Several changes to the definition of “commodity pool operator” could require fiduciaries of retirement plans to file for an exemption from treatment as a “commodity pool operator,” or be subject to comprehensive registration and compliance requirements.  A “commodity pool operator” is generally a manager of a pooled investment vehicle that invests in commodity interests.  The Dodd-Frank Act amended the Commodity Exchange Act to include swaps within the commodity interests that will establish a commodity pool.  Investment in futures and options on futures also will cause a pooled investment vehicle to be considered a commodity pool.  A plan fiduciary could therefore be treated as a “commodity pool operator” if the plan invests in swaps, futures or options on futures, or invests in a fund that, directly or indirectly, invests in those commodity interests.  Several exemptions may apply.  However, some exemptions require a filing with the National Futures Association, and recent guidance from the Commodity Futures Trading Commission (“CFTC”) requires the exemption filing in more circumstances than before.
Continue Reading Plan Fiduciaries Might Need to File a Notice to Avoid Registration Requirements as Commodity Pool Operators

The Department of Labor resolved key issues related to cleared swaps transactions in a recent advisory opinion.  The opinion concludes that margin posted by an employee benefit plan in connection with a cleared swap is not a “plan asset” for purposes of ERISA, and that a Clearing Member does not act as a fiduciary of the plan when the Clearing Member exercises discretionary account liquidation rights upon the plan’s default.  The opinion also provides guidance on prohibited transaction issues raised by the clearing process.
Continue Reading Labor Department Addresses Key Issues for Cleared Swaps