Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 19641 

1, 3, and 5 of the ‘487 patent; (iv) claims 

21, 30, 31 and 32 of the ‘325 patent; and 

(v) claim 1 of the ‘880 patent. The 

Commission has issued cease and desist 

orders directed to CCUS and CCPK, 

with an exemption for activities related 

to treatment of existing patients in the 

United States. The investigation is 

hereby terminated. 

The authority for the Commission’s 

determination is contained in section 

337 of the Tariff Act of 1930, as 

amended (19 U.S.C. 1337), and in Part 

210 of the Commission’s Rules of 

Practice and Procedure (19 CFR part 

210). 

By order of the Commission. 

Issued: April 3, 2014. 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2014–07875 Filed 4–8–14; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Office of Justice Programs 

[OJP (NIJ) Docket No. 1655] 

Draft of SWGDOC Standard for the 

Examination of Documents for 

Alterations 

AGENCY: National Institute of Justice, 

JPO, DOJ. 

ACTION: Notice and request for 

comments. 

SUMMARY: In an effort to obtain 

comments from interested parties, the 

U.S. Department of Justice, Office of 

Justice Programs, National Institute of 

Justice, Scientific Working Group for 

Forensic Document Examination 

(SWGDOC) will make available to the 

general public a draft document 

entitled, ‘‘SWGDOC Standard for the 

Examination of Documents for 

Alterations’’. The opportunity to 

provide comments on this document is 

open to forensic document examiners, 

law enforcement agencies, 

organizations, and all other stakeholders 

and interested parties. Those 

individuals wishing to obtain and 

provide comments on the draft 

document under consideration are 

directed to the following Web site: 

http://www.swgdoc.org 

DATES: Comments must be received on 

or before May 31, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Patricia Kashtan, by telephone at 202– 

353–1856 [Note: this is not a toll-free 

telephone number], or by email at 

Patricia.Kashtan@usdoj.gov. 

Gregory K. Ridgeway, 

Acting Director, National Institute of Justice. 

[FR Doc. 2014–07977 Filed 4–8–14; 8:45 am] 

BILLING CODE 4410–18–P 

DEPARTMENT OF JUSTICE 

Office of Justice Programs 

[OJP (OJJDP) Docket No. 1653] 

Meeting of the Federal Advisory 

Committee on Juvenile Justice 

AGENCY: Office of Juvenile Justice and 

Delinquency Prevention, DOJ. 

ACTION: Notice of Webinar Meeting. 

SUMMARY: The Office of Juvenile Justice 

and Delinquency Prevention (OJJDP) has 

scheduled a webinar meeting of the 

Federal Advisory Committee on 

Juvenile Justice (FACJJ). 

Dates and Location: The meeting will 

take place online, as a webinar, on 

Monday, April 28th, 2014, from 2 p.m. 

to 5 p.m. (ET). 

FOR FURTHER INFORMATION CONTACT: 

Kathi Grasso, Designated Federal 

Official, OJJDP, Kathi.Grasso@usdoj.gov, 

or (202) 616–7567. [This is not a tollfree number.] 

SUPPLEMENTARY INFORMATION: The 

Federal Advisory Committee on 

Juvenile Justice (FACJJ), established 

pursuant to section 3(2)(A) of the 

Federal Advisory Committee Act (5 

U.S.C. App. 2), will meet to carry out its 

advisory functions under section 

223(f)(2)(C–E) of the Juvenile Justice and 

Delinquency Prevention Act of 2002 (42 

U.S.C. 5633(f)(2)(C–E)). The FACJJ is 

composed of representatives from the 

states and territories. FACJJ member 

duties include: Reviewing Federal 

policies regarding juvenile justice and 

delinquency prevention; advising the 

OJJDP Administrator with respect to 

particular functions and aspects of 

OJJDP; and advising the President and 

Congress with regard to State 

perspectives on the operation of OJJDP 

and Federal legislation pertaining to 

juvenile justice and delinquency 

prevention. More information on the 

FACJJ may be found at www.facjj.org. 

Meeting Agenda: The proposed 

agenda includes: (a) Welcome and 

introductions of new members; (b) 

Report on 2013 FACJJ Report and Report 

Dissemination Plan; (c) Role of FACJJ/

Issues for consideration; (d) Planning for 

October 2014 Face-to-Face Meeting and 

(e) miscellaneous FACJJ business 

matters. 

To participate in or view the webinar 

meeting, members of the FACJJ and the 

public must pre-register online. 

Members and interested persons must 

link to the webinar registration portal 

through www.facjj.org no later than 

Wednesday, April 23th, 2014. Upon 

registration, information will be sent to 

you at the email address you provide to 

enable you to connect to the webinar. 

Should problems arise with webinar 

registration, please call Michelle 

Duhart-Tonge at 703–225–2103 [This is 

not a toll-free telephone number.] Note: 

Members of the public will be able to 

listen to and view the webinar as 

observers, but will not be able to 

actively participate during the webinar. 

An on-site room (at the Office of 

Justice Programs, 810 7th St. NW., 

Washington, DC) is available for 

members of the public interested in 

viewing the webinar in person. If 

members of the public wish to view the 

webinar in person, they must notify 

Kathi Grasso by email message to 

Kathi.grasso@usdoj.gov, no later than 

Wednesday, April 23rd, 2014. 

Please note that, with the exception of 

the FACJJ chair, FACJJ members will not 

be physically present in Washington, 

DC for the webinar. They will 

participate in the webinar from their 

respective home jurisdictions. 

Written Comments: Interested parties 

may submit written comments in 

advance to Kathi Grasso, Designated 

Federal Official, by email message to 

Kathi.Grasso@usdoj.gov, no later than 

Wednesday, April 23rd, 2014. 

Alternatively, fax your comments to 

202–307–2819 and contact Joyce Mosso 

Stokes at 202–305–4445 to ensure that 

they are received. [These are not tollfree numbers.] 

Nancy Ayers, 

Deputy Administrator for Operations, Office 

of Juvenile Justice and Delinquency 

Prevention. 

[FR Doc. 2014–07978 Filed 4–8–14; 8:45 am] 

BILLING CODE 4410–18–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 


TKELLEY on DSK3SPTVN1PROD with NOTICES
19642 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 

1The Department has considered exemption 

applications received prior to December 27, 2011 

under the exemption procedures set forth in 29 CFR 

Part 2570, Subpart B (55 FR 32836, 32847, August 

10, 1990). 2For purposes of this proposed exemption, 

references to section 406 of ERISA should be read 

to refer as well to the corresponding provisions of 

section 4975 of the Code. 

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– 

11496, Northwestern Mutual Investment 

Services, Inc.; D–11773, The Delaware 

County Bank and Trust Company 

Employee 401(k) Retirement Plan (the 

Plan); D–11780, The Home Savings and 

Loan Company 401(k) Savings Plan (the 

Plan), United Community Financial 

Corporation (UCFC) and the Home 

Savings and Loan Company (Home 

Savings); and D–11756, Liberty Media 

401(k) Savings Plan (the 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 

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. llll , stated in each Notice of 

Proposed Exemption. Interested persons 

are also invited to submit comments 

and/or hearing requests to EBSA via 

email or FAX. Any such comments or 

requests should be sent either by email 

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

(202) 219–0204 by the end of the 

scheduled comment period. The 

applications for exemption and the 

comments received will be available for 

public inspection in the Public 

Documents Room of the Employee 

Benefits Security Administration, U.S. 

Department of Labor, Room N–1513, 

200 Constitution Avenue NW., 

Washington, DC 20210. 

Warning: All comments will be made 

available to the public. Do not include 

any personally identifiable information 

(such as Social Security number, name, 

address, or other contact information) or 

confidential business information that 

you do not want publicly disclosed. All 

comments may be posted on the Internet 

and can be retrieved by most Internet 

search engines. 

SUPPLEMENTARY INFORMATION: 

Notice to Interested Persons 

Notice of the proposed exemptions 

will be provided to all interested 

persons in the manner agreed upon by 

the applicant and the Department 

within 15 days of the date of publication 

in the Federal Register. Such notice 

shall include a copy of the notice of 

proposed exemption as published in the 

Federal Register and shall inform 

interested persons of their right to 

comment and to request a hearing 

(where appropriate). 

The proposed exemptions were 

requested in applications filed pursuant 

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

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

accordance with procedures set forth in 

29 CFR Part 2570, Subpart B (76 FR 

66637, 66644, October 27, 2011).1

Effective December 31, 1978, section 

102 of Reorganization Plan No. 4 of 

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

the authority of the Secretary of the 

Treasury to issue exemptions of the type 

requested to the Secretary of Labor. 

Therefore, these notices of proposed 

exemption are issued solely by the 

Department. 

The applications contain 

representations with regard to the 

proposed exemptions which are 

summarized below. Interested persons 

are referred to the applications on file 

with the Department for a complete 

statement of the facts and 

representations. 

Northwestern Mutual Investment 

Services, Inc. Located in Milwaukee, 

Wisconsin 

[Exemption Application No. D–11496] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA or the 

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

Internal Revenue Code of 1986, as 

amended (the Code), and in accordance 

with the procedures set forth in 29 CFR 

Part 2570, Subpart B (76 FR 66637, 

66644, October 27, 2011).2

Section I. Transactions Involving Plans 

Described In Both Title I And Title II of 

ERISA 

If the proposed exemption is granted, 

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

(B), and (D) and section 406(b)(1) and 

(2) of ERISA, and the taxes imposed by 

section 4975(a) and (b) of the Code, by 

reason of section 4975(c)(1)(A), (B), (D), 

and (E) of the Code, shall not apply, 

effective February 1, 2008, to the 

following transactions, if the conditions 

set forth in Section III have been met: 

(a) The sale or exchange of an Auction 

Rate Security (as defined in Section 

IV(b)) by a Plan (as defined in Section 

IV(h)) to the Sponsor (as defined in 

Section IV(g)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Plan in 

connection with the holding of an 

Auction Rate Security by the Plan, from: 

(1) Northwestern Mutual Investment 

Services, Inc. or an affiliate 

(Northwestern Mutual); (2) an 

Introducing Broker (as defined in 

Section IV(f)); or (3) a Clearing Broker 

(as defined in Section IV(d)); where the 

loan is: (i) Repaid in accordance with its 

terms; and (ii) guaranteed by the Plan 

Sponsor. 

Section II. Transactions Involving Plans 

Described In Title II of ERISA Only 

If the proposed exemption is granted, 

the sanctions resulting from the 

application of section 4975(a) and (b) of 

the Code, by reason of section 

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

Code, shall not apply, effective February 

1, 2008, to the following transactions, if 

the conditions set forth in Section III 

have been met: 

(a) The sale or exchange of an Auction 

Rate Security by a Title II Only Plan (as 

defined in Section IV(i)) to the 

Beneficial Owner (as defined in Section 

IV(c)) of such Plan; or 

(b) A lending of money or other 

extension of credit to a Title II Only 

Plan in connection with the holding of 

an Auction Rate Security by the Title II 

Only Plan, from: (1) Northwestern 

Mutual; (2) an Introducing Broker; or (3) 

a Clearing Broker; where the loan is: (i) 

Repaid in accordance with its terms 

and; (ii) guaranteed by the Beneficial 

Owner. 

Section III. Conditions 

(a) Northwestern Mutual acted as a 

broker or dealer, non-bank custodian, or 

fiduciary in connection with the 

acquisition or holding of the Auction 

Rate Security that is the subject of the 

transaction described in Section I or II 

of this proposal; 

(b) For transactions involving a Plan 

(including a Title II Only Plan) not 


TKELLEY on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 19643 

3The Department notes that the Act’s general 

standards of fiduciary conduct also would apply to 

the transactions described herein. In this regard, 

section 404 requires, among other things, that a 

fiduciary discharge his duties respecting a plan 

solely in the interest of the plan’s participants and 

beneficiaries and in a prudent manner. 

Accordingly, a plan fiduciary must act prudently 

with respect to, among other things: (1) The 

decision to exchange an Auction Rate Security for 

a Delivery Security; and (2) the negotiation of the 

terms of such exchange (or a cash sale or loan 

described above), including the pricing of such 

securities. The Department further emphasizes that 

it expects plan fiduciaries, prior to entering into any 

of the proposed transactions, to fully understand 

the risks associated with these types of transactions 

following disclosure by Northwestern Mutual of all 

relevant information. 

sponsored by Northwestern Mutual for 

its own employees, the decision to enter 

into the transaction is made by a Plan 

fiduciary who is Independent (as 

defined in Section IV(e)) of 

Northwestern Mutual. Notwithstanding 

the foregoing, an employee of 

Northwestern Mutual who is the 

Beneficial Owner of a Title II Only Plan 

may direct such Plan to engage in a 

transaction described in Section II, if all 

of the other conditions of this Section III 

have been met; 

(c) The last auction for the Auction 

Rate Security was unsuccessful; 

(d) The Plan does not waive any rights 

or claims in connection with the sale or 

loan as a condition of engaging in the 

above-described transaction; 

(e) The Plan does not pay any fees or 

commissions in connection with the 

transaction; 

(f) The transaction is not part of an 

arrangement, agreement or 

understanding designed to benefit a 

party in interest; 

(g) With respect to any sale described 

in Section I(a) or Section II(a): 

(1) The sale is for no consideration 

other than cash payment against prompt 

delivery of the Auction Rate Security; 

and 

(2) For purposes of the sale, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 

(h) With respect to an in-kind 

exchange described in Section (I)(a) or 

Section II(a), the exchange involves the 

transfer by a Plan of an Auction Rate 

Security in return for a Delivered 

Security, as such term is defined in 

Section IV(j), where: 

(1) The exchange is unconditional; 

(2) For purposes of the exchange, the 

Auction Rate Security is valued at par, 

plus any accrued but unpaid interest; 

(3) The Delivered Security is valued at 

fair market value, as determined at the 

time of the in-kind exchange by a third 

party pricing service or other objective 

source; 

(4) The Delivered Security is 

appropriate for the Plan and is a 

security that the Plan is otherwise 

permitted to hold under applicable 

law; 3 and 

(5) The total value of the Auction Rate 

Security (i.e., par plus any accrued but 

unpaid interest) is equal to the fair 

market value of the Delivered Security; 

(i) With respect to a loan described in 

Section I(b) or II(b): 

(1) The loan is documented in a 

written agreement containing all of the 

material terms of the loan, including the 

consequences of default; 

(2) The Plan does not pay an interest 

rate that exceeds one of the following 

three rates as of the commencement of 

the loan: 

(A) The coupon rate for the Auction 

Rate Security; 

(B) The Federal Funds Rate; or 

(C) The Prime Rate; 

(3) The loan is unsecured; and 

(4) The amount of the loan is not more 

than the total par value of the Auction 

Rate Securities held by the Plan. 

Section IV. Definitions 

(a) The term ‘‘affiliate’’ means: Any 

person directly or indirectly, through 

one or more intermediaries, controlling, 

controlled by, or under common control 

with such other person; 

(b) The term ‘‘Auction Rate Security’’ 

or ‘‘ARS’’ means a security: 

(1) That is either a debt instrument 

(generally with a long-term nominal 

maturity) or preferred stock; and 

(2) With an interest rate or dividend 

that is reset at specific intervals through 

a Dutch auction process; 

(c) The term ’’Beneficial Owner’’ 

means: The individual for whose benefit 

the Title II Only Plan is established and 

includes a relative or family trust with 

respect to such individual; 

(d) The term ‘‘Clearing Broker’’ 

means: A member of a securities 

exchange that acts as a liaison between 

an investor and a clearing corporation 

and that helps to ensure that a trade is 

settled appropriately, that the 

transaction is successfully completed 

and that is responsible for maintaining 

the paper work associated with the 

clearing and executing of a transaction; 

(e) The term ‘‘Independent’’ means a 

person who is: (1) Not Northwestern 

Mutual or an affiliate; and (2) not a 

relative (as defined in ERISA section 

3(15)) of the party engaging in the 

transaction; 

(f) The term ‘‘Introducing Broker’’ 

means: A registered broker that is able 

to perform all the functions of a broker 

except for the ability to accept money, 

securities, or property from a customer; 

(g) The term ‘‘Sponsor’’ means: A plan 

sponsor as described in section 3(16)(B) 

of the Act and any Affiliates; 

(h) The term ‘‘Plan’’ means: Any plan 

described in section 3(3) of the Act and/ 

or section 4975(e)(1) of the Code; 

(i) The term ‘‘Title II Only Plan’’ 

means: Any plan described in section 

4975(e)(1) of the Code which is not an 

employee benefit plan covered by Title 

I of ERISA; 

(j) The term ‘‘Delivered Security’’ 

means a security that is: (1) Listed on a 

national securities exchange (excluding 

OTC Bulletin Board-eligible securities 

and Pink Sheets-quoted securities); or 

(2) a U.S. Treasury obligation; or (3) A 

fixed income security that has a rating 

at the time of the exchange that is in one 

of the two highest generic rating 

categories from an independent 

nationally recognized statistical rating 

organization (e.g., a highly rated 

municipal bond or a highly rated 

corporate bond); or (4) A certificate of 

deposit insured by the Federal Deposit 

Insurance Corporation. Notwithstanding 

the above, the term ‘‘Delivered 

Security’’ shall not include any Auction 

Rate Security, or any related Auction 

Rate Security, including derivatives or 

securities materially comprised of 

Auction Rate Securities or any illiquid 

securities. 

Summary of Facts and Representations 

1. The Applicant is Northwestern 

Mutual Investment Services, Inc. and its 

affiliates (hereinafter, either 

Northwestern Mutual or the Applicant). 

Northwestern Mutual is a broker-dealer 

wholly owned by Northwestern Mutual 

Life Insurance Company, whose 

businesses include the provision of 

investment advisory and other services 

to IRAs and pension, profit sharing, and 

401(k) plans qualified under section 

401(a) of the Code. Among other things, 

Northwestern Mutual acts as a broker 

and dealer with respect to the purchase 

and sale of securities, including Auction 

Rate Securities (or ARS). The Applicant 

describes ARS and the arrangement by 

which ARS are bought and sold as 

follows. ARS constitute securities 

(issued as debt or preferred stock) with 

an interest rate or dividend that is reset 

at periodic intervals pursuant to a 

process called a Dutch Auction. 

Investors submit orders to buy, hold, or 

sell a specific ARS to a broker-dealer 

selected by the entity that issued the 

ARS. The broker-dealers, in turn, submit 

all of these orders to an auction agent. 

The auction agent’s functions include 

collecting orders from all participating 

broker-dealers by the auction deadline, 

determining the amount of securities 

available for sale, and organizing the 


TKELLEY on DSK3SPTVN1PROD with NOTICES
19644 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 

4The Department notes that Class Exemption 80– 

26 (45 FR 28545 (Apr. 29, 1980), as amended at 71 

FR 17917 (Apr. 7, 2006)) permits interest-free loans 

or other extensions of credit from a party in interest 

to a Plan if, among other things, the proceeds of the 

loan or extension of credit are used only—(1) for 

the payment of ordinary operating expenses of the 

Plan, including the payment of benefits in 

accordance with the terms of the Plan and periodic 

premiums under an insurance or annuity contract, 

or (2) for a purpose incidental to the ordinary 

operation of the Plan. 

5The relief contained in this proposed exemption 

does not extend to the fiduciary provisions of 

section 404 of the Act. 

bids to determine the winning bid. If 

there are any buy orders placed into the 

auction at a specific rate, the auction 

agent accepts bids with the lowest rate 

above any applicable minimum rate and 

then successively higher rates up to the 

maximum applicable rate, until all sell 

orders and orders that are treated as sell 

orders are filled. Bids below any 

applicable minimum rate or above the 

applicable maximum rate are rejected. 

After determining the clearing rate for 

all of the securities at auction, the 

auction agent allocates the ARS 

available for sale to the participating 

broker-dealers based on the orders they 

submitted. If there are multiple bids at 

the clearing rate, the auction agent will 

allocate securities among the bidders at 

such rate on a pro-rata basis. 

2. The Applicant states that 

Northwestern Mutual is permitted, but 

not obligated, to submit orders in 

auctions for its own account either as a 

bidder or a seller and routinely does so 

in the ARS market in its sole discretion. 

Northwestern Mutual may routinely 

place one or more bids in an auction for 

its own account to acquire ARS for its 

inventory, to prevent: (1) A failed 

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

insufficient clearing bids which would 

result in the auction rate being set at a 

specified rate); or (2) an auction from 

clearing at a rate that Northwestern 

Mutual believes does not reflect the 

market for the particular ARS being 

auctioned. 

3. The Applicant states that for many 

ARS, Northwestern Mutual has been 

appointed by the issuer of the securities 

to serve as a dealer in the auction and 

is paid by the issuer for its services. 

Northwestern Mutual is typically 

appointed to serve as a dealer in the 

auctions pursuant to an agreement 

between the issuer and Northwestern 

Mutual. That agreement provides that 

Northwestern Mutual will receive from 

the issuer auction dealer fees based on 

the principal amount of the securities 

placed through Northwestern Mutual. 

4. The Applicant states further that 

Northwestern Mutual may share a 

portion of the auction rate dealer fees it 

receives from the issuer with other 

broker-dealers that submit orders 

through Northwestern Mutual, for those 

orders that Northwestern Mutual 

successfully places in the auctions. 

Similarly, with respect to ARS for 

which broker-dealers other than 

Northwestern Mutual act as dealer, such 

other broker-dealers may share auction 

dealer fees with Northwestern Mutual 

for orders submitted by Northwestern 

Mutual. 

5. According to the Applicant, since 

February 2008, a minority of auctions 

have cleared, particularly involving 

municipalities. As a result, Plans 

holding ARS may not have sufficient 

liquidity to make benefit payments, 

mandatory payments and withdrawals 

and expense payments when due.4

6. The Applicant represents that, in 

certain instances, Northwestern Mutual 

may have previously advised or 

otherwise caused a Plan to acquire and 

hold an ARS and thus may be 

considered a fiduciary to the Plan, so 

that a sale between a Plan and its 

sponsor or an IRA and its Beneficial 

Owner violates section 406(a)(1)(A) and 

(D), and 406(b)(1) and (2) of ERISA and/ 

or corresponding provisions of the 

Code; in addition, a loan to the Plan by 

Northwestern Mutual may violate 

section 406(a)(1)(B) and (D), and 

406(b)(1) and (2) of ERISA.5 The 

Applicant is therefore requesting relief 

for the following transactions, involving 

all employee benefit plans covered 

under both Title I and Title II of ERISA: 

(1) The sale or exchange of an ARS from 

a Plan to the Plan’s Sponsor; or (2) a 

lending of money or other extension of 

credit to a Plan in connection with the 

holding of an ARS from: Northwestern 

Mutual, an Introducing Broker, or a 

Clearing Broker, where the subsequent 

repayment of the loan is made in 

accordance with its terms and is 

guaranteed by the Plan Sponsor. 

7. The Applicant is requesting similar 

relief for plans covered only by Title II 

of ERISA. In this regard, the Applicant 

is requesting relief for: (1) The sale or 

exchange of an ARS from a Title II Only 

Plan to the Beneficial Owner of such 

Plan; or (2) a lending of money or other 

extension of credit to a Title II Only 

Plan in connection with the holding of 

an ARS from: Northwestern Mutual, an 

Introducing Broker, or a Clearing 

Broker, where the subsequent 

repayment of the loan is made in 

accordance with its terms and is 

guaranteed by the Beneficial Owner. 

8. The Applicant represents that the 

proposed transactions are in the 

interests of the Plans. In this regard, the 

Applicant states that the exemption, if 

granted, will provide Plan fiduciaries 

with liquidity notwithstanding changes 

that occurred in the ARS markets. The 

Applicant also notes that, other than for 

Plans sponsored by the Applicant, the 

decision to enter into a transaction 

described herein will be made by a Plan 

fiduciary who is independent of 

Northwestern Mutual. 

9. The proposed exemption contains a 

number of safeguards designed to 

protect the interests of each Plan. With 

respect to the sale of an ARS by a Plan, 

the Plan must receive cash equal to the 

par value of the security, plus any 

accrued interest. The sale must also be 

unconditional, other than being for 

payment against prompt delivery. For 

in-kind exchanges covered by the 

proposed exemption, the security 

delivered to the Plan (i.e., the Delivered 

Security) must be: (1) Listed on a 

national securities exchange (excluding 

OTC Bulletin Board-eligible securities 

and Pink Sheets-quoted securities); or 

(2) a U.S. Treasury obligation; or (3) a 

fixed income security that has a rating 

at the time of the exchange that is in one 

of the two highest generic rating 

categories from an independent 

nationally recognized statistical rating 

organization (e.g., a highly rated 

municipal bond or a highly rated 

corporate bond); or (4) a certificate of 

deposit insured by the Federal Deposit 

Insurance Corporation. The Delivered 

Security must also be appropriate for 

the Plan, and a security that the Plan is 

permitted to hold under applicable law. 

The proposed exemption further 

requires that the Delivered Security be 

valued at its fair market value, as 

determined at the time of the exchange 

from a third party pricing service or 

other objective source, and must equal 

the total value of the ARS being 

exchanged (i.e., par value, plus any 

accrued interest). 

10. With respect to a loan to a Plan 

holding an ARS, such loan must be 

documented in a written agreement 

containing all of the material terms of 

the loan, including the consequences of 

default. Further, the Plan may not pay 

an interest rate that exceeds one of the 

following three rates as of the 

commencement of the loan: The coupon 

rate for the ARS; the Federal Funds 

Rate; or the Prime Rate. Additionally, 

such loan must be unsecured and for an 

amount that is no more than the total 

par value of ARS held by the affected 

Plan. 

11. Additional conditions apply to 

each transaction covered by the 

exemption, if granted. Among other 

things, the Plan may not pay any fees or 

commissions in connection with the 

transaction and the transaction may not 

be part of an arrangement, agreement, or 


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6For purposes of this proposed exemption, 

references to the provisions of Title I of the Act, 

unless otherwise specified, refer also to the 

corresponding provisions of the Code. 

7The Summary of Facts and Representations is 

based on the Applicant’s representations and does 

not represent the views of the Department, unless 

indicated otherwise. 

8The Applicant represents that the Bank serves 

as the Trustee and custodian of the Plan in 

compliance with section 408(b)(2) of the Act and 

the regulations thereunder. Furthermore, according 

Continued 

understanding designed to benefit a 

party in interest. The exemption 

expressly prohibits any waiver of rights 

or claims by a Plan in connection with 

the sale or exchange of an ARS by a 

Plan, or a lending of money or other 

extension of credit to a Plan holding an 

ARS. 

12. In summary, the Applicant 

represents that the transactions 

described herein satisfy the statutory 

criteria set forth in section 408(a) of the 

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

because: 

(1) Any sale will be: 

(A) For no consideration other than 

cash payment against prompt delivery 

of the ARS; and 

(B) At par, plus any accrued but 

unpaid interest; 

(2) Any in-kind exchange will be 

unconditional, other than being for 

payment against prompt delivery, and 

will involve Delivered Securities that 

are: 

(A) Appropriate for the Plan; 

(B) Listed on a national securities 

exchange (but not OTC Bulletin Boardeligible securities and Pink Sheetsquoted securities); U.S. Treasury 

obligations; fixed income securities; or 

certificates of deposit; and 

(C) Securities that the Plan is 

permitted to hold under applicable law; 

and, 

(3) Any loan will be: 

(A) Documented in a written 

agreement containing all of the material 

terms of the loan, including the 

consequences of default; 

(B) At an interest rate not in excess of: 

the coupon rate for the ARS, the Federal 

Funds Rate, or the Prime Rate; 

(C) Unsecured; and 

(D) For an amount that is not more 

than the total par value of ARS held by 

the affected Plan. 

Notice to Interested Persons 

The Applicant represents that the 

potentially interested participants and 

beneficiaries cannot all be identified 

and therefore the only practical means 

of notifying such participants and 

beneficiaries of this proposed 

exemption is by the publication of this 

notice in the Federal Register. 

Comments and requests for a hearing 

must be received by the Department not 

later than 45 days from the date of 

publication of this notice of proposed 

exemption in the Federal Register. 

All comments will be made available 

to the public. Warning: Do not include 

any personally identifiable information 

(such as name, address, or other contact 

information) or confidential business 

information that you do not want 

publicly disclosed. All comments may 

be posted on the Internet and can be 

retrieved by most Internet search 

engines. 

FOR FURTHER INFORMATION CONTACT: 

Scott Ness of the Department, telephone 

(202) 693–8561. (This is not a toll-free 

number.) 

The Delaware County Bank and Trust 

Company Employee 401(k) Retirement 

Plan (the Plan) Located in Lewis Center, 

OH 

[Application No. D–11773] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA or the 

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

Internal Revenue Code of 1986, as 

amended (the Code), and in accordance 

with the procedures set forth in 29 CFR 

Part 2570, Subpart B (76 FR 66637, 

66644, October 27, 2011).6

Section I: Transactions 

If the proposed exemption is granted, 

the restrictions of sections 406(a)(1)(E), 

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

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

sanctions resulting from the application 

of section 4975 of the Code, by reason 

of section 4975(c)(1)(E) of the Code, 

shall not apply: 

(a) To the acquisition of certain 

subscription rights (the Stock Rights) by 

the Plan in connection with an offering 

(the Offering) of shares of common stock 

(the Stock) of DCB Financial Corp 

(DCBF), a party in interest with respect 

to the Plan; and 

(b) To the holding of the Stock Rights 

received by the Plan during the 

subscription period of the Offering; 

provided that the conditions set forth in 

Section II of this proposed exemption 

were satisfied. 

Section II: Conditions 

(a) The acquisition of the Stock Rights 

by the Plan was made pursuant to terms 

that were the same for all shareholders 

of DCBF Stock; 

(b) The acquisition of the Stock Rights 

by the Plan resulted from an 

independent, corporate act of DCBF; 

(c) Each shareholder of the Stock, 

including the Plan, received the same 

proportionate number of Stock Rights, 

and this proportionate number of Stock 

Rights was based on the number of 

shares of Stock held by each such 

shareholder; 

(d) The Stock Rights were acquired 

pursuant to, and in accordance with, 

provisions under the Plan for 

individually directed investments of the 

accounts of the individual participants, 

a portion of whose accounts in the Plan 

held the stock (the Invested 

Participants); 

(e) The decisions with regard to the 

holding and disposition of the Stock 

Rights by the Plan were made by the 

Invested Participants who received the 

Stock Rights in their Plan accounts; and 

(f) No brokerage fees, no subscription 

fees and no other charges were paid by 

the Plan with respect to the acquisition 

and holding of the Stock Rights, 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 Stock Rights to acquire 

DCBF shares. 

Effective Date: If granted, this 

proposed exemption will be effective 

from October 16, 2012, to November 26, 

2012. 

Summary of Facts and 

Representations 7

Parties to the Covered Transaction 

1. DCB Financial Corp (DCBF or the 

Applicant) is a financial holding 

company organized under Ohio law. 

DCBF is currently engaged in the 

financial services business through its 

wholly-owned subsidiary, Delaware 

County Bank & Trust Company (the 

Bank), and two non-bank subsidiaries, 

DCB Insurance Services, LLC and DCB 

Title Services, LLC. The Bank provides 

customary retail and commercial 

banking services through its main office 

and 14 branch offices located in 

Delaware, Ohio and surrounding 

counties. 

2. The Delaware County Bank and 

Trust Company 401(k) Retirement Plan 

(the Plan), originally effective on 

January 1, 1991, is a qualified profit 

sharing plan under Section 401(a) of the 

Code. The Plan has adopted a prototype 

plan which received a favorable opinion 

letter from the Internal Revenue Service 

on March 31, 2008. The Plan sponsor 

believes that the Plan, as amended and 

restated, operates in compliance with 

the applicable requirements of the Code. 

In addition, the Applicant states that the 

Bank is the Plan’s trustee (the Trustee) 

and custodian.8


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to the Applicant, neither the Bank nor any of its 

affiliates receives any direct or indirect 

compensation in connection with its provision of 

such services to the Plan. The Department notes 

that DOL regulation 29 CFR 2550.408b–2(e)(2) 

provides that a fiduciary does not engage in an act 

described in Section 406(b)(1) of the Act if the 

fiduciary does not use any of the authority, control 

or responsibility that makes him a fiduciary to 

cause a plan to pay additional fees for a service 

furnished by a person in which the fiduciary has 

an interest that may affect the exercise of his 

judgment as a fiduciary. It is also the Department’s 

view that generally a fiduciary’s decision to retain 

itself or an affiliate as a service provider who does 

not charge fees of any kind for the provision of such 

services will not involve an adversity of interests 

as contemplated by section 406(b)(2) of the Act. 

Accordingly, the decision by the Bank to act as the 

Trustee and custodian of the Plan, would not 

appear, in itself, to raise issues under section 

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

9The Applicant represents that the following 

firms presently make a market in DCBF Stock: 

Sweney Cartwright & Company, Columbus, OH; 

Howe, Barnes, Hoefer & Arnett, Inc., Chicago, IL; 

and Stifel, Nicolaus & Company, Incorporated, St. 

Louis, MO. 

10The Applicant states that DCBF has worked 

with Sandler O’Neill, a nationally recognized 

investment consultant, to evaluate various options 

for raising capital including strategic combinations 

with other institutions, public offerings, and the 

Rights Offering. Based on advice from this 

investment consultant, DCBF determined that the 

Rights Offering was the best opportunity to raise the 

necessary capital. 

3. All employees of the Bank and the 

Bank’s affiliates, DCB Insurance 

Services, LLC and DCB Title Services, 

LLC, are eligible to participate in the 

Plan. As of October 16, 2012, the Plan 

had 124 participants and total assets of 

approximately $4,096,517. 

4. The Plan allows participants to 

direct the investment of their Plan 

account balances amongst a variety of 

19 pre-selected investment options, 

including any combination of mutual 

funds and DCBF common stock (DCBF 

Stock). The Applicant represents that 

DCBF Stock constitutes ‘‘qualifying 

employer securities’’ under section 

407(d)(5) of the Act. The fair market 

value of the assets of the Plan invested 

in DCBF Stock, as reflected in the Plan’s 

most recent financial statements, dated 

August 29, 2012 (the Record Date), was 

approximately $383,049, held among 

the accounts of 18 Plan participants, as 

of the Record Date. The approximate 

percentage of the fair market value of 

the Plan’s total assets, represented by 

investments in DCBF Stock was 9.35%. 

5. According to the Applicant, the 

DCBF Stock is quoted on the Over-theCounter-Bulletin Board (the OTCBB) 

and is not listed on the NASDAQ or a 

national stock exchange. The Applicant 

represents that investors who wish to 

buy or sell DCBF shares will contact a 

‘‘market maker’’ who will link potential 

buyers and sellers.9 These privately 

facilitated transactions are then reported 

to the NASDAQ OTCBB. 

Background to the Offering 

6. The Applicant represents that, like 

many banks, particularly banks with 

significant lending operations, the Bank 

was impacted by challenges faced by the 

real estate market, and federal banking 

regulators were engaged in discussions 

with all regulated financial institutions. 

On June 29, 2010, DCBF entered into a 

memorandum of understanding (the 

MOU) with the Federal Reserve Bank of 

Cleveland (the Federal Reserve), 

providing that DCBF may not declare or 

pay cash dividends to its shareholders, 

repurchase any of its shares, or incur or 

guarantee any debt without the prior 

approval of the Federal Reserve. 

7. On October 28, 2010, the Bank 

entered into a written agreement (the 

Written Agreement) with the Ohio 

Division of Financial Institutions (the 

Ohio Division) and a consent order (the 

Consent Order) with the Federal Deposit 

Insurance Corporation (the FDIC) 

addressing matters pertaining to, among 

other things, strengthening the Bank’s 

capital position and submitting a 

funding contingency plan for the Bank 

that identified available sources of 

liquidity. The Applicant represents that 

the Written Agreement and Consent 

Order also provide that the Bank may 

not declare or pay dividends to DCBF 

without the prior approval of the Ohio 

Division and the FDIC. The Written 

Agreement and Consent Order also 

specifically require that the Bank, 

among other things, enhance bank 

liquidity. 

8. In response to the MOU and the 

Written Agreement, DCBF management 

and the Board of Directors of DCBF (the 

Board) chose to raise equity capital 

through a rights offering for DCBF Stock 

(the Rights Offering) to improve the 

Bank’s capital position, to retain 

additional capital at DCBF, and to give 

shareholders the opportunity to limit 

ownership dilution by buying 

additional common shares.10 As noted 

above, the Plan holds DCBF Stock 

which is subject to the investment 

direction of Plan participants. 

Therefore, according to the Applicant, 

DCBF determined it was in the interests 

of the Plan and its participants to allow 

the Plan to participate in the Rights 

Offering to the same extent as other 

shareholders, in part so that Plan 

participants holding DCBF Stock in 

their Plan accounts could avoid having 

such DCBF Stock become diluted as a 

result of the Rights Offering. 

The Terms of the Offering 

9. The Applicant represents that all 

shareholders of record as of 5:00 p.m. on 

the Record Date were eligible to 

participate in the Rights Offering. 

According to the Applicant, on or about 

October 10, 2012, Plan participants who 

held shares of DCBF Stock in their Plan 

accounts as of the Record Date (the 

Invested Participants) were mailed 

information about the Rights Offering. 

The Applicant notes that individuals 

who held DCBF Stock directly were 

mailed similar information at that time. 

In this regard, all Invested Participants 

(there were 53 at the time) were mailed: 

(a) a copy of the prospectus that was 

filed with the Securities and Exchange 

Commission; and (b) a letter from DCBF 

detailing the process Invested 

Participants would use to participate in 

the Rights Offering. In addition, the 

Applicant notes that Invested 

Participants could call the subscription 

and information agent engaged by DCBF 

in connection with the Rights Offering, 

Broadridge Corporate Solutions, Inc. 

(Broadridge), using the toll-free number 

listed in the letter, if they had any 

questions about the Rights Offering or 

the exercise process. 

10. The Applicant states further that 

the offering period of the Rights Offering 

(the Offering Period) formally opened 

on October 16, 2012, and was originally 

scheduled to expire at 5:00 p.m. on 

November 12, 2012. However, according 

to the Applicant, the Board extended 

the Offering Period for two weeks (until 

November 26, 2012), in response to 

Hurricane Sandy, which adversely 

impacted the ability of Broadridge to 

perform its duties in connection with 

the Rights Offering. 

11. The Applicant states that DCBF 

initiated the Rights Offering by 

distributing to the holders of DCBF 

Stock at no charge, non-transferable 

subscription rights (the Rights) to 

purchase additional common shares of 

DCBF Stock. For every three common 

shares of DCBF Stock owned as of the 

Record Date, a holder was entitled to 

receive one Right, subject to availability 

and proration. Each Right entitled the 

holder to a basic subscription right (the 

Basic Subscription Right) and an oversubscription privilege (the Over 

Subscription Privilege). The Rights were 

not listed for trading on any stock 

exchange or the OTCBB. 

12. As represented by the Applicant, 

the Basic Subscription Right of each 

Right gave a shareholder the 

opportunity to purchase one share of 

DCBF common stock for $3.80 per 

share, subject to certain limitations or 

proration. Shareholders could exercise 

all or a portion of their Basic 

Subscription Rights or choose to 

exercise no Basic Subscription Rights at 

all. Fractional shares resulting from the 


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11The Applicant states that the Standby Investors 

included certain directors and executive officers 

who might not participate in the original Rights 

Offering. 

12The Applicant states that five Standby 

Investors would have been permitted to terminate 

their standby purchase agreements if a certain 

amount was not raised in both the Rights Offering 

and the Private Offering. However, because the 

Rights Offering raised more than those thresholds, 

the standby purchase agreements were not 

terminated. 

13The Applicant notes that several of these 

Standby Investors were Plan participants who could 

have elected to purchase shares in the Private 

Offering through their Plan accounts using the 

Plan’s self-directed investment feature. 

exercise of Basic Subscription Rights 

were eliminated by rounding down to 

the nearest whole share. 

13. The Applicant represents that the 

Over-Subscription Privilege allowed a 

shareholder who purchased all of the 

DCBF Stock available to them pursuant 

to their Basic Subscription Right to 

purchase a portion of any shares of 

DCBF Stock that were not purchased 

pursuant to the exercise of other 

shareholders’ Basic Subscription Rights. 

Shareholders were required to indicate 

on their Rights certificate how many 

additional shares they would like to 

purchase pursuant to the OverSubscription Privilege. The Applicant 

states that, if sufficient shares of DCBF 

Stock were available, DCBF honored 

over-subscription requests in full. The 

Applicant states further, that, if oversubscription requests exceeded the 

number of common shares available to 

be purchased pursuant to the OverSubscription Privilege, DCBF allocated 

the available shares of DCBF Stock 

among shareholders who oversubscribed by multiplying the number 

of shares of DCBF Stock requested by 

each shareholder through the exercise of 

the Over-Subscription Privilege by a 

fraction that equaled (x) the number of 

shares available to be issued through the 

Over-Subscription Privilege divided by 

(y) the total number of shares of DCBF 

requested by all subscribers through the 

exercise of the Over-Subscription 

Privilege. The Applicant states that 

DCBF did not issue fractional shares 

through the exercise of OverSubscription Privileges. 

14. The Applicant represents that 

another feature of the Rights Offering 

was a subsequent private offering (the 

Private Offering) held for certain 

standby investors (the Standby 

Investors).11 According to the 

Applicant, DCBF entered into separate 

standby purchase agreements with the 

Standby Investors in order to maximize 

the amount of capital raised to ensure 

that shares of DCBF Stock available in 

the Rights Offering were purchased. In 

this regards, each Standby Investor 

agreed to acquire, in the Private 

Offering, a minimum number of shares 

of DCBF Stock if they remained unsold 

following the completion of the Rights 

Offering.12 The Applicant represents 

that the price per share to be paid by the 

Standby Investors was the same price 

paid by subscribers in the Rights 

Offering, $3.80. Furthermore, the 

Applicant states that if all of the shares 

of DCBF Stock offered were subscribed 

for in the Rights Offering, DCBF would 

nevertheless sell a minimum number of 

shares to the Standby Investors as 

required by the standby purchase 

agreements.13 The Applicant states that 

pursuant to the terms of the Rights 

Offering, all unexercised Rights would 

expire and become worthless after the 

close of the Rights Offering. 

Exercise of the Rights 

15. The Applicant states that the Plan 

received the Rights on the same terms 

as all holders of DCBF Stock. Thus, the 

Trustee received a total of 27,458 Rights 

that were allocated among Invested 

Participants based on the relative 

number of shares of DCBF Stock held in 

their accounts on the Record Date. 

16. According to the Applicant, in 

order to exercise their Rights, a 

shareholder was required to submit a 

completed exercise form and tender the 

appropriate exercise price before the 

Offering Period expired on November 

26, 2012. However, the Applicant notes 

that Invested Participants were required 

to submit elections to exercise Rights to 

the Trustee five business days before the 

above expiration date, so that the 

Trustee could aggregate all of the 

elections and submit a single 

consolidated election on behalf of all 

electing Invested Participants to 

Broadridge. Accordingly, Invested 

Participants were required to submit 

election forms to the Trustee no later 

than 5:00 p.m. on November 19, 2012. 

The Applicant represents that this early 

direction deadline was similar to the 

deadlines imposed by brokers and other 

stockholders who hold shares for the 

benefit of third parties. 

17. The Applicant states that for each 

Invested Participant who directed the 

Plan Trustee to exercise Rights 

attributable to his or her Account within 

the Plan, the funds needed to pay the 

$3.80 per share exercise price were 

obtained by either selling specific 

investments at the Invested Participant’s 

direction or by using cash equivalents in 

their account, at the Invested 

Participant’s direction. The Applicant 

represents that, to the extent that an 

Invested Participant’s account did not 

hold adequate funds to exercise all 

Rights pursuant to the Invested 

Participant’s direction, the Plan 

exercised such Rights to the fullest 

extent possible based on funds available 

in such accounts. According to the 

Applicant, any common shares of the 

DCBF Stock purchased upon exercise of 

the Rights held by an Invested 

Participant’s Plan account was allocated 

to such account, and remained there 

subject to further investment direction 

from the Invested Participant. 

18. According to the Applicant, 

notwithstanding the foregoing, the 

Trustee was instructed to note the 

public trading price of a share of DCBF 

stock on the business day immediately 

preceding the expiration of the Rights 

Offering. According to the Applicant, if, 

on that date, DCBF Stock last traded at 

or above $3.80, the Trustee was to 

exercise the Rights on behalf of Invested 

Participants pursuant to the Invested 

Participants’ instructions. However, if 

the last trade price was below $3.80 per 

share, the Trustee was instructed not to 

exercise any Rights and to redeposit all 

money into the appropriate Invested 

Participants’ Plan accounts. The 

Applicant represents that, because the 

DCBF Stock price was above $3.80 per 

share on the business day immediately 

preceding the expiration of the Offering 

Period, the Trustee exercised the Rights 

as directed by the Invested Participants. 

In this regard, the Applicant represents 

that during the 52 week period ending 

July 1, 2013, the DCBF Stock traded on 

the OTCBB in the range from $3.99 to 

$5.60 per share, well above the $3.80 

price set for shares purchased through 

the Rights Offering. Furthermore, 

according to the Applicant, from April 

1, 2012 through the expiration of the 

Rights Offering, no executive officer or 

director of DCBF, or their immediate 

family members bought or sold DCBF 

Stock, with the exception that each 

calendar quarter DCBF purchased DCBF 

Stock for its non-employee directors 

pursuant to a prior written plan as 

payment of directors’ fees. 

19. On December 5, 2012, DCBF 

announced that the Rights Offering had 

been oversubscribed and that the shares 

of the DCBF Stock purchased in the 

Rights Offering would be issued as soon 

as possible after that date. The shares of 

DCBF Stock were allocated to the Plan 

accounts of Invested Participants who 

exercised Rights on December 19, 2012. 

20. The Applicant represents that 

DCBF did not make any 

recommendation to Invested 

Participants or any DCBF shareholders 

regarding whether they should exercise 

their Rights but urged them to make 

independent decisions based on their 


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14According to the Applicant, DCBF also held the 

Private Offering as discussed above, wherein the 

Plan purchased 30,600 shares of DCBF Stock for 3 

Plan participants who were Standby Investors 

through the self-directed investment feature of the 

Plan. 

assessment of DCBF’s business and the 

risk factors associated with the Rights 

Offering. As a result, the Applicant 

states that the Plan exercised Rights and 

purchased 7,426 shares for 15 Invested 

Participants through the exercise of 

Basic Subscription Rights. The 

Applicant further represents that the 

Plan also exercised the OverSubscription Privilege for 10 Invested 

Participants who wanted to acquire an 

additional 8,740 shares. However, 

because the over-subscription requests 

exceeded the number of shares of DCBF 

Stock available to purchase under the 

Rights Offering, the Plan was only able 

to purchase an additional 6,056 shares 

for the 10 Invested Participants.14

Request for Exemptive Relief 

21. DCBF requests exemptive relief for 

acquisition and holding of the Rights by 

the Plan in connection with the Rights 

Offering. The Applicant states that the 

Rights constitute employer securities, as 

defined under section 407(d)(1) of the 

Act. The Applicant states that the Rights 

do not satisfy the definition of 

‘‘qualifying employer securities,’’ as 

defined under section 407(d)(5) of the 

Act. 

22. The Applicant notes that section 

406(a)(1)(E) of the Act prohibits the 

fiduciary of a plan from causing the 

plan to engage in a transaction that 

constitutes the acquisition, on behalf of 

a plan, of any ‘‘employer security in 

violation of Section 407(a) of the Act.’’ 

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

prohibits a fiduciary who has the 

authority or discretion to control or 

manage the assets of a plan from 

allowing the plan to hold any 

‘‘employer security’’ that violates 

section 407(a) of the Act. Section 407(a) 

of the Act prohibits plans from 

acquiring or holding employer securities 

that are not qualifying employer 

securities or employer real property that 

is not qualified employer real property. 

Additionally, Section 406(b)(1) of the 

Act prohibits a plan fiduciary from 

‘‘deal[ing] with the assets of the plan in 

his own interest or for his own 

account.’’ Under Section 406(b)(2), a 

fiduciary may not ‘‘act in any 

transaction involving the plan on behalf 

of a party (or represent a party) whose 

interests are adverse to the interests of 

the plan or the interests of its 

participants or beneficiaries.’’ 

The Applicant states that the 

acquisition and holding of the Rights by 

the Plan may violate sections 

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

of the Act and the fiduciary self-dealing 

and conflict of interest provisions of 

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

Accordingly, the Applicant requests 

relief from the restrictions of sections 

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

406(b)(2) and 407(a)(1)(A) of the Act. 

Finally, the Applicant requests that an 

exemption for the above transactions be 

granted with retroactive effect as of the 

date the Rights Offering was made to 

DCBF shareholders, and through the 

closing date of the offering. 

Statutory Findings 

23. DCBF represents that the proposed 

exemption is administratively feasible. 

In this regard, the acquisition and 

holding of the Rights by the Plan 

allocated to Invested Participants’ 

accounts was a one-time transaction that 

involved an automatic distribution of 

the Rights to all shareholders. In 

addition, the Applicant states that it is 

customary for corporations to make a 

rights offering available to all 

shareholders. 

24. DCBF represents that the 

transactions which are the subject of 

this proposed exemption are in the 

interest of the Plan and its participants 

and beneficiaries, because such 

transactions represented a valuable 

opportunity to Plan participants to buy 

DCBF Stock at a discount. This discount 

was realized by Plan participants who 

directed the Trustee to sell all or part of 

the DCBF Stock held in their accounts 

immediately after the exercise of the 

Rights and investing the proceeds from 

such sales into other investment options 

under the Plan. Furthermore, all fees 

related to the Plan’s exercise of Rights 

were paid by DCBF and no fees related 

to the Rights Offering or exercise of 

Rights were paid with Plan assets. 

25. DCBF represents that the proposed 

exemption is protective of the rights of 

the participants and beneficiaries of the 

Plan. In this regard, the Applicant states 

that participation in the Rights Offering 

protected the Invested Participants from 

having their interests in DCBF diluted 

as a result of the Rights Offering. DCBF 

represents further that the Invested 

Participants were adequately protected 

in that such individuals acquired and 

held the Rights automatically as a result 

of the Rights Offering, which itself was 

an independent corporate act of DCBF, 

all shareholders of DCBF Stock, 

including the Plan, were treated in a 

like manner. In this regard, each 

shareholder of the DCBF stock, 

including each Plan Participant who 

held DCBF shares in their Plan account, 

received the same proportionate number 

of Rights, and this proportionate 

number of Rights was based on the 

number of DCBF shares held by such 

shareholder. The Applicant represents 

that all decisions regarding Rights held 

by the Plan were made by the Invested 

Participants whose accounts in the Plan 

received the Rights. Moreover, the 

Applicant represents that these Invested 

Participants provided directions to the 

Trustee, in accordance with the 

provisions under the Plan for 

individually-directed investment of 

such accounts. Finally, the Applicant 

represents that the closing price per 

share for DCBF Stock on November 23, 

2012 (the last business day before the 

Offering election period closed), was 

$4.27, which was in excess of the strike 

price of $3.80 per share. 

Summary 

26. In summary, DCBF represents that 

the Rights Offering satisfied the 

statutory requirements for a proposed 

exemption under section 408(a) 

because: 

(a) The acquisition of the Stock Rights 

by the Plan was made pursuant to the 

terms that were the same for all 

shareholders of DCBF Stock; 

(b) The acquisition of the Rights by 

the Plan resulted from an independent, 

corporate act of DCBF; 

(c) Each shareholder of the Stock, 

including the Plan, received the same 

proportionate number of Stock Rights, 

and this proportionate number of Stock 

Rights was based on the number of 

shares of Stock held by each such 

shareholder; 

(d) The Rights were acquired pursuant 

to provisions under the Plan for 

individually-directed investments of the 

accounts of the individual participants 

in the Plan, a portion of whose accounts 

in the Plan hold DCBF Stock; 

(e) 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 

(f) No brokerage fees, no subscription 

fees and no other charges were paid by 

the Plan with respect to the acquisition 

and holding of the Rights, 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 

Notice of the proposed exemption 

will be given to all interested persons 

within 15 days of the publication of the 

notice of proposed exemption in the 

Federal Register. Notice will be 

provided by email with proof of 


TKELLEY on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 19649 

15For 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. 

16The Summary of Facts and Representations is 

based on the Applicant’s representations and does 

not reflect the views of the Department, unless 

indicated otherwise. 

17Home Savings was originally organized as a 

mutual savings association under Ohio Law in 

1889. 

delivery to all Plan participants who are 

actively employed with DCBF and will 

be mailed via first-class mail to all other 

interested persons. 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(a)(2), which 

will advise all interested persons of 

their right to comment and to request a 

hearing. 

All written comments and/or requests 

for a hearing must be received by the 

Department from interested persons 

within 45 days of the publication of this 

proposed exemption in the Federal 

Register. 

All comments will be made available 

to the public. 

Warning: Do not include any 

personally identifiable information 

(such as name, address, or other contact 

information) or confidential business 

information that you do not want 

publicly disclosed. All comments may 

be posted on the Internet and can be 

retrieved by most Internet search 

engines. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Jennifer Erin Brown of the Department 

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

number.) 

The Home Savings and Loan Company 

401(k) Savings Plan (The Plan), United 

Community Financial Corporation 

(UCFC), and the Home Savings and 

Loan Company (Home Savings) Located 

in Youngstown, OH 

[Application No. D–11780] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974, as amended, (the Act or 

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

Internal Revenue Code of 1986, as 

amended (the Code), and in accordance 

with the procedures set forth in 29 CFR 

Part 2570, Subpart B (76 FR 66637, 

66644, October 27, 2011). 

Section I: Transactions 

If the proposed exemption is granted, 

effective for the period beginning April 

30, 2013, and ending May 31, 2013, the 

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

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

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

resulting from the application of section 

4975 of the Code, by reason of section 

4975(c)(1)(E) of the Code,15 shall not 

apply: 

(a) To the acquisition of certain 

subscription right(s) (the Rights) by the 

individually-directed account(s) (the 

Account(s)) of certain participant(s) in 

the Plan (Invested Participants) in 

connection with an offering (the 

Offering) of shares of common stock (the 

Stock) of United Community Financial 

Corporation (UCFC) by UCFC, a party in 

interest with respect to the Plan; and 

(b) To the holding of the Rights 

received by the Accounts during the 

subscription period of the Offering, 

provided that the conditions, as set forth 

in Section II, below, were satisfied for 

the duration of the acquisition and 

holding. 

Section II: Conditions 

(a) The acquisition of the Rights by 

the Accounts of Invested Participants 

occurred in connection with the 

Offering, and the Rights were made 

available by UCFC to all shareholders of 

the Stock other than the Employee Stock 

Ownership Plan sponsored by UCFC; 

(b) The acquisition of the Rights by 

the Accounts of Invested Participants 

resulted from an independent corporate 

act of UCFC; 

(c) Each shareholder of Stock, 

including each of the Accounts of 

Invested Participants, received the same 

proportionate number of Rights, and 

this proportionate number of Rights was 

based on the number of shares of Stock 

held by each such shareholder; 

(d) The Rights were acquired pursuant 

to, and in accordance with, provisions 

under the Plan for individually-directed 

investments of the Accounts by the 

individual participants in the Plan, a 

portion of whose Accounts in the Plan 

held the Stock; 

(e) The decision with regard to the 

holding and disposition of the Rights by 

an Account was made by the Invested 

Participant whose Account received the 

Rights; and 

(f) No brokerage fees, commissions, or 

other fees or expenses were paid by the 

Plan to any related broker in connection 

with the exercise of any of the Rights, 

and no brokerage fees, commissions, 

subscription fees, or other charges were 

paid by the Plan with respect to the 

acquisition and holding of the Stock. 

Effective Date: This proposed 

exemption, if granted, will be effective 

for the period beginning on April 30, 

2013, the commencement date of the 

Offering, and ending on May 31, 2013, 

the close of the Offering. 

Summary of Facts and Representations 

Background 

1. The prohibited transaction 

exemption proposed herein was 

requested by the Home Savings and 

Loan Company (Home Savings), United 

Community Financial Corporation 

(UCFC), and the Home Savings and 

Loan Company 401(k) Savings Plan (the 

Plan), (together, the Applicant).16 Home 

Savings is an Ohio state-chartered 

savings bank and a wholly-owned 

subsidiary of UCFC, with 33 full-service 

branches and nine loan production 

offices located throughout Ohio and 

western Pennsylvania. The principal 

business of Home Savings is the 

origination of mortgage loans, including 

construction loans on residential and 

nonresidential real estate located in 

Home Savings’ primary market area. In 

addition to real estate lending, Home 

Savings originates commercial loans 

and various types of consumer loans. 

UCFC is a unitary thrift holding 

company incorporated in the State of 

Ohio for the purpose of owning all of 

the outstanding capital stock of Home 

Savings issued upon the conversion of 

Home Savings from a mutual savings 

association to a permanent capital stock 

savings association on July 8, 1998.17

2. Home Savings sponsors the Plan, a 

qualified defined contribution plan 

under section 401(a) of the Code, 

originally effective on January 1, 1993. 

The Applicant represents that the Plan, 

as amended and restated, operates in 

compliance with applicable 

requirements of the Code and is 

intended to operate in compliance with 

the safe harbor in section 404(c) of the 

Act. As of March 21, 2013, there were 

567 participants with account balances 

in the Plan and the Plan had total assets 

of approximately $20,392,500. 

3. The Plan is funded by elective 

employee deferrals, as well as 

discretionary employer matching 

contributions. The Applicant represents 

that the match has consistently been 

funded in cash and invested according 

to the elections of individual 

participants. Participants in the Plan 

may choose among a variety of 

investment options, including any 

combination of mutual funds and UCFC 

common stock (the Stock). Shares of 

Stock held by the Plan are held in the 

UCFC stock fund (the Stock Fund). 

Wilmington Trust, National Association 


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18According to the Applicant, the securities 

purchase agreements also required UCFC to follow 

through on its plan to conduct a stock rights 

offering to existing shareholders. 

19 In determining the price agreed to in the 

Private Offering, the Applicant represents that any 

sizeable offering would be made at a discount to 

market and book value, and UCFC considered the 

advice of its financial advisors that obtaining a 

higher price was not feasible. 

20The Applicant represents that expenses related 

to the Rights Offering included: subscription and 

information agent fees and expenses, legal fees and 

expenses, accounting fees and expenses, printing 

and mailing costs, and other miscellaneous 

expenses. 

21The Applicant states that Rights were 

distributed to all UCFC shareholders other than the 

Employee Stock Ownership Plan sponsored by 

UCFC (the ESOP). According to the Applicant, as 

of the date that Rights were distributed, the ESOP 

was invested primarily in shares of the Stock and 

would not have been able to exercise Rights without 

selling some of those shares. Accordingly, the 

Applicant notes that UCFC determined that the 

ESOP should be excluded from the Rights Offering. 

(the Trustee) serves as the Plan’s trustee 

and custodian of the Plan’s assets. The 

Stock is listed on the NASDAQ Global 

Select Market. The Applicant represents 

that the Stock is a ‘‘qualifying employer 

security,’’ as defined under section 

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

Code. 

4. The Plan is administered by the 

Compensation and Benefits Committee 

(the Committee), which is composed of 

certain appointed employees of Home 

Savings. The Committee oversees the 

selection and oversight of the Plan’s 

investment alternatives. An entity that 

is unrelated to the Applicant, UBS 

Financial Services, provides advice and 

counsel to the Committee regarding the 

menu of investment alternatives. The 

Applicant states that on an annual basis, 

or more frequently if necessary, the 

Committee reviews the Plan’s 

investment fund alternatives, including 

the Stock Fund alternative. 

Furthermore, according to the 

Applicant, although UBS Financial 

Services has recommended several 

investment fund changes, it has never 

recommended freezing or eliminating 

the Stock Fund as an investment option. 

5. The Applicant states that 

investment in the Stock Fund by 

participants in the Plan is entirely 

voluntary. The Applicant represents 

further that neither UCFC nor Home 

Savings contributes any of the Stock to 

the Plan as part of the employer 

matching contribution. Instead, the 

Stock is acquired by a participant’s Plan 

account only as a result of participantdirected investment decisions. 

According to the Applicant, the Stock 

shares held by the Plan have voting and 

dividend rights that are passed through 

to Plan participants whose accounts are 

invested in the Stock Fund. The Trustee 

has the responsibility of carrying out the 

voting directions of Plan participants. 

However, no participant instructions are 

permitted with respect to dividends 

because they are reinvested according to 

a standard process. 

Capital Raise Activities 

6. The Applicant states that since 

August 28, 2008, UCFC has been subject 

to various orders and agreements with 

federal and state bank regulators to 

reduce UCFC’s debt and raise its capital 

levels in order to comply with certain 

regulatory capital requirements. In this 

regard, the Applicant states that UCFC 

has engaged in multiple activities to 

increase its capitalization, including: 

sales of its broker/dealer and trust 

company subsidiaries; sales of various 

bank branches and securities; sales of 

Stock to certain investors; and various 

expense reduction efforts. Additionally, 

the Applicant states that UCFC explored 

other potential sales of assets, joint 

ventures, and transactions with strategic 

partners, which UCFC ultimately 

determined were not in the best interest 

of shareholders or were not likely to 

receive required regulatory approvals. 

7. According to the Applicant, UCFC’s 

capital raise plan included a private 

offering (the Private Offering) of a 

combination of preferred and common 

shares of UCFC, commencing on 

January 11, 2013. The Private Offering 

involved UCFC entering into securities 

purchase agreements with various 

accredited investors and subscription 

agreements with certain corporate 

insiders. Pursuant to the securities 

purchase agreements, on March 22, 

2013, the investors purchased 6,574,272 

newly issued shares of Stock at a 

purchase price of $2.75 per share and 

7,942 newly created and issued 

perpetual mandatorily convertible noncumulative preferred shares of UCFC at 

a purchase price of $2,750 per share, for 

an aggregate price of approximately 

$39.9 million.18 Pursuant to the 

subscription agreements in the Private 

Offering, certain insiders of UCFC were 

also to invest, and did invest, an 

aggregate of approximately $2.1 million 

in exchange for the issuance of 755,820 

newly issued shares of Stock, at the 

same purchase price of $2.75 per share. 

The issuance and sale of Stock to these 

insiders was subject to the approval of 

UCFC shareholders. 

The Rights Offering 

8. In connection with its capital raise 

and in conjunction with the Private 

Offering, the Applicant states that 

UCFC’s Board of Directors determined 

to conduct a stock rights offering (the 

Rights Offering) for existing 

shareholders of UCFC. According to the 

Applicant, in addition to maintaining 

and improving Home Savings’ capital 

position and satisfying UCFC’s 

regulatory and contractual obligations, 

the Rights Offering improved and 

strengthened UCFC’s financial 

condition, allowing UCFC to pursue 

growth strategies and give shareholders 

the opportunity to limit further 

ownership dilution after the Private 

Offering by buying additional shares of 

the Stock. 

9. The Rights Offering commenced on 

April 30, 2013, and closed on May 31, 

2013, at 5:00 p.m. Eastern Time. UCFC 

reserved the right to extend the Rights 

Offering one or more times, but in no 

event later than June 30, 2013; however, 

no extensions occurred. The terms of 

the Rights Offering provided that up to 

1,818,181 shares of the Stock would be 

available for purchase at a subscription 

price of $2.75 per share (the 

Subscription Price). According to the 

Applicant, UCFC determined that the 

Subscription Price should be the same 

as the price at which the accredited 

investors agreed to purchase the newly 

issued shares of Stock in the Private 

Offering since that price was negotiated 

in an arms-length transaction.19 Finally, 

the Applicant states that UCFC 

considered the trading price of the Stock 

over the last year compared to the past 

three years and the Stock’s low average 

trading volume. The Applicant 

represents that the Rights Offering was 

fully subscribed and resulted in gross 

proceeds for UCFC of $5,000,000 and 

net proceeds of $4,467,500.20 UCFC 

informed shareholders that the proceeds 

from the Rights Offering were intended 

to be used for general corporate 

purposes, to pursue its business 

objectives, or as an investment in Home 

Savings to improve its capital position. 

10. Under the terms of the Rights 

Offering, all shareholders of the Stock, 

including Plan participants (the 

Invested Participants) whose Plan 

accounts (the Account(s)) held shares of 

the Stock, automatically received, at no 

charge, non-transferable subscription 

rights (the Rights) to purchase, through 

the exercise of such Rights, their share 

of $5 million worth of the Stock issued 

in connection with the Rights 

Offering.21 Under the terms of the Rights 

Offering, a ‘‘basic subscription 

privilege’’ provided each shareholder, 

including an Invested Participant whose 

Account held shares of the Stock, the 

opportunity to purchase 0.06 shares of 

Stock for every one share of Stock 

owned as of March 21, 2013 (the Record 

Date), at a subscription price of $2.75 

per share, rounded down to the nearest 


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22As of the Record Date, the Plan owned 562,928 

shares out of 32,941,285 outstanding shares of 

Stock, or 1.71% of the outstanding Stock. 

whole share. The Applicant states that, 

for example, if a shareholder owned 

1,000 shares of Stock as of the record 

date, that shareholder would receive the 

right to purchase 60 shares of the Stock 

for $2.75 per share, subject to certain 

limitations and subject to allotment. 

Shareholders could exercise all or a 

portion of their basic subscription 

privilege or could choose to exercise no 

basic subscription privilege at all. 

11. The Applicant states that each 

shareholder, including an Invested 

Participant whose Account held shares 

of the Stock, was also entitled to 

purchase shares of Stock in the Rights 

Offering by using an ‘‘over-subscription 

privilege.’’ The ‘‘over-subscription 

privilege’’ allowed each shareholder to 

subscribe for additional shares of Stock, 

in the event such shareholder first 

exercised his or her basic subscription 

privileges in full, subject to certain 

limitations and allocation procedures, 

up to the number of shares of Stock 

available in the Rights Offering that 

were not subscribed for by the other 

holders of the Rights pursuant to their 

basic subscription privileges. UCFC 

allocated the available Stock among 

shareholders who over-subscribed on a 

pro-rata basis if there were not enough 

shares available to honor the oversubscription requests in full. 

12. The Applicant states that the 

ability to purchase Stock in the Rights 

Offering was subject to an overall 

beneficial ownership interest limitation 

of 4.9% of the outstanding Stock after 

giving effect to a shareholder’s 

participation in the Rights Offering and 

taking into account the holdings of the 

shareholder and his or her affiliates. All 

shareholders of Stock, including the 

Accounts of Invested Participants, held 

the Rights until the Rights were 

exercised or until the Rights expired 

and became worthless at the close of the 

Rights Offering. 

13. As of the Record Date, out of 567 

total Plan participants, 203 were eligible 

to participate in the Rights Offering.22

The Applicant states that on May 1, 

2013, each of the Invested Participants 

was sent detailed information regarding 

the Rights Offering, including a copy of 

the prospectus which described the 

Rights Offering, an election form, a 

return envelope addressed to UCFC, and 

a statement indicating the number of 

shares of Stock each such participant 

held in his or her Account, as of the 

Record Date. In addition to the form 

letters and accompanying documents, 

UCFC distributed two special Q&A 

sheets for all employees and all 

shareholders. These Q&A sheets were 

filed with the U.S. Securities and 

Exchange Commission (SEC) on May 6, 

2013, and distributed to shareholders on 

the same date. The Applicant represents 

that no other communications were sent 

to Plan participants because federal and 

state securities laws prohibit separate 

communications about offers unless 

they are filed with the SEC. 

14. The Applicant represents that 

Invested Participants were instructed 

that the election to exercise, some, all, 

or none of his or her Rights had to be 

received by the close of business on the 

fifth business day prior to the expiration 

of the Rights Offering (May 24, 2013, at 

4:00 p.m. EST) so that there was 

reasonable time for the Trustee to 

reconcile the Invested Participants’ 

instructions with their Accounts. 

Additionally, Invested Participants were 

instructed that their election to exercise 

the Rights was irrevocable. This process, 

considered an ‘‘early exercise,’’ is 

commonly required by brokers and 

other stockholders who hold shares for 

the benefit of third parties. To ensure 

the Invested Participants were protected 

against prejudice due to such early 

exercise, UCFC instructed the Trustee 

not to exercise the Invested Participants’ 

Rights if the official closing price of a 

share of Stock was below $2.75 as of the 

last business day prior to the close of 

the Rights Offering. The Applicant 

represents that at the close of business 

on May 30, 2013, one day prior to the 

close of the Rights Offering, the Stock 

was trading on the NASDAQ at $4.02 

per share. Furthermore, the closing 

price of the Stock on the closing date of 

the Rights Offering on May 31, 2013, 

was $4.09. Therefore, the exercise of the 

Rights was effectuated by the Trustee in 

accordance with the instructions from 

UCFC and at a purchase price that was 

less than its then-current fair market 

value. 

15. An Invested Participant was only 

allowed to pay for the exercise of Rights 

using funds in his or her Account. 

According to the Applicant, the exercise 

of the Rights on behalf of an Invested 

Participant required such individual to 

transfer assets into the UCFC Rights 

Offering Liquidity Fund (the Rights 

Fund), a cash fund, prior to such 

exercise. The Applicant explains that 

the Rights Offering election form 

provided a basic worksheet for the 

Invested Participant to determine the 

amount of assets that needed to be 

transferred into the Rights Fund. 

According to the Applicant, the 

Invested Participant was responsible for 

liquidating other investments in his or 

her Account and transferring those 

assets to the Rights Fund, pending the 

exercise of the Rights. To the extent that 

an Invested Participant’s Account did 

not hold adequate assets to exercise all 

the Rights pursuant to the Invested 

Participant’s direction, the Trustee 

exercised such Invested Participant’s 

Rights to the fullest extent possible 

based on the assets in such Invested 

Participant’s Rights Fund. The 

Applicant states further that Invested 

Participants received a trade 

confirmation or other notice when the 

exercise of the Rights was completed on 

their behalf. 

16. The Applicant represents that to 

exercise the Rights on behalf of Invested 

Participants, the Trustee placed the 

Invested Participants’ orders to 

purchase the Stock with the 

subscription agent, Registrar and 

Transfer Company (Registrar), a 

registered broker-dealer that is unrelated 

to UCFC and the Plan. UCFC represents 

that the subscription price (which was 

based on the number of Rights to be 

exercised for each Invested Participant) 

was liquidated from that Participant’s 

Rights Fund account, and cash equal to 

the necessary subscription payment was 

transferred to Registrar. The Applicant 

states further that Registrar received the 

subscription elections and related 

subscription payments from all electing 

shareholders, including the Trustee. 

Registrar calculated the number of 

shares of Stock to be issued to each 

subscriber and returned any excess 

subscription price paid by that 

subscriber (since the Rights Offering 

was oversubscribed). Finally, the 

Applicant states that Registrar issued 

the purchased shares of Stock to each 

subscriber, including the Trustee, and 

forwarded the subscription payments to 

UCFC. Following its receipt of the 

purchased shares of Stock after the close 

of the Rights Offering, according to 

UCFC, the Trustee allocated such shares 

to the Accounts of Invested Participants. 

In the event that the Invested 

Participant transferred more assets into 

the Rights Fund than was necessary to 

exercise all of his or her Rights, the 

Trustee transferred such assets into the 

Invested Participant’s other 

investments, consistent with his or her 

elections for future contributions, on file 

at the time the Rights Offering was 

completed. According to the Applicant, 

the Stock was issued to shareholders, 

including the Accounts of Invested 

Participants, on June 10, 2013. 

17. UCFC states that it paid any 

expenses associated with the Rights 

Offering. In this regard, the Applicant 

represents that no brokerage fees, 

commissions, subscription fees, or other 

charges were paid by the Plan with 


TKELLEY on DSK3SPTVN1PROD with NOTICES
19652 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 

respect to the acquisition and holding of 

the Stock, and no brokerage fees, 

commissions, fees, or expenses were 

paid by the Plan to any related broker 

in connection with the exercise of the 

Rights. 

18. The Applicant states that out of 

203 Invested Participants, only 40 

participated in the Rights Offering 

(7.05% of total Plan participants and 

19.70% of Invested Participants). The 

Plan purchased 97,180 shares of the 

Stock through the Rights Offering for a 

total cost to the Plan of $267,245. 

According to the Applicant, there were 

no resale restrictions on the Stock held 

in the Accounts of Invested Participants, 

other than the general limitations under 

securities laws applicable to all 

shareholders that prohibit buying or 

selling shares while in possession of 

material non-public information. The 

Applicant states that as of June 11, 2013, 

the first valuation date after the Stock 

was issued to the Plan, the Plan held 

652,391 shares of Stock which 

represented 1.3% of the 50,129,531 

shares outstanding on that date. The 

Plan’s total investment in the Stock was 

valued at $2,589,999.27 ($3.97 per 

share) as of that date. Furthermore, the 

Plan’s investment in the Stock Fund on 

that date represented 12.7% 

($2,589,992.27) of the total value of Plan 

assets ($20,399,202.42). 

Requested Relief 

19. The Applicant has requested 

exemptive relief for the acquisition of 

the Rights by the Accounts of Invested 

Participants in connection with the 

Rights Offering and the holding of the 

Rights by the Accounts of Invested 

Participants during the subscription 

period of the Rights Offering. The 

Applicant represents that the Rights 

acquired by the Invested Participants 

satisfy the definition of ‘‘employer 

securities,’’ pursuant to section 

407(d)(1) of the Act. However, as the 

Rights were not stock or marketable 

obligations, they do not meet the 

definition of ‘‘qualifying employer 

securities,’’ as set forth in section 

407(d)(5) of the Act. Accordingly, the 

Applicant states that the subject 

transactions constitute the acquisition 

and holding, on behalf of the Accounts 

of Invested Participants, of employer 

securities which are not qualifying 

employer securities, in violation of 

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

406(b)(1), and 406(b)(2) and 407(a)(1)(A) 

of the Act and the sanctions resulting 

from the application of section 4975 of 

the Code, by reason of section 

4975(c)(1)(E) of the Code. 

20. As noted above, the subject 

transactions have already been 

consummated. In this regard, the 

Accounts of Invested Participants 

acquired the Rights pursuant to the 

Rights Offering on April 30, 2013, and 

held such Rights until the closing of the 

Rights Offering on May 31, 2013, when 

such Rights were either exercised or 

expired. The Applicant has requested 

retroactive relief because UCFC 

determined that it was in the best 

interest of its shareholders generally to 

issue the Rights as soon as possible after 

the offering documents were approved 

by the SEC so that UCFC could maintain 

and improve its capital position and its 

capital ratio in accordance with its 

regulatory obligations and other 

agreements, as described above. 

Therefore, the Applicant seeks 

retroactive relief effective from April 30, 

2013, the date that the Accounts of 

Invested Participants acquired the 

Rights, to May 31, 2013, the closing date 

of the Rights Offering. 

21. UCFC represents that the 

proposed exemption is administratively 

feasible. In this regard, the acquisition 

and holding of the Rights by the 

Accounts of Invested Participants was a 

one-time transaction that involved an 

automatic distribution of the Rights to 

all shareholders. The Applicant 

represents further that it is customary 

for corporations to make a rights 

offering available to all shareholders 

and that the Department has granted 

exemptions for similar types of 

transactions in the past. 

22. UCFC represents that the 

proposed exemption is in the interests 

of the Invested Participants, because if 

the Plan had not participated in the 

Rights Offering, the Invested 

Participants would not have received 

the same benefit as other UCFC 

shareholders and would not have been 

able to reduce the dilution of their 

investment in UCFC that occurred as a 

result of the Private Offering and the 

shares of Stock purchased by other 

shareholders of UCFC in connection 

with the Rights Offering. 

23. UCFC represents that the 

proposed exemption is protective of the 

rights of the participants and 

beneficiaries of the Plan because 

decisions with regard to the holding and 

disposition of the Rights were made by 

each of the Invested Participants in 

accordance with the provisions under 

the Plan for individually-directed 

accounts. Additionally, the Applicant 

states that the Plan participants and 

beneficiaries were protected against 

prejudice in connection with the early 

exercise of the Rights by instructions 

given to the Trustee by UCFC not to 

exercise any Rights if the official closing 

price of a share of Stock was below 

$2.75 as of the last business day prior 

to the close of the Rights Offering. The 

Applicant represents that the closing 

price of the Stock on that date was 

$4.02, and the closing price on the day 

the Rights Offering closed was $4.09; 

therefore, the exercise of the Rights was 

effectuated by the Trustee in accordance 

with UCFC’s instructions and at a 

purchase price that was below its thencurrent fair market value. 

24. The Applicant states further that 

the Accounts of Invested Participants 

were protected against economic loss 

because the Rights were given to 

Invested Participants for free. 

Furthermore, the Applicant suggests 

that in the event that an Invested 

Participant chose not to exercise the 

Rights, his or her Account was not 

affected, as the Rights automatically 

expired and became worthless at the 

end of the Rights Offering. 

25. In summary, the Applicant 

represents that the subject transactions 

satisfy the statutory criteria for an 

exemption under section 408(a) of the 

Act because: 

(a) The acquisition of the Rights by 

the Accounts of Invested Participants 

occurred in connection with the Rights 

Offering, and the Rights were made 

available by UCFC to all shareholders of 

the Stock other than the Employee Stock 

Ownership Plan sponsored by UCFC; 

(b) The acquisition of the Rights by 

the Accounts of Invested Participants 

resulted from an independent corporate 

act of UCFC; 

(c) Each shareholder of Stock, 

including each of the Accounts of 

Invested Participants, received the same 

proportionate number of Rights, and 

this proportionate number of Rights was 

based on the number of shares of Stock 

held by each such shareholder; 

(d) The Rights were acquired pursuant 

to, and in accordance with, provisions 

under the Plan for individually-directed 

investments of the Accounts by the 

individual participants in the Plan, a 

portion of whose Accounts held the 

Stock; 

(e) The decision with regard to the 

holding and disposition of the Rights by 

an Account was made by the Invested 

Participant whose Account received the 

Rights; and 

(f) No brokerage fees, commissions, or 

other fees or expenses were paid by the 

Plan to any related broker in connection 

with the exercise of any of the Rights, 

and no brokerage fees, commissions, 

subscription fees, or other charges were 

paid by the Plan with respect to the 

acquisition and holding of the Stock. 


TKELLEY on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 19653 

23For 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. 

24As of August 8, 2012, there were 542,297,982 

shares outstanding of LIC Stock. 

Notice to Interested Persons 

Notice of the proposed exemption (the 

Notice) will be provided to all Invested 

Participants within fifteen (15) days of 

publication of the Notice in the Federal 

Register. Notice will be provided by 

email to all Invested Participants who 

are actively employed by UCFC or 

Home Savings in accordance with the 

Department’s procedures for electronic 

disclosure to active employees under 29 

CFR 2520.104b-1(c). Notice will be 

provided via first-class mail to all other 

Invested Participants. Such notification 

will contain a copy of the Notice, as 

published in the Federal Register, and 

a supplemental statement, as required, 

pursuant to 29 CFR 2570.43(a)(2). The 

supplemental statement will inform all 

interested persons of their right to 

comment on and to request a hearing 

with respect to the pending exemption. 

All written comments and/or requests 

for a hearing must be received by the 

Department within 45 days of the 

publication of this proposed exemption 

in the Federal Register. All comments 

will be made available to the public. 

Warning: Do not include any 

personally identifiable information 

(such as name, address, or other contact 

information) or confidential business 

information that you do not want 

publicly disclosed. All comments may 

be posted on the Internet and can be 

retrieved by most Internet search 

engines. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Erin S. Hesse of the Department, 

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

a toll-free number.) 

Liberty Media 401(k) Savings Plan (the 

Plan) Located in Englewood, Colorado 

[Application No. D–11756] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the Act 

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

in accordance with the procedures set 

forth in 29 CFR Part 2570, Subpart B (76 

FR 66637, 66644, October 27, 2011). 

Section I. Transactions 

If the exemption is granted, the 

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

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

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

resulting from the application of section 

4975 of the Code, by reason of section 

4975(c)(1)(E) of the Code,23 shall not 

apply, effective August 9, 2012, until 

October 9, 2012, to: 

(a) The acquisition by the 

individually-directed accounts (the 

Accounts) in the Plan of certain 

participants (the Invested Participants) 

of stock subscription rights (the Rights) 

pursuant to a stock rights offering (the 

Rights Offering) by Liberty Interactive 

Corporation (LIC), a party in interest 

with respect to the Plan; and 

(b) The holding of the Rights by the 

Invested Participants’ Accounts during 

the subscription period. 

Section II. Conditions 

(a) The receipt of the Rights by the 

Invested Participants’ Accounts 

occurred in connection with the Rights 

Offering, and the Rights were made 

available by LIC to all shareholders of 

Series A Liberty Interactive common 

stock (the LIC Stock); 

(b) The acquisition of the Rights by 

the Invested Participants’ Accounts 

resulted from an independent corporate 

act of LIC; 

(c) Each shareholder of LIC Stock, 

including each Invested Participant’s 

Account, received the same 

proportionate number of Rights, and 

this proportionate number of Rights was 

based on the number of shares of the 

LIC Stock held by each such 

shareholder; 

(d) The Rights were acquired pursuant 

to, and in accordance with, provisions 

under the Plan for individually-directed 

investment of the Invested Participants’ 

Accounts, all or a portion of whose 

Accounts in the Plan held the LIC Stock; 

(e) The decision with regard to the 

disposition of the Rights by an Account 

was made by the Invested Participant 

whose Account received the Rights. 

Notwithstanding the above, if any of the 

Invested Participants failed to give 

instructions as to the disposition of the 

Rights received in the Rights Offering, 

such Rights were sold on the Nasdaq 

Global Market System (the Nasdaq) and 

the proceeds from the sale were 

distributed to such Invested 

Participant’s Account; and 

(f) No brokerage fees, commissions, or 

other fees or expenses were paid by the 

Plan or by the Invested Participants’ 

Accounts to any broker related to 

Fidelity Management Trust Company 

(Fidelity), the Plan trustee, or to Liberty 

Media Corporation (LMC) or LIC in 

connection with the acquisition, 

holding or sale of the Rights. 

Effective Date: This proposed 

exemption, if granted, will be effective 

for the period beginning August 9, 2012, 

through and including October 9, 2012. 

Summary of Facts and Representations 

1. Liberty Media Corporation (LMC or 

the Applicant), a Delaware corporation 

with its principal place of business in 

Englewood, Colorado, is primarily 

engaged in media, communications and 

entertainment operating businesses. 

LMC is a publicly traded corporation 

and a participating employer in the 

Plan. 

2. LIC, which was affiliated with LMC 

until 2011, is a participating employer 

in the Plan. LIC owns interests in 

subsidiaries and other companies which 

are primarily engaged in the video and 

on-line commerce industries. Through 

subsidiaries and affiliates, LIC operates 

in North America, Europe and Asia. 

3. The Plan, which is sponsored by 

LMC and LIC, is a defined contribution 

plan that is intended to qualify under 

sections 401(a) and 401(k) of the Code. 

According to the Applicant, the Plan 

meets the requirements of section 404(c) 

of the Act and allows participants to 

direct the investment of their entire Plan 

accounts (including their 401(k) 

contributions, any employer 

contributions, and any rollover 

contributions) into one of 18 investment 

categories, including shares of Series A 

common stock issued by LMC (LMC 

Stock) and shares of LIC Stock issued by 

LIC. 

As of August 8, 2012, the Plan had 

approximately 1,904 participants 

(including beneficiaries) and total assets 

of $233,663,352. As of August 8, 2012, 

the Plan held 1,450,477 shares of LIC 

Stock, valued at $27,340,926 and 

representing 11.7% of the Plan’s 

assets.24 Such stock was allocated to the 

Plan Accounts of 970 Invested 

Participants. Also as of August 8, 2012, 

the Plan held 4,760 shares of LMC 

Stock, representing 20.85% of the Plan’s 

assets and valued at $48,699,017. The 

LIC Stock (ticker: LINTA) and the LMC 

Stock (ticker: LMCA) are traded on the 

Nasdaq. 

4. As the trustee of the Plan, Fidelity 

also acts as the custodian of Plan assets, 

holds legal title to the assets, and 

executes investment directions in 

accordance with the participants’ 

written instructions. The Liberty Media 

401(k) Savings Plan Administrative 

Committee (the Committee) is the 

fiduciary responsible for Plan matters. 

5. LIC decided to conduct the Rights 

Offering in order to raise capital for 

general corporate purposes. To this end, 

LIC provided written communications 

to all shareholders of LIC Stock 

regarding the Rights Offering. The 

disclosures to each Invested Participant 


TKELLEY on DSK3SPTVN1PROD with NOTICES
19654 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 

25Subsequent to this mailing, the Invested 

Participants were notified of the dates instructions 

would be provided to Fidelity by a mailing of a 

Rights Offering Update on September 7, 2012. In 

addition, LIC issued a press release dated 

September 7, 2012, which set forth the exercise 

price for the purchase of the shares pursuant to the 

Rights offering. 

26The Applicant represents that the Liberty 

Ventures Stock that is issued by LIC, a participating 

employer in the Plan, is a ‘‘qualifying employer 

security.’’ In relevant part, section 407(d)(5)(A) of 

the Act defines the term ‘‘qualifying employer 

security’’ as an employer security that is stock. 

Section 407(d)(1) of the Act defines the term 

‘‘employer security’’ as a security that is issued by 

an employer of employees covered by a plan or by 

an affiliate of such employer. In this proposed 

exemption, the Department expresses no opinion on 

whether the Liberty Ventures Stock satisfies the 

definition of a ‘‘qualifying employer security.’’ 

27Rule 16(b) requires an officer, director, or any 

shareholder holding more than 10% of the 

outstanding shares of a publicly-traded company 

who makes a profit on a transaction with respect 

to the company’s stock during a given six month 

period, pay the difference back to the company. 

included a copy of the LIC Offering 

Questions & Answers, as well as a copy 

of the LIC Rights Offering Instructions, 

both of which were mailed on July 17, 

2012.25

6. On August 8, 2012, shareholders of 

LIC approved a tracking stock proposal, 

which resulted in the amendment and 

restatement of LIC’s certificate of 

incorporation to create Liberty Ventures 

common stock (Liberty Ventures Stock), 

a new tracking stock, and to make 

certain conforming changes to the 

existing LIC Stock, referred to hereafter 

as the ‘‘recapitalization.’’ 

7. Under the recapitalization, the 

Liberty Ventures Stock is intended to 

track and reflect the separate economic 

performance of the LIC Ventures Group, 

which is primarily focused on the 

maximization of the value of its 

investments in such companies as, 

Expedia, Inc., TripAdvisor, Inc., and 

other entities, such as Time Warner 

Cable Inc. The existing LIC Stock is 

intended to track and reflect the 

separate economic performance of the 

LIC Interactive Group, which is focused 

on video and online commerce 

operating businesses, such as QVC, Inc., 

Provide Commerce, Inc., and 

Backcountry.com, Inc. 

8. On the date of the recapitalization 

(August 9, 2012), each holder of LIC 

Stock received: 

(a) 0.05 of a share of Liberty Ventures 

Stock 26 for each share of LIC Stock held 

as of the record date (August 9, 2012); 

and 

(b) 1⁄3 of a subscription right (each, a 

Right) to purchase one share of Liberty 

Ventures Stock for each share of Liberty 

Ventures Stock to be received by such 

holder in the distribution (rounded up 

to the nearest whole Right), as described 

in (a) above. 

Each Right entitled the holder to 

purchase one share of Liberty Ventures 

Stock at a subscription price equal to a 

20% discount to the 10-trading day 

volume weighted average trading price 

of such Stock beginning on the first day 

those shares began trading ‘‘regular 

way’’ on the Nasdaq following the 

completion of the distribution of the 

Rights (the first trading day for the 

shares was August 10, 2012). The Rights 

Offering commenced on September 12, 

2012, once the subscription price for the 

Rights was determined and remained 

open for 20 trading days. There were 

64,174 Rights offered to shareholders of 

LMC. Of the Rights, the Invested 

Participants’ Accounts received 24,174 

Rights. 

9. Except as described in 

Representation 11 below, with respect 

to Rights allocated to their Accounts, 

Invested Participants could either elect 

to (a) exercise the Rights, or (b) sell the 

Rights at an exercise price of $35.99 per 

share of Liberty Ventures Stock. The 

elections applied to all of the Rights 

held in the Invested Participants’ 

Accounts, including 401(k) 

contributions and employer matching 

contributions. 

10. In addition to the Rights, all 

shareholders of LIC Stock were 

permitted to subscribe to purchase 

shares in excess of the shares reflected 

by the basic Rights issued to such 

shareholder, if the other shareholders 

did not exercise all of their basic Rights. 

Although the Plan was able to exercise 

oversubscription Rights, the Committee 

did not pass through this option to the 

Invested Participants because the 

Invested Participants would have been 

required to liquidate the assets in their 

Plan Accounts so that the purchase 

price for any Rights available under this 

option could be transmitted to 

Computershare Trust Company, N.A. 

(the Transfer Agent). This would have 

required Plan assets to be paid out of the 

Plan for which there was no assurance 

that any additional shares could be 

purchased, and these Plan assets would 

have been held by the Transfer Agent in 

an uninvested account. 

In addition, the Committee was 

concerned about the fiduciary 

implications of permitting Plan assets to 

be held in an uninvested account where 

there was no guarantee that any shares 

of Liberty Ventures Stock would be 

available for purchase under the 

oversubscription option. Therefore, the 

Committee did not direct Fidelity to 

participate in the oversubscription 

option on behalf of the Plan. 

11. Due to securities law restrictions, 

certain Invested Participants, who were 

considered ‘‘reporting persons’’ under 

Rule 16(b) 27 of the Securities Exchange 

Act of 1934 (Rule 16(b)) with respect to 

LIC, did not have the right to instruct 

Fidelity to either sell or exercise the 

Rights credited to their Plan Accounts. 

LMC provided Fidelity with a list of 

those Invested Participants and Fidelity 

established the appropriate restrictions 

to prevent these Invested Participants 

from exercising or selling the Rights 

credited to their Accounts. As provided 

by the Plan and as directed by the 

Committee, Fidelity sold the Rights 

credited to these Rule 16(b) Invested 

Participants’ Accounts as soon as it was 

administratively feasible following the 

receipt and allocation of the Rights to 

such Accounts. 

12. To hold the Rights, the Plan 

established a temporary separate trust 

(the Rights Trust), with the Committee 

serving as the trustee. Within the Rights 

Trust, two investment funds were 

established. The first fund, the ‘‘Rights 

Holding Fund,’’ was a separate fund set 

up to hold the Rights when they were 

issued. The Rights were credited to 

Invested Participants’ Accounts based 

on their respective holdings of the 

Liberty Ventures Stock as of August 9, 

2012. The second fund, the ‘‘Rights 

Receivable Fund,’’ reflected the 

approximate value of the Liberty 

Ventures Stock due from the 

Subscription Agent, following the 

exercise of Rights on October 8, 2012, as 

directed by the Investing Participants. 

13. With the exception of the Rule 

16(b) ‘‘reporting persons,’’ as described 

above, each Investing Participant could 

elect to exercise any percentage of the 

Rights allocated to such Participant’s 

Account in the Plan. Under the Offering, 

an Invested Participant could elect to 

exercise the Rights by speaking to a 

Fidelity representative at any time prior 

to 4 p.m. Eastern Time, on or about 

September 26, 2016 (the Election CloseOut Date). Investing Participants had the 

opportunity prior to the Election CloseOut Date to revoke or change 

instructions to exercise their Rights by 

(a) electing a new percentage of Rights 

to exercise, (b) by placing an order to 

sell the Rights, or (c) selecting a 

combination of both alternatives. 

14. The dollar amount required to 

exercise the Rights was exchanged from 

other investments in an Investing 

Participant’s Account into the Rights 

Receivable Fund that had been 

established under the Plan. The 

required dollar amount to exercise the 

Rights equaled the percentage of Rights 

to be exercised (as elected by the 

Investing Participant) multiplied by the 


TKELLEY on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 19655 

28 It is represented that the Invested Participants’ 

Accounts relied on the relief provided by the 

statutory exemption pursuant to section 408(e) of 

the Act and the regulations that are promulgated 

thereunder with respect to the exercise of the 

Rights. However, in this proposed exemption, the 

Department is expressing no opinion on whether 

the requirements of the statutory exemption have 

been met. 

29The Applicant represents that the brokerage 

services and commissions received by NFS from the 

Plan in connection with the exercise of the Rights 

are statutorily exempt under section 408(b)(2) of the 

Act and the applicable regulations. However, the 

Department is expressing no opinion in this 

proposed exemption on whether the requirements 

of the statutory exemption have been met. 

number of Rights credited to the 

Investing Participant’s Account and 

multiplied by the exercise price for the 

Rights Offering. The dollar amount was 

exchanged from the other investments 

in which the Investing Participant’s 

Account was invested on a proportional 

basis by source, excluding shares of LIC 

Stock, Liberty Ventures Stock and LMC 

Stock. For those Invested Participants 

with insufficient funds to permit the 

exercise of the entire elected amount of 

Rights, Fidelity exercised as many 

Rights as their Account balances in the 

Plan permitted. 

15. On October 8, 2012, the Rights to 

be exercised and the funds needed to 

consummate the transaction were 

submitted by Fidelity to Computershare 

Trust Company, N.A. (the Subscription 

Agent) for the purchase of shares. 

Invested Participants’ balances in the 

Rights Holding Fund were reduced by 

the number of Rights exercised on the 

Invested Participant’s behalf. Upon 

receipt of the new shares, the Rights 

Receivable Fund was closed and the 

newly received shares were allocated to 

the Invested Participants’ Accounts. 

Those Invested Participants who 

elected to exercise only a portion of 

their Rights could later elect to exercise 

additional Rights to the extent that 

sufficient time existed prior to the 

Election Close-Out Date. The Election 

Close-Out Date was established to 

permit sufficient time for Fidelity to 

liquidate the Invested Participants’ 

other assets in an orderly manner so that 

the necessary cash would be available to 

exercise the Rights before the Rights 

Offering expiration date (October 9, 

2012). According to the Applicant, 74 

Invested Participants exercised 3,171 

Rights during this period.28 If an 

Investing Participant failed to make an 

election during this period, or filed an 

invalid election, such Investing 

Participant would not be deemed to 

have elected to exercise his or her 

Rights. 

In connection with the exercise of the 

Rights, National Financial Services LLC 

(NFS), an affiliate of Fidelity and a 

broker for the Plan, received a 

commission equal to 2.9 cents per 

Rights share. The commission was 

charged to the Invested Participants’ 

Accounts. According to the Applicant, 

NFS was retained by the Committee to 

provide brokerage services to the Plan 

that were required for the sale of the 

Rights on the open market. In addition, 

the Applicant represents that the 

Committee approved the compensation 

paid to NFC, and it deemed such 

compensation to be ‘‘reasonable.’’ 29

Fidelity also attempted to sell 

unexercised Rights on the open market 

between October 1 and October 9, 2012. 

Rights that remained unsold at the close 

of the market on October 9, 2012, 

expired. 

16. An Invested Participant could 

elect to sell rather than exercise the 

Rights allocated to his or her Plan 

Account. In order to sell a Right, an 

Invested Participant was required to (a) 

contact a Fidelity representative, and (b) 

specify the percentage (in whole 

amounts) of the Rights the Invested 

Participant desired to sell. The selling 

period for Invested Participants ran 

from September 13, 2012, through 

October 1, 2012.30 During this time 

period, 20 Invested Participants 

affirmatively elected to sell their Rights 

and 734 Rights were sold. The Rights 

were traded on the Nasdaq under the 

ticker symbol ‘‘LVNAR.’’ Fidelity sold a 

total of 20,269 of the remaining Rights 

for 877 Invested Participants between 

October 2 and October 5, 2012, for a 

total selling price of $257,130.70. (One 

Invested Participant had both an 

exercise and a sale.) 

17. The Applicant has requested an 

administrative exemption from the 

Department for: (a) The acquisition of 

the Rights by the Plan in connection 

with the Rights Offering; and (b) the 

holding of the Rights by the Invested 

Participants’ Accounts during the 

subscription period of the Rights 

Offering. 

The Applicant represents that the 

Rights acquired by the Plan satisfy the 

definition of ‘‘employer securities,’’ 

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

However, as the Rights are 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 by 

the Plan, of employer securities that are 

not qualifying employer securities, in 

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

which the Applicant has requested 

relief from sections 406(a)(1)(E), 

406(a)(2), and 407(a)(1)(A) of the Act. In 

addition, because the subject 

transactions raise conflict of interest 

issues by Plan fiduciaries, the Applicant 

has requested exemptive relief from the 

prohibitions of section 406(b)(1) and 

406(b)(2) of the Act. If granted, the 

proposed exemption will be effective for 

the period beginning August 9, 2012, 

through and including October 9, 2012. 

18. The Applicant represents that the 

proposed exemption is administratively 

feasible because it involves the 

acquisition and short-term holding of 

Rights by the Invested Participants’ 

Accounts and the one-time exercise of 

the Rights, as directed by the Invested 

Participants. In this regard, the 

Applicant explains that the Plan had 

already passed through certain rights to 

the Invested Participants with respect to 

the employer securities held in such 

Invested Participants’ Accounts. 

According to the Applicant, voting 

rights with respect to the employer 

securities had been passed through to 

the Invested Participants. Therefore, the 

Committee determined that it would be 

consistent with these other rights to 

pass through the decision on whether to 

exercise or sell the Rights to the 

Invested Participants. 

In addition, the Applicant represents 

that the proposed exemption is in the 

interests of the Plan and the participants 

and beneficiaries because it allowed 

Invested Participants, who exercised 

their Rights, to purchase shares of 

Liberty Ventures Stock at a significant 

discount. Had the Plan not engaged in 

the subject transactions, the Plan and 

the Invested Participants would have 

been at a disadvantage compared with 

outside shareholders. Therefore, the 

Committee determined that Invested 

Participants should be permitted to 

exercise or sell the Rights. 

Finally, the Applicant explains that 

the proposed exemption is protective of 

the Plan and the participants and 

beneficiaries because all Invested 

Participants were notified, in advance of 

the recapitalization and the subsequent 

transactions, of the procedure for 

instructing Fidelity of such Invested 

Participants’ desires with respect to the 

Rights. In addition, all instructions 

given by the Invested Participants to 

Fidelity were properly executed. 

19. In summary, the Applicant 

represents that the subject transactions 

satisfy the statutory criteria of section 

408(a) of the Act because: 

(a) The receipt of the Rights by the 

Invested Participants’ Accounts 

occurred in connection with the Rights 

Offering, and the Rights were made 

available by LIC to all shareholders of 


TKELLEY on DSK3SPTVN1PROD with NOTICES
19656 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Notices 

LIC Stock, including the Invested 

Participants’ Accounts; 

(b) The acquisition of the Rights by 

the Invested Participants’ Accounts 

resulted from an independent corporate 

act of LIC; 

(c) Each shareholder of LIC Stock, 

including each Invested Participant’s 

Account, received the same 

proportionate number of Rights, and 

this proportionate number of Rights was 

based on the number of shares of the 

LIC Stock held by each such 

shareholder; 

(d) The Rights were acquired pursuant 

to, and in accordance with, provisions 

under the Plan for individually-directed 

investment of the Invested Participants’ 

Accounts, all or a portion of whose 

Accounts in the Plan held the LIC Stock; 

(e) The decision with regard to the 

disposition of the Rights by an Account 

was made by the Invested Participant 

whose Account received the Rights. 

Notwithstanding the above, if any of the 

Invested Participants failed to give 

instructions as to the disposition of the 

Rights received in the Rights Offering, 

such Rights were sold on the Nasdaq 

and the proceeds from the sale were 

distributed to such Invested 

Participant’s Account; and 

(f) No brokerage fees, commissions, or 

other fees or expenses were paid by the 

Plan or by the Invested Participants’ 

Accounts to any broker related to 

Fidelity, the Plan trustee, or to LMC or 

LIC in connection with the acquisition, 

holding or sale 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 

(the Notice) include Invested 

Participants whose Accounts in the Plan 

were invested in LIC Stock at the time 

of the Offering. 

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(a)(2), which 

will advise all interested persons of 

their right to comment and to request a 

hearing. All written comments and/or 

requests for a hearing must be received 

by the Department from interested 

persons within 45 days of the 

publication of this proposed exemption 

in the Federal Register. 

All comments will be made available 

to the public. Warning: Do not include 

any personally identifiable information 

(such as name, address, or other contact 

information) or confidential business 

information that you do not want 

publicly disclosed. All comments may 

be posted on the Internet and can be 

retrieved by most Internet search 

engines. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Blessed Chuksorji-Keefe of the 

Department, telephone (202) 693–8567. 

(This is not a toll-free number.) 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

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

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions 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 27th day of 

March 2014. 

Lyssa E. Hall, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2014–07872 Filed 4–8–14; 8:45 am] 

BILLING CODE 4510–29–P 

NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

[NARA–2014–022] 

Agency Information Collection 

Activities: Proposed Extension of 

Collection; Comment Request 

AGENCY: National Archives and Records 

Administration (NARA). 

ACTION: Notice of proposed extension of 

information collection. 

SUMMARY: NARA is giving public notice 

that the agency proposes to request 

extension of a currently approved 

information collection consisting of 

National Archives Trust Fund (NATF) 

Order Forms for Genealogical Research 

in the National Archives. The NATF 

forms included in this information 

collection are: NATF 84, National 

Archives Order for Copies of Land Entry 

Files; NATF 85, National Archives 

Order for Copies of Pension or Bounty 

Land Warrant Applications; and NATF 

86, National Archives Order for Copies 

of Military Service Records. The public 

is invited to comment on the proposed 

information collections pursuant to the 

Paperwork Reduction Act of 1995. 

DATES: Written comments must be 

received on or before June 9, 2014 to be 

assured of consideration. 

ADDRESSES: Comments should be sent 

to: Paperwork Reduction Act Comments 

(ISSD), Room 4400, National Archives 

and Records Administration, 8601 

Adelphi Rd, College Park, MD 20740– 

6001; or faxed to 301–713–7409; or 

electronically mailed to 

tamee.fechhelm@nara.gov. 

FOR FURTHER INFORMATION CONTACT: 

Requests for additional information or 

copies of the proposed information 

collections and supporting statements 

should be directed to Tamee Fechhelm 

at telephone number 301–837–1694, or 

fax number 301–713–7409. 

SUPPLEMENTARY INFORMATION: Pursuant 

to the Paperwork Reduction Act of 1995 

(Pub. L. 104–13), NARA invites the 

general public and other Federal 

agencies to comment on proposed 

information collections. The comments 


TKELLEY on DSK3SPTVN1PROD with NOTICES