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Christopher M. Wells, Proskauer Rose LLP

The staff granted an exemption from FINRA Rule 5130 with respect to purchases of "new issues" by the "Shell Pension Funds."

November 2, 2012

Christopher M. Wells
Proskauer Rose LLP
Eleven Times Square
New York, NY 10036-8299

Re: Request for Exemption from FINRA Rule 5130

Dear Mr. Wells:

In your letter dated November 1, 2012, you request an exemption from FINRA Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) on behalf of Stichting Shell Pensioenfonds ("SSPF"), Shell Contributory Pension Fund ("SCPF"), Shell Overseas Contributory Pension Fund ("SOCPF"), Pensionsfonds der Shell Switzerland ("PDSS"), and Shell International Pension Fund ("SIPF") (collectively, the "Shell Pension Funds").

Pursuant to paragraph (h) of Rule 5130, the staff, for good cause shown after taking into consideration all relevant factors, may conditionally or unconditionally exempt any person, security or transaction (or any class or classes of persons, securities or transactions) from Rule 5130 to the extent that such exemption is consistent with the purposes of the Rule, the protection of investors and the public interest. For the reasons set forth below, the staff exempts from Rule 5130 purchases, directly or indirectly, of "new issues" (as defined in Rule 5130) by the Shell Pension Funds.


Based upon your letter and our subsequent telephone conversations, we understand the facts to be as follows. SSPF is a pension fund registered in the Netherlands with the Dutch Chamber of Commerce and subject to the laws of the Netherlands, including the Dutch Pension Act. SSPF has $19,100,000,000 in assets and serves approximately 37,000 participants and beneficiaries. An eight-member board consisting of employer and employee representatives manages SSPF. The four employer's representatives are appointed by Shell Petroleum N.V.; the four employees' representatives are appointed on the recommendation of the Central Staff Council of Shell in the Netherlands. The Members' Council, which includes participants and beneficiaries appointed by Shell Petroleum N.V., advises the board on key matters affecting the fund. SCPF is a United Kingdom registered pension scheme, regulated by Chapter 2 of the Finance Act 2004 (United Kingdom). SCPF has $16,900,000,000 in assets and serves approximately 44,000 participants and beneficiaries. Shell Pensions Trust Limited ("SPT"), a company incorporated under English law, is the corporate trustee of SCPF. The board of SPT consists of 14 directors, with seven directors appointed by Shell Petroleum Company Limited, which is SPT's parent company, and seven directors chosen by the participants and beneficiaries.

SOCPF is a pension fund incorporated and regulated under Bermudian law. SOCPF has $4,000,000,000 in assets and serves approximately 8,100 participants and beneficiaries. The trustee of SOCPF is Shell Trust (Bermuda) Limited, a corporate trustee. The trustee is appointed by Shell Petroleum N.V. and the Shell Petroleum Company Limited. PDSS is a pension fund incorporated and regulated in Switzerland and subject to the laws of Switzerland, and it is regulated by Zentralschweizer BVG- und Stiftungsaufsicht, the Swiss national pension fund regulator. PDSS has $794,000,000 in assets and serves approximately 800 participants and beneficiaries. PDSS is administered by a board of trustees, the members of which are appointed in equal numbers by participating employers and employees. SIPF is a pension fund incorporated and regulated under Bermudian law. SIPF has $500,000,000 in assets and serves approximately 730 participants and beneficiaries. Shell Trust (Bermuda) Limited is also the corporate trustee of SIPF.

The Shell Pension Funds have more than $40,000,000,000 in assets and more than 90,000 participants and beneficiaries.1 The participants and beneficiaries are current and former employees of the Shell group operating companies, and the beneficiaries of such employees. The Shell Pension Funds are operated in a non-discriminatory manner insofar as a wide range of employees, regardless of income and including rank and file employees, are eligible to receive contributions or accrue benefits under the terms of the plan (alone or in combination with other comparable plans) and without further amendment or action by the employer.2 The Shell Pension Funds are not sponsored by a broker-dealer. Finally, the Shell Pension Funds are administered by trustees (and, in the case of SSPF, a board) that have a fiduciary obligation to administer the funds in the best interests of the participants and beneficiaries.

Shell Asset Management Company B.V., an investment manager, is responsible for managing the assets of the Shell Pension Funds.

From time to time, the Shell Pension Funds may have an opportunity to invest their assets in new issues either directly by purchasing new issues or indirectly by investing in an entity, such as a hedge fund or fund of funds, that may purchase new issues. You are requesting that the staff exempt from Rule 5130 purchases of new issues by the Shell Pension Funds.


Rule 5130 protects the integrity of the public offering process by ensuring that: (1) members make bona fide public offerings of securities at the offering price; (2) members do not withhold securities in a public offering for their own benefit or use such securities to reward persons who are in a position to direct future business to members; and (3) industry insiders, including members and their associated persons, do not take advantage of their insider position to purchase new issues for their own benefit at the expense of public customers.

Rule 5130 contains a number of exemptions, including one for an Employment Retirement Income Security Act ("ERISA") benefits plan that is qualified under Section 401(a) of the IRC, provided that such plan is not sponsored solely by a broker-dealer. The Shell Pension Funds do not qualify for this exemption because, as foreign plans, they are not subject to ERISA.3 Rule 5130 does not specifically exempt foreign benefits plans, such as a foreign pension plan, because the rules and standards in foreign jurisdictions can vary widely.

However, FINRA staff believes that granting an exemption to the Shell Pension Funds is consistent with the purposes of the Rule, the protection of investors and the public interest. In view of the characteristics of the Shell Pension Funds, as described above, including the number of participants and beneficiaries and the size of assets of the Shell Pension Funds, the staff believes that the Shell Pension Funds plainly cannot serve as a conduit for restricted persons to purchase new issues.4 For these reasons, the staff exempts from Rule 5130 purchases, directly or indirectly through a collective investment account, of new issues by the Shell Pension Funds.

This exemption applies only to the issue you have raised based on the facts as you have described them, and does not address any other rule or interpretation of FINRA, or all the possible regulatory and legal issues involved. Any material changes in the facts or representations as you have described them will require further consideration and may not qualify for exemption. In addition, this exemption is subject to modification or revocation if at any time FINRA determines that such action is necessary or appropriate for the protection of investors.

If you have any questions on this matter, please do not hesitate to contact me at (202) 728-8902.

Very truly yours,

Afshin Atabaki

Michael D. Solomon,
Senior Vice President and Regional Director - New York District Office

1 The information regarding the number of participants and beneficiaries and the size of assets of the Shell Pension Funds is current as of the end of 2011.

2 The definition of "broad-based foreign retirement plan" under Section 409A of the Internal Revenue Code ("IRC") includes a substantially similar condition. See 26 CFR § 1.409A-1(a)(3)(v)(A). Section 409A imposes restrictions on the deferral of compensation by employees, directors, and independent contractors. Section 409A provides an exemption for compensation deferred under certain broad-based foreign retirement plans.

3 ERISA explicitly excludes from coverage employee benefit plans that are "maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens." 29 U.S.C. § 1003(b)(4).

4 See also letter from Gary L. Goldsholle, FINRA, to Edward A. Kwalwasser, Proskauer Rose LLP, dated December 7, 2010 (granting an exemption to the Healthcare of Ontario Pension Plan Trust Fund, which had more than 250,000 members and pension recipients and $35 billion in assets).