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

Documenting the Relationship to Minimize Risks for Plan Sponsors and Investment Advisers

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, April 26, 2023

Recorded event now available

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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 proposed 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, such as QPAM, 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 exemption, must understand the conditions of the exemption upon which they are relying.

Listen as our authoritative panel of attorneys discusses ERISA 3(38) investment managers and offers guidelines for selecting investment managers, negotiating and drafting IMAs, and documenting the investment manager partnership from the perspectives of both the plan sponsor and the investment manager.

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Outline

  1. Negotiating investment management agreements
  2. Drafting investment management agreements
  3. Documenting the investment management partnership

Benefits

The panel will review these and other key issues:

  • What standard of care should plans expect from an investment manager?
  • What representations and warranties should an IMA include?
  • What protections can side letters offer?
  • What types of investment strategies may warrant the use of an exemption other than PTE 84-14 (QPAM)?
  • What issues arise in light of the recently proposed regulations regarding QPAM?

Faculty

Eicher, Timothy
Timothy K. Eicher
Principal
Slevin & Hart

Mr. Eicher's practice focuses on all aspects of the firm’s representation of employee benefit plans under...  |  Read More

Fay, Bradley
Bradley C. Fay
Attorney
Seward & Kissel

Mr. Fay routinely counsels clients regarding the investment of plan assets and related issues including ERISA fiduciary...  |  Read More

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