Notice2025-21196
Proposed Exemption From Certain Prohibited Transactions Involving Liberty Latin America 401(k) Savings Plan (the Plan or the Applicant) Located in Denver, CO
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
November 26, 2025
Effective
September 10, 2020
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This proposed exemption would permit the Plan's acquisition, holding and sale of certain stock rights the Plan received from Liberty Latin America Ltd. in September 2020. Absent an exemption, these transactions would be prohibited by the Employee Retirement Income Security Act of 1974 (ERISA) and/or the Internal Revenue Code of 1986 (the Code).
Full Text
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<title>Federal Register, Volume 90 Issue 226 (Wednesday, November 26, 2025)</title>
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[Federal Register Volume 90, Number 226 (Wednesday, November 26, 2025)]
[Notices]
[Pages 54393-54399]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-21196]
[[Page 54393]]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Exemption Application No. D-12061]
Proposed Exemption From Certain Prohibited Transactions Involving
Liberty Latin America 401(k) Savings Plan (the Plan or the Applicant)
Located in Denver, CO
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of proposed exemption.
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SUMMARY: This proposed exemption would permit the Plan's acquisition,
holding and sale of certain stock rights the Plan received from Liberty
Latin America Ltd. in September 2020. Absent an exemption, these
transactions would be prohibited by the Employee Retirement Income
Security Act of 1974 (ERISA) and/or the Internal Revenue Code of 1986
(the Code).
DATES:
Exemption date: If granted, the exemption will be in effect as of
September 10, 2020, through September 25, 2020.
Comments due: Written comments and requests for a public hearing on
the proposed exemption must be received by the Department by January 2,
2026.
ADDRESSES: All written comments and requests for a hearing should be
submitted to the Employee Benefits Security Administration (EBSA),
Office of Exemption Determinations, Attention: Application No. D-12061:
<bullet> via email to <a href="/cdn-cgi/l/email-protection#80e5adcfc5c4c0e4efecaee7eff6"><span class="__cf_email__" data-cfemail="61044c2e242521050e0d4f060e17">[email protected]</span></a>; or
<bullet> Electronically at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the
``Submit a comment'' instructions.
Any such comments or requests should be sent by the end of the
scheduled comment period. The application for exemption and the
comments received will be available for public inspection in the Public
Disclosure Room of the Employee Benefits Security Administration, U.S.
Department of Labor, Room N-1515, 200 Constitution Avenue NW,
Washington, DC 20210, reachable by telephone at (202) 693-8673. See
SUPPLEMENTARY INFORMATION below for additional information regarding
comments.
FOR FURTHER INFORMATION CONTACT: Anna Vaughan of the Department at
(202) 693-8565. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION:
Comments: Persons are encouraged to submit all comments
electronically and not to follow with paper copies. Comments should
state the nature of the person's interest in the proposed exemption and
how the person would be adversely affected by the exemption, if
granted. Any person who may be adversely affected by an exemption can
request a hearing on the exemption if their request includes: (1) the
name, address, telephone number, and email address of the person making
the request; (2) the nature of the person's interest in the exemption,
and the manner in which the person would be adversely affected by the
exemption; and (3) a statement of the issues to be addressed and a
general description of the evidence to be presented at the hearing. The
Department will grant a hearing request made in accordance with the
requirements above when the Department finds that a hearing is
necessary to fully explore material factual issues identified by the
requestor, and the Department will publish a hearing notice in the
Federal Register. The Department may decline to hold a hearing if it
finds that: (1) the request for the hearing does not meet the
requirements stated above; (2) the only issues identified for
exploration at the hearing are matters of law; or (3) the factual
issues identified in the request can be fully explored through the
submission of evidence in written (including electronic) form.
Warning: The Department will include all comments received in the
public record without change and will make them available online at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>. The Department notes that it will include
any personal information provided in the public record and online,
unless the commenter claims that any of the information included is
confidential or the disclosure of such information is restricted by
statute. If you submit a comment, EBSA recommends that you include your
name and other contact information in the body of your comment, but DO
NOT submit information that you consider to be confidential or
otherwise protected (such as a Social Security number or an unlisted
phone number) and confidential business information that you do not
want publicly disclosed. If EBSA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EBSA
might not be able to consider your comment.
Additionally, the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website is an
``anonymous access'' system, which means EBSA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an email directly to EBSA without going
through <a href="https://www.regulations.gov">https://www.regulations.gov</a>, your email address will be
automatically captured and included as part of the comment that is
placed in the public record and made available on the internet.
This Proposed Exemption: The proposed exemption would permit, for
the period beginning September 10, 2020, and ending September 25, 2020:
(1) the acquisition by the Plan from Liberty Latin America Ltd. (LLA),
a party in interest to the Plan, of certain stock rights (the Rights)
to purchase shares of Series C Liberty Latin America Ltd. (the Series C
LLA Stock), in connection with a Rights offering by LLA (the Rights
Offering); (2) the Plan's holding of the Rights during the subscription
period of the Rights Offering (the Rights Offering Period); and (3) the
sale, at the direction of the 401(k) Committee of LiLAC Communications,
Inc. (the Committee), of any unexercised and unsold Rights held by Plan
participants towards the end of the Rights Offering Period, provided
that the conditions in Section II below are met.
The Department is considering granting this exemption under the
authority of ERISA section 408(a) and Code section 4975(c)(2) and in
accordance with the Department's exemption procedures regulation.\1\
This proposed exemption would provide relief from certain restrictions
set forth in ERISA sections 406(a)(1)(E), 406(a)(2), 406(b)(1) and
407(a), and the excise tax imposed by Code section 4975(a) and (b) (due
to the operation of parallel prohibited transaction provisions
contained in Code section 4975(c)(1)). However, this proposed exemption
would not provide relief from any other violation of law.
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\1\ 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27,
2011). Effective December 31, 1978, section 102 of the
Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996),
transferred the authority of the Secretary of the Treasury to issue
administrative exemptions under the Code Section 4975(c)(2) to the
Secretary of Labor. Accordingly, the Department is proposing this
exemption under its sole authority. Any references hereinafter to
sections of ERISA shall be deemed to refer to the corresponding
sections of the Code, unless indicated otherwise.
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Benefits of the Proposed Exemption: The Applicant represents that
Plan participants acquired the Rights at no additional cost. Plan
participants could then sell the Rights at their fair market value or
exercise the Rights to purchase Series C LLA Stock, at a discount.
[[Page 54394]]
Summary of Facts and Representations <SUP>2</SUP>
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\2\ The Summary of Facts and Representations is based on the
Applicant's representations and does not reflect factual findings or
opinions of the Department, unless indicated otherwise. The
Department notes that the availability of this exemption, if
granted, is subject to the express condition that the material facts
and representations made by the Applicant in Application D-12061 are
true and complete and accurately describe all material terms of the
transactions covered by the exemption. If there is any material
change in a transaction covered by the exemption, or in a material
fact or representation described in the application, the exemption
may cease to be effective, with such determination made at the
Department's sole discretion. See 29 CFR 2570.49.
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Background
1. LLA is a telecommunications services provider. LiLAC
Communications Inc. (LiLAC) is an indirect subsidiary of LLA. LiLAC
sponsors the Plan, which is a defined contribution plan. At the time of
the Rights Offering, the Plan had 77 participants and beneficiaries,
and approximately $5,963,983.97 in assets.
2. The trustee of the Plan is Fidelity Management Trust Company
(the Trustee). The Trustee acts as custodian of the Plan's assets,
holding legal title to the assets, and executing investment directions
in accordance with the participants' written instructions. The
Committee is the Plan fiduciary responsible for Plan matters.
3. The Plan permits participants to direct the investment of their
Plan accounts into several investment alternatives. At the time of the
Rights Offering, the investment alternatives included employer
securities issued by LLA. As of September 8, 2020, the Plan held
$21,326.02 in Series A LLA common stock (Series A LLA Stock), which
represented approximately 0.36% of total Plan assets. As of the same
date, the Plan held $1,423,491.03 in Series C LLA Stock, which
represented approximately 23.9% of total Plan assets.
Description of LLA Stock
4. The Applicant states that unlike some companies where the value
of a particular class or series of common stock is based on the assets,
businesses, and investments that the issuing company has assigned to
the class or series (also known as a ``tracking stock''), Series A LLA
Stock and Series C LLA Stock (together or individually, LLA Stock) are
intended to reflect the value of LLA's business as a whole.\3\ The
Applicant states that the voting power between Series A and C stock
varies, with one vote per share for Series A LLA Stock and no votes per
share for Series C LLA Stock.
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\3\ The Applicant states that although LLA issued Series B LLA
Stock, no Plan participant accounts held Series B LLA Stock.
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The Rights Offering
5. The Applicant represents that Plan participants who held LLA
Stock (and thus would receive the Rights) were notified of the Rights
Offering and of the procedure for instructing the Trustee how to handle
the Rights. The Applicant states that Plan participants received the
following documents in connection with the Rights Offering: (a) a
document titled ``Instructions for Participants in the Liberty Latin
America 401(k) Savings Plan--Important Information on the Liberty Latin
America LTD. Rights Offering,'' which is a disclosure in a question-
and-answer format, describing the Rights Offering, the choices
available to Plan participants regarding the sale or exercise of the
Rights, as well as any applicable deadlines and fees to sell or
exercise the Rights (the Instruction); and (b) the prospectus provided
to all other LLA shareholders.
6. On September 10, 2020, LLA issued Rights to all holders of LLA
Stock, including the Plan.\4\ Each holder of LLA Stock received Rights
equal to the number of shares of LLA Stock held by the shareholder,
multiplied by 0.2690. Each Right gave each recipient shareholder the
right to purchase one share of Series C LLA Stock at a price equal to
$7.14 per full share, an approximate 25% discount to the volume
weighted average trading price (the VWAP) of the Series C LLA Stock,
beginning on August 31, 2020 and ending on and including September 2,
2020.\5\ The Applicant states that the Rights permitted the purchase of
only a whole number of shares, and any fractional shares were rounded
up to the next whole share.\6\ The following table shows the total
number of shares of LLA Stock eligible to receive the Rights, and the
market closing price of Series A LLA Stock and Series C LLA Stock on
September 10, 2020, and September 25, 2020.
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\4\ Holders of all Series of LLA Stock received Rights, but
because Plan participants were not permitted to hold Series B LLA
Stock, they only received Rights in respect of Series A and Series C
LLA Stock.
\5\ The Applicant states that the subscription price was based
on advice from JPMorgan, and set at a discount to the theoretical
ex-rights price (TERP) of the shares. A TERP is the market price
that a stock will theoretically have following the completion of a
rights offering, taking into account any changes in the company's
overall value due to the issuance of additional shares at a
discount. The Applicant represents that the actual subscription
price of $7.14 was equal to a 25% discount to the VWAP of the Series
C LLA Stock over a three-day period beginning on August 31, 2020,
and ending on (and including) September 2, 2020. The Applicant
states that this method is consistent with how other public
companies have conducted their rights offerings and would be
recognizable to investors and market participants who had looked at
and/or participated in those other offerings. The Applicant states
that after reviewing other rights offerings, considering volatility
and market dynamics and consulting with advisors, it was determined
that a 25% discount to VWAP was appropriate. The Applicant states
that the chosen VWAP was intended to represent fair market value,
with the 25% discount thereafter being applied to derive the
subscription price. By exercising their Rights, Plan participants
were able to preserve their ownership percentage/interest in the
business.
\6\ The Applicant represents that all holders of Series A LLA
Stock or Series C LLA Stock, including the Plan, were treated in a
like manner, with the exception that the oversubscription privilege
available under the Rights Offering was not available to Plan
participants. Under the oversubscription privilege, each
rightsholder which exercises its basic subscription privilege, in
full, had the right to subscribe, at the subscription price, for up
to that number of Series C LLA Stock which were not purchased by
rightsholders under their basic subscription privilege. If a
rightsholder delivered an oversubscription request for Series C LLA
Stock and LLA received oversubscription requests for more Series C
LLA Stock than was available for oversubscription, the rightsholder
would receive its pro rata portion of the available Series C LLA
Stock based on the number of shares it purchased under its basic
subscription privilege or, if less, the number of shares for which
it oversubscribed.
[[Page 54395]]
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Shares outstanding as of
September 8, 2020, the
record date for Market closing price on Market closing price on
participation in the September 10, 2020 \8\ September 25, 2020 \9\
offering \7\
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Series A LLA Stock............... 48,891,293 $9.51 $7.85
Series C LLA Stock............... 131,375,442 9.31 7.75
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7. The following table summarizes the Stock held by the Plan on
September 8, 2020 and which continued to be held through September 10,
2020, and the Rights received by the Plan on September 10th, 2020 on
behalf of all participant shareholders of Series A and C LLA Stock.
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\7\ As reported in the Rights Offering prospectus, September 8,
2020, is the Rights distribution record date. The Applicant
represents that, as described in the Rights Offering prospectus,
because of ``due bill'' trading procedures required by NASDAQ in
connection with the Rights Offering, the number of Rights received
was actually calculated based on shares of Stock held by
participants on September 10, 2020. However, the number of shares of
Stock held by participants on September 10, 2020 was identical to
that of September 8, 2020, thus the shares held on the Record Date
of September 8, 2020 controlled for purposes of the Rights Offering.
\8\ As discussed herein, LLA Stockholders were issued Rights on
September 10, 2020. The market closing price for each Right on
September 11, 2020 was $1.76.
\9\ As stated in the Rights Offering prospectus, the Rights
Offering expired on September 25, 2020, 5:00 p.m., New York City
time.
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Number of securities
Series of stock held by Plan
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Series A LLA Stock held on the ex-dividend date 2,198
Series C LLA Stock held on the ex-dividend date 150,962
Total Series A LLA Stock and Series C LLA Stock 153,160
held on the ex-dividend date..................
Number of Rights Received by Plan (total LLA 41,201
Stock multiplied by 0.2690, including rounding
up to the nearest whole share for each
participant)..................................
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Acquisition of the Rights: No Committee Discretion \10\
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\10\ Because Plan participants' accounts may own fractional
shares, the Plan relied on its stock purchase account to round the
number of Shares to whole numbers, since only whole shares can be
traded on the open market. The number of shares of Series A and
Series C stock includes shares in the Plan's stock purchase account.
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8. The Applicant states that the Committee did not exercise
discretion regarding the Plan's acquisition of the Rights. The Rights
were automatically provided to all holders of LLA Stock, including Plan
participants.
Disposition of the Rights: Participant Directed, With Narrow Exception
9. The Applicant states that the Committee determined that it would
be prudent and in the best interest of Plan participants to let the
participants elect to exercise or sell the Rights. However, if a Plan
participant did not elect to exercise or sell their Rights by the close
of trading on September 21, 2020, the Committee directed the Trustee to
sell those Rights on behalf of the participant. The Applicant notes
that, in the absence of this direction, any Rights for which the
Trustee did not receive an election would have expired at the end of
the Rights Offering Period for no value. The Applicant states that the
Committee, instead of allowing the Rights to expire, directed the
Trustee to sell the Rights of non-electing participants after the
Committee determined that it would be prudent and in the best interests
of participants to avoid expiration of the Rights without the provision
of value to the participants. The Applicant represents that, as a
result of the Committee's direction to the Trustee, the participants
received the fair market value for the sale of their Rights,
effectively ensuring that both electing and non-electing participants
were treated similarly.
Participants Who Elected To Exercise Rights
10. A participant could direct the Trustee to exercise their Rights
at any time prior to 4:00 p.m. New York City Time, on September 21,
2020. The Applicant states that, of the 73 Plan participants holding
LLA Stock at the time of the Rights Offering, 25 chose to exercise
15,763.677 total Rights.
11. On September 22, 2020, of the 15,763.677 Rights that Plan
participants elected to exercise, the Trustee only exercised 1,895.543
Rights and mistakenly sold 13,868.134 Rights. LiLAC discovered the
mistake on September 28, 2020, following the conclusion of the Rights
Offering Period. The Applicant states that these mistakes were promptly
corrected, and all participants were made whole by: (1) the Trustee
purchasing shares on the open market, (2) the Plan charging the
participants only the subscription price of $7.14 per share (the same
subscription price paid by all Plan participants exercising their
Rights) rather than the higher price paid by the Trustee to purchase
the shares on the open market, and (3) removing the proceeds of the
sold Rights from the affected participant accounts.\11\ All costs
related to the error and correction were paid by the Trustee, not by
the Plan or its participants. The corrections were made from October
13, 2020, through October 15, 2020.\12\
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\11\ The Applicant states that LiLAC has reviewed the audit of
all the Rights held by the Plan and confirms that the correction
fully restored all participants to the position they would have been
in the absence of the Trustee's error.
\12\ The Department notes that no exemptive relief is being
provided herein for the mistaken sale of the Rights for which the
Trustee had received an election to exercise from a Plan
participant. Furthermore, the Department is not proposing exemptive
relief with respect to the correction of the mistaken sale of Rights
through the purchase of shares through blind transactions on the
open market, as described herein.
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12. All Plan participants who exercised their Rights (including
those who were affected by the mistake described above) received shares
of Series C LLA Stock at $7.14 price per share in proportion to the
amount of Rights they held in connection with the Rights Offering. The
following chart summarizes the total amounts paid by Plan participants
to acquire shares of Series C LLA Stock, as compared to the actual
closing price of the stock on September 22, 2020.
[[Page 54396]]
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Price (per Total fair market value
September 22, 2020 share) of 15,763.677 rights
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Series C LLA Stock........... $7.95 $125,321.23
Series C LLA Stock at 25% 7.14 112,552.65
discount to VWAP--the
exercise price of a Right...
Difference................... 0.81 12,768.58
Average Discount Per 510.74
Participant.................
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On the date that the Trustee exercised participants' Rights, the
fair market value of Series C LLA Stock closed at $7.95, so that
participants in the Rights Offering received shares of Series C stock
at a $0.81 discount. Furthermore, Series C LLA Stock closed at prices
of $10.65 on October 13, 2020, $10.55 on October 14, 2020, and $10.26
on October 15, 2020, on the Nasdaq Global Select Market.
Participants Who Elected To Sell the Rights
13. A participant could direct the Trustee to sell their Rights at
any time from September 11, 2020, through September 21, 2020.\13\ The
Applicant states that the Trustee sold Rights as soon as
administratively possible after an election was made by a Plan
participant. A total of 13,098.61 Rights were sold by the Trustee
between September 18, 2020, and September 21, 2020, on the Nasdaq
Global Select Market in ``blind transactions.'' \14\ The proceeds of
the sales were directed by the Plan participants to be invested in one
of the other 28 Plan investment options.\15\
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\13\ As reported in the Instruction, while the Rights Offering
period formally commenced on September 11, 2020, the Rights were not
accessible to the Trustee for exercise or sale until on or near
September 15, 2020.
\14\ The Department notes that a transaction will, generally,
not be a prohibited transaction if the transaction is an ordinary
``blind'' purchase or sale of securities through an exchange where
neither the buyer nor the seller (nor the agent of either) knows the
identity of the other party involved. In this regard the Department
notes that the ERISA Conference Report states that ``[i]n general,
it is expected that a transaction will not be a prohibited
transaction (under either the labor or tax provisions) if the
transaction is an ordinary ``blind'' purchase or sale of securities
through an exchange where neither buyer nor seller (nor the agent of
either) knows the identity of the other party involved.'' See H.R.
Rep. 93-1280, 93rd Cong., 2d Sess. 307 (1974); see also ERISA
Advisory Opinion 2004-05A (May 24, 2004).
\15\ The Applicant states that Plan participants were able to
process these exchanges on the Applicant's NetBenefits website, and
that the Trustee sold the Rights through its trading arm, Fidelity
Capital Markets.
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Number of participants whose rights were sold at their 23
direction..............................................
Number of Rights Sold at the Direction of Participants.. 13,098.61
Average Price Received for Sale of Rights at the $0.89866
Direction of Participants..............................
Total Proceeds Received for Sale of Rights at the $11,389.20
Direction of Participants..............................
Average proceeds per Participant........................ $495.18
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* The amounts received by Participants shown in this table are net of
fees.
Rights For Which No Plan Participant Election Was Made
14. On September 22, 2020, the Trustee sold a total of 12,336.558
Rights on behalf of the 26 participants who made no election with
respect to those Rights by the close of trading on September 21, 2020.
The Trustee sold the unexercised Rights on the Nasdaq Global Select
Market in ``blind transactions'' for an average price of $0.8026 per
Right for total proceeds of $9,901.32, and the proceeds from the sales
were allocated proportionally to the relevant participants' accounts.
The average proceeds received per Plan participant in respect of such
sales was $380.82. Thus, all unexercised Rights were sold by the
Trustee, no Rights expired,\16\ and the settlement from all sales of
the Plan's Rights was completed by September 24, 2020.
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\16\ The Applicant represents that commissions and SEC fees were
charged against the price received by the Plan participant selling
the Right and are exempt under ERISA section 408(b)(2). The
Department is not opining on whether the conditions set forth in
ERISA section 408(b)(2) and the Department's regulations, pursuant
to 29 CFR 2550.408(b)(2), have been satisfied, as such matters are
outside the scope of this exemption. However, the Applicant states
that the brokerage services provided by the Trustee's affiliate
Fidelity Capital Markets were necessary for the execution of Plan
participants' directives to sell their Rights and ensure that all
Plan participants received value for their Rights even if they did
not respond to the communications provided to them regarding
exercise or sale of the Rights. The Applicant states that the
service agreement with the Trustee was reasonable and permitted
termination by the Plan without penalty on reasonably short notice
under the circumstances. Further, the Applicant states that the
Trustee makes written disclosures to the Committee regarding the
fees it receives and the services it performs, in compliance with
the final regulation on fee disclosure for reasonable contract or
arrangements under ERISA Section 408(b)(2).
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15. According to the Applicant, the Committee prudently and loyally
determined on behalf of the Plan that: (a) the Plan's acquisition,
holding, and sale of the Rights could proceed, and (b) the Plan's
participants received at least the fair market value for the exercise
and sale of their Rights. The Department notes that this exemption
requires that the material facts and representations set forth in the
Summary of Facts and Representations must be true and accurate at all
times, and the Plan must retain for six years the records necessary for
the Department to ascertain whether the conditions for relief have been
adhered to.
16. The Applicant represents that it filed the exemption
application after the Rights Offering, when the appropriate review and
approvals were concluded.
ERISA Analysis
17. ERISA section 406(a)(1)(E) provides that a fiduciary with
respect to a plan shall not cause the plan to engage in a transaction
if they know or should know that such transaction constitutes the
acquisition, on behalf of the plan, of any employer security in
violation of ERISA section 407(a). ERISA section 406(a)(2) provides
that a fiduciary of a plan shall not permit the plan to hold any
employer security if they know or should know that holding such
security violates ERISA section 407(a).
18. ERISA section 407(a)(1)(A) provides that a plan may not acquire
or hold any ``employer security'' which is not a ``qualifying employer
security.'' ERISA section 407(d)(1) defines ``employer securities,'' in
relevant part, as securities issued by an employer of employees covered
by the plan, or by an affiliate of such employer. ERISA section
407(d)(5) provides, in relevant part, that ``qualifying employer
securities'' are stock or marketable obligations.
[[Page 54397]]
19. The Applicant represents that the Plan was a holder of record
of Series A LLA Stock and Series C LLA Stock issued by LLA on the date
the Rights were acquired by the Plan, so the acquisition of the Rights
by the Plan was an acquisition of an ``employer security'' under ERISA
section 407(d)(1). The Applicant represents that since the Rights did
not constitute either stock or marketable obligations for indebtedness,
the Rights were not ``qualifying employer securities'' under ERISA
section 407(d)(5). Therefore, the Applicant represents that the Plan's
acquisition and holding of the Rights, would violate ERISA sections
406(a)(1)(E), 406(a)(2), and 407(a)(1)(A), unless an exemption is
granted by the Department.
20. In addition, ERISA section 406(b)(l) prohibits a plan fiduciary
from dealing with the assets of a plan in their own interest or own
account. Further, ERISA section 406(b)(2) prohibits a fiduciary from
acting in any transaction involving a plan on behalf of a party whose
interests are adverse to interests of the plan or the interests of the
plan's participants or beneficiaries. The Applicant requested relief
from ERISA section 406(b)(1) and (2) with respect to the Committee's
instruction to sell unexercised Rights held by participants prior to
the expiration of the Rights in the event that the Committee's actions
are construed as dealing with the assets of the Plan in its own
interest or for its own account or acting on behalf of a party whose
interests are adverse to those of the Plan, when it caused the sale of
any unexercised and unsold Rights on behalf of Plan participants.\17\
If granted, the exemption will be effective for the period September
10, 2020, through September 25, 2020.
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\17\ The Department notes that the determination whether the
Committee exercised its fiduciary authority in a manner that
violated ERISA section 406(b)(1) and (b)(2) when it directed the
sale of unexercised Rights held by the Plan on behalf of
participants is subject to a factual inquiry that is outside the
scope of this proposed exemption. Nevertheless, if the Committee's
exercise of discretion also benefitted the Applicant, an entity in
which the Committee has an interest that may affect the Committee's
best judgment as a fiduciary, then such exercise of discretion may
raise questions about whether the Committee acted in a manner that
complies with ERISA section 406(b)(1) and (b)(2).
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Statutory Findings
The Department has tentatively made the following required findings
under ERISA section 408(a) with respect to the proposed exemption:
21. ``Administratively Feasible.'' The Department has tentatively
determined that the proposed exemption is administratively feasible for
the Department because, among other things, the Plan participants
received their Rights pursuant to LLA's independent corporate act in
which all shareholders, including the Plan participants, were treated
in a like manner with respect to the acquisition and holding of the
Rights, with the exception that the oversubscription option available
under the Rights Offering was not available to Plan participants.
22. ``In the Interest of the Plan.'' The Department has tentatively
determined that the proposed exemption is in the Plan's and its
participants' and beneficiaries' interests because, among other things:
(a) each Plan participant received their Rights at no additional cost;
(b) the participants who exercised their Rights paid $7.14 per share
for Series C LLA Stock, which was equal to an approximate 25% discount
to the volume weighted average trading price of Series C LLA Stock for
the trading period beginning on August 31, 2020, and ending on, and
including, September 2, 2020. On September 22, 2020, the date of
exercise, the discount per share was equal to $0.81; (c) the
participants who elected to sell their Rights received an average price
of $0.89866 for each Right sold; and (d) those participants who failed
to make an election received an average of $0.803 for each Right sold
at the direction of the Committee.\18\
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\18\ Therefore, participants whose accounts held shares of LLA
Stock in the Rights Offering received a benefit of approximately (a)
$0.24 per Share owned prior to the Offering for participants that
elected to sell their Rights; (b) $0.21 per Share owned for
participants that did not make any election to sell or exercise
their Rights; and (c) $0.22 per Share for participants that elected
to exercise their Rights for Shares of Series C stock.
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23. ``Protective of the Plan.'' The Department has tentatively
determined that the proposed exemption is protective of the Plan's
participants' and beneficiaries' rights because, among other things:
(a) each Plan participant was able to independently decide whether to
exercise or sell their Rights, and any unexercised and unsold Rights
were sold prior to the end of the Rights Offering; (b) the Rights were
sold by the Trustee on the Nasdaq Global Select Market at market value,
in arm's-length transactions between unrelated parties; (c) all
shareholders were treated in the same manner during the Rights
Offering's process; and (d) the Plan did not pay any fees or
commissions in connection with the acquisition or holding of the
Rights.\19\
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\19\ As described above, the Plan paid SEC fees and commissions
to the Trustee's affiliate, Fidelity Capital Markets, to sell the
Rights on behalf of the Plan participants, charged solely against
the price received by the Plan participant selling the Right. The
Applicant represents that the fees and brokerage services received
by Fidelity Capital Markets in connection with the sale of the
Rights held by Plan participants, are exempt under ERISA section
408(b)(2). The Department is not providing relief for any services
or receipt of compensation and is not opining herein whether the
conditions set forth in ERISA section 408(b)(2) and the Department's
regulations, pursuant to 29 CFR 2550.408(b)(2), have been satisfied.
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Notice to Interested Persons
The Applicant will provide notification to interested persons
(Notice) as agreed to with the Department: (1) by posting the Notice on
the LLA intranet site and in the LLA's sites customarily used for
posting notices to employees regarding employment matters; and (2) via
a return-receipt email that links to the information posted on the LLA
intranet site within 7 days of the date of the publication of the
Notice in the Federal Register. The Notice will include a copy of the
Notice, as it appears in the Federal Register, plus a copy of the
Supplemental Statement required pursuant to 29 CFR 2570.43(a)(2), which
advises interested persons of their right to comment and to request a
hearing.
The Department will not consider comments and requests for a
hearing received by the Department after 37 days of the publication of
the notice of proposed exemption in the Federal Register.
All comments will be made available to the public.
Warning: Do not include any personally identifiable information
(such as name, address, or other contact information) or confidential
business information that you do not want publicly disclosed. All
comments become part of the disclosable administrative record. Further,
comments may be posted on the internet and can be retrieved by most
internet search engines.
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) and/or Code section 4975(c)(2) does not
relieve a fiduciary or other party in interest or disqualified person
from certain other provisions of ERISA or the Code, 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 their
duties respecting the plan solely in the interest of the plan and its
participants and beneficiaries
[[Page 54398]]
and in a prudent manner in accordance with ERISA section 404(a)(1)(B);
nor does it affect the requirement of Code section 401(a) that the plan
must operate for the exclusive benefit of the employees of the employer
maintaining the plan and their beneficiaries;
(2) Before an exemption may be granted under ERISA section 408(a)
and/or Code section 4975(c)(2), the Department must find that the
exemption is administratively feasible, in the interests of the plan
and its participants and beneficiaries, and protective of the rights of
participants and beneficiaries of the plan;
(3) The proposed exemption, if granted, would be supplemental to,
and not in derogation of, any other provisions of ERISA and/or the
Code, including statutory or administrative exemptions and transitional
rules. Furthermore, the fact that a transaction is subject to an
administrative or statutory exemption is not dispositive of whether the
transaction is, in fact, a prohibited transaction; and
(4) The proposed exemption, if granted, would be subject to the
express condition that the material facts and representations contained
in the application are true and complete at all times and that the
application accurately describes all material terms of the transactions
which are the subject of the exemption.
Proposed Exemption
The Department is considering granting an exemption under the
authority of ERISA section 408(a) and Internal Revenue Code (or Code)
section 4975(c)(2) in accordance with the Department's exemption
procedures regulation.\20\ Effective December 31, 1978, section 102 of
Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred
the authority of the Secretary of the Treasury to issue exemptions of
the type requested by the Applicant to the Secretary of Labor.
Therefore, this notice of proposed exemption is issued solely by the
Department.
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\20\ 29 CFR part 2570, subpart B (76 FR 66637, 66644, October
27, 2011). For purposes of this proposed exemption, references to
ERISA section 406, unless otherwise specified, should be read to
refer as well to the corresponding provisions of Code section 4975.
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Section I. Transactions
This exemption would provide relief from the prohibited
transactions provisions of ERISA sections 406(a)(1)(E), 406(a)(2),
406(b)(1), 406(b)(2), and 407(a)(1)(A), and the excise tax imposed by
Code section 4975(a) and (b) (due to the operation of a parallel
prohibited transaction provision contained in Code section
4975(c)(1)(E)), for the period beginning September 10, 2020, and ending
September 25, 2020, with respect to:
(a) the acquisition by the Liberty Latin America 401(k) Savings
Plan (the Plan) of certain stock subscription rights (the Rights),
pursuant to a stock rights offering (the Rights Offering) by Liberty
Latin America Ltd. (LLA), for the purchase of shares of Series C LLA
common stock (Series C LLA Stock);
(b) the holding of the Rights by the Plan during the subscription
period of the Rights Offering (the Rights Offering Period); and
(c) the sale of any unexercised and unsold Rights held by Plan
participants, at the direction of the 401(k) Committee of LiLAC
Communications, Inc. (LiLAC), prior to the expiration of the Rights
Offering Period, provided the conditions set forth below in Section II
are always satisfied.
Section II. Conditions
(a) The Plan's acquisition of the Rights resulted solely from an
independent corporate act of LLA as a corporate entity, without the
exercise of any discretion on the part of the Committee of LiLAC (the
Committee);
(b) All holders of Series A LLA common stock (Series A LLA Stock)
or Series C LLA Stock (individually or together, LLA Stock), including
the Plan, were issued the same proportionate number of Rights based on
the number of shares of LLA Stock held by each shareholder;
(c) For purposes of the Rights Offering, all holders of Series A
LLA Stock or Series C LLA Stock, including the Plan, were treated in a
like manner, with the exception that the oversubscription option
available under the Rights Offering was not available to participants
of the Plan;
(d) The acquisition of the Rights by the Plan was made in a manner
that was consistent with provisions of the Plan for the individually
directed investment of participant accounts;
(e) All decisions regarding the holding and disposition of the
Rights were made by the participants whose Plan accounts were credited
with the Rights, with the exception of the direction by the Committee
to the Plan's trustee, Fidelity Management Trust Company (the Trustee)
to sell any Rights that remained unexercised and unsold towards the end
of the Rights Offering. With respect to Rights sold at the direction of
the Committee, the sale must have been effected in a prudent manner on
the open market so that the Plan participants received at least fair
market value for the Rights sold;
(f) The Plan did not pay any brokerage fees, commissions,
subscription fees, or other charges in connection with the acquisition
and holding of the Rights, except for the Securities Exchange
Commission fee and the commission paid to the Trustee's affiliate,
Fidelity Capital Markets, which were charged solely against the price
received by the Plan participant selling the Right. The Commission's
decision to allow this fee and commission must have been prudent,
consistent with their duties under ERISA Section 404, and the fee and
commission must have been reasonable, consistent with ERISA Section
408(b)(2);
(g) The Plan did not pay any fees in connection with the
Applicant's request for this exemption;
(h) The Plan fiduciary 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, and (2) the Plan's participants
received at least the fair market value for the exercise and sales of
the Rights;
(i) LiLAC maintains for a period of six (6) years from the date of
a Sale, in a manner that is convenient and accessible for audit and
examination, the records necessary to enable the persons described in
paragraph (j)(1)-(4) below to determine whether 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 LiLAC, the records are lost or destroyed prior to the end of
the six-year period, and (2) no party in interest other than LiLAC
shall be subject to the civil penalty that may be assessed under ERISA
section 502(i) if the records are not maintained, or are not available
for examination as required by paragraph (j) below;
(j) Notwithstanding any provisions of subsections (a)(2) and (b) of
ERISA section 504, the records referred to in paragraph (i) above shall
be unconditionally available at their customary location during normal
business hours to:
(1) any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(2) LiLAC or any duly authorized representative of LiLAC;
(3) the Plan fiduciary or any duly authorized representative of the
Plan fiduciary; and
(4) any participant or beneficiary of the Plan, or any duly
authorized representative of such participant or beneficiary;
[[Page 54399]]
(k) The Plan must provide to the Department the records necessary
to demonstrate that the conditions of this exemption, as amended, have
been met, within 30 days from the date the Department requests such
records; and
(l) All the material facts and representations made by the Plan
that are set forth in the Summary of Facts and Representations are true
and accurate at all times. If there is any material change in a
transaction covered by the exemption, or in a material fact or
representation described by the Applicant in the application, the
exemption will cease to apply as of the date of the change.
Exemption date: If granted, the exemption will be in effect from
September 10, 2020, the date that the Plan received the Rights, through
September 25, 2020, the last date the Rights were sold on the Nasdaq
Global Select Market.
Signed at Washington, DC, this 19th day of November 2025.
Christopher Motta,
Acting Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2025-21196 Filed 11-25-25; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on November 26, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.