* A bundled services arrangement is a comprehensive package of administrative, custodial and investment
services offered by affiliated mutual funds entities or unaffiliated entities, such as a mutual fund company and an
unaffiliated bank, to the defined contribution plan market.
May 28, 1997
TO: BOARD OF GOVERNORS No. 35-97
RE: DEPARTMENT OF LABOR LETTERS REGARDING BUNDLED SERVICES
______________________________________________________________________________
As you may know, the Institute has been seeking from the Department of Labor
confirmation that the bundled services arrangements* used extensively by mutual funds and
their affiliates in the defined contribution plan market do not violate ERISA’s prohibited
transaction provisions. In this regard, the Institute, the American Bankers Association and the
ABA Securities Association jointly requested an advisory opinion from the Department last
October. A second submission in support of the joint request was made in February.
We are pleased to report that the Department has released the attached two advisory
opinions that favorably address the ERISA issues under review by the Department in
connection with bundled services arrangements. Although the fact patterns set forth in these
letters are not identical to the typical mutual fund bundled services arrangement, the
Department has informally stated that the favorable conclusions in these letters can be applied
to the typical mutual fund arrangement.
We intend to seek formal confirmation of this position and will keep you informed of
further developments.
Catherine L. Heron
Vice President and Senior Counsel
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