The American Bankers Association today reiterated concerns about proposed amendments to Prohibited Transaction Exemption 84-14, known as the Qualified Professional Asset Manager exemption, in a letter to the U.S. Department of Labor. The agency held a public hearing on the proposal in November, during which the association raised several issues, including that the department failed to seek advance input from affected parties regarding the changes as required by official rulemaking procedures. Friday’s letter was a follow-up to that testimony, responding to an agency request for supplementary information on the average number of client plans of qualified professional asset managers, and the proposal’s requirement that QPAMs notify the department of their reliance on the QPAM exemption.
In its letter, ABA said the Labor Department significantly miscalculated the number of client plans per QPAM, which led to “a critical error of multiple magnitudes in the department’s calculation of the estimated time, resources and costs for QPAMs to comply with the revised exemption.” That error, along with the failure to gather advance input from stakeholders, “provide compelling reasons to withdraw the proposal,” the association said.
In terms of the proposed notification requirement, ABA expressed concern that it would set a precedent that would be hard to break. “If a registration or notification to the department is required for the QPAM exemption, what prevents the department from establishing a similar requirement for other PTEs, such as PTE 2020-02?” the association said. ABA also questioned whether the notification requirement could inadvertently convey information that the department could misinterpret as incomplete and/or inaccurate. “This further poses a liability and litigation risk for asset managers if the information were posted—as the proposal requires—on the publicly available portion of the department’s website.”
