A QPAM is a financial institution meeting specific ERISA requirements, entitling it to manage pension plan assets under a prohibited transaction exemption that provides critical operational flexibility.
At CRAGSI, we define a Qualified Professional Asset Manager (QPAM) as a financial institution — typically a registered investment adviser, bank, insurance company, or broker-dealer — that meets specific requirements under the Employee Retirement Income Security Act of 1974 (ERISA) and is therefore entitled to manage pension plan assets under the QPAM Exemption (Prohibited Transaction Class Exemption 84-14).
Under ERISA, transactions between a pension plan and a "party in interest" are generally prohibited. The QPAM Exemption provides a critical carve-out: if a plan's assets are managed by a QPAM, and certain conditions are met, the QPAM can enter into transactions that would otherwise be prohibited. This exemption is essential to the practical management of pension assets, particularly in the alternative and special situations space where counterparties are often parties in interest.
To qualify as a QPAM, a manager must meet minimum standards for assets under management, shareholder equity, and operational independence. The Department of Labor administers and enforces QPAM standards and has the authority to revoke QPAM status for violations — a significant consequence that has materialized for several major financial institutions in recent years.
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