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

November 28, 2012

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.

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