June 22, 2017

Seward & Kissel Participates in Washington, DC Compliance Roundtable

Click here for notes from June 15, 2017 members meeting with Mark J. Dowdell, Assistant Regional Director of Securities and Exchange Commission (Philadelphia Regional Office).

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June 22, 2017

Q&As — Now That the DOL’s Fiduciary Rule Is Applicable

Q 1:    What representations should a private investment fund get from new "benefit plan investors"? A:    Assuming that an investment manager or "you" are not intending to rely on the "best interest contract" ("BIC") prohibited transaction exemption and except as discussed in Q 2 below, a private investment fund can only be offered to an ERISA plan or IRA which employs an "independent fiduciary with financial expertise" ("IFFE") in connection with the investment into the fund. Under the Department of Labor fiduciary rule (the "Rule"), you can rely on representations from investors as to their qualifications as an IFFE. We recommend that any new investment from a "benefit plan investor" only be accepted if the investor can and does make representations and warranties as to IFFE involvement (Exhibit A provides a sample representation form). While the Rule also requires that an IFFE meet several other requirements, we do not believe that during the "transition period" (i.e., through December 31, 2017), additional representations are required in order for a private investment fund to rely on the IFFE exception to the Rule. The representations from "benefit plan investors" in Seward & Kissel's typical subscription agreements contain several provisions that address these other requirements, which, we believe, when used in conjunction with the additional representations set forth on Exhibit A, should suffice during the "transition period".

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