ERISA Considerations. The U.S. Employee Retirement Income Security Act of 1974 (“ERISA”), imposes certain requirements on employee benefit plans (as defined in section 3(3) of ERISA) subject to Title I of ERISA, and certain entities such as collective investment funds and separately managed accounts whose underlying assets include or are deemed to include the assets of those plans (collectively, “ERISA Plans”), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans, for example, are subject to ERISA’s general fiduciary duties, including the duties of investment prudence and diversification. In addition, ERISA requires the fiduciary of an ERISA Plan to maintain the indicia of ownership of the ERISA Plan’s assets within the jurisdiction of the U.S. district courts. The prudence of a particular investment must be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plan’s particular circumstances and all of the relevant facts and circumstances of the investment. The responsible fiduciary of each ERISA Plan must determine whether to invest in the Fund independently and without relying on any information provided by the Fund, the Manager, or any affiliates thereof as advice or a recommendation in connection with such determination. Section 406 of ERISA and section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan and of other “plans” that are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, “Plans”), and certain persons (referred to as “parties in interest” or “disqualified persons”) having certain relationships to Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to non-deductible excise taxes and other penalties and liabilities under ERISA and Section 4975 of the Code, and the transaction might have to be rescinded. Each original or subsequent purchaser or transferee of a Unit that is or may become a Plan is responsible for determining the extent, if any, to which a Unit will constitute or otherwise result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code, and otherwise for determining compliance with ERISA and Section 4975 of the Code. U.S. federal, state or local governmental plans, non-U.S. plans, and non-electing U.S. church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to local, state or other federal laws that are substantially similar to (or wholly different than) the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing a Unit. The U.S. Department of Labor has promulgated a regulation, 29 C.F.R. Section 2510.3-101 (as modified by Section 3(42) of ERISA, the “Plan Assets Regulation”), describing what constitutes the assets of a Plan with respect to the Plan’s investment in an entity for purposes of certain provisions of ERISA, including the fiduciary responsibility provisions of Title I of ERISA, and Section 4975 of the Code. Under the Plan Assets Regulation, if a Plan invests in an “equity interest” of an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act, the Plan’s assets include both the equity interest and an undivided interest in each of the entity’s underlying assets, unless it is established that the entity is an “operating company” or that equity participation in the entity by “benefit plan investors” (as defined below) is not “significant” (as described below). Each Unit is an “equity interest” in the Fund for purposes of the Plan Assets Regulation, and the Interests will not constitute “publicly offered securities” for purposes of the Plan Assets Regulation. In addition, the Fund will not be registered under the Investment Company Act. Under the Plan Assets Regulation, and assuming no other exception applies, an entity’s assets are deemed to include “plan assets” subject to ERISA or section 4975 of the Code on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25% or more of the value of any class of equity interests in the entity is held by “benefit plan investors” (the “25% Limit”). For purposes of this determination, the value of equity interests held by a person (other than a benefit plan investor) that has discretionary authority or control with respect to the assets of the entity or that provides investment advice for a fee with respect to those assets (or any affiliate of such a person) is disregarded. The term “benefit plan investor” is defined in the Plan Assets Regulation as (a) any employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (b) any plan that is subject to section 4975 of the Code, and (c) any entity whose underlying assets include plan assets by reason of a plan’s investment in the entity (to the extent of such plan’s investment in the entity). Thus, while the assets of the Fund are not considered to be “plan assets” for purposes of ERISA so long as the 25% Limit is not exceeded, no assurance can be given that the 25% Limit will not be exceeded at all times. The Fund intends to rely on this aspect of the Plan Assets Regulation. To qualify for the 25% Limit exception, the Manager may limit the investment in the Fund by benefit plan investors, which in certain circumstances could have the result that (i) transfers of Units would be limited, and (ii) the Units of some investors would be subject to mandatory redemption. If the Fund’s assets are deemed to constitute “plan assets” under ERISA or section 4975 of the Code, certain of the transactions in which the Fund might normally engage could constitute a non-exempt “prohibited transaction” under ERISA or section 4975 of the Code. In those circumstances, the Manager, in its sole discretion, may void or undo any such prohibited transaction, and may require each Investor that is a “benefit plan investor” under the Plan Assets Regulation to withdraw from the Fund upon terms that the Manager considers appropriate. In addition, if the Fund’s assets are deemed to include “plan assets,” any person exercising authority or control over the management or disposition of the Fund’s assets would be deemed to be a fiduciary under ERISA with respect to “benefit plan investors” under the Plan Assets Regulation invested in the Fund and subject to the fiduciary duties described in Title I of ERISA, including, without limitation, the requirements of section 404(b) of ERISA (requiring that the indicia of ownership of plan assets generally be held within the jurisdiction of the U.S. district courts), which could severely restrict the investment strategy of the Fund. Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA or section 4975 of the Code may result in the imposition of liability for damages, civil and, in certain instances, criminal penalties and may subject the fiduciary to equitable remedies. In addition, if an investment in the Fund constitutes a non-exempt prohibited transaction under the Code, any “disqualified person” within the meaning of section 4975 of the Code involved in the investment (excluding fiduciaries acting only in their fiduciary capacities) may be subject to the imposition of punitive excise taxes with respect to the amount involved. A fiduciary of an ERISA Plan or other Plan that proposes to cause such entity to purchase a Unit should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and section 4975 of the Code to such an investment, and to independently confirm that the investment will not constitute or result in a non-exempt prohibited transaction or any other violation of ERISA. The sale of a Unit to a Plan is in no respect a representation by the Fund, the Manager or any other person associated with the offering of Units that the investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that the investment is appropriate for Plans generally or any particular Plan. None of the Fund, the Manager or its affiliates is undertaking to provide impartial investment advice or to give advice in a fiduciary capacity in connection with the offering or purchase of Units, and no information provided by the foregoing in connection with that offering or purchase should be viewed or relied upon as advice or a recommendation to invest in the Fund. The Manager has financial interests associated with the purchase of Units including the fees and other allocations and distributions they may receive from the Fund as a result of the purchase of Units by a Plan.
Appears in 2 contracts
Sources: Subscription Agreement, Subscription Agreement
ERISA Considerations. The U.S. Employee Retirement Income Security Act of 1974 (“ERISA”), imposes certain requirements on employee benefit plans (as defined in section 3(3) of ERISA) subject to Title I of ERISA, and certain entities such as collective investment funds and separately managed accounts whose underlying assets include or are deemed to include the assets of those plans (collectively, “ERISA Plans”), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans, for example, are subject to ERISA’s general fiduciary duties, including the duties of investment prudence and diversification. In addition, ERISA requires the fiduciary of an ERISA Plan to maintain the indicia of ownership of the ERISA Plan’s assets within the jurisdiction of the U.S. district courts. The prudence of a particular investment must be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plan’s particular circumstances and all of the relevant facts and circumstances of the investment. The responsible fiduciary of each ERISA Plan must determine whether to invest in the Fund independently and without relying on any information provided by the Fund, the Manager, or any affiliates thereof as advice or a recommendation in connection with such determination. Section 406 of ERISA and section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan and of other “plans” that are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, “Plans”), and certain persons (referred to as “parties in interest” or “disqualified persons”) having certain relationships to Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a non-non- exempt prohibited transaction may be subject to non-deductible excise taxes and other penalties and liabilities under ERISA and Section 4975 of the Code, and the transaction might have to be rescinded. Each original or subsequent purchaser or transferee of a Unit that is or may become a Plan is responsible for determining the extent, if any, to which a Unit will constitute or otherwise result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code, and otherwise for determining compliance with ERISA and Section 4975 of the Code. U.S. federal, state or local governmental plans, non-U.S. plans, and non-electing U.S. church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to local, state or other federal laws that are substantially similar to (or wholly different than) the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing a Unit. The U.S. Department of Labor has promulgated a regulation, 29 C.F.R. Section 2510.3-101 (as modified by Section 3(42) of ERISA, the “Plan Assets Regulation”), describing what constitutes the assets of a Plan with respect to the Plan’s investment in an entity for purposes of certain provisions of ERISA, including the fiduciary responsibility provisions of Title I of ERISA, and Section 4975 of the Code. Under the Plan Assets Regulation, if a Plan invests in an “equity interest” of an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act, the Plan’s assets include both the equity interest and an undivided interest in each of the entity’s underlying assets, unless it is established that the entity is an “operating company” or that equity participation in the entity by “benefit plan investors” (as defined below) is not “significant” (as described below). Each Unit is an “equity interest” in the Fund for purposes of the Plan Assets Regulation, and the Interests will not constitute “publicly offered securities” for purposes of the Plan Assets Regulation. In addition, the Fund will not be registered under the Investment Company Act. Under the Plan Assets Regulation, and assuming no other exception applies, an entity’s assets are deemed to include “plan assets” subject to ERISA or section 4975 of the Code on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25% or more of the value of any class of equity interests in the entity is held by “benefit plan investors” (the “25% Limit”). For purposes of this determination, the value of equity interests held by a person (other than a benefit plan investor) that has discretionary authority or control with respect to the assets of the entity or that provides investment advice for a fee with respect to those assets (or any affiliate of such a person) is disregarded. The term “benefit plan investor” is defined in the Plan Assets Regulation as (a) any employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (b) any plan that is subject to section 4975 of the Code, and (c) any entity whose underlying assets include plan assets by reason of a plan’s investment in the entity (to the extent of such plan’s investment in the entity). Thus, while the assets of the Fund are not considered to be “plan assets” for purposes of ERISA so long as the 25% Limit is not exceeded, no assurance can be given that the 25% Limit will not be exceeded at all times. The Fund intends to rely on this aspect of the Plan Assets Regulation. To qualify for the 25% Limit exception, the Manager may limit the investment in the Fund by benefit plan investors, which in certain circumstances could have the result that (i) transfers of Units would be limited, and (ii) the Units of some investors would be subject to mandatory redemption. If the Fund’s assets are deemed to constitute “plan assets” under ERISA or section 4975 of the Code, certain of the transactions in which the Fund might normally engage could constitute a non-exempt “prohibited transaction” under ERISA or section 4975 of the Code. In those circumstances, the Manager, in its sole discretion, may void or undo any such prohibited transaction, and may require each Investor that is a “benefit plan investor” under the Plan Assets Regulation to withdraw from the Fund upon terms that the Manager considers appropriate. In addition, if the Fund’s assets are deemed to include “plan assets,” any person exercising authority or control over the management or disposition of the Fund’s assets would be deemed to be a fiduciary under ERISA with respect to “benefit plan investors” under the Plan Assets Regulation invested in the Fund and subject to the fiduciary duties described in Title I of ERISA, including, without limitation, the requirements of section 404(b) of ERISA (requiring that the indicia of ownership of plan assets generally be held within the jurisdiction of the U.S. district courts), which could severely restrict the investment strategy of the Fund. Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA or section 4975 of the Code may result in the imposition of liability for damages, civil and, in certain instances, criminal penalties and may subject the fiduciary to equitable remedies. In addition, if an investment in the Fund constitutes a non-exempt prohibited transaction under the Code, any “disqualified person” within the meaning of section 4975 of the Code involved in the investment (excluding fiduciaries acting only in their fiduciary capacities) may be subject to the imposition of punitive excise taxes with respect to the amount involved. A fiduciary of an ERISA Plan or other Plan that proposes to cause such entity to purchase a Unit should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and section 4975 of the Code to such an investment, and to independently confirm that the investment will not constitute or result in a non-exempt prohibited transaction or any other violation of ERISA. The sale of a Unit to a Plan is in no respect a representation by the Fund, the Manager or any other person associated with the offering of Units that the investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that the investment is appropriate for Plans generally or any particular Plan. None of the Fund, the Manager or its affiliates is undertaking to provide impartial investment advice or to give advice in a fiduciary capacity in connection with the offering or purchase of Units, and no information provided by the foregoing in connection with that offering or purchase should be viewed or relied upon as advice or a recommendation to invest in the Fund. The Manager has financial interests associated with the purchase of Units including the fees and other allocations and distributions they may receive from the Fund as a result of the purchase of Units by a Plan. The following is a general summary of certain material U.S. federal income tax consequences to a U.S. Investor (defined below) relating to the purchase, ownership and disposition of units in the Fund (“Units”). This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the regulations promulgated thereunder (“Treasury Regulations”), court decisions and published rulings of the U.S. Internal Revenue Service (the “IRS”) currently in effect and does not take into account the possible effect of future legislative or administrative changes or court decisions. The Fund does not intend to request any rulings from the IRS on the tax consequences described below, or on any other issues. The IRS or a court might reach a contrary conclusion with respect to the issues addressed herein if the matter were contested. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Potential investors are urged to consult their own tax advisors with respect to the tax consequences of an investment in the Fund. This summary does not purport to address all material tax consequences of the purchase, ownership and disposition of Units and assumes that all investors hold their Units as a capital asset within the meaning of Section 1221 of the Code. Except as otherwise provided below, this summary does not take into account the specific circumstances of any particular investors who may be subject to special rules under the Code (such as banks, insurance companies, broker dealers, regulated investment companies, traders in securities that elect to ▇▇▇▇ to market, investors liable for alternative minimum tax, investors that hold Units as part of a straddle, hedge or conversion transaction or as part of a “synthetic security” or other integrated financial transaction, investors whose functional currency is not the U.S. dollar, and investors that hold Units through a partnership, limited liability company or other entity treated as a pass-through entity for U.S. federal income tax purposes). This summary does not address the treatment of investors under the laws of any U.S. state, local or non-U.S. taxing jurisdiction. THE INCOME TAX LAWS APPLICABLE TO THE FUND AND TO INVESTORS THEREIN ARE EXTREMELY COMPLEX, AND THE FOLLOWING SUMMARY IS NOT EXHAUSTIVE AND DOES NOT CONSTITUTE TAX ADVICE. A PERSON CONSIDERING AN INVESTMENT IN THE FUND SHOULD CONSULT ITS TAX ADVISOR IN ORDER TO FULLY UNDERSTAND THE FEDERAL, STATE, LOCAL AND NON-U.S. INCOME TAX CONSEQUENCES OF AN INVESTMENT WITH RESPECT TO THE INVESTOR’S PARTICULAR SITUATION. For purposes of this discussion (i) an “Investor” is any beneficial owner of Units and (ii) a “U.S. Investor” is any Investor that is: (w) a citizen or resident of the United States; (x) a corporation or other entity treated as a corporation for U.S. federal income tax purposes organized under the laws of the United States or any political subdivision thereof; (y) an estate the income of which is subject to U.S. federal income tax without regard to its source; or (z) a trust, if either: (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) it has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership or other pass-through entity holds Units, the U.S. federal income tax treatment of a partner (or other owner) in that partnership (or other pass-through entity) will generally depend on the status of the partner (or other owner) and the activities of the partnership (or other pass-through entity). Accordingly, prospective Investors that are partnerships or other pass-through entities should consult their own tax advisors regarding the consequences of an investment in the Fund. Under the Code and Treasury Regulations, an entity organized under the laws of the Province of Ontario, other than a corporation or a company, is considered a “foreign eligible entity” the classification of which as a partnership or association taxable as a corporation is determined under the default entity classification rules set forth in Treasury Regulations Section 301.7701-3(b)(2) (the “Default Classification Rules”). Under the Default Classification Rules, a “foreign eligible entity” is classified as one of the following: (i) a partnership for U.S. federal income tax purposes if it has two or more members and at least one member does not have limited liability; (ii) an association taxable as a corporation for U.S. federal income tax purposes if all members have limited liability; and (iii) an entity disregarded as separate from its owner for U.S. federal income tax purposes if it has a single owner that does not have limited liability. The Fund has determined that, under the Default Classification Rules, it is likely to be classified as an association taxable as a corporation for U.S. federal income tax purposes. The Fund does not intend to file an entity classification election with the U.S. Internal Revenue Service or seek any ruling from the Internal Revenue Service with respect to its classification. The remainder of this summary assumes that the Fund will be taxed as a corporation for U.S. federal income tax purposes. Section 864(b)(2) of the Code, provides a safe harbor (the “Safe Harbor”), applicable to a non-U.S. corporation (other than a dealer in stocks or securities) that engages in the United States in trading stocks or securities (including contracts or options to buy or sell securities) for its own account pursuant to which that non-U.S. corporation will not be deemed to be engaged in a U.S. trade or business. The Safe Harbor also provides that a non-U.S. corporation (other than a dealer in commodities) that engages in the United States in trading commodities for its own account is not deemed to be engaged in a U.S. trade or business if “the commodities are of a kind customarily dealt in on an organized commodity exchange and if the transaction is of a kind customarily consummated at such place.” Pursuant to proposed regulations, a non-U.S. taxpayer (other than a dealer in stocks, securities or derivatives) that effects transactions in the United States in derivatives (including (a) derivatives based upon stocks, securities, and certain commodities, and (b) certain notional principal contracts based upon an interest rate, equity, or certain commodities and currencies) for its own account is not deemed to be engaged in a U.S. trade or business. Although the proposed regulations are not final, the IRS has indicated in the preamble to the proposed regulations that, for periods prior to the effective date of the proposed regulations, taxpayers may take any reasonable position with respect to the application of Section 864(b)(2) of the Code to transactions in derivatives, and that any position consistent with the proposed regulations will be considered a reasonable position. The Manager intends to conduct the business of the Fund in a manner so as to generally satis
Appears in 2 contracts
Sources: Subscription Agreement, Subscription Agreement
ERISA Considerations. The U.S. Employee Retirement Income Security Act of 1974 (“ERISA”), imposes certain requirements on employee benefit plans (as defined in section 3(3) of ERISA) subject to Title I of ERISA, and certain entities such as collective investment funds and separately managed accounts whose underlying assets include or are deemed to include the assets of those plans (collectively, “ERISA Plans”), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans, for example, are subject to ERISA▇▇▇▇▇’s general fiduciary duties, including the duties of investment prudence and diversification. In addition, ERISA requires the fiduciary of an ERISA Plan to maintain the indicia of ownership of the ERISA Plan’s assets within the jurisdiction of the U.S. district courts. The prudence of a particular investment must be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plan’s particular circumstances and all of the relevant facts and circumstances of the investment. The responsible fiduciary of each ERISA Plan must determine whether to invest in the Fund independently and without relying on any information provided by the Fund, the Manager, or any affiliates thereof as advice or a recommendation in connection with such determination. Section 406 of ERISA and section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan and of other “plans” that are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, “Plans”), and certain persons (referred to as “parties in interest” or “disqualified persons”) having certain relationships to Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to non-deductible excise taxes and other penalties and liabilities under ERISA and Section 4975 of the Code, and the transaction might have to be rescinded. Each original or subsequent purchaser or transferee of a Unit that is or may become a Plan is responsible for determining the extent, if any, to which a Unit will constitute or otherwise result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code, and otherwise for determining compliance with ERISA and Section 4975 of the Code. U.S. federal, state or local governmental plans, non-U.S. plans, and non-electing U.S. church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to local, state or other federal laws that are substantially similar to (or wholly different than) the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing a Unit. The U.S. Department of Labor has promulgated a regulation, 29 C.F.R. Section 2510.3-101 (as modified by Section 3(42) of ERISA, the “Plan Assets Regulation”), describing what constitutes the assets of a Plan with respect to the Plan’s investment in an entity for purposes of certain provisions of ERISA, including the fiduciary responsibility provisions of Title I of ERISA, and Section 4975 of the Code. Under the Plan Assets Regulation, if a Plan invests in an “equity interest” of an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act, the Plan’s assets include both the equity interest and an undivided interest in each of the entity’s underlying assets, unless it is established that the entity is an “operating company” or that equity participation in the entity by “benefit plan investors” (as defined below) is not “significant” (as described below). Each Unit is an “equity interest” in the Fund for purposes of the Plan Assets Regulation, and the Interests will not constitute “publicly offered securities” for purposes of the Plan Assets Regulation. In addition, the Fund will not be registered under the Investment Company Act. Under the Plan Assets Regulation, and assuming no other exception applies, an entity’s assets are deemed to include “plan assets” subject to ERISA or section 4975 of the Code on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25% or more of the value of any class of equity interests in the entity is held by “benefit plan investors” (the “25% Limit”). For purposes of this determination, the value of equity interests held by a person (other than a benefit plan investor) that has discretionary authority or control with respect to the assets of the entity or that provides investment advice for a fee with respect to those assets (or any affiliate of such a person) is disregarded. The term “benefit plan investor” is defined in the Plan Assets Regulation as (a) any employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (b) any plan that is subject to section 4975 of the Code, and (c) any entity whose underlying assets include plan assets by reason of a plan’s investment in the entity (to the extent of such plan’s investment in the entity). Thus, while the assets of the Fund are not considered to be “plan assets” for purposes of ERISA so long as the 25% Limit is not exceeded, no assurance can be given that the 25% Limit will not be exceeded at all times. The Fund intends to rely on this aspect of the Plan Assets Regulation. To qualify for the 25% Limit exception, the Manager may limit the investment in the Fund by benefit plan investors, which in certain circumstances could have the result that (i) transfers of Units would be limited, and (ii) the Units of some investors would be subject to mandatory redemption. If the Fund’s assets are deemed to constitute “plan assets” under ERISA or section 4975 of the Code, certain of the transactions in which the Fund might normally engage could constitute a non-exempt “prohibited transaction” under ERISA or section 4975 of the Code. In those circumstances, the Manager, in its sole discretion, may void or undo any such prohibited transaction, and may require each Investor that is a “benefit plan investor” under the Plan Assets Regulation to withdraw from the Fund upon terms that the Manager considers appropriate. In addition, if the Fund’s assets are deemed to include “plan assets,” any person exercising authority or control over the management or disposition of the Fund’s assets would be deemed to be a fiduciary under ERISA with respect to “benefit plan investors” under the Plan Assets Regulation invested in the Fund and subject to the fiduciary duties described in Title I of ERISA, including, without limitation, the requirements of section 404(b) of ERISA (requiring that the indicia of ownership of plan assets generally be held within the jurisdiction of the U.S. district courts), which could severely restrict the investment strategy of the Fund. Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA or section 4975 of the Code may result in the imposition of liability for damages, civil and, in certain instances, criminal penalties and may subject the fiduciary to equitable remedies. In addition, if an investment in the Fund constitutes a non-exempt prohibited transaction under the Code, any “disqualified person” within the meaning of section 4975 of the Code involved in the investment (excluding fiduciaries acting only in their fiduciary capacities) may be subject to the imposition of punitive excise taxes with respect to the amount involved. A fiduciary of an ERISA Plan or other Plan that proposes to cause such entity to purchase a Unit should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and section 4975 of the Code to such an investment, and to independently confirm that the investment will not constitute or result in a non-exempt prohibited transaction or any other violation of ERISA. The sale of a Unit to a Plan is in no respect a representation by the Fund, the Manager or any other person associated with the offering of Units that the investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that the investment is appropriate for Plans generally or any particular Plan. None of the Fund, the Manager or its affiliates is undertaking to provide impartial investment advice or to give advice in a fiduciary capacity in connection with the offering or purchase of Units, and no information provided by the foregoing in connection with that offering or purchase should be viewed or relied upon as advice or a recommendation to invest in the Fund. The Manager has financial interests associated with the purchase of Units including the fees and other allocations and distributions they may receive from the Fund as a result of the purchase of Units by a Plan.
Appears in 1 contract
Sources: Subscription Agreement