[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2580.412-35]

[Page 608]
 
                             TITLE 29--LABOR
 
 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2580_TEMPORARY BONDING RULES--Table of Contents
 
 Subpart G_Prohibition Against Bonding by Parties Interested in the Plan
 
Sec. 2580.412-35  Disqualification of agents, brokers and sureties.

    Since 13(c) is to be construed as disqualifying any agent, broker, 
surety or other company from having a bond placed through or with it, if 
the plan or any party in interest in the plan has a significant 
financial interest or control in such agent, broker, surety or other 
company, a question of fact will necessarily arise in many cases as to 
whether the financial interest or control held is sufficiently 
significant to disqualify the agent, broker or surety. Although no rule 
of guidance can be established to govern each and every case in which 
this question arises, in general, the essential test is whether the 
existing financial interest or control held is incompatible with an 
unbiased exercise of judgment in regard to procuring the bond or bonding 
the plan's personnel. In regard to the foregoing, it is also to be 
pointed out that lack of knowledge or consent on the part of persons 
responsible for procuring bonds with respect to the existence of a 
significant financial interest or control rendering the bonding 
arrangement unlawful will not be deemed a mitigating factor where such 
persons have failed to make a reasonable examination into the pertinent 
circumstances affecting the procuring of the bond.