Department of Labor Clarifies Interpretation of “Related” Under the QPAM Exemption

Explore:  Asset Management DOL ERISA

The U.S. Department of Labor (the “DOL”) recently issued an information letter, dated November 9, 2012 (the “Information Letter”), in which it confirms that, for all purposes of determining what parties are “related” to a qualified professional asset manager (“QPAM”) under prohibited transaction class exemption 84-14 (the “QPAM Exemption”), only direct ownership interests, and not indirect ownership, should be considered. The “QPAM Exemption is an exemption that allows certain investment managers that are QPAMs to enter into transactions that might otherwise be “prohibited transactions” under the Employee Retirement Income Security Act of 1974 (“ERISA”), if specified conditions are satisfied. One of those conditions is that the other party to the transaction not be “related” to the QPAM.

In Advisory Opinion 2011-06A, dated February 4, 2011, the DOL opined that two particular entities were not “related” for purposes of the QPAM Exemption despite the fact that there was some common ownership of the two entities. Advisory Opinion 2011-06A was helpful to investment managers in that it clarified that the QPAM Exemption is potentially available notwithstanding certain types of affiliation between the QPAM and the transaction counterparty. However, uncertainty arose with respect to the application of the “related” parties condition of the QPAM Exemption because in Advisory Opinion 2011-06A, in analyzing whether a particular party was “related” to another for purposes of the QPAM Exemption, the DOL recited that the party in question did not own, directly or indirectly, a sufficient interest in the other party.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.