The Employee Retirement Income Security Act of 1974 (ERISA) and the plan asset regulations generally provide that when a “benefit plan investor” acquires an equity interest in an entity, other than a public operating company or a registered investment company, all of the assets of that entity are deemed to be “plan assets” subject to ERISA and related provisions of the Internal Revenue Code of 1986 (IRC), unless an exception applies.  However, investments by benefit plan investors in a hedge fund would generally not constitute plan assets (thereby subjecting the hedge fund and its manager to ERISA and related IRC provisions) unless such benefit plan investors own 25% or more of any class of equity securities issued by the fund.  See “Applicability of New Disclosure Obligations under ERISA to Hedge Fund Managers,” Hedge Fund Law Report, Vol. 5, No. 9 (Mar. 1, 2012).  Once subject to ERISA, a fund and its manager may not engage in certain specified “prohibited transactions,” including transactions with “parties in interest,” which may include the fund’s brokers and counterparties pursuant to Section 406(a) of ERISA.  Many fund managers rely on a class exemption for funds that are managed by a “qualified professional asset manager” (QPAM).  A recent panel, including participants from FTI Consulting and K&L Gates, reviewed the QPAM exemption and the parallel exemption for an “In-House Asset Manager” (INHAM).  The panel described the conditions for reliance on the QPAM and INHAM class exemptions and also focused on the audit requirement that is an important component of the exemption when a QPAM or INHAM manages its own retirement plan.  This article summarizes the key points from the panel discussion.