Hedge funds that accept investments from pension plans need to be cognizant of the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and its “plan asset” regulations.  Specifically, if a benefit plan investor owns more than 25 percent of any class of a fund’s equity securities, the fund could be deemed a “plan asset fund” subject to ERISA, including its prohibition against transactions with “parties in interest.”  As a result, many managers of plan asset funds rely on an exemption from ERISA’s prohibited transaction rules for “qualified professional asset managers” (QPAM).  A recent panel reviewed the requirements of the QPAM exemption and the related exemption for “in-house asset managers” (INHAM), emphasizing the requirement that INHAMs and certain QPAMs conduct an annual audit of their compliance with the exemptions.  This article summarizes the key take-aways from that discussion.  See “How Can Hedge Fund Managers Accept ERISA Money Above the 25 Percent Threshold While Avoiding ERISA’s More Onerous Prohibited Transaction Provisions? (Part Three of Three),” Hedge Fund Law Report, Vol. 3, No. 24 (Jun. 18, 2010).