[Code of Federal Regulations]

[Title 29, Volume 9]

[Revised as of July 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 29CFR2509.75-3]



[Page 348-349]

 

                             TITLE 29--LABOR

 

 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 

                                  LABOR

 

PART 2509_INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE RETIREMENT 

INCOME SECURITY ACT OF 1974--Table of Contents

 

Sec.  2509.75-3  Interpretive bulletin relating to investments by 

employee benefit plans in securities of registered investment companies.



    On March 12, 1975, the Department of Labor issued an interpretive 

bulletin, ERISA IB 75-3, with regard to its interpretation of section 

3(21)(B) of the Employee Retirement Income Security Act of 1974. That 

section provides that an investment by an employee benefit plan in 

securities issued by an investment company registered under the 

Investment Company Act of 1940 shall not by itself cause the investment 

company, its investment adviser or principal underwriter to be deemed to 

be a fiduciary or party in interest ``except insofar as such investment 

company or its investment adviser or principal underwriter acts in 

connection with an employee benefit plan covering employees of the 

investment company, the investment adviser, or its principal 

underwriter.''

    The Department of Labor interprets this section as an elaboration of 

the principle set forth in section 401(b)(1) of the Act and ERISA IB 75-

2 (issued February 6, 1975) that the assets of an investment company 

shall not be deemed to be assets of a plan solely by reason of an 

investment by such plan in the shares of such investment company. 

Consistent with this principle, the Department of Labor interprets this 

section to mean that a person who is connected with an investment 

company, such as the investment company itself, its investment adviser 

or its principal underwriter, is not to be deemed to be a fiduciary of 

or party in interest with respect to a plan solely because the plan has 

invested in the investment company's shares.

    This principle applies, for example, to a plan covering employees of 

an investment adviser to an investment company where the plan invests in 

the securities of the investment company. In such a case the investment 

company or its principal underwriter is not to be deemed to be a 

fiduciary of or party in interest with respect to the plan solely 

because of such investment.

    On the other hand, the exception clause in section 3(21) emphasizes 

that if an investment company, its investment adviser or its principal 

underwriter is a fiduciary or party in interest for a reason other than 

the investment in the securities of the investment company, such a 

person remains a party in interest or fiduciary. Thus, in the preceding 

example, since an employer is a party in interest, the investment 

adviser remains a



[[Page 349]]



party in interest with respect to a plan covering its employees.

    The Department of Labor emphasized that an investment adviser, 

principal underwriter or investment company which is a fiduciary by 

virtue of section 3(21)(A) of the Act is subject to the fiduciary 

responsibility provisions of part 4 of title I of the Act, including 

those relating to fiduciary duties under section 404.



[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]