The Department of Labor (the “DOL”) adopted a final amendment to prohibited transaction class exemption 84-14 (the “QPAM Exemption”) under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The QPAM Exemption allows an ERISA plan to engage in transactions with “parties in interest” if, among other conditions, the assets are managed by a “qualified professional asset manager,” or “QPAM,” that is independent of the parties in interest and that meets certain other requirements. (See the August 23, 2005 Alert for information on the proposed amendment.)
The amendment to the QPAM Exemption permits a QPAM to manage assets of a plan sponsored by the QPAM or an affiliate of the QPAM. The amendment requires a QPAM that manages assets of its own plan (or a plan of an affiliate) to adopt written policies and procedures that are designed to assure compliance with the conditions of the QPAM Exemption, and to undergo an annual exemption audit by an independent person. The written policies and procedures and the annual exemption audit requirements are substantially similar to those required under Prohibited Transaction Class Exemption 96-23 (the “INHAM Exemption”). The final amendment to the QPAM Exemption adds additional clarifying language regarding certain aspects of the audit requirement that were not included in the proposed amendment. The amendment will become effective November 3, 2010.