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Employee Retirement Income Security Act of 1974: Difference between revisions
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Employee Retirement Income Security Act of 1974 (view source)
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*Establishing standards of conduct for plan fiduciaries; | *Establishing standards of conduct for plan fiduciaries; | ||
*Providing for appropriate remedies and access to the federal courts. | *Providing for appropriate remedies and access to the federal courts. | ||
*ERISA is sometimes used to refer to the full body of laws regulating employee benefit plans, which are found mainly in the [[Internal Revenue Code]] and {{tag|ERISA}} itself. | *[[ERISA]] is sometimes used to refer to the full body of laws regulating employee benefit plans, which are found mainly in the [[Internal Revenue Code]] and {{tag|ERISA}} itself. | ||
===[[Plan assets]]=== | ===[[Plan assets]]=== | ||
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If there is more than a certain percentage of {{tag|ERISA}} plan money (or money from other non-{{tag|ERISA}} Government retirement plans with similar legislation) in a fund, it becomes itself subject to {{tag|ERISA}} regulations, particularly penal tax and investor protection provisions, ''and also provisions affecting the ordinary winding up of the fund and therefore [[netting]]''. | If there is more than a certain percentage of {{tag|ERISA}} plan money (or money from other non-{{tag|ERISA}} Government retirement plans with similar legislation) in a fund, it becomes itself subject to {{tag|ERISA}} regulations, particularly penal tax and investor protection provisions, ''and also provisions affecting the ordinary winding up of the fund and therefore [[netting]]''. | ||
While some people will loosely talk of a “look-through” to the underlying fund it doesn’t seem right that you would look through the [[close out]] [[netting]] of a separate | While some people will loosely talk of a “look-through” to the underlying fund it doesn’t seem right that you would look through the [[close out]] [[netting]] of a separate [[Fund]] legal entity to view the insolvency scenario of an underlying {{tag|ERISA}} investor – particularly since the underlying investor will by no means necessarily itself be insolvent, just because a legally distinct fund it had invested in had blown up. | ||
It seems more likely that by dint of its {{tag|ERISA}} investment, the sleeve fund itself would be deemed subject to {{tag|ERISA}} and therefore {{tag|ERISA}} might intervene in the Fund's insolvency. | It seems more likely that by dint of its {{tag|ERISA}} investment, the sleeve fund itself would be deemed subject to {{tag|ERISA}} and therefore {{tag|ERISA}} might intervene in the Fund's insolvency. | ||
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Famously, ERISA plans tend to be set '''not''' to [[Netting|net]], and for the unholiest of reasons, courtesy of the phantasmagorical imagination of some wise [[mediocre lawyer|counsel]] at Cadwalader, upon whom the whole market relies. | Famously, ERISA plans tend to be set '''not''' to [[Netting|net]], and for the unholiest of reasons, courtesy of the phantasmagorical imagination of some wise [[mediocre lawyer|counsel]] at Cadwalader, upon whom the whole market relies. | ||
This gentleman’s opinion is predicated on the risk that a court would interpret the {{tag|ERISA}} act as requiring the US [[Bankruptcy Code]] ''as it stood in 1971'' to be applied to the insolvency of an {{tag|ERISA}} plan, rather than as it stands at the time of insolvency. The reason that’s a problem is that the | This gentleman’s opinion is predicated on the risk that a court would interpret the {{tag|ERISA}} act as requiring the US [[Bankruptcy Code]] ''as it stood in 1971'' to be applied to the insolvency of an {{tag|ERISA}} plan, rather than as it stands at the time of insolvency. The reason that’s a problem is that the “[[safe harbor]]s” for closing out swaps in the [[Bankruptcy Code]] were only enacted in the 1980s. | ||
This is the fear that prompts attorneys the world over to interpose “[[as amended from time to time]]” and phrases like it into their drafts. It is a frankly fantastical fear: Not only is it impossible to be certain, at this remove, exactly how the US Bankruptcy Code stood in 1971 much less how it might have been interpreted in those days, but many of the institutions and concepts it relies on will have since been abolished or materially changed. | This is the fear that prompts attorneys the world over to interpose “[[as amended from time to time]]” and phrases like it into their drafts. It is a frankly fantastical fear: Not only is it impossible to be certain, at this remove, exactly how the US Bankruptcy Code stood in 1971 much less how it might have been interpreted in those days, but many of the institutions and concepts it relies on will have since been abolished or materially changed. | ||
{{ | {{sa}} | ||
*[[Safe harbor]] | |||
*[[Pension Fund]] | *[[Pension Fund]] | ||
*[[ERISA Reps]] | *[[ERISA Reps]] | ||
*[[Qualifying Professional Asset Manager]] ([[QPAM]]) | *[[Qualifying Professional Asset Manager]] ([[QPAM]]) | ||
*[[Indicia of ownership]] where you have a non-US investment manager. | *[[Indicia of ownership]] where you have a non-US investment manager. | ||
{{ | {{c2|US Securities Regulation|Insolvency}} | ||