Proposed Exemption for Goldman Sachs from ERISA Prohibited Transaction Rules Following Malaysia FCPA Conviction
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The U.S. Department of Labor is considering a proposed exemption that would allow Goldman Sachs-affiliated asset managers to continue relying on Prohibited Transaction Exemption 84-14 (PTE 84-14) despite the criminal conviction of a Goldman Sachs subsidiary related to the 1Malaysia Development Berhad (1MDB) corruption scandal, known as the GS Malaysia FCPA Conviction. PTE 84-14, also known as the 'QPAM Exemption,' allows qualified professional asset managers (QPAMs) to engage in certain transactions involving ERISA-covered pension plans and IRAs that would otherwise be prohibited. However, a criminal conviction for certain offenses — including violations of the Foreign Corrupt Practices Act (FCPA) — automatically disqualifies a firm and its affiliates from using this exemption. The proposed exemption, if granted, would restore Goldman Sachs-related QPAMs' ability to manage pension and retirement assets under PTE 84-14, subject to specific conditions designed to protect plan participants and beneficiaries. These conditions typically include enhanced compliance programs, independent audits, and ongoing disclosure obligations. This notice opens a public comment period allowing stakeholders — including pension funds, plan sponsors, and beneficiaries — to weigh in on whether the exemption should be granted and under what conditions.
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Key Changes
- Goldman Sachs-affiliated asset managers would regain eligibility to use PTE 84-14 (QPAM Exemption) despite the GS Malaysia FCPA criminal conviction
- Exemption conditioned on specific compliance requirements, likely including enhanced internal controls and independent audits
- Affected Goldman Sachs entities would need to meet ongoing disclosure obligations to plan sponsors and fiduciaries
+ 3 more changes with Pro
Obligations
What this law requires
Goldman Sachs-affiliated asset managers must implement and maintain enhanced compliance programs as a condition of relying on PTE 84-14
Goldman Sachs-affiliated asset managers must submit to independent audits to verify compliance with exemption conditions
Goldman Sachs-affiliated asset managers must make ongoing disclosures regarding their use of PTE 84-14 and compliance status
Pension funds and plan sponsors must consider whether to permit Goldman Sachs-affiliated asset managers to continue managing ERISA-covered pension plans and IRAs under PTE 84-14, and may submit comments during the public comment period
The U.S. Department of Labor must evaluate public comments from stakeholders before deciding whether to grant the proposed exemption