Can A Relying Adviser Be A Qpam

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The question of “Can A Relying Adviser Be A QPAM?” is a complex one within the world of ERISA (Employee Retirement Income Security Act). It revolves around whether an entity that relies on another entity’s registration with the SEC (Securities and Exchange Commission) can itself qualify as a Qualified Professional Asset Manager (QPAM). Understanding the nuances of ERISA and the QPAM exemption is crucial for investment managers and plan sponsors seeking to navigate regulatory compliance.

Understanding the QPAM Exemption and Relying Advisers

The QPAM exemption is a significant provision within ERISA that allows certain investment managers, deemed to be highly qualified and experienced, to engage in transactions with parties in interest of employee benefit plans, which would otherwise be prohibited under ERISA. These prohibited transactions could include things like sales, leases, and loans between the plan and parties connected to it. The QPAM exemption provides a safe harbor, allowing these transactions to occur if they are managed by a QPAM. The importance of this exemption lies in facilitating efficient investment management while safeguarding plan assets from potential conflicts of interest.

A “relying adviser,” in the context of SEC registration, is an investment adviser that does not itself register with the SEC but relies on the registration of another adviser. This typically occurs when the relying adviser is controlled by or under common control with the registered adviser. The SEC allows this structure under specific circumstances, often involving affiliated entities. This structure allows for operational efficiencies and specialization within a larger advisory group.

To achieve QPAM status, an investment manager must meet certain criteria outlined in the ERISA regulations. These typically include:

• Having at least $85,000,000 in assets under management.
• Maintaining a substantial equity or net worth.
• Being either a bank, insurance company, or a registered investment adviser.
• Acknowledging its fiduciary status and accepting responsibility for its investment decisions.

The following table summarizes some key elements of QPAM qualification:

Navigating ERISA regulations and understanding the requirements for QPAM status can be complex. To gain a deeper understanding of this topic and ensure compliance, refer to the official Department of Labor guidance on QPAM exemptions.