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Trust Examination Manual
29 CFR 2509.75-3 - Interpretive bulletin relating
to investments by employee benefit plans in securities of registered investment
companies.
Section Number: 2509.75-3
Section Name: Interpretive bulletin relating to investments
by employee benefit plans in securities of registered investment companies.
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On March 12, 1975, the Department of Labor issued an interpretive bulletin,
ERISA IB 75-3, with regard to its interpretation of section
3(21)(B) of the Employee Retirement Income Security Act
of 1974. That section provides that an investment by
an employee benefit plan in securities issued by an investment
company registered
under the Investment Company Act of 1940 shall not by
itself cause the investment company, its investment adviser
or principal underwriter to be deemed to be a fiduciary
or party in interest ``except insofar as such investment
company or its investment adviser or principal underwriter
acts in connection with an employee benefit plan covering
employees of the investment company, the investment adviser,
or its principal underwriter.''
The Department of Labor interprets this section as
an elaboration of the principle set forth in section
401(b)(1) of the Act and ERISA IB 75-2 (issued February
6, 1975) that the assets of an investment company shall
not be deemed to be assets of a plan solely by reason
of an investment by such plan in the shares of such
investment company. Consistent with this principle,
the Department of Labor
interprets this section to mean that a person who is
connected with an investment company, such as the investment
company itself, its investment adviser or its principal
underwriter, is not to be deemed to be a fiduciary
of or party in interest with respect to a plan solely
because the plan has invested in the investment company's
shares. This principle applies, for example, to a plan
covering employees of an
investment adviser to an investment company where the
plan invests in the securities of the investment company.
In such a
case the investment company or its principal underwriter
is not to be deemed to be a fiduciary of or party in
interest with respect to the plan solely because of
such investment.On the other hand, the exception clause
in section 3(21) emphasizes that if an investment company,
its investment adviser or its principal underwriter
is a fiduciary or party in interest for a reason other than
the investment in the securities of the investment
company, such a person remains a party in interest
or fiduciary. Thus, in the preceding example, since an
employer is a party in interest, the investment adviser
remains a party in interest with respect to a plan covering
its employees.
The Department of Labor emphasized that an investment
adviser, principal underwriter or investment company
which is a fiduciary by virtue of section 3(21)(A)
of the Act is subject to the fiduciary responsibility
provisions of part 4 of title I of the Act, including
those relating to fiduciary duties under section 404.
[40 FR 31599, July 28, 1975. Redesignated at 41 FR
1906, Jan. 13, 1976]
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