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Date
Rule
801.1(c), 801.15
Staff
Michael Verne
Response/Comments
mail. Obviously, there is a dearth of detail. That's the problem with some of the letters in the database. 401-K plans are generally trusts that are deemed to hold the stock they acquire, not the plan participants. The only factors I can think of for coming out the way we did are: 1) if the "major shareholder" controlled the trust by being able to designate the trustee(s); 2) the "major shareholder" controlled the issuer who in turn could designate the trustee(s); or 3) the 401-K was structured so that each participant was able to vote, receive dividends and sell the stock held in his account. In those cases the shareholder would hold the voting securities in the trust. In your transaction, the executive would have to aggregate his current holdings with the distribution he receives from the 401-K because he does not currently hold the stock in the trust and neither 802.10 nor 7A(c)(10) is listed in 801.15. I hope this is helpful. If we still need to talk let me know.

Question

From: (Redacted)
Sent: Thursday, February 04, 2010 9:39 AM
To: Verne, B. Michael
Cc: Johnson, Janice C.; (Redacted)

Subject: HSRReporting Requirements re 401 (k) Plan Distribution of Voting Securities

Attachments:0403015.pdf

Mr. Verne,

Would you beavailable later today or tomorrow, or at a convenient time next week, for aconference call with your colleague Janice Johnson, my colleague (redacted)and me to discuss potential HSR reporting requirements relating to thedistribution of company stock by a 401 (k) plan to an executive of the company?

The circumstances that we would like todiscuss are the following:

1. A large company (the "Company") has (i)adopted a 401 (k) plan (the "Plan") for its employees in compliancewith section 401 of the Internal Revenue Code, (ii) established a trust to holdPlan assets, and (iii) appointed a trustee (the "Trustee") to managethe Plan.

2. Each Company employee may elect to contribute aportion of his or her salary to the Plan. Among the investment options that anemployee may elect under the Plan is an option that authorizes the Trustee touse a portion of such employee's contributions to purchase some of theCompany's publicly traded voting securities.

3. A Company senior executive (the"Executive") has contributed to the Plan for many years during whichhe has elected to authorize the Trustee to purchase Company voting securities.

4. The Executive has held for more than 5 years about 5%of the Company's voting securities worth in excess of $100 M. During that time,he has not acquired any Company securities in a reportable transaction under theHSR Act.

5. The Executive reaches 70 years of age, whichtriggers the requirement under the Plan and applicable IRS regulations for amandatory distribution to him by the Trustee. Electing to take a portion of thedistribution in Company securities (which is an option available under thePlan), the Executive receives from the Plan 5,000 shares of Company securitieswith a value of $100,000.

We are trying tounderstand how to apply FTC Rules 801.1(c), 801.15(a) and 802.35 while takinginto consideration the informal staff opinion that is located on the FTC'swebsite at http://wwwtlc.gov/opinions/0403015.htm. (A copy of the informal staff opinion is attached for your convenience.)

Please let us knowa convenient time for you and Janice when (redacted) and I can call youto discuss any HSR reporting requirements that would apply to the Trustee'sdistribution of Company stock to the Executive.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.

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