Today’s Federal Register contains a Department of Labor (“DOL”) Notice of Proposed Amendment to Prohibited Transaction Exemption (PTE) 84-14 for Plan Asset Transactions Determined by Independent Qualified Professional Asset Managers. The original PTE 84-14 provides an exemption from the prohibited transaction rules under ERISA for various parties that are related to employee benefit plans who engage in transactions involving plan assets if, among other conditions, the assets are managed by “qualified professional asset managers” (QPAMs), which are independent of the parties in interest and which meet specified financial standards. The Notice issued today proposes certain amendments be made to PTE 84-14.
The reason behind the proposals, according to the Notice, is that a number of interested persons had expressed concerns over difficulties encountered in complying with several conditions contained in PTE 84-14. According to the Notice, the difficulties have to do with consolidation in the financial services industry and the large size of the resulting institutions, so that many financial institutions have found it more difficult to ensure that section I(a) (power of appointment) and section I(d) parties “related” to the QPAM) of PTE 84-14 are satisfied. Therefore, with respect to section I(a) (power of appointment), the proposed amendment would delete the “one year look-back rule” under which the exemption would be unavailable to a party in interest if it had exercised the power of appointment within the one-year period preceding the transaction. Second, the proposed amendment would clarify that section I(a)’s power of appointment refers only to the power to appoint the QPAM as manager of the assets involved in the transaction, as opposed to any of the plan’s assets.
Interested parties are invited to make comments to EBSA regarding the proposed amendment on or before October 20, 2003. (PTE 84-14 is apparently not available online at the DOL website.)