RIA who manages 4 partnerships wants to invest pension fund in one of LPs

[CharlesLeggette]

XYZ is an RIA. They manage money. They have 4 different partnerships which hold client funds and buy stocks and bonds...no unrelated business taxable income.The partnerships are each over $150mm, so they are big.

They have adopted a PSP and a CB...they have only 4 employees so they will be contributing about $350k to the 2 plans.

Can they invest their pension assets in one or more of the limited partnerships.

[jpod]

I don't think the question is answerable via a message board. If this issue was presented to me I would say two things. First, securities law counsel must be consulted. Depending upon the result of that consultation you may not need to read the next two sentences here. Second, this raises all sorts of ERISA prohibited transaction concerns. One must work through the PT rules and the facts to determine whether this can be done without any PT concerns.

[CharlesLeggette]

Yes, well I think that is obvious by inspection...I have had bank clients with trust departments that invested their own pension $$, Fidelity invests its own $$, I have had large corporate clients that had a Chief Investment Officer that invested their own plan's funds...I think if they were investing in their own company or they were receiving fees from the investments, I would be more nervous, but neither is true....the hangup seems to be the Partnerships and the fact that they are General Partner....I believe it is probably a securities/ERISA lawyer question....

[MoJo]

I believe there is a PTE for an investment manager investing in their own products. I don't have the cite - but should be easy to find. The question in my mind is whether the structure as a "partnership" is relevant....

[jpod]

PTCE 77-3 is available for 40 Act registered mutual funds. There is nothing comparable for an unregistered partnership.