Notice2023-17317
Exemption From Certain Prohibited Transaction Restrictions Involving the Liberty Media 401(k) Savings Plan and the Liberty Media 401(k) Savings Plan Trust Located in Englewood, Colorado
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 14, 2023
Effective
May 18, 2020
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This document contains a notice of an exemption issued by the Department of Labor (the Department) from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (ERISA or the Act). The exemption permits: the Liberty Media 401(k) Savings Plan's (the Plan) acquisition of certain stock subscription rights (the Rights) to purchase shares of the Series C Liberty SiriusXM common stock (the Series C Liberty SiriusXM Stock), in connection with a rights offering (the Rights Offering) by Liberty Media Corporation (the Applicant or LMC); and the Plan's holding of the Rights during the subscription period of the Rights Offering.
Full Text
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<title>Federal Register, Volume 88 Issue 155 (Monday, August 14, 2023)</title>
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[Federal Register Volume 88, Number 155 (Monday, August 14, 2023)]
[Notices]
[Pages 55078-55080]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-17317]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2023-18; Exemption Application No. D-
12023]
Exemption From Certain Prohibited Transaction Restrictions
Involving the Liberty Media 401(k) Savings Plan and the Liberty Media
401(k) Savings Plan Trust Located in Englewood, Colorado
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of exemption.
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SUMMARY: This document contains a notice of an exemption issued by the
Department of Labor (the Department) from certain of the prohibited
transaction restrictions of the Employee Retirement Income Security Act
of 1974 (ERISA or the Act). The exemption permits: the Liberty Media
401(k) Savings Plan's (the Plan) acquisition of certain stock
subscription rights (the Rights) to purchase shares of the Series C
Liberty SiriusXM common stock (the Series C Liberty SiriusXM Stock), in
connection with a rights offering (the Rights Offering) by Liberty
Media Corporation (the Applicant or LMC); and the Plan's holding of the
Rights during the subscription period of the Rights Offering.
DATES: This exemption will be in effect from May 18, 2020, the date
that the Plan received the Rights, through June 5, 2020, the last date
the Rights were sold on the NASDAQ.
FOR FURTHER INFORMATION CONTACT: Mr. Frank Gonzalez of the Department
at (202) 693-8553. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: The Applicant requested an exemption
pursuant to ERISA section 408(a) and supplemented the request with
certain additional information (collectively, this information is
referred to as the Exemption Application).\1\ On February 9, 2023, the
Department published a notice of proposed exemption in the Federal
Register at 88 FR 8469 (the Proposed Exemption).
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\1\ The procedures for requesting an exemption are set forth in
29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).
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Based on the record, the Department has determined to grant the
proposed exemption. This exemption provides only the relief specified
herein. It provides no relief from violations of any law other than the
prohibited transaction provisions of ERISA, as expressly stated herein.
The Department makes the requisite findings under ERISA section
408(a) based on the Applicants' adherence to all the conditions of the
exemption. Accordingly, affected parties should be aware that the
conditions incorporated in this exemption are, taken individually and
as a whole, necessary for the Department to grant the relief requested
by the Applicants. Absent these conditions, the Department would not
have granted this exemption.
Background
LMC sponsors the Plan, which is a defined contribution plan. The
Plan is administrated by a committee (the Administrative Committee),
and Fidelity Management Trust Company (Trustee or Fidelity) serves as
the Plan's trustee. Plan participants can direct the investment of
their Plan accounts into one of 27 investment alternatives, and these
alternatives include LMC's issued securities. As of May 13, 2020, the
Plan held a total of $7,186,824 in Series C Liberty SiriusXM Stock
shares, which represented 6 percent of the Plan's total assets.
On May 15, 2020, LMC conducted the Rights Offering with holders of
shares of Series C Liberty SiriusXM Stock. The Series A, B, or C
Liberty SiriusXM Stock is LMC's stock that is intended to track and
reflect the separate economic performance of the business, assets, and
liabilities of Sirius XM Holdings. Under the Rights Offering, each
holder of Series A Liberty SiriusXM Stock, Series B Liberty SiriusXM
Stock, and Series C Liberty SiriusXM Stock received 0.0939 of a Right
for each share of Series A Liberty SiriusXM Stock, Series B Liberty
SiriusXM Stock, and Series C Liberty SiriusXM Stock held on May 13,
2020, which is the record date (rounded up to the nearest whole
Right(s)). Each Right entitled the holder to purchase one share of
Series C Liberty SiriusXM Stock at a subscription price of $25.47,
which was equal to an approximate 20% discount to the volume weighted
average trading price of Series C Liberty SiriusXM Stock for the three-
day trading period ending on and including May 9, 2020.
[[Page 55079]]
The Rights Offering for 231,861,714 shares of Series C Liberty
SiriusXM Stock commenced on May 18, 2020, and remained open until June
5, 2020. The market closing price for each share of Series C Liberty
SiriusXM Stock was $32.59 on May 18, 2020 and $38.88 on June 5, 2020.
In connection with the Rights Offering, Plan participants were
notified of the Rights Offering and the procedure for instructing
Fidelity of the participant's desires with respect to the Rights. Plan
participants received the following documents: (a) Questions and
Answers, which explained the Rights issuance and participant's option
to exercise or sell the Rights attributable to the employer securities
allocated to the participant's Plan account; (b) the Rights Offering
Instructions, which explained the steps required for participants to
exercise or sell the Rights; \2\ and (c) the Prospectus (within LMC's
Form S-3 as filed with the Securities and Exchange Commission on May
14, 2020), which was made available to all shareholders explaining the
Rights Offering.
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\2\ All involved Plan participants were notified in advance of
the procedure for instructing Fidelity of the participants' desires
with respect to the Rights.
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Under the terms of both the Plan and the Trust, the Trustee passed
through its right to vote or act on LMC's securities to the Plan's
participants. Each Plan participant was given the opportunity to decide
whether to exercise or sell the Rights that were attributable to the
shares of employer securities allocated to each participant's account.
Due to securities law restrictions, certain Plan participants who were
reporting persons under Rule 16(b) of the Securities Exchange Act of
1934 (Rule 16(b)) did not have the right to instruct Fidelity to either
sell or exercise the Rights credited to their Plan accounts, and
Fidelity sold the Rights credited to these Rule 16(b) participant
accounts, along with the Rights of other participants who did not elect
to sell or exercise the Rights credited to their accounts, during the
last few days of the Rights Offering period.\3\
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\3\ Rule 16(b) requires an officer, director, or any shareholder
holding more than 10% of the outstanding shares of a publicly traded
company to disgorge any profit made on a purchase and sale, or sale
and purchase, of the company's stock within any period of less than
six months.
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The Plan established two temporary investment funds to accommodate
the Rights. The first fund, the ``Rights Holding Fund,'' was a separate
fund established to hold the Rights when they were issued. Rights were
credited to participants' accounts based on their respective holdings
of Series C Liberty SiriusXM Stock as of May 13, 2020. The second fund,
the ``Rights Receivable Fund,'' received the Series C Liberty SiriusXM
Stock shares following the exercise of the Rights on June 5, 2020 (the
last day of the Rights Offering period), as the Plan participants
directed. Plan participants ended up exercising 3,219 rights. In
addition, on or about June 2 through June 5, 2020, Fidelity sold 17,808
unexercised Rights on the NASDAQ Global Market (the NASDAQ) on behalf
of Plan participants in blind transactions for an average price of
$11.79 per Right for a total price $209,956.32. The proceeds from the
sales were allocated proportionally to the relevant participants'
accounts. Thus, all unexercised Rights were sold by Fidelity, and no
Rights expired.
Lastly, if a Plan participant wanted to sell the Rights allocated
to that participant's account, such individual was required to contact
Fidelity (including through Fidelity's website for the Plan), and
specify the whole percentage of the Rights that participant desired to
sell. The selling period for participants ran from May 26, 2020,
through June 1, 2020. At the directions of Plan participants, Fidelity
sold a total of 1,506 Rights (rounded to the nearest whole Right). LMC
represents that it filed the Exemption Application after the last day
of the Rights Offering period to provide current information.
The Department invited all interested persons to submit written
comments and/or requests for a public hearing with respect to the
Proposed Exemption. The Department did not receive any written
comments, and it did not receive any requests for a public hearing.
The complete application file (D-12023) is available for public
inspection in the Public Disclosure Room of the Employee Benefits
Security Administration, Room N-1515, U.S. Department of Labor, 200
Constitution Avenue NW, Washington, DC 20210. For a more complete
statement of the facts and representations supporting the Department's
decision to grant this exemption, please refer to the notice of
proposed exemption published in the Federal Register on February 9,
2022, at 88 FR 8469.
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 ERISA section 408(a) does not relieve a fiduciary or other party
in interest from certain requirements of other ERISA provisions,
including any prohibited transaction provisions to which the exemption
does not apply and the general fiduciary responsibility provisions of
ERISA section 404, which, among other things, require a fiduciary to
discharge his or her duties respecting the plan solely in the interest
of the plan's participants and beneficiaries and in a prudent fashion
in accordance with ERISA section 404(a)(1)(B).
(2) As required by ERISA section 408(a), the Department hereby
finds that the exemption is (1) administratively feasible, (2) in the
interests of affected plans and of their participants and
beneficiaries, and (3) protective of the rights of participants and
beneficiaries of such plans;
(3) The exemption is supplemental to, and not in derogation of, any
other ERISA provisions, 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 determining whether the transaction is in fact a
prohibited transaction; and
(4) The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application accurately describe all material terms of the transaction
that are the subject of the exemption.
Accordingly, the following exemption is granted under the authority
of ERISA Section 408(a) and in accordance with the procedures set forth
in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).
Exemption
Section I. Covered Transactions
The restrictions of ERISA sections 406(a)(1)(E), 406(a)(2), and
407(a)(1)(A) shall not apply, to:
(a) The acquisition by the Liberty Media 401(k) Savings Plan's (the
Plan) of certain stock subscription rights (the Rights), pursuant to a
stock right offering (the Offering) by Liberty Media Corporation (LMC)
to purchase shares of Series C Liberty SiriusXM common stock; and
(b) The holding of the Rights by the Plan during the subscription
period of the Offering, provided the conditions set forth below in
Section II are satisfied.
Section II. Conditions
(a) The Plan's acquisition of the Rights resulted solely from an
independent corporate act of LMC's Board of Directors;
(b) All holders of Series A, Series B, or Series C Liberty SiriusXM
common stock, including the Plan, were issued the same proportionate
number of Rights based on the number of shares of
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the Series A, B, or C Liberty SiriusXM Stock held by each such
shareholder;
(c) For purposes of the Rights Offering, all holders of Series A,
B, or C Liberty SiriusXM Stock, including the Plan, were treated in a
like manner, with two exceptions:
(1) The oversubscription option available under the Rights Offering
was not available to participants in the Plan; and
(2) Certain participants deemed to be reporting persons under Rule
16(b) of the Securities Exchange Act of 1934 (Rule 16(b)) with respect
to LMC did not have the right to instruct Fidelity to either sell or
exercise the Rights credited to their Plan accounts;
(d) The acquisition of the Rights by the Plan was consistent with
provisions of the Plan for the individually directed investment of
participant accounts;
(e) The Liberty Media 401(k) Savings Plan administrative committee
did not exercise any discretion with respect to the acquisition,
holding or sale of the Rights by the Plan;
(f) The Plan fiduciary or fiduciaries responsible for overseeing
the Plan's participation in the Rights offering prudently and loyally
determined on behalf of the Plan that: (1) the Plan's acquisition,
holding and sale of the Rights could proceed on the terms established
by such fiduciaries, and (2) the Plan's participants received all they
were entitled to under the Rights arrangement (i.e., the Participants
got at least the fair market value for the exercise and sales of the
Rights);
(g) Each Plan participant made an independent decision whether to
liquidate his or her account assets in the Rights Holding Fund to
purchase additional shares of Series C Liberty SiriusXM common stock at
a discount;
(h) The Plan did not pay any fees or commissions to LMC and/or its
affiliates in connection with the acquisition, holding, or sale of the
Rights;
(i) The Plan did not pay any fees in connection with the exemption
request; and
(j) All material facts and representations set forth in the Summary
of Facts and Representations are true and accurate.
Effective Date: This exemption will be in effect from May 18, 2020,
the date that the Plan received the Rights, through June 5, 2020, the
last date the Rights were sold on the NASDAQ.
Signed at Washington, DC, this 7th day of August 2023.
George Christopher Cosby,
Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2023-17317 Filed 8-11-23; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on August 14, 2023.
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