Grant of Individual Exemptions; TA Associates, Inc. (TA Associates), et al.

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 97-42, et al.; Exemption Application

No. D-10314, et al.]

Grant of Individual Exemptions; TA Associates, Inc. (TA

Associates), et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) from certain of the prohibited transaction

restrictions of the Employee Retirement Income Security Act of 1974

(the Act) and/or the Internal Revenue Code of 1986 (the Code).

Notices were published in the Federal Register of the pendency

before the Department of proposals to grant such exemptions. The

notices set forth a summary of facts and representations contained in

each application for exemption and referred interested persons to the

respective applications for a complete statement of the facts and

representations. The applications have been available for public

inspection at the Department in Washington, D.C. The notices also

invited interested persons to submit comments on the requested

exemptions to the Department. In addition the notices stated that any

interested person might submit a written request that a public hearing

be held (where appropriate). The applicants have represented that they

have complied with the requirements of the notification to interested

persons. No public comments and no requests for a hearing, unless

otherwise stated, were received by the Department.

The notices of proposed exemption were issued and the exemptions

are being granted solely by the Department because, effective December

31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR

47713, October 17, 1978) transferred the authority of the Secretary of

the Treasury to issue exemptions of the type proposed to the Secretary

of Labor.

Statutory Findings

In accordance with section 408(a) of the Act and/or section

4975(c)(2) of the Code and the procedures set forth in 29 CFR Part

2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon

the entire record, the Department makes the following findings:

(a) The exemptions are administratively feasible;

(b) They are in the interests of the plans and their participants

and beneficiaries; and

(c) They are protective of the rights of the participants and

beneficiaries of the plans.

TA Associates, Inc. (TA Associates) Located in Boston, MA

[Prohibited Transaction Exemption 97-42; Exemption Application No. D-

10314]

Exemption

The restrictions of section 406(a) of the Act and the sanctions

resulting from the application of section 4975 of the Code, by reason

of section 4975(c)(1)(A) through (D) of the Code, shall not apply,

effective December 29, 1993, to the making, by an employee benefit plan

(the Plan), of capital contributions to any venture capital fund (the

TA Fund) that is organized, sponsored and/or managed by TA Associates

and/or any of its affiliates (collectively, TA) pursuant to a

contractual obligation by a Plan having an interest in the TA Fund.

This exemption is subject to the following conditions:

(a) At the time the Plan undertakes the obligation to make such

capital contributions (the Determination Date), the TA Fund is not a

party in interest with respect to the Plan.

(b) The decision to make a capital contribution to a TA Fund is

made on behalf of the Plan by a Plan fiduciary which is independent of

and unrelated to TA and the portfolio company whose interest is

acquired by the TA Fund.

(c) TA does not otherwise provide investment advice to the Plan

within the meaning of Regulation section 29 CFR 2510.3-21(c) with

respect to such Plan's assets that are invested in the TA Fund.

(d) At the Determination Date, the Plan has aggregate assets that

are in excess of $50 million; provided however, that in the case of--

(1) Two or more Plans which are not maintained by the same

employer, controlled group of corporations or employee organization

(the Unrelated Plans), whose assets are invested in a TA Fund through a

group trust, an insurance company pooled separate account or any other

form of entity the assets of which are ``plan assets'' under 29 CFR

2510.3-101 (the Plan Asset Regulation), the foregoing $50 million

requirement shall in any event be satisfied if such trust, separate

account or other entity has aggregate assets which are in excess of $50

million, provided further that the fiduciary responsible for making the

investment decision on behalf of such group trust, insurance company

pooled separate account or other entity has--

(i) Full investment responsibility 1 with respect to the

plan assets invested therein; and

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\1\ For purposes of this exemption, the term ``full investment

responsibility'' means that the fiduciary responsible for making the

investment decision has and exercises discretionary management

authority over all of the assets of the group trust or other plan

assets entity.

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(ii) Total assets under its management and control, exclusive of

the assets invested in the TA Fund, which are in excess of $100

million, for TA Funds established after the date this grant notice is

published in the Federal Register.

(2) Two or more Plans which are maintained by the same employer,

controlled group of corporations or employee organization (the Related

Plans), whose assets are invested in a TA Fund through a master trust

or any other entity the assets of which are ``plan assets'' under the

Plan Asset Regulation, the $50 million requirement shall in any event

be satisfied if such trust or other entity has aggregate assets which

are in excess of $50 million, provided, further, that, in the case of a

[[Page 42840]]

TA Fund established after the date this grant notice is published in

the Federal Register, in addition to the $50 million requirement, if

the fiduciary responsible for making the investment decision on behalf

of such master trust or other entity is not the employer or an

affiliate of the employer, then such fiduciary has total assets under

its management and control, exclusive of the assets invested in the TA

Fund, which are in excess of $100 million.

(e) Subsequent to the Determination Date, the TA Fund is a party in

interest with respect to the Plan solely by reason of a relationship to

a portfolio company which is a service provider to a Plan, as described

in section 3(14) (H) or (I) of the Act, including a fiduciary with

respect to such Plan.

(f) At the Determination Date, the capital commitment of the Plan

(together with the capital commitments of any other Plans maintained by

the same employer, controlled group of corporations or employee

organization) with respect to the TA Fund, does not exceed 15 percent

of the total capital commitments with respect to such TA Fund.

(g) At the Determination Date, the percentage of the Plan's assets

committed to be invested in the TA Fund does not exceed 5 percent of

the Plan's total assets.

(h) At the Determination Date, a Plan's aggregate capital

commitment to all TA Funds does not exceed 25 percent of the Plan's

total assets.

(i) The Plan receives the following initial and ongoing disclosures

with respect to the TA Fund:

(1) A copy of the private placement memorandum applicable to the TA

Fund or another comparable document containing substantially the same

information;

(2) A copy of the limited partnership or other agreement

establishing the TA Fund;

(3) A copy of the subscription agreement applicable to the TA Fund,

if any;

(4) Copies of the proposed exemption and grant notice related to

the exemptive relief described herein; and

(5) Periodic, but no less frequently than annually, reports

relating to the overall financial position and operational results of

the TA Fund including copies of the TA Fund's annual financial

statements.

(j) With respect to capital contributions made to a TA Fund by a

Plan after the date of issuance of the final exemption, TA maintains or

causes to be maintained for a period of six years from the date of the

transaction the records necessary to enable the persons described in

paragraph (k) to determine whether the conditions of this exemption

have been met, except that--

(1) A prohibited transaction will not be considered to have

occurred, if due to circumstances beyond the control of TA, the records

are lost or destroyed prior to the end of the six year period; and

(2) No party in interest, other than TA, 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 (k).

(k)(1) Except as provided in paragraph (k)(2) and notwithstanding

any provisions of subsection (a)(2) and (b) of section 504 of the Act,

the records referred to in paragraph (j) 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 a Plan which has an interest in the TA Fund

and has the authority to acquire or dispose of the interest of the Plan

in the TA Fund, or any duly authorized employee or representative of

such fiduciary; and

(C) Any participant or beneficiary of any Plan which has an

interest in the TA Fund or duly authorized representative of such

participant or beneficiary.

(2) None of the persons described in paragraph (k)(1)(B) and

(k)(1)(C) shall be authorized to examine trade secrets of TA or

commercial or financial information which is privileged or

confidential.

EFFECTIVE DATE: This exemption is effective as of December 29, 1993.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption (the Notice) published on March 5,

1997 at 62 FR 10075.

Written Comments

The Department received one written comment with respect to the

Notice. The comment, which was submitted by the applicant, requested

modifications to the conditional language (the Conditions) and the

Summary of Facts and Representations (the Summary) of the Notice in the

following areas:

1. Condition (d). Condition (d) of the Notice establishes a $50

million threshold for Plans that are or will be covered by the

exemption. Specifically, there is a sentence in Condition (d) which

provides that the $50 million threshold will apply to the aggregate

assets of a group trust or a master trust which invests in a TA Fund.

TA requests that this concept also be applied to investments in a TA

Fund by insurance company pooled separate accounts, large collective

investment funds which are organized as partnerships, or other tax

pass-through entities, provided the assets of these entities are deemed

to be plan assets under the Plan Asset Regulation. Under these

circumstances, TA believes that as long as the investing entity has

assets in excess of $50 million and as long as the decision to invest

in the TA Fund is made by an independent fiduciary unrelated to TA,

then it is appropriate to apply the $50 million threshold to the

aggregate assets held by the investing entity.

Although the Department does not object to this provision, it

wishes to emphasize its view that a fiduciary exercising investment

discretion over a pooled investment vehicle that is invested in a TA

Fund should possess some minimum level of investor sophistication.

Therefore, the Department is proposing certain additional requirements

for pooled arrangements involving the assets of either Unrelated Plans

or Related Plans. These requirements are as follows:

A. Unrelated Plans

For two or more Plans which are not maintained by the same

employer, controlled group of corporations or employee organization,

whose assets are invested in a TA Fund through a group trust, insurance

company pooled separate account or other plan asset look-through

entity, the $50 million threshold will apply to the aggregate assets of

such entity so long as the fiduciary responsible for making the

investment decision on behalf of the group trust, insurance company

pooled separate account or other entity has full investment

responsibility with respect to plan assets invested therein. However,

in the event the entity holding the assets of Unrelated Plans is

invested in a TA Fund established after the date this final exemption

is granted, the fiduciary must, in addition to meeting the $50 million

investment threshold, have total assets under its management and

control, exclusive of the assets invested in the TA Fund, which are in

excess of $100 million.

B. Related Plans

With respect to two or more Plans, which are maintained by the same

employer, controlled group of

[[Page 42841]]

corporations or employee organization, whose assets are invested in a

TA Fund through a master trust or any other form of plan asset look-

through entity, the Department notes that the $50 million threshold may

be satisfied by aggregating the assets of the investing Plans within

the pooled vehicle. In this regard, the Department notes that an

employer may retain an independent investment manager to manage all or

a portion of Plan assets invested in a master trust. Under these

circumstances, the Department believes that the independent investment

manager must satisfy the outside business test for any TA Fund that is

established after the date this grant notice is published in the

Federal Register. In addition, the pooled vehicle would still have to

meet the $50 million investment threshold.

Accordingly, Condition (d) has been amended to read as follows:

(d) At the Determination Date, the Plan has aggregate assets

that are in excess of $50 million; provided however, that in the

case of--

(1) Two or more Plans which are not maintained by the same

employer, controlled group of corporations or employee organization

(the Unrelated Plans), whose assets are invested in a TA Fund

through a group trust, an insurance company pooled separate account

or any other form of entity the assets of which are ``plan assets''

under 29 CFR 2510.3-101 (the Plan Asset Regulation), the foregoing

$50 million requirement shall in any event be satisfied if such

trust, separate account or other entity has aggregate assets which

are in excess of $50 million, provided further that the fiduciary

responsible for making the investment decision on behalf of such

group trust, insurance company pooled separate account or other

entity has--

(i) Full investment responsibility with respect to the plan

assets invested therein; and

(ii) Total assets under its management and control, exclusive of

the assets invested in the TA Fund, which are in excess of $100

million, for TA Funds established after the date this grant notice

is published in the Federal Register.

(2) Two or more Plans which are maintained by the same employer,

controlled group of corporations or employee organization (the

Related Plans), whose assets are invested in a TA Fund through a

master trust or any other entity the assets of which are ``plan

assets'' under the Plan Asset Regulation, the $50 million

requirement shall in any event be satisfied if such trust or other

entity has aggregate assets which are in excess of $50 million,

provided, further, that, in the case of a TA Fund established after

the date this grant notice is published in the Federal Register, in

addition to the $50 million requirement, if the fiduciary

responsible for making the investment decision on behalf of such

master trust or other entity is not the employer or an affiliate of

the employer, then such fiduciary has total assets under its

management and control, exclusive of the assets invested in the TA

Fund, which are in excess of $100 million.

2. Condition (k)(1)(B). The applicant notes that the word ``who''

in Condition (k)(1)(B) should be changed to the word ``which.'' The

Department concurs and has made the requested change.

3. Condition (k)(1)(C). The applicant requests that Condition

(k)(1)(C) be amended to clarify that a participant or a beneficiary of

a Plan having an interest ``in a TA Fund'' (or the authorized

representatives of these individuals) may review records that TA

maintains with respect to the exemption. Therefore, the Department has

agreed to modify this condition to read as follows:

Any participant or beneficiary of any Plan which has an interest in

the TA Fund or duly authorized representative of such participant or

beneficiary.

4. Representation 3. Representation 3 of the Summary states that

TA's most recent venture capital fund is Advent VII. Although Advent

VII was the most recent TA Fund at the time the exemption application

was filed, TA states that it subsequently closed a new TA Fund, TA/

Advent VIII, L.P. (Advent VIII), which as of December 31, 1996, had

aggregate capital commitments of approximately $800 million from 96

individual and institutional investors. Of the institutional investors,

17 investors are Plans that are covered by the Act. As of December 31,

1996, these Plans had made a total capital commitment to Advent VIII of

approximately $188 million. In addition, TA wishes to clarify that it

currently has organized, sponsored and/or managed 22 venture capital

funds involving total capital commitments of approximately $2.25

billion. The Department has noted these clarifications.

5. Representation 7. To correct an inadvertent error on its part,

TA wishes to clarify that the fourth line of Representation 7 of the

Summary should refer to ``a greater than 10 percent interest in a

portfolio'' rather than a ``100 percent interest.'' The Department

notes this revision.

6. Representation 8. TA wishes to clarify that in the sixth line of

Representation 8 of the Summary, the word ``on'' should be changed to

the word ``after.'' Again, the Department notes this revision.

Thus, after giving full consideration to the entire record,

including the written comment, the Department has made the

aforementioned changes to the Notice and has decided to grant the

exemption subject to the clarifications described above. The comment

letter has been included as part of the public record of the exemption

application. The complete application file, as well as all supplemental

submissions received by the Department, is made available for public

inspection in the Public Documents Room of the Pension and Welfare

Benefits Administration, Room N-5638, U.S. Department of Labor, 200

Constitution Avenue, N.W., Washington, D.C. 20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

First Savings Bank, F.S.B. Profit Sharing and Employee Stock Ownership

Plan (the Plan) Located in Clovis, New Mexico

[Prohibited Transaction Exemption 97-43 Exemption Application No. D-

10409]

Exemption

The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the

Act and the sanctions resulting from the application of section 4975 of

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

shall not apply, effective December 26, 1996 to (1) the acquisition by

the Plan of certain stock rights (the Rights) pursuant to a stock

rights offering (the Offering) by Access Anytime Bancorp, Inc. (the

Parent), which is the parent corporation of First Savings Bank, F.S.B.,

the sponsor of the Plan; (2) the holding of the Rights by the Plan

during the subscription period of the Offering; and (3) the exercise of

certain of the Rights by the Plan; provided that the following

conditions are met:

(A) The Plan's acquisition and holding of the Rights occurred in

connection with the Offering made available to all shareholders of

common stock of the Parent;

(B) All holders of the common stock of the Parent were treated in

the same manner with respect to the Offering, including the Plan;

(C) All decisions regarding the holding and potential exercise of

the Rights by the Plan were made in accordance with Plan provisions for

individually-directed investment of participant accounts by the

individual Plan participants whose accounts in the Plan received Rights

in the Offering; and

(D) With respect to any participants' accounts in the Plan for

which no valid instructions were timely filed regarding the Rights

during the Offering, such Rights expired unexercised in the same manner

as unexercised Rights issued to all other holders of the common stock

of the Parent, since the Rights were not transferable and could not be

sold.

[[Page 42842]]

EFFECTIVE DATE: This exemption is effective as of December 26, 1996.

WRITTEN COMMENTS: The Department no requests for a hearing and one

written comment with respect to the proposed exemption. The comment was

submitted by the applicant, the First Savings Bank, in correction of

information submitted by the applicant which appeared in the Summary of

Facts and Representations (the Summary) in the Notice of Proposed

Exemption. The fourth paragraph of the Summary includes the Employer's

representation that 5,000 Rights were exercised by Invested

Participants, and that the remaining 4,798 Rights expired on the

Expiration Date. The applicant notes that this representation was in

error, reflecting a misunderstanding about the information that was

requested. The applicant represents that the actual number of Rights

exercised by Invested Participants was 367.

After consideration of the entire record, as corrected by the

applicant, the Department has determined to grant the exemption.

For a more complete statement of the summary of facts and

representations supporting the Department's decision to grant this

exemption refer to the Notice of Proposed Exemption published on June

4, 1997 at 62 FR 30620.

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

General Information

The attention of interested persons is directed to the following:

(1) The fact that a transaction is the subject of an exemption

under section 408(a) of the Act and/or section 4975(c)(2) of the Code

does not relieve a fiduciary or other party in interest or disqualified

person from certain other provisions to which the exemptions do 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) These exemptions are supplemental to and not in derogation of,

any other provisions of the Act and/or the Code, including statutory or

administrative exemptions and transactional rules. Furthermore, the

fact that a transaction is subject to an administrative or statutory

exemption is not dispositive of whether the transaction is in fact a

prohibited transaction; and

(3) The availability of these exemptions is subject to the express

condition that the material facts and representations contained in each

application are true and complete and accurately describe all material

terms of the transaction which is the subject of the exemption. In the

case of continuing exemption transactions, if any of the material facts

or representations described in the application change after the

exemption is granted, the exemption will cease to apply as of the date

of such change. In the event of any such change, application for a new

exemption may be made to the Department.

Signed at Washington, D.C., this 5th day of August, 1997.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, Department of Labor.

[FR Doc. 97-21005 Filed 8-7-97; 8:45 am]

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