1204005 Informal Interpretation

15 USC 18a(c)(4) - 7A(c)(4)
Michael Verne

  – Agree –Exempt under 18a(c)(4) -
7A(c)(4). No acquired person (see pt 6 of below / attached).  DOJ
-The government is not an entity as defined in §801.1(a)(2)
2 -Therefore, it cannot be
an ultimate parent entity as defined in §801.1(a)(3)
3 -Therefore, it cannot be
a person as defined in §801.1(a)(1) -"person means an ultimate parent
entity and all entities which it controls directly or indirectly"
4 -Therefore, the language
in §801.1(c) "A person holds all assets and voting securities held by
the entities included within it; in addition to its own holdings, an entity
holds all assets and voting securities held by the entities which it controls
directly or indirectly" -cannot apply to the government
5 -Therefore, if an entity
(i.e., a corporation or non-corporate entity engaged in commerce) owned by
the government buys or sells anything, it is its own ultimate parent entity
and the transaction would not be covered by 7A(c)(4), because the government
does not hold the assets, voting securities or non-corporate interests that
the entity is buying or selling
6 -Conversely, if the
government buys or sells assets directly, the transaction is not reportable
because there is either no acquiring (if the government is buying) or
acquired person (if the government is selling).





Friday, April 13, 2012 2:48 PM


Verne, B. Michael


HSR Act (c)(4) Exemption


Iwanted to confirm that the statutory (c)(4) exemption for "transfers to orfrom a Federal agency ..." applies to an acquisition of assets of a failedcredit union that has been placed into a conservatorship under the supervisionof the National Credit Union Administration ("NCUA").

Thetransaction will be between NCUA, as Liquidating Agent, and the buyer (anothercredit union), who will acquire substantially all assets of the credit union inthe NCUA conservatorship (largely consisting of consumer loans, residentialmortgage loans and cash). No commercial loans will be acquired. The buyer willalso assume all the deposits of the failed credit union, and the NCUA willprovide financial assistance to the buyer in the form of cash.

Thistransaction closely tracks several in which the PNO has agreed that (c)(4)exempts sales from FDIC and RTC receiverships or conservatorships (e.g., Interpretations1011008 (FDIC), 9101007 (RTC), 9205007 (RTC), 9011011 (RTC)). They follow onInterpretation 29 in the 1991 edition of the Premerger Notification PracticeManual, which states that "[w[hen RTC declares a conservatorship and takesover a financial institution, the sale of the financial institution, itsassets, its subsidiaries or assets of its subsidiaries will be exempt."Interpretation 12 in the current edition is consistent with that analysis.

NCUAis a federal agency, governed by a board that is appointed by the President andconfirmed by the Senate. Its conservatorships for failed institutions areessentially identical to what the FDIC does and the RTC did.

However,because I was not able to locate any informal interpretations in the FTCdatabase specifically addressing the application of exemption (c)(4) toNCUA-supervised sales, I thought I should confirm its applicability with you.

Iknow the PNO has also offered an alternative analysis-that the FDIC, RTC andother federal government agencies are not entities under 801.1(a)(2) so thatsales by them are not covered by the statute. Interpretations 11 & 12 inthe current edition of the Manual explain that reasoning. If that is now thepreferred analysis, can you confirm it applies to an NCUA sale of an institution'sassets in conservatorship, and that there is no reportable transaction here?

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