules were enacted, they also distort 

the ways in which Sammons must 

operate its businesses, to the detriment 

of the ESOP and its participants. 

10. Sammons’ business planning is 

thus significantly influenced by the 

potential application of the PHCT, and 

otherwise desirable business activities 

are avoided or structured in a less 

efficient manner so that Sammons may 

maintain its tax obligations at the same 

level as that applicable to its 

competitors. 

11. Because the PHCT is applied to 

the company’s undistributed personal 

holding company income, it is possible 

to avoid the tax by paying to the 

company’s shareholders dividends 

equivalent to the amount of the 

company’s personal holding company 

taxable income. The applicant 

represents that while the payment of 

such a dividend would resolve the 

PHCT problem, it is not an attractive 

alternative for (a) investors who would 

prefer to have the dividend amount 

remain invested in the company in 

order to fund future growth, or (b) 

companies that lack the liquidity to pay 

the required dividend. 

12. In response to these concerns, 

section 565 of the Code allows 

companies to pay what is called a 

‘‘consent dividend.’’ In the case of a 

consent dividend, the shareholder 

agrees to recognize current income on a 

‘‘deemed dividend’’ that is not actually 

distributed to the shareholder in cash. 

Rather, the shareholder is treated, for 

tax purposes, as if it had received the 

dividend (on which it will be taxed), 

and then made a capital contribution to 

the company in equivalent amount. The 

amount of the consent dividend remains 

within the company to be utilized in 

furtherance of the company’s objectives 

and shareholders’ interests. 

13. The applicant has requested an 

exemption to permit the Plan, based 

upon the discretionary determination of 

GreatBanc as trustee and independent 

fiduciary, to utilize the consent 

dividend process available to 

shareholders under Code section 565. If, 

in a year in which Sammons would 

otherwise be subject to the PHCT, the 

ESOP were able to elect to ‘‘receive’’ a 

consent dividend in an amount 

sufficient to represent a complete 

distribution of Sammons’ personal 

holding company income, Sammons 

would be able to achieve significant tax 

savings at virtually no cost to the ESOP. 

This is because the ESOP, being a taxexempt entity, would have no tax 

liability as a result of ‘‘receiving’’ the 

consent dividend. The applicant states 

that this represents a legitimate and 

appropriate use of the consent dividend 

process under Code section 565, and is 

entirely consistent with the language 

and purpose of that Code section, as 

well as the provisions of sections 401(a) 

and 501(a) of the Code. 

14. For example, if a $5 million 

distribution were required in order to 

avoid imposition of the PHCT upon 

Sammons, a $5 million consent 

dividend would save Sammons, at the 

current surtax rates, $750,000. 

Virtually 16 the entire amount of this 

savings would inure to the benefit of the 

ESOP and its participants (because the 

ESOP presently owns 99.997% of the 

outstanding shares of Sammons). 

Importantly, this approach would also 

allow the consent dividend amount (and 

not just the tax savings) to continue to 

build share values within a successful 

and growing business. 

15. The applicant represents that the 

ESOP’s participation in the consent 

dividend process will permit Sammons 

to manage its businesses and conduct 

long-range business planning without 

the need to structure its operations, or 

to forego potentially profitable 

opportunities and initiatives, so as to 

avoid the generation of personal holding 

company income. This will create 

greater opportunities for corporate 

growth and the enhancement of 

shareholder value, which will inure 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70505 

17Sammons paid a relatively small dividend 

while Mrs. Sammons was alive. No dividends have 

been paid since her death, and Sammons does not 

anticipate paying dividends in the future. 

18For 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. 

19Bancshares also maintained a qualified 

Employee Stock Ownership Plan which was merged 

into the Plan, effective June 1, 2006. 

directly to the benefit of the ESOP and 

its participants and beneficiaries. The 

ESOP will incur no economic detriment 

by participating in the consent dividend 

process, because Sammons does not 

otherwise pay dividends.17 Thus, the 

ESOP would not be foregoing the option 

of receiving current cash dividends by 

consenting to receive the undistributed 

personal holding company income as a 

deemed dividend. Rather, the proposed 

transaction would permit Sammons to 

deploy its capital on a tax efficient basis 

in accordance with the provisions of the 

Code. Nevertheless, if GreatBanc 

determines in any year that it is not 

prudent and in the best interests of the 

ESOP and its participants and 

beneficiaries to participate in the 

consent dividend process, the Plan will 

be under no obligation to provide its 

consent. In such case, it will be up to 

Sammons’ board and management to 

determine how best to address 

Sammons’ tax position and obligations. 

16. In summary, the applicant 

represents that the subject transaction 

satisfies the criteria contained in section 

408(a) of the Act because: (a) The trustee 

of the ESOP, GreatBanc, is an 

independent, qualified fiduciary, acting 

on behalf of the ESOP, which 

determines prior to entering into the 

transaction that the transaction is 

feasible, in the interest of, and 

protective of the ESOP and the 

participants and beneficiaries of the 

ESOP; (b) Before the ESOP enters into 

the proposed transaction, GreatBanc 

will review the transaction, and 

determine whether or not to approve the 

transaction, in accordance with the 

fiduciary provisions of the Act; (c) 

GreatBanc will monitor compliance 

with the terms and conditions of this 

proposed exemption, as described 

herein, and ensure that such terms and 

conditions are at all times satisfied; (d) 

Sammons will provide to GreatBanc, in 

a timely fashion, all information 

reasonably requested by the GreatBanc 

to assist it in making its decision to 

consent (the Consent) to treat as a 

dividend from Sammons the amount 

specified in the Consent; (e) The 

consent dividend will represent no 

more than two percent (2%) of the 

ESOP’s assets in any taxable year within 

the timeframe of the exemption 

proposed herein; (f) Shares of Sammons 

stock are held in an ESOP suspense 

account, and are allocated each year to 

each eligible ESOP participant at the 

maximum level permitted under the 

Code; (g) The dividend meets all of the 

requirements of section 565 of the Code 

to be treated as a consent dividend; (h) 

All shareholders of Sammons are 

requested to Consent to the dividend in 

the manner prescribed under section 

565 of the Code; and (i) Because the 

ESOP owns 99.997% of Sammons’ 

outstanding stock, the tax savings 

realized by Sammons from the subject 

transaction would inure directly to the 

benefit of the ESOP and its participants 

and beneficiaries. 

FOR FURTHER INFORMATION CONTACT: Gary 

H. Lefkowitz of the Department, 

telephone (202) 693–8546. (This is not 

a toll-free number.) 

First Federal Bancshares of Arkansas, 

Inc. Employees’ Savings and Profit 

Sharing Plan (the Plan), Located in 

Harrison, Arkansas, [Application No. D– 

11683]. 

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 (55 

FR 32836, 32847, August 10, 1990). 

Section I: Transactions 

If the proposed exemption is granted, 

effective May 10, 2011, the restrictions 

of sections 406(a)(1)(A), 406(a)(1)(E), 

406(a)(2), 406(b)(1), 406(b)(2), and 

407(a)(1)(A) of the Act and the sanctions 

resulting from the application of section 

4975 of the Code, by reason of section 

4975(c)(1)(A) and 4975(c)(1)(E) of the 

Code,18 shall not apply: 

(1) To the acquisition of certain rights 

(the Rights) by the Plan in connection 

with an offering (the Offering) of shares 

of the common stock (the Stock) of First 

Federal Bancshares of Arkansas, Inc. 

(Bancshares) by Bancshares, a party in 

interest with respect to the Plan, and 

(2) to the holding of the Rights 

received by the Plan during the 

subscription period of the Offering; 

provided that the conditions as set forth 

in section II of this proposed exemption 

were satisfied for the duration of the 

acquisition and holding. 

Section II: Conditions 

The relief provided in this exemption 

is conditioned upon adherence to the 

material facts and representations 

described, herein, and as set forth in the 

application file and upon compliance 

with the conditions, as set forth in this 

proposed exemption. 

(1) The receipt of the Rights by the 

Plan occurred in connection with the 

Offering and was made available by 

Bancshares on the same terms to all 

shareholders of the Stock of Bancshares; 

(2) The acquisition of the Rights by 

the Plan resulted from an independent 

act of Bancshares, as a corporate entity, 

and all holders of the Rights, including 

the Plan, were treated in the same 

manner with respect to the acquisition 

of such Rights; 

(3) Each shareholder of the Stock, 

including the Plan, received the same 

proportionate number of Rights based 

on the number of shares of Stock of 

Bancshares held by such shareholder; 

(4) The Rights were acquired pursuant 

to provisions under the Plan for 

individually directed investments of the 

accounts of the individual participants 

(the Invested Participants), all or a 

portion of whose accounts in the Plan 

hold the Stock; 

(5) The decisions with regard to the 

holding and disposition of the Rights by 

the Plan were made by each of the 

Invested Participants in accordance 

with the provisions under the Plan for 

individually-directed accounts; and 

(6) No brokerage fees, no 

commissions, no subscription fees, and 

no other charges were paid by the Plan 

with respect to the Offering, and no 

brokerage fees, no commissions, and no 

other monies were paid by the Plan to 

any broker in connection with the 

exercise of the Rights. 

Effective Date: This proposed 

exemption, if granted, will be effective, 

May 10, 2011, the commencement date 

of the Offering. 

Summary of Facts and Representations 

1. The Plan is defined contribution 

profit sharing plan adopted effective 

June 1, 2006.19 The Plan provides for a 

cash and deferred arrangement, i.e. a 

401(k) plan. The Plan is a participant 

directed account plan designed and 

operated to comply with the 

requirements of section 404(c) of the 

Act. The fair market value of the total 

assets of the Plan, as of May 10, 2011, 

was $3.579 million. 

2. Bancshares is the sponsor of the 

Plan for its subsidiaries. Bancshares is 

also the administrator for the Plan and 

the fiduciary responsible for Plan 

matters. As a fiduciary with respect to 

the Plan, Bancshares is a party in 

interest to the Plan, pursuant to section 

3(14)(A) of the Act. 

3. Since June 5, 2009, Reliance Trust 

Company (RTC) has served as the 

mstockstill on DSK4VPTVN1PROD with NOTICES

70506 Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 

20The shareholders have approved the 

reincorporation of Bancshares from Texas to 

Arkansas during the annual meeting of shareholders 

held on June 22, 2011. Bancshares is in the process 

of making the requisite filings to complete the 

reincorporation. 

21 It is represented that because the Offering was 

fully subscribed, Bear State was not required to 

purchase any shares of Stock in a second private 

placement to backstop the Offering. 

directed trustee and custodian for the 

Plan. As directed trustee and custodian, 

RTC is a party in interest to the Plan, 

pursuant to section 3(14)(A) of the Act. 

As service providers to the Plan, both 

Bancshares and RTC are parties in 

interest to the Plan, pursuant to section 

3(14)(B) of the Act. 

4. The Plan offers to participants a 

wide variety of institutionally managed 

collective trust index funds from which 

the Plan participants may choose to 

invest. One of the investment options 

under the Plan is the First Federal 

Employer Stock Fund (the Stock Fund). 

As of May 10, 2011, the Plan had 

approximately 231 participants of 

which 180 participant held shares in the 

Stock Fund. 

5. The Stock Fund allows participants 

in the Plan to invest in the Stock of 

Bancshares. The Stock is a ‘‘qualifying 

employer security,’’ as defined under 

section 407(d)(5) of the Act and 4975(e) 

of the Code. The Stock ($0.01 par value) 

is listed for quotation on the NASDAQ 

Global Select Market (NASDAQ) under 

the symbol, FFBH. It is represented that 

the Stock is the same class of shares 

available to other investors. 

Investment in the Stock Fund is 

entirely voluntary. Plan participants 

may invest in the Stock Fund up to 25 

percent (25%) of any contributions 

remitted to the Plan. Features of the 

Stock Fund include: 

(a) Neither Bancshares nor its 

subsidiaries contribute any capital Stock 

to the Plan. Instead all employer 

contributions are made in cash, and the 

Stock is acquired for the Plan only as a 

result of participant-directed investment 

decisions; 

(b) Upon direction from a Plan 

participant to invest in the Stock Fund, 

RTC, acting as directed trustee, 

purchases the Stock on the open market 

at the prevailing market price; 

(c) Bancshares, as the administrator of 

the Plan, has the responsibility of 

coordinating with RTC, regarding the 

administrative procedures to implement 

participant investment decisions 

regarding the Stock, but otherwise has 

no authority with respect to the Stock 

Fund; 

(d) Upon the settlement of a trade 

implementing a participant’s direction 

to invest in the Stock Fund, RTC 

becomes the shareholder of record and 

the Plan participant becomes the 

beneficial owner; and 

(e) The Plan provides that participants 

are entitled to direct Bancshares, as the 

administrator of the Plan, regarding the 

voting of shares of the Stock held in 

their accounts, and that RTC shall 

follow such directions. 

6. The application was filed on behalf 

of Bancshares, a unitary savings and 

loan holding company established in 

January 1996. Bancshares is a Texas 

corporation.20 However, the 

shareholders approved the 

reincorporation of Bancshares from 

Texas to Arkansas during the annual 

meeting of shareholders held on June 

22, 2011. Bancshares is in the process of 

making the requisite filings to complete 

the reincorporation. Bancshares has its 

principal place of business in Harrison, 

Arkansas. Bancshares does not employ 

any persons other than officers of First 

Federal Bank (the Bank), and 

Bancshares uses the support staff of the 

Bank from time to time. Substantially all 

of the activities of Bancshares are 

conducted through the Bank. As of 

March 31, 2011, Bancshares had $577.7 

million in total assets, $542.9 million in 

total liabilities and $34.8 million in 

stockholders’ equity. 

7. The Bank is a wholly-owned 

subsidiary of Bancshares. Bancshares, as 

the parent of the Bank, is a party in 

interest with respect to the Plan, 

pursuant to section 3(14)(E) of the Act. 

The Bank is a community bank and a 

federally chartered saving and loan 

association formed in 1934 with a main 

office and full service branches in North 

central and Northwest Arkansas. As of 

March 31, 2011, the Bank had $577.7 

million in assets. The Bank, as an 

employer any of whose employees are 

covered by the plan, is a party in 

interest with respect to the Plan, 

pursuant to section 3(14)(C) of the Act. 

8. As part of its recapitalization plan, 

Bancshares and the Bank, on January 26, 

2011, entered into an investment 

agreement with Bear State Financial 

Holdings, LLC (Bear State), a private 

equity investment group. The 

investment agreement set forth the 

terms and conditions of the 

recapitalization plan which consisted of 

the following: 

(a) As a condition of the investment 

agreement with Bear State, Bancshares 

agreed to commence the Offering which 

is the subject of this proposed 

exemption, whereby shareholders of 

record would receive the Rights. In a 

press release, dated January 28, 2011, 

Bancshares, as a corporate entity, 

announced the Offering, and on the 

same date, in connection with the 

Offering, announced the issuance of up 

to 2,908,071 shares of Stock; 

(b) On May 3, 2011, Bear State 

purchased from the United States 

Department of the Treasury (the 

Treasury) for $6 million aggregate 

consideration: (i) 16,500 shares of 

Bancshares’ Fixed Rate Cumulative 

Perpetual Preferred Stock, Series A (the 

Preferred Stock), including accrued but 

unpaid dividends thereon; and (ii) a 

related warrant (the TARP Warrant), 

dated March 6, 2009, which provided 

for the purchase of 321,847 shares of the 

Stock at an exercise price of $7.69 per 

share. Both the TARP Warrant and the 

Preferred Stock were previously issued 

to the Treasury through the Troubled 

Asset Relief Program—Capital Purchase 

Program; 

(c) Bancshares amended its Articles of 

Incorporation to cause a one-for-five 

stock split (the Reverse Stock Split) that 

occurred on May 3, 2011, in which the 

outstanding shares of the Stock 

decreased from 4,846,785 to 

approximately 969,357; 

(d) On May 3, 2011, Bancshares sold 

to Bear State: (i) 15,425,262 postReverse Stock Split shares (the First 

Closing Shares) of the Stock at $3.00 per 

share in a private placement, and (ii) a 

warrant (the Investor Warrant) which 

provided for the purchase of 2 million 

post-Reverse Stock Split shares of the 

Stock at an exercise price of $3.00 per 

share; 

(e) On May 3, 2011, Bear State paid 

Bancshares aggregate consideration of 

approximately $46.3 million for the 

First Closing Shares and the Investor 

Warrant, consisting of: (i) $40.3 million 

in cash, and (ii) Bear State’s surrender 

of the Preferred Stock and the TARP 

Warrant to Bancshares for a $6 million 

credit against the purchase price of the 

First Closing Shares; and 

(f) Pursuant to the investment 

agreement, Bear State agreed to backstop 

the Offering by purchasing in a second 

private placement for a purchase price 

of $3.00 per share, any Stock not 

subscribed for in the Offering, subject to 

an overall limitation on Bear State’s 

ownership of 94.9 percent (94.9%) of 

the Stock.21 In this regard, the backstop 

commitment would ensure that 

Bancshares would raise net proceeds 

after expenses of approximately $8.5 

million through the Offering. It is 

represented that Bancshares used the 

net proceeds from the Offering for 

general corporate purposes, including 

capital contributions to the Bank. 

8. In addition to providing Bancshares 

with an opportunity to raise equity 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70507 

22 It is represented that the extra five (5) business 

days were required to provide RTC, the Registrar 

and Transfer Company (the Subscription Agent), 

the Plan’s record keeper, the custodian for the First 

Federal Bancshares of Arkansas, Inc. Rights Fund 

(the Rights Fund), and the clearing agent for the 

Offering sufficient time to process all such elections 

by the Invested Participants to exercise their Rights, 

tabulate and confirm the results, liquidate each 

such Invested Participant’s funds, confirm the 

orders and the availability of such funds, and remit 

payment to purchase the shares. 

23 It is represented that if the value of investments 

liquidated did not equal or exceed the purchase 

price of the Stock that an Invested Participant had 

elected to purchase in the Offering, none of the 

Rights held in such Invested Participant’s account 

were exercised. In that situation, such Invested 

Participant was deemed not to have exercised his 

Rights and all subscription payments received on 

that Invested Participant’s behalf were returned to 

the Plan and deposited based upon such 

Participant’s investment allocation election. 

capital, the Offering also provided 

existing shareholders with the 

opportunity to purchase the Stock at the 

same price per share paid by Bear State 

for the 15,425,262 post-Reverse Split 

shares of Stock Bear State acquired on 

May 3, 2011. 

9. The total number of shares of Stock 

outstanding, as of the commencement 

date of the Offering on May 10, 2011, 

was 16,394,619. At the close of business 

on May 10, 2011, the Stock was trading 

on the NASDAQ at $9.07 per share. 

After giving effect to the 2,908,071 

shares of Stock issued in connection 

with the Offering, the issued and 

outstanding shares of Stock totaled 

19,302,690. The closing price of the 

Stock on the ending date of the Offering 

on June 21, 2011, was $7.77. 

10. Under the terms of the Offering, 

all shareholders of the Stock, including 

the Invested Participants in the Plan, 

automatically received at no charge the 

Rights to purchase, through the exercise 

of such Rights, the Stock being issued 

by Bancshares in connection with the 

Offering. All shareholders of the Stock, 

including the Invested Participants, 

held the Rights until such Rights were 

either exercised, or such Rights expired. 

With respect to the Rights, under the 

terms of the Offering, one (1) Right was 

issued for every share of the Stock held 

by each shareholder, including the 

Invested Participants, on March 23, 

2011, 5 p.m. Eastern time (the Record 

Date), as adjusted to take account of the 

Reverse Stock Split that occurred on 

May 3, 2011. All Rights were rounded 

down to the nearest whole number for 

each shareholder, including the 

Invested Participants. 

11. It is represented that the Rights 

were not listed, traded or quoted on 

NASDAQ or on any other stock 

exchange or trading market. Further, the 

terms of the Offering stipulated that the 

Rights could not be sold, assigned or 

transferred. 

12. The Rights could only be 

exercised in whole numbers. Upon 

exercise, each of the Rights permitted a 

shareholder of the Stock, including the 

Invested Participants, to purchase three 

(3) additional shares of Stock at a 

subscription price of $3.00 per share. A 

shareholder, including each Invested 

Participant, had the right to choose to 

exercise some, all, or none of his Rights. 

The exercise of any of the Rights was 

irrevocable. 

13. It is represented that to the extent 

shareholders did not exercise in full all 

of their Rights, each shareholder who 

did timely and fully exercise his basic 

Rights would have an oversubscription 

privilege to subscribe for a portion of 

the Stock in the Offering, subject to 

availability and allocation. However, a 

shareholder’s ability to purchase Stock 

in the Offering (through the exercise of 

his basic Rights and any 

oversubscription privilege) was subject 

to an overall beneficial ownership 

limitation of 4.9 percent (4.9%) of 

Bancshares outstanding Stock. If 

oversubscription requests exceed the 

number of shares available, Bancshares 

allocated the available shares pro rata 

among the holders of Rights who 

exercised the oversubscription privilege. 

14. The Rights could be exercised 

beginning May 10, 2011, the date of the 

issuance of the prospectus describing 

the Offering. The Offering was to have 

closed with respect to the exercise of the 

Rights on June 7, 2011, but due to 

delays in the delivery of subscription 

materials, the closing of the Offering 

was extended to June 21, 2011. Pursuant 

to the terms of the Offering all 

unexercised Rights expired and became 

worthless after the closing of the 

Offering. 

15. It is represented that on May 10, 

2011, the commencement date of the 

Offering, the Plan was the record owner 

of 106,964 shares of Stock which were 

allocated to the individual accounts of 

180 Invested Participants. The aggregate 

fair market value of the assets of the 

Plan invested in shares of the Stock, on 

May 10, 2011, based on a closing price 

of such Stock of $9.07 on NASDAQ on 

that date was $970,167. As of May 10, 

2011, the approximate percentage of the 

fair market value of the total assets of 

the Plan invested in the Stock was 27 

percent (27%). As of the same date, 

106,964 shares of Stock constituted 

approximately .65 percent (.65%) of the 

16,394,619 shares of Stock outstanding. 

16. Based on the ratio of one (1) Right 

for each share of Stock held, the Plan 

acquired 106,964 Rights, as a result of 

the Offering. It is represented that the 

Plan subscribed for 276,579 shares of 

Stock in the exercise of the basic Rights 

and the oversubscription privilege. Of 

the Rights received by the Plan on 

behalf of accounts of the Invested 

Participants all Rights were either 

exercised or expired. 

17. The Plan and RTC were notified 

of the issuance of the Rights in a press 

release from Bancshares, dated May 10, 

2011. Enclosed with a form letter 

mailed, on May 10, 2011, to each 

Invested Participant in the Plan 

Bancshares also provided a copy of the 

prospectus which described the 

Offering, a document providing 

frequently asked questions and answers 

regarding the Offering, an election form 

for Invested Participants in the Plan, a 

return envelope addressed to 

Bancshares, and a statement indicating 

the number of shares of Stock each 

Invested Participant held, as of the 

Record Date. 

18. In order to exercise some or all of 

the Rights, an Invested Participant had 

to complete an election form and to 

submit such election form to Bancshares 

by the close of business on the fifth (5th) 

business day (June 14, 2011 at 5 p.m. 

EST), prior to the expiration of the 

Offering on June 21, 2011.22 Each 

Invested Participant who submitted an 

election form was required to indicate 

on such election form a sufficient 

amount of current investments in such 

Invested Participant’s account in the 

Plan to be liquidated in order to 

generate the full subscription price in 

cash based on the number of basic 

Rights and any oversubscription 

privileges to be exercised.23 It is 

represented that the selected 

investments were liquidated consistent 

with such Invested Participant’s 

direction on the election form and 

transferred to the Rights Fund at RTC 

which was established in anticipation of 

the Offering. RTC placed the order to 

purchase the shares with the 

Subscription Agent. It is represented 

that the Rights Fund was liquidated on 

June 21, 2011, and cash equal to the 

necessary subscription payment was 

transferred to the Subscription Agent. 

Following the closing of the Offering, 

the acquired shares of Stock were then 

credited to the applicable Invested 

Participant’s account in the Plan. In the 

event the Invested Participants oversubscribed for more shares of Stock than 

were available under the Offering, the 

money resulting from the liquidation of 

investments to buy those oversubscribed 

shares was re-deposited into the Plan 

based on the Investment Participant’s 

investment allocation election. 

It is represented that although 

5,576,216 total shares were subscribed 

for by all shareholders, including the 

mstockstill on DSK4VPTVN1PROD with NOTICES

70508 Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 

24 It is represented that the Invested Participants 

rely on the relief provided by the statutory 

exemption, pursuant to section 408(e) of the Act for 

the exercise of the Rights. The Department is 

offering no view, as to whether the requirements of 

the statutory exemption provided in section 408(e) 

of the Act have been satisfied. Further, the 

Department, herein, is not providing any relief with 

respect to the exercise of the Rights. 

Invested Participants, under the basic 

Rights and under the oversubscription 

privilege, only a total of 2,908,071 

shares of Stock were issued. 

It is represented that 102 Invested 

Participants out of 180 decided to 

exercise the Rights. In this regard, the 

Rights of such Invested Participants 

were executed on or about May 10, 

2011, until the Offering closed at 5 p.m. 

EST on June 14, 2011.24 The Invested 

Participants exercised 64,677 basic 

Rights. As a result of this exercise, the 

Invested Participants received 194,031 

shares of Stock from the exercise of their 

basic Rights and 55,014 shares of Stock 

from the exercise of their 

oversubscription privilege. 

19. It is represented that no brokerage 

fees, commissions, subscription fees, or 

any other charges were paid by the Plan 

with respect to the Offering, and no 

brokerage fees, commissions, or other 

monies were paid by the Plan to any 

broker in connection with the exercise 

of the Rights. It is further represented 

that Bancshares did not charge any fees 

or sales commissions to issue the Rights 

and did not charge any fees to issue the 

Stock upon the exercise of the Rights. 

20. It is represented that on June 30, 

2011, the Invested Participants received 

the Stock purchased as a result of the 

exercise of the Rights. It is further 

represented that the Stock purchased in 

connection with the Offering was 

eligible for trading on NASDAQ by the 

Invested Participants on June 30, 2011. 

21. Bancshares has requested an 

exemption with respect to the 

transactions which are the subject of 

this proposed exemption. In this regard, 

relief has been requested: (a) For the 

acquisition of the Rights by the Plan in 

connection with the Offering by 

Bancshares, and (b) for the holding of 

the Rights by the Plan during the 

subscription period of the Offering. 

It is represented that the Rights 

acquired by the Plan satisfy the 

definition of ‘‘employer securities,’’ 

pursuant to section 407(d)(1) of the Act. 

As the Rights were not stock or a 

marketable obligation, such Rights do 

not meet the definition of ‘‘qualifying 

employer securities,’’ as set forth in 

section 407(d)(5) of the Act. 

Accordingly, the subject transactions 

constitute an acquisition and holding on 

behalf of a plan, of an employer security 

which is not a qualifying employer 

security, in violation of section 407(a) of 

the Act, for which the applicant has 

requested relief from sections 

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

407(a)(1)(A) of the Act. The subject 

transactions also raise conflict of 

interest issues by fiduciaries of the Plan 

for which relief from the prohibitions of 

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

Act has been requested. 

22. It is represented that the subject 

transactions have already been 

consummated. In this regard, the Plan 

acquired the Rights pursuant to the 

Offering on May 10, 2011, and held 

such Rights pending the closing of the 

Offering on June 21, 2011. As there was 

insufficient time between the dates 

when the Plan acquired the Rights and 

when such Rights expired, to apply for 

and be granted an exemption, 

Bancshares is seeking a retroactive 

exemption to be granted, effective as of 

May 10, 2011, the date that the Plan 

acquired the Rights. 

23. Bancshares represents that the 

proposed exemption is administratively 

feasible. In this regard, the acquisition 

and holding of the Rights by the Plan 

were one-time transactions that 

involved an automatic distribution of 

the Rights to all shareholders at no cost. 

It is represented that it is customary for 

the industry involved to make a rights 

offering available to all shareholders. 

24. Bancshares represents that the 

transactions which are the subject of 

this proposed exemption are in the 

interest of the Plan, because the subject 

transactions represented a valuable 

opportunity to the accounts of the 

Invested Participants in the Plan to buy 

the Stock at a discount. It is represented 

that this discount could be realized by 

selling the Stock immediately after the 

exercise of the Rights and investing the 

proceeds from such sale of the Stock in 

other investment options under the 

Plan. 

25. Bancshares represents that the 

proposed exemption provides sufficient 

safeguards for the protection of the Plan 

and its participants and beneficiaries. In 

this regard, participation in the Offering 

protected the accounts of the Invested 

Participants in the Plan from having 

their interests in the Stock diluted as a 

result of the Offering. 

It is further represented that the 

interests of the accounts of Invested 

Participants in the Plan were adequately 

protected in that the Plan acquired and 

held the Rights automatically as a result 

of the Offering. 

The accounts of Invested Participants 

in the Plan were protected against 

economic loss from the exercise of the 

Rights. In this regard, it is represented 

that RTC was instructed to note the 

public trading price of the Stock on June 

20, 2011 (one business day before the 

close of the Offering), and was 

instructed not to exercise any Rights 

held by the Plan, if the per share public 

trading price of the Stock at the close of 

trading was less than or equal to the 

subscription price of $3.00 per share on 

that date. It is represented that the 

closing price of the Stock on June 20, 

2011, was $8.01 per share. If on June 20, 

2011 the public trading price per share 

of the Stock had not been greater than 

the exercise price under the Rights, the 

election to exercise would not have 

been honored and the payments 

received on behalf of Invested 

Participants would have been returned 

to the Plan and deposited based on such 

Invested Participants investment 

allocation election. 

26. In summary, Bancshares 

represents that the subject transactions 

satisfy the statutory criteria of section 

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

of the Code because: 

(a) The receipt by the Plan of the 

Rights occurred in connection with the 

Offering made available by Bancshares 

on the same terms to all shareholders of 

the Stock of Bancshares; 

(b) The acquisition of the Rights by 

the Plan resulted from an independent 

act of Bancshares, as a corporate entity, 

and all holders of the Rights, including 

the Plan, were treated in the same 

manner with respect to the acquisition 

of such Rights; 

(c) Each shareholder of the Stock, 

including the Plan, received the same 

proportionate number of Rights based 

on the number of shares of Stock of 

Bancshares held by such shareholder; 

(d) The Rights were acquired pursuant 

to provisions under the Plan for 

individually directed investments of the 

accounts of the Invested Participants, all 

or a portion of whose accounts in the 

Plan hold the Stock; 

(e) The decision to exercise the Rights 

or to refrain from exercising the Rights 

was made by each of the Invested 

Participants in accordance with the 

provision under the Plan for 

individually-directed accounts; and 

(f) No brokerage fees, no commissions, 

no subscription fees, and no other 

charges were paid by the Plan with 

respect to the Offering, and no brokerage 

fees, no commissions, and no other 

monies were paid by the Plan to any 

broker in connection with the exercise 

of the Rights. 

Notice to Interested Persons 

The persons who may be interested in 

the publication in the Federal Register 

of the Notice of Proposed Exemption 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 76, No. 219 / Monday, November 14, 2011 / Notices 70509 

(the Notice) include all individuals who 

are participants in the Plan who 

received the Rights. 

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. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Angelena C. Le Blanc of the Department, 

telephone (202) 693–8540. (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 7th day of 

November 2011. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2011–29235 Filed 11–10–11; 8:45 am] 

BILLING CODE 4510–29–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

Agency Sunshine Act Meeting 

TIME AND DATE: 9 a.m., Thursday, 

November 17, 2011. 

PLACE: Board Room, 7th Floor, Room 

7047, 1775 Duke Street, Alexandria, VA 

22314–3428. 

STATUS: Open. 

MATTERS TO BE CONSIDERED: 

1. Final Rule—Section 701.20 of 

NCUA’s Rules and Regulations, 

Remittance Transfers. 

2. Final Rule—Part 750 of NCUA’s 

Rules and Regulations, Golden 

Parachute and Indemnification 

Payments, Technical Corrections. 

3. Proposed Rule—Parts 701, 741, and 

742 of NCUA’s Rules and Regulations, 

Loan Participations. 

4. Request from Finance Center 

Federal Credit Union to Expand its 

Community Charter. 

5. Insurance Fund Report and 

Premium/Assessment Ranges. 

6. NCUA’s 2012 Operating Budget. 

7. NCUA’s Overhead Transfer Rate. 

8. NCUA’s Operating Fee Scale. 

FOR FURTHER INFORMATION CONTACT: 

Mary Rupp, Secretary of the Board, 

Telephone: (703) 518–6304. 

Mary Rupp, 

Board Secretary. 

[FR Doc. 2011–29488 Filed 11–9–11; 4:15 pm] 

BILLING CODE 7535–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

Agency Sunshine Act Meeting 

TIME AND DATE: 10 a.m., Wednesday, 

November 16, 2011. 

PLACE: Board Room, 7th Floor, Room 

7047, 1775 Duke Street, Alexandria, VA 

22314–3428. 

STATUS: Closed. 

MATTERS TO BE CONSIDERED: 

1. Member Business Loan Waiver 

Appeal. Closed pursuant to some or all 

of the following: exemptions (4) and (8). 

2. Consideration of Supervisory 

Activities (2). Closed pursuant to some 

or all of the following: exemptions (8), 

(9)(A)(ii) and 9(B). 

FOR FURTHER INFORMATION CONTACT: 

Mary Rupp, Secretary of the Board, 

Telephone: (703) 518–6304. 

Mary Rupp, 

Board Secretary. 

[FR Doc. 2011–29490 Filed 11–9–11; 4:15 pm] 

BILLING CODE 7535–01–P 

NATIONAL FOUNDATION ON THE 

ARTS AND THE HUMANITIES 

National Endowment for the Arts; 

Federal Advisory Committee on 

International Exhibitions 

Pursuant to Section 10(a)(2) of the 

Federal Advisory Committee Act (Pub. 

L. 92–463), as amended, notice is hereby 

given that a meeting of the Federal 

Advisory Committee on International 

Exhibitions (FACIE) will be held on 

December 7, 2011 in Room 815 at the 

Nancy Hanks Center, 1100 Pennsylvania 

Avenue NW., Washington, DC 20506 

(ending time is approximate). This 

meeting, from 9 a.m. to 12:30 p.m., is for 

application review and will be closed. 

The closed portions of meetings are 

for the purpose of Panel review, 

discussion, evaluation, and 

recommendations on financial 

assistance under the National 

Foundation on the Arts and the 

Humanities Act of 1965, as amended, 

including information given in 

confidence to the agency. In accordance 

with the determination of the Chairman 

of February 15, 2011, these sessions will 

be closed to the public pursuant to 

subsection (c)(6) of section 552b of Title 

5, United States Code. 

Further information with reference to 

these meetings can be obtained from Ms. 

Kathy Plowitz-Worden, Office of 

Guidelines & Panel Operations, National 

Endowment for the Arts, Washington, 

DC 20506, or call (202) 682–5691. 

mstockstill on DSK4VPTVN1PROD with NOTICES