Final Class Exemption on Plan Lending of Securities Assets

November 1, 2006 – The Department of Labor’s Employee Benefits Security Administration (EBSA) has published a final prohibited transaction class exemption (PTE 2006-16) regarding the lending of plan securities assets. Its effect is to expand the range of potential borrowers. PTE 2006-16 consolidates and replaces PTE 81-6 and PTE 82-63.

Under this expanded exemption, retirement plans may now enter into securities lending transactions with broker-dealers and banks in the United Kingdom, Canada, and certain other foreign broker-dealers and banks. In addition, PTE 2006-16 expands the types of collateral that may be used by a plan to secure such loans to eligible borrowers.

The EBSA news release and PTE 2006-16 may be accessed as follows.