January 6, 2023

Office of Exemption Determinations
Employee Benefits Security Administration
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210

Re: EBSA-2022-0008; Proposed Amendment to Prohibited Transaction Class Exemption 84-14 (the QPAM Exemption); Supplemental Comment

Dear Assistant Secretary Gomez, Deputy Assistant Secretaries Khawar and Hauser and Mr. Cosby:

The Securities Industry Financial Markets Association (“SIFMA”)1 appreciates the opportunity to file a supplemental comment on the Department of Labor’s Proposed Amendment to PTE 84-14, the class exemption for assets managed by a Qualified Professional Asset Managers (the “QPAM Exemption”).

As every witness and commenter from the plan sponsor, investment advisory, counterparty, legal, banking and insurance community has testified or commented, the QPAM Exemption has worked extraordinarily well in allowing plans to access the investment markets over the past almost 40 years, facilitating retirement plans’ access to a variety of investments, and allowing plans to operate on an efficient and effective basis. These witnesses and commenters were uniformly opposed to changing the exemption, citing the proposed changes as disadvantageous and harmful to plans, costly, unnecessarily burdensome and confusing, and in sum, not in the best interests of plans and their participants.2 It is especially noteworthy that employers and plan sponsors overwhelmingly agree that these changes are a mistake, and will hurt their plans’ access to the markets. The QPAM Exemption is well understood and accepted by asset managers and by counterparties in various transactions with plans, including with borrowers in the financial markets. QPAMs, plans and parties in interest have developed well accepted approaches for allocating responsibility among themselves that permit plans to access markets efficiently and on an equal footing with other institutional investors. We respectfully submit that the Department’s proposed changes do not meet the standards in section 408(a) of ERISA.

 

1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 The only witnesses who testified to the contrary mistakenly believed that without the QPAM Exemption, section 3(38) Investment Managers would not be permitted under ERISA to manage plan assets. While Mr. Hauser corrected that impression, they did not appear to understand how the prohibited transaction provisions of ERISA