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Release Date: 05/21/2002
Release Number: 02-12
Contact Name: Gloria Della
Phone Number: 202.693.8666
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Washington, DC - The U. S. Department of Labor's Pension and Welfare
Benefits Administration (PWBA) today proposed an amendment to a group of
individual prohibited transaction exemptions known as the Underwriter
Exemptions. |
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The Underwriter Exemptions permit plans to hold securities representing
interests in certain investment trusts. The proposed amendment would
repeal existing requirements that trustees of the investment trusts be
independent of the underwriter of the securities. |
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In proposing the amendment, PWBA recognizes that the requirements calling for
independent trustees has become onerous and disadvantageous to plan investors in
light of the shrinking number of banks participating in the corporate trust
business. The industry has represented to PWBA that trustees in such
transactions do not have the opportunity or the incentive to act in a manner
detrimental to plan investors. Moreover, the underwriters’ interest
would be limited after issuance of the securities. Therefore, PWBA has
determined that permitting the trustee to be an affiliate of the underwriter
will benefit plan investors without posing additional risk of loss. PWBA
notes that the trustee must be independent of all other parties to the
transaction. |
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ERISA allows the department to grant an administrative exemption from the
restrictions imposed by ERISA's prohibited transaction provisions. |
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The proposed amendment is scheduled to be published in the May 22, 2002
Federal Register. Comments on the proposal or requests for a hearing
should be submitted by email or fax to
202.219.0204 by July 5, 2002, or by postal mail to:
U. S.
Department of Labor
Pension and Welfare Benefits Administration
Office of Exemption Determinations
200 Constitution Avenue, NW, Room N-5649
Washington, D.C. 20210
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U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7775. |
