ERISA Benefit Plan Investment Management Agreements: Selecting 3(38) Investment Managers, Structuring the IMA

BARBRI

This CLE course will discuss legal best practices for selecting a 3(38) investment manager and outline key steps in structuring and documenting the investment manager relationship. Our panel will review the recent regulations that significantly impact the QPAM exemption, how best to negotiate and draft investment management agreements (IMAs), and what terms to look for when a plan invests in a pooled investment vehicle subject to ERISA.

Description

ERISA requires that plan fiduciaries act with prudence and care; breaching these fiduciary duties subjects plan fiduciaries to personal liability. ERISA Section 3(38) defines an investment manager to whom investment responsibility can be delegated. A named fiduciary who has delegated investment decisions to a 3(38) investment manager is not responsible or liable for the 3(38) investment manager's investment decisions but remains accountable for hiring and monitoring the 3(38) investment manager.

ERISA also imposes the duty to avoid "prohibited transactions" with "parties in interest" to the ERISA plan unless an exemption from the prohibited transaction rules applies. Because ERISA defines both prohibited transactions and parties in interest broadly, all transactions are potentially prohibited, requiring an applicable exemption. However, the exemptions are nuanced and fiduciaries appointing 3(38) investment managers, as well as the 3(38) investment manager taking advantage of the exemptions, must understand the conditions of the exemptions upon which they are relying.

Listen as our panel will discuss legal best practices for selecting a 3(38) investment manager and outline key steps in structuring and documenting the investment manager relationship. Our panel will review the recent changes to the QPAM exemption, how best to negotiate and draft investment management agreements (IMAs), and what terms to look for when a plan invests in a pooled investment vehicle subject to ERISA.

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