Table of Contents
Title
Copyright
Preface
About the Authors
Chapter 1
Introduction
§ 1.01 General
§ 1.02 Types of Commingled Funds
[1] Collective Trust Funds
[2] Common Trust Funds
[3] Group Trusts
§ 1.03 Brief Background and History of Collective and Common Trust Funds
§ 1.04 Commingled Fund Advantages
§ 1.05 Commingled Fund Disadvantages
CHAPTER 2
Structure of Commingled Funds
§ 2.01 Collective Trust Funds
[1] Eligible Investors
[2] Ineligible Investors
§ 2.02 Collective Trust Fund Structures
[1] “Unitized”Funds
[2] Open Architecture/Third-Party Sub-Advisers
[3] Funds of Funds
[4] Multi-Class Structure
[5] Master-Feeder
§ 2.03 Group Trusts
CHAPTER 3
Operation of Collective Trust Funds
§ 3.01 Establishment,Operation, and Liquidation Overview
§ 3.02 Key Service Providers
§ 3.03 Key Documents
[1] Declaration of Trust
[2] Fund Description/Offering Memorandum
[3] Subscription/Participation Agreement
[4] Service Provider Required Disclosure
[5] Trading Relationship Agreements
[6] Form ADV for Investment Adviser
§ 3.04 Communications with Participating Plans and Participants
[1] Quarterly Letters or Fund Fact Sheets
[2] Plan Participant Disclosures: DOL Regulation 404a-5
CHAPTER 4
Portfolio Management:
Investment Strategies and Instruments
§ 4.01 General
§ 4.02 Investment Strategies
[1] Investment Strategies—Equities
[2] Investment Strategies—Fixed Income
[3] Investment Strategies—Stable Value
[4] Investment Strategies—Mortgages and Mortgage-Backed Securities
[5] Investment Strategies—Alternatives
[6] Investment Strategies—Real Estate
[7] Investment Strategies—Multi-Asset
[8] Investment Strategies—Short-Term Investment Funds (STIFs)
§ 4.03 Investments in Other Investment Vehicles—Generally
[1] Investments in Other Investment Vehicles—Other Collective Trust Funds
[2] Investments in Other Investment Vehicles—Target Date Funds
[3] Investments in Other Investment Vehicles—Mutual Funds
[4] Investmentsin Other Investment Vehicles—Exchange-Traded Funds
[5] Investmentsin Other Investment Vehicles—Private Funds and Structured Vehicles
§ 4.04 Investment Instruments and Practices—Generally
[1] Investment Instruments and Practices—Derivatives
[2] Purchases of Rule 144A Securities and Status as Qualified Institutional Buyer
[3] Securities Lending
CHAPTER 5
Sales and Related Activities
§ 5.01 Sales and Distribution Process
[1] Internal Sales Force
[2] Financial Advisors and Broker-Dealers
[3] RFPs and Consultants
[4] Marketing and Advertising
§ 5.02 Automatic Enrollment and Qualified Default Investment Alternatives (QDIAs)
§ 5.03 Record keeping Platforms
[1] Revenue Sharing
§ 5.04 Omnibus Accounts
CHAPTER 6
Investment and Withdrawal Process
§ 6.01 Investment and Withdrawal Process
§ 6.02 National Securities Clearing Corporation (NSCC)
§ 6.03 Direct Investment vs. Unitization
§ 6.04 Valuation
§ 6.05 Large Investments and Large Withdrawals
[1] Large Investments in Collective Trust Funds
[2] Large Withdrawals from Collective Trust Funds
§ 6.06 In-Kind Transactions
§ 6.07 Transitions
§ 6.08 Late Trading and Market Timing
CHAPTER 7
Bank Regulation of
Collective and Common Trust Funds
§ 7.01 Bank Regulation
§ 7.02 Requirements of OCC Regulation 12 C.F.R. § 9.18
[1] Written Plan
[2] Exclusive Management
[3] Valuation,Investments, and Withdrawals
[4] Segregation of Investments
[5] Annual Audit and Financial Report
[6] Advertising Restrictions
[7] Self-Dealing and Conflicts of Interest
[8] Management Fees
[9] Expenses
[10] Standard of Care and Good Faith Mistakes
[11] Key Differences Between Common and Collective Trust Fund Regulation
§ 7.03 Account Reviews: OCC Regulation 12 C.F.R. § 9.6
§ 7.04 Sections23A and 23B
[1] Section 23A
[2] Section 23B
§ 7.05 Interagency Policy on Banks/Thrifts Providing Financial Support to Advised Funds
§ 7.06 TheVolcker Rule
§ 7.07 Regulatory Examinations
CHAPTER 8
Federal Securities and Commodities Laws
§ 8.01 Securities Act of 1933 and Exemptions
[1] Keogh Plans:Rule 180
[2] Defined Contribution Plans
§ 8.02 Investment Company Act of 1940 and Exceptions
§ 8.03 Banks,Insurance Companies, Savings and Loans, and Other Financial Institutions:Section 3(c)(3)
[1] Common Trust Funds
[2] Maintained by a Bank
[3] Individual Retirement Accounts (IRAs)
[4] Employee Benefit Plan Assets
§ 8.04 Pension and Profit-Sharing Plans: Section 3(c)(11)
[1] Single Trusts
[2] Collective Trust Funds
[3] Section 457Plans
[4] Individual Retirement Accounts (IRAs)
§ 8.05 Private Funds: Section 3(c)(1) and Section 3(c)(7)
§ 8.06 Securities Exchange Act of 1934 and Exemptions
[1] Exemption from Broker-Dealer Registration: Section 3(a)(12)
[2] FINRA Regulation
[3] Exemption from Security Registration: Section 12(g)(2)(H) and Rule 12h-1
§ 8.07 Commodity Law Issues
[1] Regulatory Notice and Disclosure Requirements
CHAPTER 9
Employee Retirement Income
Security Act of 1974
§ 9.01 General
§ 9.02 Basic Fiduciary Requirements
[1] ERISA Requirements for Fiduciaries
§ 9.03 Prohibited Transactions
[1] Party-in-Interest Definition
[2] Qualified Professional Asset Managers (QPAMs): Prohibited Transaction Class Exemption84-14
§ 9.04 ERISA Fidelity Bonding Requirements: Section 412
§9.05 Transactions Involving Collective Trust Funds
[1] Purchases and Sales of Interests in Collective Trust Funds: Section 408(b)(8)
[2] Arm’s Length Transactions with Collective Trust Funds: Prohibited Transaction Class Exemption 91-38
[3] Affiliated Sub-Adviser to Collective Trust Fund: DOL Advisory Op. 96-15A
[4] Collective Trust Fund Conversions: Prohibited Transaction Class Exemption 97-41
[5] Transactions with Broker-Dealers and Other Service Providers: Section 408(b)(2) and Rule408b-2
[6] Transactions with Broker-Dealers and Other Financial Institutions: Prohibited Transaction Class Exemptions 86-128 and 75-1
[a] Prohibited Transaction Class Exemption 86-128
[b] Prohibited Transaction Class Exemption 75-1
[7] Cross Trades
[a] Cross Trades:ERISA Section 408(b)(19)
[b] Cross Trades: Rule 408b-19
[8] Investments in Affiliated Mutual Funds: Prohibited Transaction Class Exemption 77-4
[9] Securities Lending: Prohibited Transaction Class Exemption 2006-16
§ 9.06 Proxy Voting and Socially Responsible Investing
§ 9.07 Plan Participant Information: Rule 404a-5
§ 9.08 Service Provider Disclosures: Section 408(b)(2) and Rule 408b-2
APPENDICES
Appendix A Banking Law Materials
A. Statutes and Regulations
Appendix A-1 12 C.F.R. § 9.6
Appendix A-2 12 C.F.R. § 9.18
B. OCC Letters
Appendix A-3 OCC Interpretive Letter No.722 (March 12, 1996)
Appendix A-4 OCC Interpretive Letter No.829 (April 9, 1998)
Appendix A-5 OCC Interpretive Letter No.841 (Sept. 21, 1998)
Appendix A-6 OCC Interpretive Letter No.865 (May 26, 1999)
Appendix A-7 OCC Interpretive Letter No.936 (May 22, 2002)
Appendix A-8 OCC Interpretive Letter No.1121 (June 18, 2009)
C. OCC Bulletins
Appendix A-9 OCC Bulletin 2008-10 (March27, 2008)
Appendix A-10 OCC Bulletin 2011-11 (March 29,2011)
D. Other
Appendix A-11 Interagency Policy on Banks/Thrifts Providing Support to Funds Advised by the Banking Organization or its Affiliates (Jan. 5, 2004)
Appendix A-12 Comptroller’s Handbook on Collective Investment Funds (May 2014)
Appendix B Federal Securities Law Materials
A. Statutes and Regulations
1. Securities Act of 1933 (1933 Act)
Appendix B-1 Section 3(a)(2) of the 1933 Act
Appendix B-2 Rule 132 under the 1933 Act
Appendix B-3 Rule 180 under the 1933 Act
2. Securities Exchange Act of 1934 (1934 Act)
Appendix B-4 Section 3(a)(12) of the 1934Act
Appendix B-5 Section 12(g) of the 1934 Act
Appendix B-6 Rule 3a12-6 under the 1934 Act
Appendix B-7 Rule 12h-1 under the 1934 Act
3. Investment Company Act of 1940 (1940 Act)
Appendix B-8 Section 3(c)(3) of the 1940 Act
Appendix B-9 Section 3(c)(11) of the 1940 Act
Appendix B-10 Rule 3c-4 under the 1940 Act
B. FINRA Materials
Appendix B-11 FINRA Rule 150
Appendix B-12 NASD Notice to Members 97-27 (May1997)
C. Commodity Futures Trading Commission (CFTC) Materials
Appendix B-13 CFTC Rule 4.5
Appendix C ERISA Materials
A. Statutes and Regulations
Appendix C-1 ERISA Section 404
Appendix C-2 ERISA Section 406
Appendix C-3 ERISA Section 408
Appendix C-4 DOL Reg. § 404a-5
B. Prohibited Transaction Class Exemptions
Appendix C-5 Prohibited Transaction Class Exemption 91-38
Appendix C-6 Prohibited Transaction Class Exemption 84-14
Appendix C-7 Prohibited Transaction Class Exemption 77-4
C. DOL Advisory Opinions
Appendix C-8 DOL Advisory Op. 96-15A (Aug. 7,1996)
Appendix C-9 DOL Advisory Op. 2005-09A (May11, 2005)
D. Forms
Appendix C-10 Form 5500 and Selected Schedules
Appendix D Tax Materials
A. Statutes
Appendix D-1 Selected Portions of Internal Revenue Code Section 401(a)
Appendix D-2 Internal Revenue Code Section414(d)
Appendix D-3 Selected Portions of Internal Revenue Code Section 457
Appendix D-4 Internal Revenue Code Section501(a)
Appendix D-5 Internal Revenue Code Section584
B. Other
Appendix D-6 IRS Revenue Ruling 81-100
Appendix D-7 IRS Revenue Ruling 2011-1
Appendix D-8 Form 5316
Index