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Department of Labor Promulgates Interim Cross-Trading Rules
02/22/2007

As part of the Pension Protection Act enacted in 2006 (PPA), Congress added to ERISA a statutory exemption for cross-trading. The Department of Labor (DOL) has traditionally taken a restrictive view of the circumstances under which an investment manager could initiate trades between its clients if one of those clients (or both) were ERISA-covered employee benefit plans. In 2002, the DOL issued a prohibited transaction class exemption that permitted cross trades, but only for certain computer-generated model strategies or index type accounts. As a result of the DOL’s position, many investment managers have adopted a policy that prohibits cross trades involving ERISA clients.


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