Relationship With The Federal Financial And Other Regulatory Agencies

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1. Purpose. The purpose of establishing relationships with the federal financial and other regulatory agencies is to facilitate EBSA exchange of information and facilities with these agencies. Such exchanges assist in developing and providing more efficient enforcement activities and strategies in investigating employee benefit plans, financial institutions, and other entities providing services to employee benefit plans.

2. Background. Section 3004(b) of ERISA provides that the Secretary may utilize the facilities or services of any department, agency, or establishment of the United States, with the lawful consent of such department, agency, or establishment to obtain information and facilities, to the extent permitted by law, as the Secretary may require in the performance of his functions under ERISA.

3. Federal Financial Institution Regulatory Agencies. In February 2006, an interagency agreement was signed between DOL and the federal financial institution regulatory agencies⁽¹⁾, i.e., the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and Office of Thrift Supervision (OTC), whereby those agencies agreed to provide written notification to DOL of possible violations of ERISA of a significant nature which are discovered in the course of their supervision of the fiduciary activities of institutions subject to their respective jurisdictions (Figure 1). The functions of each of the agencies are described in Figure 2.

a. Scope. The federal financial institution regulatory agencies will provide written notification to OE of possible violations of ERISA of a significant nature, which are discovered in the course of their supervision of fiduciary activities of institutions subject to their respective jurisdictions. NCUA's responsibility shall be limited to possible violations disclosed in the examination of federal credit unions.

b. Definition of Significant Violations. In situations where the financial institution is neither a plan administrator nor a plan sponsor as defined in ERISA section 3(16), a violation will be considered significant when:

1) The violation either individually or in combination with other questionable transactions constitutes a potential loss of $100,000 or more and the violation is related to section 404 of ERISA.

2) The potential violation involves the breach of co-fiduciary responsibilities under section 405 of ERISA and the transaction amounts, individually or in combination with other questionable transactions, constitute $100,000 or more.

3) The potential violation relates to sections 406 and 407(a) except where the threat of loss to plan participants is de minimis.

4) The potential violation relates to ERISA section 411 (prohibition against certain persons holding certain positions with employee benefit plans).

5) The potential violation relates to section 412 of ERISA (relating to bonding requirements) but only as applicable to the financial institution itself.

c. Definition of Significant Violations where the Financial Institution is the Plan Administrator or Plan Sponsor. In cases where a financial institution also serves as plan administrator or plan sponsor, in addition to all of the situations listed in Paragraph 4 above, the federal financial institution regulatory agencies will also provide written notification to EBSA of any potential violations of part 1 of Title I of ERISA relating to reporting and disclosure.

d. Contents of Written Notice. Any written notice to EBSA by a federal financial institution regulatory agency shall contain the following information:

1) The name of the financial institution.

2) The name of the plan.

3) A brief description of the nature of the possible violation and any corrective action with regard to that violation requested by the federal financial institution regulatory agency.

4) Any action initiated by the federal financial institution regulatory agency with regard to that violation. The written notification will, in all cases, be directed to the Director of Enforcement, EBSA.

e. Confidentiality. All information received from the federal financial institution regulatory agencies pursuant to this agreement shall be clearly identified as such by OE and, to the extent permissible by law, will be held in strict confidence and only used for investigative purposes. No other use of such information shall be made without the express written authorization of the agency which originally supplied the information. All requests for disclosure of information received pursuant to this agreement shall be immediately referred to OE/DFO, which in appropriate cases will seek permission of the agency which provided the information prior to disclosure.

f. Regional Requests for Information. Regional requests for information from a federal financial institution regulatory agency will be made in writing to the Director of Enforcement. OE will be responsible for contacting the appropriate agency and obtaining permission for the region to review the agency's file.

g. Disposition of Referrals. If a case is opened, pursuant to a referral from a federal financial institution, the RO should inform DFO of the case opening and of the final disposition of that case. When the RO already has a case open at the time of the referral, DFO should be apprised of the case and its predication.

4. Securities and Exchange Commission. The Securities and Exchange Commission (SEC) has established procedures for granting access, on a limited basis, to the SEC's non-public files.

a. RO requests for non-public information from the SEC national office will be made in writing to the Director of Enforcement. OE will be responsible for contacting the SEC and obtaining permission for the RO to review the agency's file.

b. Requests for non-public information from the SEC Regional Offices should be made in writing directly to the appropriate office. Public information may be obtained directly from the appropriate SEC office.

5. Pension Benefit Guaranty Corporation. RO investigators, with the approval of the Regional Director, may contact Pension Benefit Guaranty Corporation (PBGC) representatives directly to discuss PBGC referrals. Regional requests for PBGC non-public documents must be submitted by RO memorandum to OE for review and processing to PBGC. Any formal referrals to the PBGC must be done through DFO.

6. State Agencies. On May 14, 1990, the Secretary wrote to each State Insurance Commissioner underscoring the Department's commitment to strengthen efforts to ensure maximum cooperation and coordination of enforcement with the States.

a. Scope. Both federal and state laws regulate multiple employer welfare arrangements (MEWAs). The 1983 amendments to ERISA specifically granted authority to the states to regulate MEWAs even though a particular arrangement may be an ERISA covered plan.

b. Regional Coordination. The Region will pursue cooperative arrangements with appropriate agencies pursuant to which the Regions will share and discuss information relating to open and closed MEWA cases. The Region may also make documents, including documents obtained by voluntary production or civil subpoena, available to the state agency involved. Refer to Chapter 20 for further guidance in the release of investigative material.

(Figure 1)

Interagency Agreement

Procedures for Cooperation Between the Federal Financial Institution Regulatory Agencies and the Department of Labor in the Enforcement of the Employee Retirement Income Security Act of 1974.

The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, the Office of the Comptroller of the Currency, and Office of Thrift Supervision (the federal financial institution regulatory agencies) as part of their supervision of the institutions regulated by them, conduct examinations and perform other functions which occasionally disclose violations of the Employee Retirement Income Security Act of 1974 (ERISA). The Department of Labor (DOL) is charged with the administration, interpretation, and enforcement of standards of conduct and responsibility of fiduciaries of employee benefit plans under ERISA.

Section 3004(b) of ERISA provides that the Secretary of Labor may utilize the facilities or services of any department, agency, or establishment of the United States, with the lawful consent of such department, agency, or establishment; and each department, agency or establishment of the United States is authorized and directed to cooperate with the Secretary of Labor and, to the extent permitted by law, to provide such information and facilities as the Secretary may request for his assistance in the performance of his functions under ERISA. This agreement is executed pursuant to that authority.

1. To the maximum extent consistent with law and dependent upon the availability of resources, the federal financial institution regulatory agencies shall provide written notification to the DOL of possible violations of ERISA of a significant nature, which are discovered in the course of their supervision of institutions subject to their respective jurisdiction.

2. A possible violation shall be considered significant when, in the view of the appropriate federal financial institution regulatory agency, it falls within the following circumstances:

a. Where the financial institution does not serve as plan administrator or plan sponsor, as those terms are defined in ERISA Section 3(16), possible violations of:

(1) Title I, Part 4, Section 404, relating to fiduciary duties (including transactions directed by named fiduciaries or qualified investment managers), except where the transaction amounts, individually or in combination with other questionable transactions, constitute less than $100,000;

(2) Title I, part 4, Section 405, relating to liability for breach of co-fiduciary duties (including transactions directed by named fiduciaries or qualified investment managers), except where the transaction amounts, individually or in combination with other questionable transactions, constitute less than $100,000;

(3) Title I, Part 4, Sections 406 and 407(a), relating to prohibited transactions, except where the threat of loss to the plan participants is de minimis;

(4) Title I, Part 4, Section 411, relating to prohibition against certain persons holding certain positions;

(5) Title I, Part 4, Section 412, relating to the bonding requirements as applicable to the financial institution itself.

b. Where the financial institution, in respect to a plan, also serves as plan administrator or plan sponsor, the agencies shall provide written notification of possible violations of the ERISA sections enumerated in a. above and, in addition, shall provide written notification of possible violations of Title I, Part 1 of ERISA relating to reporting and disclosure.

3. The written notification to the DOL shall include the following:

a. The name of the financial institution.

b. The name of the plan.

c. A brief description of the nature of the possible violation, and any corrective action requested by the federal financial institution regulatory agency and/or initiated by the federal financial institution regulatory agency.

4. The DOL agrees that any information received from the federal financial institution regulatory agencies pursuant to this agreement shall, to the extent permissible by law, be held in strict confidence and may be used for investigative purposes only; and that no other use of such information shall be made without the express written authorization of the agency that supplied such information, except as required by law..

5. The written notification shall be sent to the Director of Enforcement, Employee Benefits Security Administration, U.S. Department of Labor, Washington, D.C. 20210.

(Figure 2)

The Federal Financial Institutions Regulator Agencies And Their Supervised Institutions
The Board Of Governors Of The Federal Reserve System (FRB)

• examines, supervises, and regulates state member banks, bank holding companies, and Edge and agreement corporations; approves or denies applications for mergers, acquisitions and change in control by state member banks and bank holding companies; and

• approves or denies applications for foreign operations of member banks and has residual supervisory responsibility for U.S. offices of foreign banks.

Implementation of policy decisions is carried out by the FRB and by the twelve Federal Reserve Banks, each of which has operational responsibility within a specific geographical area. Each Reserve Bank has a president and other officers and employs a staff of bank examiners who examine state member banks and inspect bank holding companies located within the Reserve Bank's district. All national banks must be members of the Federal Reserve System. State-chartered banks may apply and be accepted for membership.

The Federal Deposit Insurance Corporation (FDIC)

• provides deposit insurance for commercial banks, certain federal savings banks, and state-chartered savings banks;

• supervises FDIC-insured, state-chartered commercial and savings banks that are not members of the Federal Reserve System; and

• serves as receiver or liquidator of all closed national banks and as receiver of closed insured state-chartered banks.

The bank supervision functions of the FDIC are shared with state and other federal authorities. All national banks and state banks that are members of the Federal Reserve System must be insured by the FDIC. Nonmember state banks may apply for FDIC deposit insurance. The FDIC examines and supervises those banks under its purview, approves or denies applications for structural or corporate changes, and rules on applications for insurance.

The FDIC is organized geographically into nine regions, each of which is headed by a regional director.

The Office Of Thrift Supervision (OTS)

The OTS, pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), succeeded the FHLBB. The OTS provides for the examination, safe and sound operation, and regulation of Federal savings associations, including Federal savings banks; issues charters; enforces the regulatory authority of the FIRRE Act, section 8 of the FDIC Act, and the regulations prescribed thereunder; and makes such examinations of savings association affiliates as are necessary to disclose fully the relationships between such savings associations and affiliates and the effect of such relations upon the saving association.

The National Credit Union Administration (NCUA)

The purpose of the NCUA is to charter, examine, supervise, and insure the nation's nearly 10,000 federal credit unions. In addition, NCUA also provides insurance for member accounts at 4,980 state-chartered credit unions.

The major responsibilities of the NCUA are:

• chartering, supervising, and examining federal credit unions;

• administering the National Credit Union Share Insurance Fund (NCUSIF); and

• managing the Central Liquidity Facility.

The NCUA also has statutory authority to examine and supervise NCUSIF-insured, state-chartered credit unions, which it does in coordination with state agencies.

The Office Of The Comptroller Of The Currency (OCC)

The OCC is the regulator and supervisor of the national banking system. The OCC is the only federal banking agency with authority to charter commercial banks. The OCC has authority to approve or deny applications for new bank charters, the establishment of branches, and mergers of national banks.

The principal supervisory tools of the OCC are on-site supervisory activities and detailed off-site analysis of national bank operations. As appropriate, the OCC issues rules and regulations concerning bank lending, bank investment, and other aspects of bank operations.

The OCC is organized geographically into six districts, each headed by a Deputy Comptroller.

Footnotes

1. This replaces the prior agreement, which was signed in December 1980.