33830 Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices 

1Section 102 of Reorganization Plan No. 4 of 

1978, 5 U.S.C. App. at 214 (2000) generally 

transferred the authority of the Secretary of 

Treasury to issue exemptions under section 

4975(c)(2) of the Code to the Secretary of Labor. In 

the discussion of the exemption, references to 

specific provisions of the Act should be read to 

refer as well to the corresponding provisions of 

section 4975 of the Code. 

information collection instrument with 

instructions or additional information, 

please contact Patricia Power, Chief, 

Federal Firearms Licensing Center, 244 

Needy Road, Martinsburg, WV 25405. 

Written comments and suggestions 

from the public and affected agencies 

concerning the proposed collection of 

information are encouraged. Your 

comments should address one or more 

of the following four points: 

—Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; 

—Evaluate the accuracy of the agencies 

estimate of the burden of the 

proposed collection of information, 

including the validity of the 

methodology and assumptions used; 

—Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

—Minimize the burden of the collection 

of information on those who are to 

respond, including through the use of 

appropriate automated, electronic, 

mechanical, or other technological 

collection techniques or other forms 

of information technology, e.g., 

permitting electronic submission of 

responses. 

Overview of this information 

collection: 

(1) Type of Information Collection: 

Extension of a currently approved 

collection. 

(2) Title of the Form/Collection: 

Application for Federal Firearms 

License (Collector of Curios and Relics). 

(3) Agency form number, if any, and 

the applicable component of the 

Department of Justice sponsoring the 

collection: Form Number: ATF F 7CR 

(5310.16). Bureau of Alcohol, Tobacco, 

Firearms and Explosives. 

(4) Affected public who will be asked 

or required to respond, as well as a brief 

abstract: Primary: Individuals or 

households. Other: None. The form is 

used by the public when applying for a 

Federal firearms license to collect curios 

and relics to facilitate a personal 

collection in interstate and foreign 

commerce. The information requested 

on the form establishes eligibility for the 

license. 

(5) An estimate of the total number of 

respondents and the amount of time 

estimated for an average respondent to 

respond: It is estimated that 7,300 

respondents will complete a 15 minute 

form. 

(6) An estimate of the total public 

burden (in hours) associated with the 

collection: There are an estimated 1,825 

annual total burden hours associated 

with this collection. 

If additional information is required 

contact: Lynn Bryant, Department 

Clearance Officer, Policy and Planning 

Staff, Justice Management Division, 

Department of Justice, Patrick Henry 

Building, Suite 1600, 601 D Street, NW., 

Washington, DC 20530. 

Dated: June 10, 2010. 

Lynn Bryant, 

Department Clearance Officer, PRA, U.S. 

Department of Justice. 

[FR Doc. 2010–14352 Filed 6–14–10; 8:45 am] 

BILLING CODE 4410–FY–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Application No. D–11337] 

Adoption of Amendment to the Class 

Exemption for the Release of Claims 

and Extensions of Credit in 

Connection With Litigation (PTE 2003– 

39) 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 

ACTION: Adoption of Amendment to a 

Class Exemption. 

SUMMARY: This document amends PTE 

2003–39 (68 FR 75632, Dec. 31, 2003), 

a class exemption from certain 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act) and from 

certain taxes imposed by the Internal 

Revenue Code of 1986, as amended (the 

Code). PTE 2003–39 generally exempts 

a plan’s receipt of consideration from a 

related party in partial or complete 

settlement of actual or threatened 

litigation, as well as extensions of credit 

from a plan in connection with 

settlement payments made over time by 

the related party. The amendment 

expands the categories of assets that 

may be accepted by plans in the 

settlement of litigation, subject to 

certain conditions. Among other things, 

the amendment permits the receipt of 

non-cash assets in settlement of a claim 

(including the promise of future 

employer contributions) but only in 

instances where the consideration can 

be objectively valued. The amendment 

also modifies PTE 2003–39 to permit 

plans to acquire, hold, or sell employer 

securities such as warrants and stock 

rights which are received in settlement 

of litigation, including bankruptcy 

proceedings. 

This amendment is being granted in 

response to requests from practitioners 

and independent fiduciaries who sought 

an expansion of the types of 

consideration that plans could accept in 

connection with the settlement of 

litigation. The amendment affects all 

employee benefit plans, the participants 

and beneficiaries of such plans, and 

parties in interest with respect to those 

plans engaging in the described 

transactions. 

DATES: Effective Date: The amendment 

is effective June 15, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Christopher Motta or Allison PadamsLavigne, Office of Exemption 

Determinations, Employee Benefits 

Security Administration, U.S. 

Department of Labor, Washington, DC 

20210 (202) 693–8540 (not a toll-free 

number). 

SUPPLEMENTARY INFORMATION: On 

November 21, 2007, a notice was 

published in the Federal Register (72 

FR 65597) of the pendency before the 

Department of a proposed amendment 

to PTE 2003–39, which exempts certain 

transactions from the restrictions of 

sections 406(a) and 407(a) of the Act 

and from the sanctions resulting from 

the application of section 4975 of the 

Code, by reason of section 4975(c)(1)(A) 

through (D) of the Code. 

The amendment described herein is 

being granted by the Department on its 

own motion pursuant to section 408(a) 

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

Code, and in accordance with the 

procedures set forth in 29 CFR Part 2570 

Subpart B (55 FR 32836, August 10, 

1990).1 The notice gave interested 

persons an opportunity to submit 

written comments or request a public 

hearing on the proposed amendment to 

the Department. The Department 

received two comments and no requests 

for a public hearing. Upon consideration 

of the record taken as a whole, the 

Department has determined to grant the 

proposed amendment with minor 

modifications. 

Executive Order 12866 Statement 

Significant regulatory actions are 

subject to the requirements of Executive 

Order 12866 and subject to review by 

the Office of Management and Budget 

(OMB). Under section 3(f), the order 

defines a ‘‘significant regulatory action’’ 

as an action that is likely to result in a 

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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices 33831 

2For example, PTE 2004–03, Lodgian 401(k) Plan 

and Trust Agreement, 69 FR 7506, 7509 (Feb. 14, 

2004) (warrants); PTE 2003–33, Liberty Media 

401(k) Savings Plan, 68 FR 64657 (Nov. 14, 2003) 

(stock rights); PTE 2002–02, The Golden Retirement 

Savings Program and The Golden Security Program, 

67 FR 1242, 1243 (Jan. 9, 2002) (warrants). 

3See Advisory Opinion 95–26A (October 17, 

1995). 

4Where the Department of Labor (DOL) and/or 

the Internal Revenue Service (IRS) is a party to the 

litigation, new prohibited transactions may be 

Continued 

rule: (1) Having an annual effect on the 

economy of $100 million or more, or 

adversely and materially affecting a 

sector of the economy, productivity, 

competition, jobs, the environment, 

public health or safety, or State, local or 

tribal governments or communities (also 

referred to as ‘‘economically 

significant’’); (2) creating serious 

inconsistency or otherwise interfering 

with an action taken or planned by 

another agency; (3) materially altering 

the budgetary impacts of entitlement 

grants, user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raising novel legal or 

policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

Pursuant to the terms of the Executive 

Order, this action is significant under 

section 3(f)(4) of the Executive Order. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520) (PRA 95), the Department 

submitted the information collection 

request (ICR) included in the Class 

Exemption for Release of Claims and 

Extensions of Credit in Connection With 

Litigation (the ‘‘Class Exemption’’) to the 

Office of Management and Budget 

(OMB) for review and clearance at the 

time the class exemption was published 

in the Federal Register (68 FR75632, 

December 31, 2003) under OMB control 

number 1210–0091. The ICR was 

renewed by OMB through June 30, 2012, 

on June 15, 2009. 

The Amendment to the Class 

Exemption contains the following 

information collections: 

Written Settlement Agreement. The 

terms of the settlement must be 

specifically described in a written 

agreement or consent decree. 

Acknowledgement by Fiduciary. The 

fiduciary acting on behalf of the plan 

must acknowledge in writing that s/he 

is a fiduciary with respect to the 

settlement of the litigation. 

The amendment would expand the 

scope of non-cash consideration that 

may be accepted by an authorizing 

fiduciary on behalf of the plan in 

connection with the settlement of 

litigation (subject to additional 

conditions) to include employer 

securities, including bonds, and stock 

rights or warrants to acquire employer 

stock. The amendment also would make 

the valuation methods used to value 

non-cash consideration more flexible. 

The amendment to the class 

exemption would modify the written 

settlement agreement information 

collection by requiring the agreement to 

specifically describe (i) the employer 

securities and written promises of future 

employer contributions (and the 

methodology for determining the fair 

market value of such consideration) that 

has been tendered as consideration in 

settlement of litigation and/or (ii) 

benefit enhancements as approved by 

the authorizing fiduciary that are 

provided to the plan as consideration 

for settlement. Because it is usual and 

customary business practice to express 

the terms of a settlement in writing with 

some degree of detail, no additional 

hour burden has been accounted for this 

provision of the amendment. 

The 2007 amendment modifies the 

information collection associated with 

the Fiduciary Acknowledgment by 

requiring the authorizing fiduciary to 

acknowledge its fiduciary responsibility 

for the approval of an attorney’s fee 

award in connection with the settlement 

in writing. The Department expects the 

authorizing fiduciary to incorporate this 

acknowledgement into the investment 

management or trustee agreement 

outlining the terms and conditions of 

the fiduciary’s retention as a plan 

service provider, and that this 

agreement will already be in existence 

as part of usual and customary business 

practice. The additional hour burden 

attributable to the acknowledgement 

provided in the amendment is 

negligible; therefore, the Department has 

not increased the overall hour burden 

for this provision of the amendment. 

I. Background 

Based upon feedback from 

practitioners and independent 

fiduciaries working to settle litigation 

with parties in interest, the Department 

is amending PTE 2003–39 to expand the 

type of consideration that can be 

accepted by an employee benefit plan in 

settlement of litigation. While the 

Department encourages cash 

settlements, it recognizes that there are 

situations in which it may be in the 

interest of participants and beneficiaries 

to accept consideration other than cash 

in exchange for releasing the claims of 

the plan and/or the plan fiduciary. 

Because ERISA does not permit plans to 

hold employer-issued stock rights, 

warrants, or most bonds, without an 

individual exemption,2 the transactions 

covered by PTE 2003–39 have been 

expanded to include the acquisition, 

holding, and disposition of employer 

securities received in settlement of 

litigation, including bankruptcy 

litigation. Other amendments to the 

class exemption seek to clarify the scope 

of the duties of the independent 

fiduciary charged with responsibility for 

settling litigation. 

The Department understands that 

segments of the pension community 

question whether the receipt of property 

by a plan in consideration for the 

release of a claim arising out of 

litigation with a party in interest would 

constitute a prohibited transaction 

under section 406 of the Act. It is the 

Department’s position that the release 

by the plan of a legal or equitable claim 

against a party in interest in exchange 

for consideration is an exchange of 

property (a chose in action) between the 

plan and the party in interest which is 

prohibited under section 406(a)(1)(A) of 

the Act in the absence of an exemption. 

This administrative class exemption 

provides conditional relief from this 

prohibition. 

In many cases where a plan has 

brought, or is considering, a lawsuit 

against a party in interest, the plan will 

have terminated its relationship with 

the party, and the party will no longer 

be party in interest at the time of the 

settlement. A settlement of the claims 

against such a party would not 

constitute a prohibited transaction. In 

addition, the Department has concluded 

that the statutory exemption in ERISA 

section 408(b)(2) may be available under 

limited circumstances for an exchange 

of property made solely to resolve 

claims arising out of the performance of 

an underlying service arrangement.3

II. Description of Existing Relief 

The class exemption for the release of 

claims and extensions of credit in 

connection with litigation provides 

limited relief. Since conflicted 

fiduciaries are not permitted to have a 

role under the exemption in settling the 

litigation, no relief is provided from the 

self-dealing provisions of ERISA. The 

current exemption permits the release of 

the plan’s or the plan fiduciary’s claim 

against a party in interest in exchange 

for consideration, and related 

extensions of credit. No relief is 

provided for any prohibited transactions 

that are the subject of the underlying 

litigation, or any new prohibited 

transactions (other than consideration 

for the release of claims) that may be 

proposed in settlement of litigation.4

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33832 Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices 

permitted to resolve litigation pursuant to PTE 79– 

15, Class Exemption for Certain Transactions 

Authorized or Required by Judicial Order or 

Judicially Approved Settlement Decree, 44 FR 

26979 (May 8, 1979). DOL may also enter into a 

voluntary settlement with parties covered by 

ERISA, in which case any prospective prohibited 

transactions may be covered by the Class 

Exemption to Permit Certain Transactions 

Authorized Pursuant to Settlement Agreements 

between the Department of Labor and Plans, PTE 

94–71, 59 FR 51216 (Oct. 7, 1994). 

5 It should be noted that the Department of the 

Treasury has authority to issue regulations, rulings 

and opinions regarding the term ‘‘correction’’ as 

defined in § 4975 of the Code. Reorg. Plan No. 4 of 

1978, 5 U.S.C. App. at 214 (2000). Treas. Reg. 

§ 53.4941(e)–1(c)(1) (1986) (excise taxes on private 

foundations) applies to ‘‘correction’’ of prohibited 

transactions under section 4975(f) of the Code 

(dealing with pension excise taxes) by reason of 

Temp. Treas. Reg. § 141.4975–13 (1986). 

6Parties entering into such arrangement should 

review the IRS rules with respect to restorative 

payments. Rev. Rul. 2002–45, 2002–2 C.B. 116. 

7See, Advisory Opinion 95–26A (Oct. 17, 1995). 

8See Lockheed v. Spink, 517 U.S. 882, 892–893 

(1996) (the payment of benefits is not a prohibited 

transaction). 

9The Department is aware that at least one 

commentator has interpreted this condition as 

requiring a formal opinion of counsel. This is not 

the case. Further, it is not necessary for the 

litigation to be filed. If suit has not been filed, the 

independent attorney can review the disputed 

issues and conclude that there is a genuine 

controversy. As noted in the original exemption, the 

purpose of this condition is to avoid covering sham 

settlements. See, Dairy Fresh Corp. v. Poole, 108 F. 

Supp. 2d 1344, 1353 (S.D. Ala. 2000). 

10The Department does not suggest that other 

litigants can release ERISA-based claims of the 

Secretary of Labor, plan fiduciaries, participants or 

beneficiaries. 

11 In some instances, the amount of the settlement 

fund is finalized before the attorney’s fee awards are 

determined. In other instances, the attorney’s fees 

are calculated as a percentage of the settlement 

fund. Generally, a court will review the 

reasonableness of the attorney’s fee award. 

12This issue was considered by the Federal Trade 

Commission’s Class Action Fairness Project. The 

FTC’s Web site contains links to many of the 

materials produced in connection with the ClassAction Fairness Project. Federal Trade Commission 

Home Page: http://www.ftc.gov/bcp/workshops/ 

classaction/index.htm. 

13Public Law 109–2, 119 Stat. 4 (2005). The Act 

amends both Rule 23 of the Federal Rules of Civil 

Procedure and 28 U.S.C. 1332. It expands federal 

jurisdiction over certain cases and contains new 

rules for class action settlements and calculation of 

attorney’s fees. 

Where a prohibited transaction giving 

rise to the actual or potential litigation 

is ‘‘corrected’’ in compliance with 

section 4975(f)(5) of the Code, this 

exemption will not be necessary 

because correcting a prohibited 

transaction under section 4975 of the 

Code does not give rise to a prohibited 

transaction under Title I of the Act.5

Additionally, there is no prohibited 

transaction if the plan receives 

consideration,6 but does not have to 

relinquish its cause of action, or other 

assets. Finally, if the dispute involves 

the provision of services or incidental 

goods by a service provider, the 

settlement may fall within the statutory 

exemption under section 408(b)(2) of 

the Act.7

The exemption is not available where 

a party in interest is suing an employee 

benefit plan, unless the party in interest 

is suing on behalf of the plan pursuant 

to section 502(a)(2) or (3) of ERISA, in 

their capacity as a participant, 

beneficiary, or fiduciary. Further, it is 

the view of the Department that, in 

general, no exemption is needed to 

settle benefits disputes,8 including 

subrogation cases. 

III. Description of Amendments 

New Transactions 

The proposed amendment expanded 

the transactions covered by the 

exemption. In this regard, warrants and 

stock rights are often offered to 

shareholders, including the company’s 

employee benefit plan, in settlement of 

litigation, including bankruptcy. In such 

situations, bonds or other property that 

do not constitute qualifying employer 

securities under ERISA may also be 

offered to employee benefit plans. 

ERISA does not permit plans to hold 

these assets absent an individual 

exemption. Effective as of the date of 

publication of the final exemption in the 

Federal Register, a plan may acquire, 

hold, and dispose of employer securities 

in settlement of litigation, including 

bankruptcy. The transactions covered by 

the exemption include the subsequent 

disposition of stock rights and warrants 

by sale or by exercise of the rights or 

warrants. 

Modified Conditions 

The exemption currently requires that 

an attorney retained to advise 9 the plan 

determine that there is a genuine 

controversy, unless the case has been 

certified as a class action. As amended, 

this genuine controversy requirement 

may be met in non-class action cases if 

a Federal or State agency is a plaintiff 

in the litigation. 

Section II (b) has been redrafted to 

clarify that the settlement is being 

authorized by a fiduciary (hereinafter 

referred to as the authorizing fiduciary). 

Currently, the independent fiduciary 

must assess the reasonableness of the 

settlement in light of the risks and costs 

of litigation, and the value of claims 

foregone. The Department had become 

concerned that some independent 

fiduciaries, and those responsible for 

their retention, were viewing this 

condition too narrowly. As a result, the 

amendment clarified that in assessing 

the reasonableness of any settlement, 

the authorizing fiduciary must consider 

the entire settlement. This includes the 

scope of the release of claims and the 

value of any non-cash assets. In this 

regard, the Department further 

emphasized that the authorizing 

fiduciary, in assessing the 

reasonableness of the settlement, may 

not exclude consideration of the 

attorney’s fee award or any other sums 

to be paid from the recovery (e.g., for 

consultants) in connection with the 

settlement of the litigation. 

Since the class exemption was 

finalized, attorneys for the Department 

have reviewed numerous releases in 

class-action litigation involving 

employee benefit plans. Some of these 

releases were unreasonably broad. The 

Department continues to believe that the 

role of the authorizing fiduciary 

includes a careful review of the scope of 

any release that will eliminate the 

claims of the plan or the plan 

fiduciaries. In some instances, it may be 

necessary for the authorizing fiduciary 

to raise objections with the court, for 

example, requesting that the court 

narrow the scope of the release.10

When a plan participates in a 

settlement, it does so as an independent 

legal entity with legal rights and 

obligations distinct from those of both 

the plan sponsor and from any given 

plan participant or beneficiary. In a 

class action, the authorizing fiduciary 

should consider whether the plan is 

being treated less equitably than are 

other class members, either by the terms 

of the settlement or through the failure 

of the settlement to adequately 

recognize the plan’s particular interests. 

For example, a settlement could be 

viewed as less advantageous to the plan 

than to other class members if it 

requires the plan to surrender ERISArelated claims without payment of 

additional consideration, or if it 

imposes restrictions on the plan that are 

not placed on other class members (e.g., 

by not considering some or all of the 

plan’s securities in allocating settlement 

proceeds). 

Attorney’s fees awarded to plaintiffs’ 

attorneys may reduce the plan’s 

recovery, directly or indirectly.11

Although the attorneys bringing these 

class actions are entitled to fair 

compensation, in some instances abuses 

have occurred.12 In 2005, Congress 

passed the Class Action Fairness Act of 

2005 13 to address some of these abuses. 

Where the plan’s share of the settlement 

is significant, the authorizing fiduciary 

is generally well-positioned to use its 

bargaining strength to ensure that these 

fees are reasonable. It is the view of the 

Department that the authorizing 

fiduciary’s role may require 

involvement in the attorney’s fee 

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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices 33833 

14 71 FR 20262 (Apr. 19, 2006). The VFC Program, 

as amended, covers certain prohibited transactions 

involving illiquid property. The exemption states 

that such property includes, but is not limited to, 

restricted and thinly traded stock, limited 

partnership interests, real estate and collectibles. 71 

FR at 20279. Authorizing Fiduciaries may find the 

guidelines in the VFC Program helpful in 

considering whether accepting Non-Cash property 

as part of a settlement is appropriate given the risks 

and additional costs that may be incurred where a 

plan holds such property. Illiquid assets may 

complicate the plan’s mandatory distributions at 

age 701⁄2 pursuant to section 401(a)(9) of the Code. 

The Service takes the position that compliance with 

this provision may necessitate distribution of a 

participant’s fractional interest in the illiquid asset, 

which could result in additional costs to the plan. 

See, e.g., I.R.S. Priv. Ltr. Rul. 9726032 (June 27, 

1997) and I.R.S. Priv. Ltr. Rul. 9226066 (June 26, 

1992). 

15See generally, Field Assistance Bulletin No. 

2006–01 (Apr. 9, 2006) at http://www.dol.gov/ebsa/ 

regs/fab_2006-1.html for a discussion of issues to be 

considered when the need arises to allocate 

settlement proceeds among different classes of 

participants and beneficiaries. 

16The Department encourages the independent 

fiduciary to the extent possible, consistent with its 

fiduciary obligations, to dispose of property 

received as part of a settlement within a reasonably 

short timeframe in order to limit costs to the plan 

of the independent fiduciary’s services. 

decisions, including possibly filing a 

formal objection with the court 

regarding these fees. 

The proposed amendment expanded 

the scope of non-cash consideration that 

may be accepted by an authorizing 

fiduciary on behalf of the plan, subject 

to additional conditions. Such 

consideration is divided into two 

categories: non-cash assets and benefits 

enhancements. Non-cash assets consist 

of property that can be appraised 

pursuant to the guidelines set forth in 

the Department’s Voluntary Fiduciary 

Correction (VFC) Program.14 As 

amended, employer securities, 

including bonds, and stock rights or 

warrants on employer securities, are 

covered. 

The current exemption specifies that 

a written agreement to make future 

contributions could be accepted in 

exchange for a release. This continues to 

be the case. As amended, a written 

promise by the employer to increase 

future contributions falls within the 

expanded category of non-cash assets. 

The fair market value of a stream of 

future contributions can be determined 

by a qualified appraiser. In contrast, 

benefits enhancements, i.e., where the 

employer offers to change the plan 

design to increase opportunities to 

diversify, or to offer other employee 

benefits, are plan amendments, not plan 

assets. Therefore, the exemption 

requires only approval by the 

authorizing fiduciary with respect to 

such benefits enhancements. Because 

such enhancements do not make the 

plan whole and may not benefit the 

same participants who were harmed by 

the actions that are the subject of 

litigation,15 an authorizing fiduciary 

should give such offers special scrutiny. 

As amended, relief is provided for the 

acquisition, holding, and disposition of 

employer securities that are not 

‘‘qualifying,’’ within the meaning of 

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

understand from our conversations with 

independent fiduciaries that, in cases 

involving financially troubled 

companies, stock rights and warrants 

may be the only assets available. In 

other instances, employer-issued bonds 

or other debt instruments may offer the 

best value for the plan. The relief 

provided by the class exemption for 

accepting and holding such non-cash 

assets extends only to relief from the 

prohibited transaction provisions of 

sections 406(a) and 407(a) of the Act; no 

relief is provided from the fiduciary 

provisions of section 404 of the Act. 

Before authorizing a settlement 

involving non-cash assets, the 

authorizing fiduciary must determine 

whether accepting such assets is 

prudent and in the interest of 

participants and beneficiaries. 

In addition, where such non-cash 

assets are employer securities, particular 

attention must be paid to ERISA’s 

diversification requirements. Section 

404(a)(1)(C) requires that a fiduciary 

diversify the investments of the plan so 

as to minimize the risk of large losses, 

unless under the circumstances it is 

clearly prudent not to do so. Section 

404(a)(2) provides that, in the case of an 

eligible individual account plan, the 

diversification requirement of section 

404(a)(1)(C) and the prudence 

requirement (only to the extent that it 

requires diversification) of section 

404(a)(1)(B) is not violated by the 

acquisition or holding of qualifying 

employer securities. If the employer 

securities do not meet the definition of 

qualifying employer securities under 

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

exception contained in section 404(a)(2) 

from the diversification requirements of 

the Act will not apply to a Plan’s 

investment in these assets. Accordingly, 

the authorizing fiduciary must 

determine the appropriate level of 

investment in employer securities, 

based on the particular facts and 

circumstances, consistent with its 

responsibilities under section 404 of the 

Act. 

Where non-cash assets or benefits 

enhancements are being considered, the 

authorizing fiduciary must first 

determine that a cash settlement is 

either not feasible or is less beneficial 

than the alternative. Any non-cash 

assets must be valued at their fair 

market value in accordance with section 

5 of the Voluntary Fiduciary Correction 

Program, 71 FR 20262, 20270 (Apr. 19, 

2006). Both non-cash assets and benefits 

enhancements must be described in the 

written settlement agreement. 

Where the plan receives employer 

securities as part of the settlement, the 

authorizing fiduciary or another 

independent fiduciary must retain sole 

responsibility for investment decisions 

regarding the assets unless the plan is a 

participant-directed individual account 

plan and the authorizing fiduciary 

allows the participants and beneficiaries 

to exercise control over the securities 

allocated to their accounts.16 The 

proposed amendment provided that the 

plan could not pay any commissions in 

connection with the acquisition of 

assets pursuant to this exemption. 

As is the case in the current 

exemption, the authorizing fiduciary 

must acknowledge in writing that it is 

a fiduciary for purposes of the 

settlement. As noted above, since the 

original exemption was granted at the 

end of 2003, the Department has learned 

that practitioners are divided on 

whether or not the authorizing 

fiduciary’s role in the settlement 

included review of attorney’s fees. It is 

the view of the Department that in any 

instance where an attorney’s fee award 

or any other sums to be paid from the 

recovery has the potential to reduce the 

plan’s overall recovery, the authorizing 

fiduciary should take appropriate steps 

to review the proposed fees. The exact 

nature of the authorizing fiduciary’s role 

in connection with attorney’s fees and 

other expenses paid from the recovery 

will vary depending on the size and 

nature of the litigation. 

Discussion of the Comments Received 

The Department received two 

comments with respect to the proposed 

amendment, each of which suggested 

modifications to the text of the proposal 

as described below. 

One commenter suggested that the 

language of section II (m)(2) of the 

proposed exemption be modified to 

ensure that certain information offered 

confidentially by parties to a settlement 

(i.e., data that is not readily classified as 

either company trade secrets or other 

commercial or financial information) be 

kept confidential by the Department and 

the Internal Revenue Service, and not be 

disclosable to plan participants or 

beneficiaries, fiduciaries, contributing 

employers or employee organizations. 

To support its position, the 

commenter explained that settlements 

resulting from a mediation process 

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33834 Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices 

frequently involve the preparation of 

statements by the parties; these 

statements may contain certain 

information relevant to the dispute, 

such as a company’s loss analysis, that 

is deemed sensitive by one of the 

parties. Because such information may 

not always be readily classified as a 

trade secret or as confidential, 

commercial or financial information 

under either the current or amended 

version of the exemption, the 

commenter believes that an 

independent fiduciary may not be able 

to guarantee the confidentiality of such 

internally-generated information. As a 

result, the commenter stated that parties 

to a mediation are often unwilling to 

share sensitive information and 

analysis; thus depriving the 

independent fiduciary of information 

that may be relevant in evaluating the 

appropriateness of a proposed 

settlement. In the commenter’s opinion, 

the independent fiduciary’s access to 

sensitive information relevant to the 

settlement is paramount, even if such 

access results in a less transparent 

decisional record for plan participants 

and other interested parties. 

After considering this comment, the 

Department has determined to modify 

the language of the final exemption to 

clarify that, where information is offered 

to an authorizing fiduciary by a party to 

the settlement negotiations on the 

condition that the fiduciary agree that 

the information be kept confidential, the 

fiduciary may accept the information 

and use it to assist in its decision 

making without making it available to 

plan participants and beneficiaries or 

the Secretary, provided that: (i) the 

fiduciary makes a written finding that 

the proferred information would likely 

assist the fiduciary in carrying out its 

responsibilities; and (ii) a decision of a 

court or an opinion of counsel confirms 

that the proferred information likely 

cannot be obtained unconditionally by 

seeking discovery through the court, or 

cannot be obtained in a timely fashion. 

Another commenter proposed that 

Section I of the exemption be amended 

to modify the relief provided for the 

‘‘acquisition, holding and disposition of 

employer securities received in 

settlement of litigation, including 

bankruptcy.’’ This commenter stated 

that section II(i)(2) of the proposed 

amendment, which requires that the fair 

market value of non-cash assets 

tendered to a plan in exchange for a 

release of claims must be determined in 

accordance with section 5 of the 

Voluntary Fiduciary Correction (VFC) 

Program, would prove unduly 

restrictive and burdensome with respect 

to achievement of settlements involving 

the pricing and transfer of employer 

securities. The commenter stated that 

the valuation of non-cash assets in a 

settlement transaction is generally the 

product of litigation and settlement 

negotiations between adverse parties to 

a genuine controversy which may not 

have involved employee benefits, and as 

to which ERISA-regulated plans may 

have only a minor stake. The 

commenter also opined that a plan’s 

decision whether to receive the noncash assets will be made by an 

authorizing fiduciary who is, by 

definition, independent, a feature not 

present in the typical VFC context. The 

commenter further argues that certain 

conditions of the exemption (sections II 

(c) and (d)) of the exemption already 

require that the authorizing fiduciary 

find the settlement terms, including the 

value of any non-cash assets, are 

‘‘reasonable’’ and ‘‘no less favorable to 

the plan than comparable arms-length 

terms and conditions.’’ Accordingly, the 

commenter believes that the existing 

conditions in the exemption are 

sufficiently protective and rigorous 

without incorporating additional 

requirements from the VFC program. 

Section 5(a)(1) of the VFC states that, 

for securities for which ‘‘there is a 

generally recognized market,’’ the fair 

market is the ‘‘average’’ value of the asset 

‘‘on the applicable date’’ unless the plan 

document provides another objectively 

determined value. According to the 

commenter, legal counsel for the 

plaintiff class may have good reason for 

agreeing to a method for valuing 

publicly traded employer securities on a 

basis other than the average price on a 

given date. Moreover, the commenter 

represents that, for some plans, the 

acceptance of settlement proceeds at the 

average daily price may require 

amending the terms of the plan. The 

commenter further states that, even in 

rare instances where an independent 

fiduciary possesses the authority to 

make such an amendment, the process 

of adopting such a change would 

consume time and resources without 

providing meaningful protection to plan 

participants. 

The commenter notes that, in certain 

situations, the parties to a lawsuit may 

agree to settle their claims by utilizing 

the average price of publicly traded 

employer securities over a range of days 

rather than on a single day. The 

commenter then expresses the view 

that, because section 5(a)(1) of the VFC 

Program utilizes the words ‘‘the 

applicable date’’ in connection with 

determining the value of an asset for 

which there is a generally recognized 

market, any plan receiving proceeds 

under a settlement agreement that 

utilizes the average price of an employer 

security spread over a range of days 

would not be eligible for the relief 

afforded under the amended class 

exemption. The commenter further 

states that an authorizing fiduciary 

would thus be required to petition the 

Department for an individual exemption 

to obtain relief for transactions 

involving these types of settlements. 

Such an outcome would be 

unsatisfactory, the commenter states, 

because the authorizing fiduciary 

cannot know, at the time a settlement is 

reached, whether the Department 

ultimately, will approve such an 

individual exemption application. 

Additionally, the commenter states 

that the other VFC related requirement 

of the proposed amendment imposes 

burdens on authorizing fiduciaries, 

particularly with respect to the 

valuation of securities such as warrants, 

and even stock, issued through 

bankruptcy reorganization. Specifically, 

the commenter points to section 5(a)(2) 

of the VFC program, which requires 

that, if there is no generally recognized 

market for the assets, the fair market 

value of such assets must be determined 

in accordance with ‘‘generally accepted 

appraisal standards by a qualified, 

independent appraiser.’’ The commenter 

maintains that a company emerging 

from bankruptcy typically is not 

required to obtain appraisals of its 

securities from licensed appraisers. In 

this connection, the commenter states 

that it is unrealistic to expect that 

bankruptcy reorganizations will be 

negotiated to meet the requirements of 

the VFC Program because one of the 

shareholders or creditors that will be 

receiving a distribution also happens to 

be a benefit plan sponsored by the 

reorganizing debtor. The commenter 

states that the VFC-related requirements 

of the proposed amendment are 

administratively burdensome to 

authorizing fiduciaries, and that the 

remaining conditions of the proposed 

class exemption, along with the general 

fiduciary standards of ERISA, provide 

safeguards that are sufficient to protect 

plans receiving settlement proceeds. 

After considering these comments, the 

Department has decided to modify the 

language of section II(i)(2) of the 

exemption to read as follows: 

The non-cash assets are specifically 

described in writing as part of the settlement, 

and valued at their fair market value as of the 

date or dates specified in the settlement 

agreement utilizing objective third party 

sources such as price quotations from 

persons independent of the issuer or 

independent third party pricing services for 

the non-cash assets (in instances where there 

is a generally recognized market for the 

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assets) or utilizing an objective and generally 

recognized methodology for valuing the noncash assets that is approved as reasonable by 

the authorizing fiduciary and fully described 

in the written settlement agreement. 

The Department expects the authorizing 

fiduciary to be experienced and 

knowledgeable regarding the valuation 

of any non-cash asset that is part of a 

settlement. If the authorizing fiduciary 

is not experienced with the type of asset 

offered as part of the settlement, such 

fiduciary must seek advice from an 

experienced independent party with 

respect to the valuation at issue. 

The commenter also suggested that, in 

the case of a securities class action in 

section (i)(1), the authorizing fiduciary 

cannot know in advance of a settlement 

what percentage of the recovery will be 

in the form of cash and what percentage 

will be in the form of employer 

securities, thus complicating the 

fiduciary’s evaluation of the plan’s 

diversification of assets. The preamble 

to the proposed exemption notes that a 

fiduciary must be mindful of ERISA’s 

general diversification requirements 

under ERISA section 404(a) in instances 

where the plan is to receive employer 

securities as part of a settlement. The 

commenter also noted that, if the 

authorizing fiduciary must decline to 

accept a settlement which may result in 

a distribution raising a diversification 

issue, the plan may receive nothing if 

there is no cost-efficient means for the 

plan to pursue a recovery in a form that 

avoids a diversification problem. 

The commenter suggested to the 

Department that the value of a particular 

settlement payable in employer 

securities, and the absence of costeffective alternatives to accepting the 

settlement, may constitute 

circumstances which make it ‘‘clearly 

prudent’’ to accept the settlement 

although doing so would result in a lack 

of diversification. The authorizing 

fiduciary would still be required to 

consider whether the receipt of the 

employer securities would impair the 

plan’s overall operations or ability to 

make benefit payments. In addition, the 

commenter opined that the amendment 

to the class exemption should permit a 

grace period (perhaps one year in 

duration) for the plan to divest those 

employer securities which exceed the 

limitations described in section 407(a) 

of the Act. In response, the Department 

continues to believe that the authorizing 

fiduciary has a responsibility to 

consider ERISA’s diversification 

requirements when evaluating a 

settlement offer. Nevertheless, the 

Department concurs with the 

commenter’s argument that the 

fiduciary must consider the totality of 

circumstances when evaluating a 

settlement consisting in whole or part of 

employer securities under section 404(a) 

of ERISA. Clearly, the impact of the 

receipt of employer securities on the 

plan’s overall operations or the ability to 

make benefit payments is relevant to the 

authorizing fiduciary’s determination as 

to whether or not the settlement is 

reasonable and consistent with the 

requirements of section 404 of ERISA. In 

addition, the Department has 

determined not to adopt the 

commenter’s suggestion for a grace 

period. In the Department’s view, it is 

the responsibility of the authorizing 

fiduciary to determine when to sell or 

otherwise dispose of the employer 

securities and the best method for such 

disposition. 

Another commenter states that section 

II(c) of the proposed amendment, which 

requires that the authorizing fiduciary 

consider the scope of the release of 

claims and the attorney’s fee award and 

other payments from the recovery in 

evaluating a particular settlement, is 

potentially problematic because: (1) 

Prospective members of a class must 

decide whether to opt out of the class, 

thereby foregoing the benefits of a 

settlement, before or simultaneously 

with the deadline for objecting; (2) class 

members who decline to opt out become 

bound to the terms of the settlement, 

including its release provisions; and (3) 

persons who opt out of the class have 

no standing to object to the settlement. 

Thus, according to the commenter, an 

authorizing fiduciary cannot object to 

the attorney’s fees, or any other aspect 

of the settlement, without waiving the 

plan’s right to opt out, and binding the 

plan to the release, even if the court 

overrules the objection and approves a 

fee award or other provision which the 

authorizing fiduciary found 

unreasonable. The commenter also 

believes that at the time of the opt-out 

decision, counsel for the plaintiff class 

will not yet have filed its motion for 

attorney’s fees, and the notice to class 

members typically states only the upper 

limit of attorney’s fees which counsel 

may receive. 

The commenter notes that some of 

these issues would be mitigated if the 

authorizing fiduciary is retained well in 

advance of a settlement in order to raise 

plan-related concerns before the 

settlement is finalized. However, the 

commenter continues to believe that, 

even in situations of early retention, 

independent fiduciaries may find 

themselves with little leverage to 

negotiate modifications of a fee 

arrangement or other aspects of the 

settlement due to the plan’s relatively 

small stake in the litigation. The 

commenter suggests that the language in 

the preamble be modified to 

acknowledge these constraints imposed 

on authorizing fiduciaries. The 

commenter also suggests that the text of 

the exemption be modified to provide 

that the authorizing fiduciary’s 

judgments on the matters set forth in 

sections II(c), (d) and (i)(l), in situations 

where the plan is a member of a class 

asserting claims, are to be made on the 

basis of the information available to the 

authorizing fiduciary as of the deadline 

by which class members must decide 

whether to grant a release. 

The Department continues to believe 

that the authorizing fiduciary must 

consider the entire settlement, including 

the scope of the release of claims and 

the amount of any attorney’s fee award. 

In this regard, the Department 

recognized, in the preamble to the 

proposed amendment, that where the 

plan’s share of the settlement is 

significant, the authorizing fiduciary is 

generally well-positioned to use its 

bargaining strength to ensure that the 

legal fees are reasonable. Conversely, 

where the plan has a small stake in the 

litigation as a member of a class 

asserting claims, the authorizing 

fiduciary, after the end of the opt-out 

period, may raise objections with the 

court which the court subsequently 

finds unpersuasive. The Department 

recognizes that there may be constraints 

on an authorizing fiduciary’s ability to 

influence the terms of a settlement. 

Similarly, the Department also 

recognizes that judgments must be made 

on the basis of all of the information 

available to the fiduciary as of the 

deadline for the decision by class 

members to opt out of the class. The 

Department believes that section II(b) as 

proposed provides sufficient flexibility 

to enable an authorizing fiduciary to 

carry out its responsibilities under the 

class exemption, notwithstanding the 

variety of facts and circumstances that 

may arise in connection with each 

settlement. 

Finally, the commenter notes that the 

proposed amendment in section II(i) 

limits the scope of acceptable 

consideration (other than cash) to noncash assets and benefit enhancements. 

The commenter states that other types of 

non-cash elements that fall outside the 

categories enumerated in section II(i) of 

the proposed exemption often constitute 

a meaningful part of securities litigation 

settlements. These may include 

corporate governance reforms, 

resignations of corporate officials, and 

other promised actions which will 

enhance the value of the corporation 

whose securities are subject to the 

litigation. 

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33836 Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices 

17The Department notes that the authorizing 

fiduciary, in assessing the reasonableness of a 

settlement, must evaluate the totality of 

circumstances, which may include corporate 

reforms. See section II(i) of final exemption. 

The Department recognizes that the 

aforementioned types of corporate 

reforms could constitute a meaningful 

part of securities litigation 

settlements.17 Thus, the Department has 

amended section II(i) of the operative 

language of the amendment in order to 

expand the scope of other 

enhancements that may be accepted by 

an authorizing fiduciary on behalf of the 

plan in determining whether to grant a 

release. 

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 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 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 require, among other things, that 

a fiduciary discharge his or her duties 

with respect to the plan solely in the 

interests 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) The amendment will not extend to 

transactions prohibited under sections 

406(b) of the Act and 4975(c)(1)(E) and 

(F) of the Code. 

(3) In accordance with sections 408(a) 

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

Code, the Department finds that the 

exemption is administratively feasible, 

in the interests of plans and their 

participants and beneficiaries and 

protective of the rights of the 

participants and beneficiaries of plans. 

(4) The amendment is supplemental 

to, and not in derogation of, any other 

provisions of the Code and the Act, 

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. 

(5) The amendment is applicable to a 

transaction only if the conditions 

specified in the class exemption are 

satisfied. 

Amendment 

Section I. Prospective Exemption— 

Covered Transactions 

Effective [INSERT DATE OF 

PUBLICATION OF FINAL EXEMPTION 

IN THE FEDERAL REGISTER], the 

restrictions of sections 406(a) and 407(a) 

of ERISA and the taxes imposed by 

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

reason of section 4975(c)(1)(A) through 

(D) of the Code, shall not apply to the 

following transactions, if the relevant 

conditions set forth in sections II 

through III below are met: 

(a) The release by the plan or a plan 

fiduciary of a legal or equitable claim 

against a party in interest in exchange 

for consideration, given by, or on behalf 

of, a party in interest to the plan in 

partial or complete settlement of the 

plan’s or the fiduciary’s claim. 

(b) An extension of credit by a plan 

to a party in interest in connection with 

a settlement whereby the party in 

interest agrees to repay, over time, an 

amount owed to the plan in settlement 

of a legal or equitable claim by the plan 

or a plan fiduciary against the party in 

interest. 

(c) The plan’s acquisition, holding, 

and disposition of employer securities 

received in settlement of litigation, 

including bankruptcy. Disposition of 

employer securities that are stock rights 

or warrants includes sale of these 

securities, as well as the exercise of the 

rights or warrants. 

Section II Prospective Exemption— 

Conditions 

(a) Where the litigation has not been 

certified as a class action by the court, 

and no federal or state agency is a 

plaintiff in the litigation, an attorney or 

attorneys retained to advise the plan on 

the claim, and having no relationship to 

any of the parties involved in the 

claims, other than the plan, determines 

that there is a genuine controversy 

involving the plan. 

(b) The settlement is authorized by a 

fiduciary (The authorizing fiduciary) 

that has no relationship to, or interest 

in, any of the parties involved in the 

claims, other than the plan, that might 

affect the exercise of such person’s best 

judgment as a fiduciary. 

(c) The settlement terms, including 

the scope of the release of claims; the 

amount of cash and the value of any 

non-cash assets received by the plan; 

and the amount of any attorney’s fee 

award or any other sums to be paid from 

the recovery, are reasonable in light of 

the plan’s likelihood of full recovery, 

the risks and costs of litigation, and the 

value of claims foregone. 

(d) The terms and conditions of the 

transaction are no less favorable to the 

plan than comparable arms-length terms 

and conditions that would have been 

agreed to by unrelated parties under 

similar circumstances. 

(e) The transaction is not part of an 

agreement, arrangement, or 

understanding designed to benefit a 

party in interest. 

(f) Any extension of credit by the plan 

to a party in interest in connection with 

the settlement of a legal or equitable 

claim against the party in interest is on 

terms that are reasonable, taking into 

consideration the creditworthiness of 

the party in interest and the time value 

of money. 

(g) The transaction is not described in 

section A.I. of Prohibited Transaction 

Exemption (PTE) 76–1 (41 FR 12740, 

12742 (Mar. 26, 1976), as corrected, 41 

FR 16620 Apr. 20, 1976) (relating to 

delinquent employer contributions to 

multiemployer and multiple employer 

collectively bargained plans). 

(h) All terms of the settlement are 

specifically described in a written 

settlement agreement or consent decree. 

(i) Non-cash assets, which may 

include employer securities, and written 

promises of future employer 

contributions (hereinafter, ‘‘non-cash 

assets’’), and/or a written agreement to 

adopt future plan amendments or 

provide additional employee benefits or 

corporate reforms (hereinafter 

‘‘enhancements’’) may be provided to the 

plan by a party in interest in exchange 

for a release by the plan or a plan 

fiduciary only if: 

(1) The Authorizing Fiduciary 

determines that an all cash settlement is 

either not feasible, or is less beneficial 

to the participants and beneficiaries 

than accepting all or part of the 

settlement in non-cash assets and/or 

enhancements; 

(2) The non-cash assets are 

specifically described in writing as part 

of the settlement, and valued at their 

fair market value as of the date or dates 

specified in the settlement agreement 

utilizing objective third party sources 

such as price quotations from persons 

independent of the issuer or 

independent third party pricing services 

for the non-cash assets (in instances 

where there is a generally recognized 

market for the assets) or utilizing an 

objective and generally recognized 

methodology for valuing the non-cash 

assets that is approved as reasonable by 

the authorizing fiduciary and fully 

described in the settlement agreement; 

(3) The enhancements are specifically 

described in writing as part of the 

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Federal Register / Vol. 75, No. 114 / Tuesday, June 15, 2010 / Notices 33837 

settlement. Enhancements may be 

included as part of the settlement 

without an independent appraisal. In 

deciding whether to approve the release 

of a claim in exchange for 

enhancements, the authorizing fiduciary 

shall take into account all aspects of the 

settlement, including the cash or other 

assets to be received by the plan, the 

solvency of the party in interest, and the 

best interests of the class of participants 

harmed by the acts that are the subject 

of the plan’s claims; 

(4) The authorizing fiduciary, or 

another independent fiduciary, acts on 

behalf of the plan and its participants 

and beneficiaries for all purposes 

related to any property, including 

employer securities as defined by 

section 407(d)(1) of the Act, received by 

the plan from the employer as part of 

the settlement. The authorizing 

fiduciary or another independent 

fiduciary continues to act on behalf of 

the plan and its participants and 

beneficiaries for the period that the plan 

holds the property, including employer 

securities, received from the employer 

as part of the settlement. The 

authorizing fiduciary or another 

independent fiduciary shall have sole 

responsibility relating to the acquisition, 

holding, disposition, ongoing 

management, and where appropriate, 

exercise of all ownership rights, 

including the right to vote securities, 

unless the plan is a participant-directed 

individual account plan and the 

authorizing fiduciary allows the 

participants and beneficiaries to 

exercise control over the securities 

allocated to their accounts; 

(j) The plan does not pay any 

commissions in connection with the 

acquisition of the assets; 

(k) The authorizing fiduciary acting 

on behalf of the plan has acknowledged 

in writing that it is a fiduciary with 

respect to the settlement of the litigation 

on behalf of the plan; 

(l) The plan fiduciary maintains or 

causes to be maintained for a period of 

six years the records necessary to enable 

the persons described below in 

paragraph (m) to determine whether the 

conditions of this exemption have been 

met, including documents evidencing 

the steps taken to satisfy section II (c), 

such as correspondence with attorneys 

or experts consulted in order to evaluate 

the plan’s claims, except that: 

(1) if the records necessary to enable 

the persons described in paragraph (m) 

to determine whether the conditions of 

the exemption have been met are lost or 

destroyed, due to circumstances beyond 

the control of the plan fiduciary, then 

no prohibited transaction will be 

considered to have occurred solely on 

the basis of the unavailability of those 

records; and 

(2) No party in interest, other than the 

plan fiduciary responsible for recordkeeping, shall be subject to the civil 

penalty that may be assessed under 

section 502(i) of the Act or to the taxes 

imposed by section 4975(a) and (b) of 

the Code if the records are not 

maintained or are not available for 

examination as required by paragraph 

(m) below; 

(m)(1) Except as provided below in 

paragraph (m)(2) and notwithstanding 

any provisions of section 504(a)(2) and 

(b) of the Act, the records referred to in 

paragraph (l) are unconditionally 

available at their customary location for 

examination during normal business 

hours by— 

(A) any duly authorized employee or 

representative of the Department or the 

Internal Revenue Service; 

(B) any fiduciary of the plan or any 

duly authorized employee or 

representative of such fiduciary; 

(C) any contributing employer and 

any employee organization whose 

members are covered by the plan, or any 

authorized employee or representative 

of these entities; or 

(D) any participant or beneficiary of 

the plan or the duly authorized 

employee or representative of such 

participant or beneficiary. 

(2) Nothing in this exemption 

supersedes any restriction on the 

disclosure of trade secrets or other 

commercial or financial information 

which is privileged or confidential and 

this exemption does not authorize any 

of the persons described in paragraph 

(m)(1)(B)–(D) to examine trade secrets or 

such commercial or financial 

information. Similarly, nothing in this 

exemption requires the disclosure of 

information to the persons described in 

paragraph (m)(1)(A–(D) which is offered 

to the authorizing fiduciary by a party 

to the settlement negotiations 

conditioned on the maintenance of its 

confidentiality, provided that: (1) the 

Fiduciary makes a written 

determination that the information 

would likely assist the Fiduciary in 

carrying out its responsibilities on 

behalf of the plan; and (2) a decision of 

a court or an opinion of an attorney, 

having no relationship to any of the 

parties involved in the claims other than 

the plan, confirms that the proffered 

information likely cannot be obtained 

unconditionally by seeking discovery 

through the court, or cannot be obtained 

in a timely fashion. 

Section III. Definitions 

For purposes of this exemption, the 

terms ‘‘employee benefit plan’’ and 

‘‘plan’’ refer to an employee benefit plan 

described in section 3(3) of ERISA and/ 

or a plan described in section 4975(e)(1) 

of the Code. 

For purposes of this exemption, the 

term ‘‘employer security’’ refers to 

employer securities described in section 

407(d)(1) of ERISA. 

IV. Effective Dates 

This amendment to the class 

exemption is effective for settlements 

occurring on or after the date of 

publication of the final exemption in the 

Federal Register. For settlements 

occurring before the date of publication 

of the final exemption in the Federal 

Register, see the original grant of the 

Class Exemption for Release of Claims 

and Extensions of Credit in Connection 

with Litigation, 68 FR 75632 (Dec. 31, 

2003). 

Signed at Washington, DC this 10th day of 

June, 2010. 

Ivan L. Strasfeld, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2010–14381 Filed 6–14–10; 8:45 am] 

BILLING CODE 4510–29–P 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

[Notice (10–066)] 

NASA Advisory Council; Science 

Committee; Astrophysics 

Subcommittee; Meeting 

AGENCY: National Aeronautics and 

Space Administration. 

ACTION: Notice of meeting. 

SUMMARY: The National Aeronautics and 

Space Administration (NASA) 

announces a meeting of the 

Astrophysics Subcommittee of the 

NASA Advisory Council (NAC). This 

Subcommittee reports to the Science 

Committee of the NAC. The Meeting 

will be held for the purpose of soliciting 

from the scientific community and other 

persons scientific and technical 

information relevant to program 

planning. 

DATES: Wednesday, July 7, 8:30 a.m. to 

5 p.m., and Thursday, July 8, 2010, 8:30 

a.m. to 4 p.m. Eastern Daylight Time. 

ADDRESSES: NASA Headquarters, 300 E 

Street, SW., Room 3H46, Washington, 

DC 20546. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Marian Norris, Science Mission 

Directorate, NASA Headquarters, 

Washington, DC 20546, (202) 358–4452, 

fax (202) 358–4118, or 

mnorris@nasa.gov. 

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