(a)(1) The Board, each member of the Board, and each person defined in § 1- 702(20) shall discharge responsibilities with respect to a Fund as a fiduciary with respect to the Fund. The Board may designate one or more other persons who exercise responsibilities with respect to a Fund to exercise such responsibilities as a fiduciary with respect to such Fund. The Board shall retain such fiduciary responsibility for the exercise of careful, skillful, prudent, and diligent oversight of any person so designated as would be exercised by a prudent individual acting in a like capacity and familiar with such matters under like circumstances.
(2) A fiduciary shall discharge his duties with respect to a Fund solely in the interest of the participants and beneficiaries and:
(A) For the exclusive purpose of providing benefits to participants and their beneficiaries;
(B) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent individual acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(C) By diversifying the investments of the Fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
(D) In accordance with the provisions of law, documents, and instruments governing the retirement program to the extent that such documents and instruments are consistent with the provisions of this chapter.
(b) In addition to any liability which he may have under any other provision of this subchapter, a fiduciary with respect to a Fund shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the same Fund:
(1) If he knowingly participates in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach of fiduciary responsibility;
(2) If, by his failure to comply with subsection (a)(2) of this section in the administration of his specific responsibilities which give rise to his status as a fiduciary, he has enabled such other fiduciary to commit a breach of fiduciary responsibility; or
(3) If he has knowledge of a breach of fiduciary responsibility by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.
(c) Except as provided in subsections (f), (g), and (h) of this section, a fiduciary with respect to a Fund shall not cause the Fund to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect:
(1) Sale or exchange, or leasing, of any property between the Fund and a party in interest;
(2) Lending of money or other extension of credit between the Fund and a party in interest;
(3) Furnishing of goods, services, or facilities between the Fund and a party in interest; or
(4) Transfer to, or use by or for the benefit of, a party in interest, of any assets of the Fund.
(d) Except as provided in subsection (h) of this section, a fiduciary with respect to a Fund shall not:
(1) Deal with the assets of the Fund in his own interest or for his own account;
(2) In his individual or in any other capacity act in any transaction involving the Fund on behalf of a party (or represent a party) whose interests are adverse to the interests of the Fund or the interests of its participants or beneficiaries; or
(3) Receive any consideration for his own personal account from any party dealing with such Fund in connection with a transaction involving the assets of the Fund.
(e) A transfer of real or personal property by a party in interest to a Fund shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the Fund assumes or if it is subject to a mortgage or similar lien which a party in interest placed on the property within the 10- year period ending on the date of the transfer.
(f) The prohibitions provided in subsection (c) of this section shall not apply to any of the following transactions:
(1) Contracting or making reasonable arrangements with a party in interest for office space, or legal, accounting, or other services necessary for the establishment or operation of the Fund, if no more than reasonable compensation is paid therefor;
(2) The investment of all or part of a Fund's assets in deposits which bear a reasonable interest rate in a bank or similar financial institution supervised by the United States or a state, if such bank or other institution is a fiduciary of such Fund and if such investment is expressly authorized by regulations of the Board or by a fiduciary (other than such bank or institution or affiliate thereof) who is expressly empowered by the Board to make such investment;
(3) The providing of any ancillary service by a bank or similar financial institution supervised by the United States or a state if such bank or other institution is a fiduciary of such Fund and if:
(A) Such bank or similar financial institution has adopted adequate internal safeguards which assure that the providing of such ancillary service is consistent with sound banking and financial practice, as determined by federal or state supervisory authority; and
(B) The extent to which such ancillary service is provided is subject to specific guidelines issued by such bank or similar financial institution (as determined by the Mayor after consultation with federal and state supervisory authority), and adherence to such guidelines would reasonably preclude such bank or similar financial institution from providing such ancillary service (i) in an excessive or unreasonable manner, and (ii) in a manner that would be inconsistent with the best interests of participants and beneficiaries of the retirement program. Such ancillary services shall not be provided at more than reasonable compensation;
(4) The exercise of a privilege to convert securities, to the extent provided in regulations of the Council, but only if the Fund receives no less than adequate consideration pursuant to such conversion; or
(5) Any transaction between a Fund and a common or collective trust fund or pooled investment fund maintained by a party in interest which is a bank or trust company supervised by a state or federal agency, or a pooled investment fund of an insurance company qualified to do business in a state, if:
(A) The transaction is a sale or purchase of an interest in the fund;
(B) The bank, trust company, or insurance company receives not more than reasonable compensation; and
(C) Such transaction is expressly permitted by the Board, or by a fiduciary (other than the bank, trust company, insurance company, or an affiliate thereof) who has authority to manage and control the assets of the Fund.
(g) Nothing in subsection (c) of this section shall be construed to prohibit any fiduciary from:
(1) Receiving any benefit to which he may be entitled as a participant or beneficiary in the retirement program, so long as the benefit is computed and paid on a basis which is consistent with the terms of the retirement program as applied to all other participants and beneficiaries;
(2) Receiving any reasonable compensation for services rendered, or for the reimbursement of expenses properly and actually incurred, in the performance of his duties with respect to the Fund; or
(3) Serving as a fiduciary in addition to being an officer, employee, agent, or other representative of a party in interest.
(h) The Board may from time to time avail itself to exemptive relief from all or part of the restrictions imposed by subsections (c) and (d) of this section for administrative exemptions which have been previously granted by the United States Department of Labor. Prior to utilizing exempted transactions, the Board shall hold a public hearing on the proposed exemption. Notice of the time, place, and subject matter of the public hearing shall be published in the D.C. Register at least 15 days in advance of its scheduled date in order to afford interested persons an opportunity to present their views. The proposed exemption shall be published in the D.C. Register and submitted to the Council along with a synopsis of the results of the public hearing, and written findings by the Board that the exemptions are:
(1) Administratively feasible;
(2) In the best interests of the funds and of their participants and beneficiaries; and
(3) Protective of the rights of participants and beneficiaries of these funds.
(h-1) Unless the Council disapproves the proposed exemption submitted under subsection (h) of this section by resolution within 30 days of receipt by the Council, the exemption shall be deemed approved. If a resolution of disapproval has been introduced by at least one member of the Council within the 5-day period (excluding Saturdays, Sundays, and holidays) following its receipt, the period of Council review shall be extended by an additional 15 days (excluding Saturdays, Sundays, and holidays) from the date of its receipt. If the resolution of disapproval has not been approved within the 15- day extended period, the proposed exemption shall be deemed approved.
(i) For purposes of subsections (c) and (d) of this section, the assets of a Fund shall not include assets in a pooled separate account of an insurance company qualified to do business in a state or assets in a collective investment fund of a bank or similar financial institution supervised by the United States or any state, provided that:
(1) The interest of all Funds in the separate account or collective investment fund does not exceed 5% of the total of all assets in the account or fund; and
(2) At the time a transaction that would otherwise be prohibited by subsection (c) or (d) of this section is entered into, and at the time of any subsequent renewal which requires the approval of the bank or insurance company, the terms of the transaction are not less favorable to the pooled separate account or collective investment fund than the terms generally available in an arm's length transaction between unrelated parties.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 181; Feb. 24, 1987, D.C. Law 6-163, § 2, 33 DCR 6698; Mar. 24, 1990, D.C. Law 8-97, § 2(e), 37 DCR 1046; Sept. 10, 1992, D.C. Law 9-145, § 401(c), 39 DCR 4895; Oct. 29, 1993, 107 Stat. 1349, Pub. L. 103-127, 139(a); Apr. 8, 2005, D.C. Law 15- 300, § 2(d), 52 DCR 1504.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-741.
1973 Ed., § 1-1841.
Effect of Amendments
D.C. Law 15-300 rewrote subsec. (h) and added subsec. (h-1). Prior to amendment, subsec. (h) read as follows:
"(h) The Board may from time to time submit to the Council for its approval by resolution proposed exemptions from all or part of the restrictions imposed by subsections (c) and (d) of this section. The Board shall only request exemptions that have been granted by the United States Secretary of Labor. Prior to the submission to the Council of any proposed exemption, the Board shall hold a public hearing on the proposed exemption. Notice of the time, place, and subject matter of the public hearing shall be published in the D.C. Register at least 15 days in advance of its scheduled date in order to afford interested persons an opportunity to present their views. Prior to or simultaneous with the submission of a proposed exemption to the Council, the proposed exemption shall be published by the Board in the D.C. Register. Any proposed exemption submitted to the Council shall be accompanied by a synopsis of the results of the public hearing held by the Board in connection with the proposed exemption, and written findings by the Board that the proposed exemption is:
"(1) Administratively feasible;
"(2) In the best interests of the funds and of their participants and beneficiaries; and
"(3) Protective of the rights of participants and beneficiaries of these funds."
Legislative History of Laws
Law 6-160 was introduced in Council and assigned Bill No. 6-488. The Bill was adopted on first and second readings on June 24, 1986 and July 8, 1986, respectively. Signed by the Mayor on July 16, 1986, it was assigned Act No. 6- 205 and transmitted to both Houses of Congress for its review.
Law 6-163 was introduced in Council and assigned Bill No. 6-417, which was referred to the Committee on Government Operations. The Bill was adopted on first and second readings on July 8, 1986 and September 23, 1986, respectively. Signed by the Mayor on October 9, 1986, it was assigned Act No. 6-209 and transmitted to both Houses of Congress for its review.
For legislative history of D.C. Law 8-97, see Historical and Statutory Notes following § 1-702.
For legislative history of D.C. Law 9-134, see Historical and Statutory Notes following § 1-711.
For legislative history of D.C. Law 9-145, see Historical and Statutory Notes following § 1-711.
For Law 15-300, see notes following § 1-702.
Resolutions
Resolution 15-288, the "District of Columbia Retirement Board Restricted Transaction Exemption Approval Resolution of 2003", was approved effective November 4, 2003.
Miscellaneous Notes
Repeal of Title IV of D.C. Law 9-145: Section 139(a) of Pub. L. 103-127, 107 Stat. 1349, provided that Title IV of the District of Columbia Omnibus Budget Support Act of 1992 (D.C. Law 9-145) is hereby repealed, and any provision of the District of Columbia Retirement Reform Act amended by such title is restored as if such title had not been enacted into law.
Section 139(b) of Pub. L. 103-127 provided that subsection (a) of that section shall apply beginning September 10, 1992.
Approval of rules to establish administrative class exemptions: Pursuant to Resolution 8-293, the "District of Columbia Retirement Board Administrative Class Exemptions Approval Resolution of 1990", effective November 30, 1990, the Council approved the proposed rules to establish administrative class exemptions from prohibited transactions in order to permit the District of Columbia Retirement Board to participate in certain commercially reasonable and noncontroversial financial transactions.
Independent audit of Retirement Board: Section 135 of Public Law 103-334, 108 Stat. 2586, the District of Columbia Appropriations Act, 1995, provided that the District of Columbia Retirement Board shall enter into an agreement with an independent firm meeting certain qualifications to prepare and submit to the Retirement Board a written set of findings and recommendations not later than 6 months after the date of enactment of this Act regarding the appropriateness and adequacy of the Retirement Board's fiduciary, management, and investment practices and procedures, and provided for expenditure of funds.
(a) Any person who is a fiduciary with respect to a Fund who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this chapter shall be personally liable to make good to such Fund any losses to the Fund resulting from each such breach and to restore to such Fund any profits of such fiduciary which have been made through the use of assets of the Fund by the fiduciary and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary.
(b) No fiduciary shall be liable with respect to a breach of fiduciary duty under this chapter if such breach was committed before he became a fiduciary or after he ceased to be a fiduciary.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 182.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-742.
1973 Ed., § 1-1842.
(a) Any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under this subchapter shall be void as against public policy.
(b) Nothing in this section shall preclude:
(1) The Board from purchasing insurance for its fiduciaries or for itself to cover liability or losses occurring by reason of the act or omission of a fiduciary, if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary;
(2) A fiduciary from purchasing insurance to cover liability under this subchapter from and for his own account; or
(3) An employee organization from purchasing insurance to cover potential liability of one or more persons who serve in a fiduciary capacity with regard to the Fund from which the annuities and other retirement and disability benefits of the members of such employee organization are paid.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 183.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-743.
1973 Ed., § 1-1843.
(a) No person who has been convicted of, or has been imprisoned as a result of his conviction of, robbery, bribery, extortion, embezzlement, fraud, grand larceny, burglary, arson, a felony violation of federal or state law involving substances defined in § 102(6) of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. § 802(6)), murder, rape, kidnapping, perjury, assault with intent to kill, any crime described in § 9(a)(1) of the Investment Company Act of 1940 (15 U.S.C. § 80a-9(a)(1)), a violation of any provision of this chapter, a violation of § 302 of the Labor-Management Relations Act, 1947 (29 U.S.C. § 186), a violation of Chapter 63 of Title 18, United States Code, a violation of § 874, 1027, 1503, 1505, 1506, 1510, 1951, or 1954 of Title 18, United States Code, a violation of the Labor-Management Reporting and Disclosure Act of 1959 (29 U.S.C. § 401), or conspiracy to commit any such crime or attempt to commit any such crime, or a crime in which any of the foregoing crimes is an element, shall serve or be permitted to serve: (1) As a fiduciary, investment counsel, agent, or employee of any Fund established by this chapter; or (2) as a consultant to any Fund established by this chapter; during or for 5 years after such conviction or after the end of such imprisonment, whichever is the later, unless prior to the end of such 5-year period, in the case of a person so convicted or imprisoned, his citizenship rights, having been revoked as a result of such conviction, have been fully restored, or the Board of Parole of the United States Department of Justice determines that such person's service in any capacity referred to in clause (1) or (2) of this subsection would not be contrary to the purposes of this chapter. Prior to making any such determination the Board of Parole shall hold an administrative hearing and shall give notice of such proceeding by certified mail to the state, county, and federal prosecuting officials in the jurisdiction or jurisdictions in which such person was convicted. The Board of Parole's determination in any such proceeding shall be final. No person shall knowingly permit any other person to serve in any capacity referred to in clause (1) or (2) of this subsection in violation of this subsection. Notwithstanding the preceding provisions of this subsection, no corporation or partnership will be precluded from acting as an administrator, fiduciary, officer, trustee, custodian, counsel, agent, or employee, of any Fund established by this chapter, or as a consultant to any Fund established by this chapter, without a notice, hearing, and determination by such Board of Parole that such service would be inconsistent with the intention of this section.
(b) Whoever willfully violates this section shall be fined not more than $10,000, or imprisoned for not more than 1 year, or both.
(c) For the purposes of this section:
(1) A person shall be deemed to have been "convicted" and to be under the disability of "conviction" from the date of entry of the judgment of the trial court or the date of the final sustaining of such judgment on appeal, whichever is the later event.
(2) The term "consultant" means any person who, for compensation, advises or represents a Fund or who provides other assistance to such Fund concerning the operation of such Fund.
(3) A period of parole shall not be considered as part of a period of imprisonment.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 184.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-744.
1973 Ed., § 1-1844.
(a)(1)(A) Each fiduciary of a Fund established by this chapter and each person who handles funds or other property of such a Fund (hereinafter in this section referred to as "Fund official") shall be bonded as provided in this section, except that no bond shall be required of a fiduciary (or of any director, officer, or employee of such fiduciary) if such fiduciary:
(i) Is a corporation organized and doing business under the laws of the United States or of any state;
(ii) Is authorized under such laws to exercise trust powers or to conduct an insurance business;
(iii) Is subject to supervision or examination by federal or state authority; and
(iv) Has at all times a combined capital and surplus in excess of such a minimum amount as may be established by regulations issued by the Council, which amount shall be at least $1,000,000.
(B) Sub-subparagraph (iv) of subparagraph (A) of this paragraph shall apply to a bank or other financial institution which is authorized to exercise trust powers and the deposits of which are not insured by the Federal Deposit Insurance Corporation only if such bank or institution meets bonding or similar requirements under state law which the Council determines are at least equivalent to those imposed on banks by federal law.
(2)(A) The amount of such bond shall be the lesser of 10 percent of the amount of the funds handled by such fiduciary and $500,000, except that the amount of such bond shall be at least $1,000.
(B) The Mayor, after notice and opportunity for hearing to such fiduciary and all other parties in interest to such Fund, may waive the $500,000 limit.
(C) The amount of such bond shall be set at the beginning of each fiscal year.
(3) For purposes of fixing the amount of such bond, the amount of funds handled shall be determined by the funds handled by the person, group, or class to be covered by such bond and by the predecessor or predecessors, if any, during the preceding reporting year, or if the Fund has no preceding reporting year under this chapter, the amount of funds to be handled during the current reporting year by such person, group, or class, estimated as provided in regulations to be prescribed by the Council.
(4) Such bond shall provide protection to the Fund against loss by reason of acts of fraud or dishonesty on the part of the Fund official, directly or through connivance with others.
(5) Any bond shall have as surety thereon a corporate surety company which is an acceptable surety on federal bonds under authority granted by the Secretary of the Treasury pursuant to §§ 6 through 13 of Title 6, United States Code. Any bond shall be in a form or of a type approved by the Council, including individual bonds or schedule or blanket forms of bonds which cover a group or class.
(b) It shall be unlawful for any Fund official to receive, handle, disburse, or otherwise exercise custody or control of any of the funds or other property of any Fund without being bonded as required by subsection (a) of this section, and it shall be unlawful for any Fund official or any other person having authority to direct the performance of such functions to permit such functions, or any of them, to be performed by any Fund official with respect to whom the requirements of subsection (a) of this section have not been met.
(c) It shall be unlawful for any person to procure any bond required by subsection (a) of this section from any surety or other company or through any agent or broker in whose business operations the Fund or any party in interest in the Fund has any control or significant financial interest, direct or indirect.
(d) Nothing in any other provision of law shall require any person required to be bonded as provided in subsection (a) of this section because he handles funds or other property of a Fund to be bonded insofar as the handling by such person of the funds or other property of such Fund is concerned.
(e) The Council shall prescribe such regulations as may be necessary to carry out the provisions of this section.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 185.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-745.
1973 Ed., § 1-1845.
References in Text
"Sections 6 through 13 of Title 6, United States Code," referred to in subsection (a)(5), were repealed by § 5(b) of the Act of September 13, 1982, Pub. L. 97-258, 96 Stat. 1068.
No action may be commenced under this chapter with respect to a fiduciary's breach of any responsibility, duty, or obligation under this subchapter, or with respect to a violation of this subchapter, after the earlier of: (1) Six years after: (A) The date of the last action which constituted a part of the breach or violation; or (B) in the case of an omission, the latest date on which the fiduciary could have cured the breach or violation; or (2) three years after the earliest date: (A) On which the plaintiff had actual knowledge of the breach or violation; or (B) on which a report from which he could reasonably be expected to have obtained knowledge of such breach or violation was filed with the Mayor or the Council under this chapter; except that in the case of fraud or concealment, such an action may be commenced not later than 6 years after the date of discovery of such breach or violation.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 186; Apr. 13, 2005, D.C. Law 15-354, § 3(c), 52 DCR 2638.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-746.
1973 Ed., § 1-1846.
Effect of Amendments
D.C. Law 15-354 substituted "or the Council" for ", the Council, the Speaker, or the President pro tempore".
Legislative History of Laws
For Law 15-354, see notes following § 1-523.01.
(a) A civil action may be brought:
(1) By a participant or beneficiary:
(A) For the relief provided for in subsection (b) of this section; or
(B) To recover benefits due to him under the terms of his retirement program, to enforce his rights under the terms of the retirement program, or to clarify his rights to future benefits under the terms of the retirement program;
(2) By a participant or beneficiary, the District of Columbia, or the Board for appropriate relief under § 1-742; or
(3) By a participant or beneficiary, the District of Columbia, and the Board:
(A) To enjoin any act or practice which violates any provision of this chapter or the terms of a retirement program; or
(B) To obtain other appropriate equitable relief:
(i) To redress any such violation; or
(ii) To enforce any provision of this chapter or the terms of a retirement program.
(b) If the Board fails or refuses to comply with a request for any information which the Board is required by this chapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the Board) by mailing the information requested to the last known address of the requesting participant or beneficiary within 30 days after such request, then the Board may, in the court's discretion, be liable to such participant or beneficiary in an amount of up to $100 a day from the date of such failure or refusal, and the court may order the Board to provide the required information and may in its discretion order such other relief as it considers proper.
(c) The Board may sue and be sued under this chapter as an entity. Service of summons, subpoena, or other legal process of a court upon the Chairman of the Board in his capacity as such shall constitute service upon the Board.
(d) In any action under this chapter by a participant, beneficiary, fiduciary, or the Board, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 187; Mar. 24, 1990, D.C. Law 8-97, § 2(f), 37 DCR 1046.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-747.
1973 Ed., § 1-1847.
Legislative History of Laws
For legislative history of D.C. Law 8-97, see Historical and Statutory Notes following § 1-702.
In accordance with regulations issued by the Board, the Board shall provide to any participant or beneficiary who has a claim for benefits under a retirement program denied:
(1) Adequate written notice of such denial, setting forth the specific reasons for such denial in a manner calculated to be understood by such participant or beneficiary; and
(2) A reasonable opportunity for a full and fair review of the decision denying such claim.
(Nov. 17, 1979, 93 Stat. 866, Pub. L. 96-122, § 188; Apr. 13, 2005, D.C. Law 15-354, § 3(d), 52 DCR 2638.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 1-748.
1973 Ed., § 1-1848.
Effect of Amendments
D.C. Law 15-354 substituted "In accordance with regulations issued by the Board, the Board shall" for "In accordance with regulations of the Council, the Mayor shall".
Legislative History of Laws
For Law 15-354, see notes following § 1-523.01.
Delegation of Authority
Delegation of authority under Law 4-123, see Mayor's Order 83-245, October 14, 1983.
