29 U.S.C. § 1111 — Persons prohibited from holding certain

Page 530 TITLE 29—LABOR § 1111 1 So in original. Probably should be ‘‘of’’. losses occurring by reason of the act or omis- sion of a fiduciary, if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obliga- tion by such fiduciary; (2) a fiduciary from purchasing insurance to cover liability under this part from and for his own account; or (3) an employer or an employee organization from purchasing insurance to cover potential liability of one or more persons who serve in a fiduciary capacity with regard to an employee benefit plan. (Pub. L. 93–406, title I, § 410, Sept. 2, 1974, 88 Stat. 886.) § 1111. Persons prohibited from holding certain positions (a) Conviction or imprisonment 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 sub- stances defined in section 802(6) of title 21, mur- der, rape, kidnaping, perjury, assault with in- tent to kill, any crime described in section 80a–9(a)(1) of title 15, a violation of any provi- sion of this chapter, a violation of section 186 of this title, a violation of chapter 63 of title 18, a violation of section 874, 1027, 1503, 1505, 1506, 1510, 1951, or 1954 of title 18, a violation of the Labor- Management Reporting and Disclosure Act of 1959 (29 U.S.C. 401), any felony involving abuse or misuse of such person’s position or employment in a labor organization or employee benefit plan to seek or obtain an illegal gain at the expense of the members of the labor organization or the beneficiaries of the employee benefit plan, or conspiracy to commit any such crimes or at- tempt to commit any such crimes, or a crime in which any of the foregoing crimes is an element, shall serve or be permitted to serve— (1) as an administrator, fiduciary, officer, trustee, custodian, counsel, agent, employee, or representative in any capacity of any em- ployee benefit plan, (2) as a consultant or adviser to an employee benefit plan, including but not limited to any entity whose activities are in whole or sub- stantial part devoted to providing goods or services to any employee benefit plan, or (3) in any capacity that involves decision- making authority or custody or control of the moneys, funds, assets, or property of any em- ployee benefit plan, during or for the period of thirteen years after such conviction or after the end of such impris- onment, whichever is later, unless the sen- tencing court on the motion of the person con- victed sets a lesser period of at least three years after such conviction or after the end of such imprisonment, whichever is later, or unless prior to the end of such period, in the case of a person so convicted or imprisoned (A) his citi- zenship rights, having been revoked as a result of such conviction, have been fully restored, or (B) if the offense is a Federal offense, the sen- tencing judge or, if the offense is a State or local offense, the United States district court for the district in which the offense was com- mitted, pursuant to sentencing guidelines and policy statements under section 994(a) of title 28, determines that such person’s service in any capacity referred to in paragraphs (1) through (3) would not be contrary to the purposes of this subchapter. Prior to making any such deter- mination the court shall hold a hearing and shall give notice to 1 such proceeding by cer- tified mail to the Secretary of Labor and to State, county, and Federal prosecuting officials in the jurisdiction or jurisdictions in which such person was convicted. The court’s determination in any such proceeding shall be final. No person shall knowingly hire, retain, employ, or other- wise place any other person to serve in any ca- pacity in violation of this subsection. Notwith- standing the preceding provisions of this sub- section, no corporation or partnership will be precluded from acting as an administrator, fidu- ciary, officer, trustee, custodian, counsel, agent, or employee of any employee benefit plan or as a consultant to any employee benefit plan with- out a notice, hearing, and determination by such court that such service would be inconsistent with the intention of this section. (b) Penalty Any person who intentionally violates this section shall be fined not more than $10,000 or imprisoned for not more than five years, or both. (c) Definitions For the purpose of this section— (1) A person shall be deemed to have been ‘‘convicted’’ and under the disability of ‘‘con- viction’’ from the date of the judgment of the trial court, regardless of whether that judg- ment remains under appeal. (2) The term ‘‘consultant’’ means any person who, for compensation, advises, or represents an employee benefit plan or who provides other assistance to such plan, concerning the establishment or operation of such plan. (3) A period of parole or supervised release shall not be considered as part of a period of imprisonment. (d) Salary of person barred from employee ben- efit plan office during appeal of conviction Whenever any person— (1) by operation of this section, has been barred from office or other position in an em- ployee benefit plan as a result of a conviction, and (2) has filed an appeal of that conviction, any salary which would be otherwise due such person by virtue of such office or position, shall be placed in escrow by the individual or organi- zation responsible for payment of such salary. Payment of such salary into escrow shall con- tinue for the duration of the appeal or for the period of time during which such salary would be otherwise due, whichever period is shorter. Upon the final reversal of such person’s convic- tion on appeal, the amounts in escrow shall be paid to such person. Upon the final sustaining of Page 531 TITLE 29—LABOR § 1112 2 So in original. Probably should be ‘‘section’’. 1 So in original. The period probably should be ‘‘, and’’. that person’s conviction on appeal, the amounts in escrow shall be returned to the individual or organization responsible for payments of those amounts. Upon final reversal of such person’s conviction, such person shall no longer be barred by this statute 2 from assuming any posi- tion from which such person was previously barred. (Pub. L. 93–406, title I, § 411, Sept. 2, 1974, 88 Stat. 887; Pub. L. 98–473, title II, §§ 229, 230, 802, Oct. 12, 1984, 98 Stat. 2031, 2131; Pub. L. 100–182, § 15(b), Dec. 7, 1987, 101 Stat. 1269.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (a), was in the original ‘‘this Act’’, meaning Pub. L. 93–406, known as the Employee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are classified prin- cipally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of this title and Tables. The Labor-Management Reporting and Disclosure Act of 1959, referred to in subsec. (a), is Pub. L. 86–257, Sept. 14, 1959, 73 Stat. 519, which is classified prin- cipally to chapter 11 (§ 401 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 401 of this title, and Tables. AMENDMENTS 1987—Subsec. (a). Pub. L. 100–182, in concluding provi- sions, substituted ‘‘if the offense is a Federal offense, the sentencing judge or, if the offense is a State or local offense, the United States district court for the district in which the offense was committed, pursuant to sentencing guidelines and policy statements under section 994(a) of title 28,’’ for ‘‘the United States Parole Commission’’, ‘‘court shall’’ for ‘‘Commission shall’’, ‘‘court’s’’ for ‘‘Commission’s’’, ‘‘such court’’ for ‘‘such Parole Commission’’, and ‘‘a hearing’’ for ‘‘an adminis- trative hearing’’. 1984—Subsec. (a). Pub. L. 98–473, § 229, which directed substitution of ‘‘if the offense is a Federal offense, the sentencing judge or, if the offense is a State or local of- fense, on motion of the United States Department of Justice, the district court of the United States for the district in which the offense was committed, pursuant to sentencing guidelines and policy statements issued pursuant to section 994(a) of title 28,’’ for ‘‘the Board of Parole of the United States Justice Department’’, ‘‘court’’ and ‘‘court’s’’ for ‘‘Board’’ and ‘‘Board’s’’, re- spectively, and ‘‘a’’ for ‘‘an administrative’’, was (ex- cept for the last substitution) incapable of execution in view of the previous amendment by section 802 of Pub. L. 98–473 which became effective prior to the effective date of the amendment by section 229. See note below. Pub. L. 98–473, § 802(a), in amending provisions after ‘‘the Labor-Management Reporting and Disclosure Act of 1959 (29 U.S.C. 401),’’ generally, inserted provisions relating to abuse or misuse of employment in a labor organization or employee benefit plan, in cl. (1) sub- stituted ‘‘employee, or representative in any capacity’’ for ‘‘or employee’’, in cl. (2) substituted ‘‘consultant or adviser to an’’ for ‘‘consultant to any’’, added cl. (3), substituted ‘‘the period of thirteen years’’ for ‘‘five years’’, ‘‘unless the sentencing court on the motion of the person convicted sets a lesser period of at least three years after such conviction or after the end of such imprisonment, whichever is later, or unless prior to the end of such period,’’ for ‘‘unless prior to the end of such five-year period,’’, in cl. (B) substituted ‘‘the United States Parole Commission’’ for ‘‘the Board of Parole of the United States Department of Justice’’ and ‘‘paragraphs (1) through (3)’’ for ‘‘paragraph (1) or (2)’’, and in provisions following cl. (B) substituted ‘‘Commission’’ and ‘‘Commission’s’’ for ‘‘Board’’ and ‘‘Board’s’’, respectively, inserted provision of notice to the Secretary of Labor, and substituted ‘‘hire, retain, employ, or otherwise place any other person to serve in any capacity’’ for ‘‘permit any other person to serve in any capacity referred to in paragraph (1) or (2)’’ and ‘‘Parole Commission’’ for ‘‘Board of Parole’’. Subsec. (b). Pub. L. 98–473, § 802(b), substituted ‘‘five years’’ for ‘‘one year’’. Subsec. (c)(1). Pub. L. 98–473, § 802(c), substituted ‘‘, regardless of whether that judgment remains under appeal’’ for ‘‘or the date of the final sustaining of such judgment on appeal, whichever is the later event’’. Subsec. (c)(3). Pub. L. 98–473, § 230, inserted ‘‘or super- vised release’’ after ‘‘parole’’. Subsec. (d). Pub. L. 98–473, § 802(d), added subsec. (d). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–182 applicable with re- spect to offenses committed after Dec. 7, 1987, see sec- tion 26 of Pub. L. 100–182, set out as a note under sec- tion 3006A of Title 18, Crimes and Criminal Procedure. EFFECTIVE DATE OF 1984 AMENDMENT Amendments by sections 229 and 230 of Pub. L. 98–473 effective Nov. 1, 1987, and applicable only to offenses committed after the taking effect of such amendments, see section 235(a)(1) of Pub. L. 98–473, set out as an Ef- fective Date note under section 3551 of Title 18, Crimes and Criminal Procedure. Amendment by section 802 of Pub. L. 98–473 effective with respect to any judgment of conviction entered by the trial court after Oct. 12, 1984, except as otherwise provided, see section 804 of Pub. L. 98–473, set out as a note under section 504 of this title. § 1112. Bonding (a) Requisite bonding of plan officials Every fiduciary of an employee benefit plan and every person who handles funds or other property of such a plan (hereafter in this section referred to as ‘‘plan official’’) shall be bonded as provided in this section; except that— (1) where such plan is one under which the only assets from which benefits are paid are the general assets of a union or of an employer, the administrator, officers, and employees of such plan shall be exempt from the bonding require- ments of this section, (2) no bond shall be required of any entity which is registered as a broker or a dealer under section 78o(b) of title 15 if the broker or dealer is subject to the fidelity bond requirements of a self-regulatory organization (within the mean- ing of section 78c(a)(26) of title 15).1 (3) no bond shall be required of a fiduciary (or of any director, officer, or employee of such fi- duciary) if such fiduciary— (A) is a corporation organized and doing business under the laws of the United States or of any State; (B) is authorized under such laws to exercise trust powers or to conduct an insurance busi- ness; (C) is subject to supervision or examination by Federal or State authority; and (D) has at all times a combined capital and surplus in excess of such a minimum amount