Check out the following DOL Field Assistance Bulletin which allows plan fiduciaries of public companies to deny participant loans to officers and directors without violating certain requirements of ERISA: Field Assistance Bulletin 2003-1
Section 402 of the Sarbanes-Oxley Act of 2002 added a new subsection (k) to Section 13 of the Securities Exchange Act of 1934 which makes it unlawful for any issuer to to make loans to directors or executive officers. Many have been concerned that this provision might be interpreted to prohibit loans to be made to directors or executive officers under qualified employee benefit plans. With no guidance from the SEC on the subject, practitioners have been promoting the view that qualified plan loans should not violate the Act. However, with the push from certain Senators and the SEC for a broad interpretation of the Act, some have felt that a more cautious approach should be taken–that of prohibiting new qualified plan loans to executive officers. Before this guidance issued by the DOL, many thought that if you took such a cautious approach you might violate a provision of ERISA which requires that all loans be made available to participants and benefiticiares on a reasonably equivalent basis. However, the DOL makes it clear that such action to disallow a participant loan based on a reasonable question concerning the legality of the loan would not be a failure to provide loans to all participants on a reasonably equivalent basis. The question now becomes whether or not this DOL guidance will open the door for the SEC to take an overly broad interpretation of the Act, i.e. that of prohibiting loans to executive officers under qualified plans. . .