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(a) A fiduciary shall discharge his duties with respect to the Trust solely in the interest of the participants and beneficiaries and:
(1) For the exclusive purpose of providing benefits to participants and beneficiaries;
(2) 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;
(3) By diversifying the investments of the Trust so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
(4) In accordance with the provisions of law, documents, and instruments governing the retirement program to the extent that the documents and instruments are consistent with this chapter.
(b) In addition to any liability which he may have under any other provision of this section, a fiduciary with respect to the Trust shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the Trust:
(1) If he knowingly participates in, or knowingly undertakes to conceal, an act or omission of the other fiduciary, knowing the act or omission is a breach of fiduciary responsibility;
(2) If, by his failure to discharge the responsibilities which give rise to his status as a fiduciary, he has enabled the other fiduciary to commit a breach of fiduciary responsibility; or
(3) If he has knowledge of a breach of fiduciary responsibility by the 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 the Trust shall not cause the Trust to engage in a transaction, if he knows or should know that the transaction constitutes a direct or indirect:
(1) Sale or exchange, or leasing, of any property between the Trust and a party in interest;
(2) Lending of money or other extension of credit between the Trust and a party in interest;
(3) Furnishing of goods, services, or facilities between the Trust and a party in interest;
(4) Transfer to, or use by or for the benefit of, a party in interest, of any assets of the Trust.
(d) Except as provided in subsection (h) of this section, a fiduciary with respect to the Trust shall not:
(1) Deal with the assets of the Trust in his own interest or for his own account;
(2) In his individual or in any other capacity act in any transaction involving the Trust on behalf of a party (or represent a party) whose interests are adverse to the interests of the Trust or the interests of its participants or beneficiaries; or
(3) Receive any consideration for his own personal account from any party dealing with the Trust in connection with a transaction involving the assets of the Trust.
(e) A transfer of real or personal property by a party in interest shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the Trust 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 Trust, if no more than reasonable compensation is paid for it;
(2) The investment of all or part of the Trust'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 (including the District), if such bank or other institution is a fiduciary of the Trust and if the investment is expressly authorized by the Mayor or by a fiduciary (other than the bank or institution or an affiliate) who is expressly empowered by the Mayor to make such investment;
(3) The providing of any ancillary service by a bank or similar financial institution supervised by the United States or any state (including the District) if the bank or other institution is a fiduciary of the Trust and if:
(A) The bank or similar financial institution has adopted adequate internal safeguards which assure that the providing of the ancillary service is consistent with sound banking and financial practice, as determined by federal or state supervisory authority; and
(B) The extent to which the ancillary service is provided is subject to specific guidelines issued by the bank or similar financial institution (as determined by the Mayor after consultation with federal and state supervisory authority), and adherence to the guidelines would reasonably preclude the bank or similar financial institution from providing the ancillary service (i) in an excessive and unreasonable manner, and (ii) in a manner that would be inconsistent with the best interests of participants and beneficiaries of the retirement program. The ancillary services shall not be provided for more than reasonable compensation;
(4) The exercise of a privilege to convert securities, but only if the Trust receives no less than adequate consideration pursuant to the conversion; or
(5) Any transaction between the Trust 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 (including the District) or a 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 Trust;
(B) The bank, trust company, or insurance company receives not more than reasonable compensation; and
(C) The transaction is expressly permitted by the Mayor, or by a fiduciary (other than the bank, trust company, insurance company, or any affiliate) who has authority to manage and control the assets of the Trust.
(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 Trust; or
(3) Serving as a fiduciary in addition to being an officer, employee, agent, or other representative of a party in interest.
(h) The Mayor may 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 Mayor shall only request exemptions that have been granted by the United States Secretary of Labor. Any proposed exemption submitted to the Council shall be accompanied by written findings by the Mayor that the proposed exemption is administratively feasible, in the best interests of the Trust and its participants and beneficiaries, and protective of the rights of participants and beneficiaries of the Trust.
(i)(1) Any person who is a fiduciary with respect to the Trust who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this section shall be personally liable to make good to the Trust any losses to the Trust resulting from each breach and to restore to the Trust any profits of the fiduciary which have been made through the use of assets of the Trust by the fiduciary and shall be subject to whatever other equitable or remedial relief the court may deem appropriate, including removal of the fiduciary.
(2) No fiduciary shall be liable with respect to a breach of fiduciary duty under this section if the breach was committed before he became a fiduciary or after he ceased to be a fiduciary.
(3) No action may be commenced under this chapter with respect to a fiduciary's breach of any responsibility, duty, or obligation under this section later than 3 years from the date the plaintiff knew or should have known of the alleged breach, except that in the case of fraud or concealment, the action may be commenced not later than 6 years after the date of the plaintiff's discovery of the alleged breach or violation.
Cite this article: FindLaw.com - District of Columbia Code Division I. Government of District. § 1-626.13. Duties and liabilities of Trustee; exemptions; violations and sanctions. - last updated January 01, 2020 | https://codes.findlaw.com/dc/division-i-government-of-district/dc-code-sect-1-626-13/
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