The PWBA has proposed an amendment that would repeal existing requirements that trustees of the investment trusts be independent of the underwriter of the securities.
The proposed amendment is scheduled to be published in the May 22, 2002 Federal Register.
In a press release the PWBA acknowledged that the requirements calling for independent trustees have become troublesome and disadvantageous to plan investors in light of the shrinking number of banks participating in the corporate trust business.
In addition, industry members have informed the PWBA that trustees in such transactions do not have the opportunity or the incentive to act in a manner detrimental to plan investors, and that the underwriters’ interest would be limited after issuance of the securities.
Consequently, the PWBA says it has determined that allowing the trustee to be an affiliate of the underwriter will benefit plan investors without posing additional risk of loss, although the PWBA also noted that the trustee must be independent of all other parties to the transaction.
The PWBA notes that ERISA allows the department to grant an administrative exemption from the restrictions imposed by ERISA’s prohibited transaction provisions.
Comments on the proposal or requests for a hearing should be submitted by July 5, 2002 to: Office of Exemption Determinations, Pension and Welfare Benefits Administration, Room N-5649, US Department of Labor, 200 Constitution Ave., NW, Washington, DC 20210, or by email to email@example.com , or by fax to (202) 219-0204.
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