COLLECTED WISDOM™ on the DOL and SEC Fiduciary Rules
This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.
If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.
In December 2020, the DOL reinstated the five-part test and issued a revised interpretation of the definition of "investment advice" under ERISA. Additionally, a new prohibited transaction exemption was established. Then, in 2021, the DOL issued further guidance to clarify the rule changes.
Source: Fidelity.com, September 2021
In the absence of further direction from DOL, it now has become incumbent on firms to accelerate their Rule 3.0 compliance project if the December 20 date is to be met, and in particular to implement PTE 2020-02 or an alternative solution if they are or may be serving as a fiduciary in rollover interactions.
Source: Eversheds-Sutherland.com, September 2021
Cautioning those looking to "game the system," a senior Labor Department official affirmed July 27 that suggesting investments that could occur after a rollover is tantamount to recommending the rollover, and if it meets the rest of the five-part test will constitute fiduciary advice regardless of how it's phrased.
Source: Asppa.org, July 2021
The DOL recently issued guidance concerning a new exemption under the prohibited transaction provisions of ERISA in connection with the provision of investment advice. PTE 2020-02, Improving Investment Advice for Workers & Retirees, became effective on February 16, 2021. On April 13, 2021, the DOL issued additional guidance, in FAQ format, to further explain the Exemption. In this article, the authors explain the significance of this new guidance.
Source: Mwe.com, July 2021
On April 13, 2021, the DOL issued clarifying guidance for Prohibited Transaction Exemption 2020-02, Improving Investment Advice for Workers & Retirees, which became effective on February 16, 2021. The DOL guidance for investment advice providers comes in a series of 21 FAQs that address three main subjects reviewed here.
Source: Hallbenefitslaw.com, July 2021
No matter if an adviser is a flat-fee registered investment adviser or a commission-based broker/dealer, the DOL says the collection of compensation related to rollover guidance is almost always going to be a prohibited transaction, triggering the need for an exemption.
Source: Planadviser.com, June 2021
The 10-year saga of the fiduciary rule will continue. As various administration officials had been suggesting over the past few months, the DOL's Spring 2021 Regulatory Agenda confirms that the Employee Benefits Security Administration plans to issue a Notice of Proposed Rulemaking addressing the definition of fiduciary. The DOL agenda item shows that EBSA plans to issue the NPRM by December 2021.
Source: Ntsa-net.org, June 2021
The DOL's latest attempt to address these concerns is Prohibited Transaction Exemption 2020-02. This guidance offers important takeaways for employer-plan fiduciaries concerning hiring and monitoring: (1) those who advise you about the investment funds that should be included in the plan; and (2) those who provide advice to participants about their investment fund selection in the plan or on rollovers.
Source: Wnj.com, June 2021
The DOL issued guidance that reinforces that the new investment advice regulation in retirement accounts will strengthen oversight of rollover recommendations and require investment advisers to mitigate conflicts of interest.
Source: Jdsupra.com, June 2021
The Exemption regulates the conduct of "Investment Advice Fiduciaries" who provide investment and/or rollover advice. "Investment Advice Fiduciaries" are investment advisers, broker-dealers, banks, and insurance companies and their employees, agents, and representatives. The Exemption very squarely places the responsibility for compliance with its requirements on outside investment advisors. To rely on the Exemption, besides other requirements, Investment Advice Fiduciaries must provide certain disclosure and meet specified standards of conduct.
Source: Benefitslawadvisor.com, May 2021
Attorneys warned this week that Labor is setting up "regulatory whiplash" and huge compliance costs by requiring retirement advisors to comply with a new fiduciary prohibited transaction exemption that it plans to eventually amend.
Source: Thinkadvisor.com, May 2021
In a troubling development, the DOL has announced its expectation that it will proceed to propose yet another iteration of investment advice guidance under ERISA -- which would become Rule 4.0 -- possibly on even more radical terms than its 2016 Rule 2.0 that was vacated by the Fifth Circuit Court of Appeals.
Source: Eversheds-Sutherland.com, April 2021
The DOL issued a set of previously promised FAQs addressing its new prohibited transaction exemption. PTE 2020-02 allows "investment advice fiduciaries" to employee benefit plans and individual retirement accounts to receive certain otherwise prohibited compensation, including commissions, 12b-1 fees, revenue sharing, and mark-ups and mark-downs in certain principal transactions. The exemption expressly covers prohibited transactions resulting from rollover advice, advice on how to invest assets within a plan or IRA, and advice on whether to engage in certain principal transactions.
Source: Ropesgray.com, April 2021
The DOL has issued separate guidance documents for investment advice providers and retirement plan investors to help them understand and respond to the new Prohibited Transaction Exemption 2020-02. Adopted last December, PTE 2020-02 allows financial institutions and investment professionals who provide fiduciary investment advice to receive various forms of otherwise prohibited compensation if they comply with certain requirements.
Source: Thomsonreuters.com, April 2021
The DOL released a set of Frequently Asked Questions designed to clarify certain aspects of Prohibited Transaction Exemption 2020-02. The exemption enables investment advice fiduciaries to ERISA plans and IRAs to receive a wide range of compensation as a result of the advice without running afoul of the applicable prohibited transaction rules. This piece summarizes some of the key takeaways from the FAQs.
Source: Fiduciarygovernanceblog.com, April 2021
New DOL guidance on fiduciary investment advice provides important insights on the agency's perspective on the new rule, particularly as it relates to rollover advice and a reminder that other changes may well lie ahead. Of most immediate interest is likely the second of two documents -- a set of compliance-focused frequently asked questions -- with guidance for investment advice providers who are relying upon the exemption.
Source: Asppa.org, April 2021
The DOL has issued two pieces of guidance on its new fiduciary advice prohibited transaction exemption, PTE 2020-02. The first piece is intended to educate retirement savers about considerations when choosing a potential advisor. The second piece of guidance, which is briefly highlighted here below, is titled, "New Fiduciary Advice Exemption: PTE 2020-02 Improving Investment Advice for Workers & Retirees," and is a detailed set of frequently asked questions.
Source: Ascensus.com, April 2021
The DOL's fiduciary rule still generates discussion. That's staying power, it was first proposed more than a decade ago. A March 31 NTSA webcast took a look at the rule and current developments involving it.
Source: Asppa.org, April 2021
The PTE will likely affect the business of broker-dealers that regularly make investment recommendations to IRA owners, as well as retirement plans and their participants (including rollover recommendations). As a result of these changes, broker-dealers need to re-evaluate whether and when they (and their investment professionals) may be fiduciaries, and where they are fiduciaries, they need to develop compliant practices, policies, and procedures. Here are five key points of which brokerage firms should be aware.
Source: Brokerdealerlawblog.com, March 2021
As the DOL's Fiduciary Rule 3.0 takes effect, the DOL has suggested that it might in the future "improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach." The Fifth Circuit Court of Appeals opinion that vacated Rule 2.0 leaves no room to expand the regulatory definition of fiduciary status, however. As to the exemption, when compared to the gold standard for proponents of more ERISA regulation -- the vacated Best Interest Contract Exemption -- there may be nothing left to argue about.
Source: Eversheds-Sutherland.com, February 2021
In a press release addressing the effective date of the new fiduciary rule, the DOL stated that "In the coming days, the agency will publish related guidance for retirement investors, employee benefit plans and investment advice providers" and "we will continue our stakeholder outreach to determine how we might improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach." Thus, while the rule is final and effective, there may be future modifications.
Source: Cammackretirement.com, February 2021
The DOL has confirmed that the Trump administration's "Improving Investment Advice for Worker & Retirees" Prohibited Transaction Exemption for investment advice fiduciaries will go into effect as scheduled on February 16, 2021. The DOL adds that "in the coming days" it will publish related guidance for retirement investors, employee benefit plans, and investment advice providers.
Source: Asppa.org, February 2021
The DOL announced that it will allow a Trump-era exemption for investment advice fiduciaries to move forward. The exemption, "Improving Investment Advice for Worker & Retirees," grants certain forms of compensation for fiduciary advice and will go into effect as scheduled on February 16.
Source: 401kspecialistmag.com, February 2021
President Biden named Boston Mayor Martin Walsh as his nominee for Secretary of Labor. Walsh's nomination raises questions for the future of the DOL's fiduciary rule, which regulates investment fiduciaries under ERISA. In particular, the new fiduciary rule guidelines promulgated by the DOL in December 2020 appear to be in jeopardy under a Biden administration with Walsh as Labor Secretary.
Source: 401kspecialistmag.com, January 2021
Many fiduciary and best interest investment advice regulations advanced at both the federal and state levels last year. As we begin 2021, firms subject to these regulations face challenges in dealing with rules that impose a host of new obligations, and that at times overlap and conflict with one another. This chart is intended to help firms take stock of the evolving framework and aid firms in putting the pieces together.
Source: Eversheds-sutherland.com, January 2021
Since the effective date for the exemption is after the inauguration of the Biden administration, it is almost certain that the effective date will be further delayed. During that delay, we think it is likely the exemption will be revised or possibly withdrawn. But, it is just as likely that the expanded definition of fiduciary advice for rollover recommendations will be retained and possibly expanded. That could make life more difficult for broker-dealers, investment advisers, and insurance companies. While these rules will affect all of those industries, this article focuses on the impact of the likely outcomes on broker-dealers.
Source: Brokerdealerlawblog.com, January 2021
Under the PTE, plan fiduciaries are required to meet impartial conduct standards, provide certain disclosures, conduct annual reviews, maintain policies and procedures, and keep records. However, the PTE relaxes proposed restrictions on fiduciary compensation to allow fiduciaries to be compensated for advice to rollover assets from retirement plans to individual retirement accounts and engage in transactions that previously were not permitted.
Source: Icemiller.com, January 2021
A recent webinar emphasized a few important points about the new prohibited transaction exemption recently finalized by the DOL. It was explained that everyone is initially eligible for the DOL's new prohibited transaction exemption, but the regulator reserves the right to suspend eligibility for up to 10 years after certain violations.
Source: Planadviser.com, December 2020
Attorneys with Groom Law Group explain how the DOL has extended the reach of its "five-part test" for determining fiduciary status under ERISA. This makes its new prohibited transaction exemption all the more important, according to attorneys.
Source: Planadviser.com, December 2020
On December 18, 2020, the DOL adopted with limited changes its Proposal 3.0 regarding ERISA fiduciary investment advice, focused on the fiduciary status of rollover advice and a "best interest" prohibited transaction exemption for conflicted advice aligned with the primary regulation of various types of financial services providers. While the final guidance broadly retains the structure and approach of Proposal 3.0, the DOL incorporated some important changes in response to comments.
Source: Eversheds-Sutherland.com, December 2020
The DOL has confirmed that a financial professional cannot simply write their way out of a functional fiduciary relationship. This point relates to the "mutual understanding" prong of the five-part test which stipulates that two parties' "reasonable understandings of their relationship" are critical to determining whether they have arrived at a mutual agreement, arrangement, or understanding that the investment advice will serve as a primary basis for investment decisions. Under the new framework, written statements disclaiming a mutual understanding or forbidding reliance on the advice as a primary basis for investment decisions are not determinative.
Source: Planadviser.com, December 2020
The DOL issued a release finalizing an important new initiative for retirement accounts that are subject to ERISA or Section 4975 of the Internal Revenue Code. The Release finalizes Prohibited Transaction Class Exemption 2020-2, but gives rise to at least three broad important considerations.
Source: Dechert.com, December 2020
Appearing in the Federal Register is DOL's Prohibited Transaction Exemption 2020-02, which will provide guidance to investment advisors who counsel retirement and other investors. With the publication of the guidance, PTE 2020-02 becomes effective February 16, 2021.
Source: Ascensus.com, December 2020
The DOL has published the final version of a new prohibited transaction exemption. The text of the exemption notice stretches to nearly 300 pages, so it will naturally take some time for the full implications to be realized. However, the final rule confirms the reinstatement of the traditional five-part test for determining fiduciary status, though it does not definitively state that advice regarding IRA rollovers necessarily triggers fiduciary status.
Source: Planadviser.com, December 2020
The Department of Labor has rolled out a new prohibited transaction exemption for offering investment advice, and some good news on rollover advice, but it may be short-lived. Less than 24 hours after the release from review by the Office of Management and Budget, the DOL has unwrapped a new exemption, one that is slated to become effective 60 days after it is published in the Federal Register and yes, that would fall after Jan. 20, when it could be reviewed by the incoming Biden administration.
Source: Asppa.org, December 2020
The Labor Department's proposed new fiduciary rule has moved one step closer to being finalized and could be released any day now. While we don't yet know what's in the final version, the original filing suggested that the final rule is "economically significant," which could delay the effective date for 60 days and allow the incoming Biden administration to review it before taking effect.
Source: Napa-net.org, December 2020
On June 29, 2020, the DOL proposed a prohibited transaction exemption called Improving Investment Advice for Workers & Retirees, which could have a substantial impact on the compliance operations of financial firms and their representatives. Possibly, the most significant development can be found in the preamble to the exemption. The DOL states that it will now interpret more broadly its long-standing regulation in defining investment advice.
Source: Groom.com, December 2020
The sense of deja vu associated with the filing of a finalized fiduciary rule by the Department of Labor is palpable, but one ERISA expert says this version could stick -- for good -- despite the pending change in administration.
Source: Planadviser.com, December 2020
In a year chock-full of proposed rules and final regulations, the Labor Department has wrapped up its work on a new fiduciary rule. According to a posting on the Office of Management and Budget website, the Labor Department on Nov. 24 dropped off its final rule on its proposed advice package.
Source: Napa-net.org, November 2020
The SEC's Regulation Best Interest applies to recommendations by a broker-dealer to "retail customers." As the term suggests, a retail customer is a "natural person" who uses the recommendation "primarily for personal, family, or household purposes." This means that advice given to legal entities and advice related to investing the assets of a business are not covered by the regulation. But what about recommendations provided to retirement plans? This is a simple question, but the answer is a bit complicated.
Source: Brokerdealerlawblog.com, October 2020
The DOL amended the Code of Federal Regulations to execute the Fifth Circuit's order, which effectively reinstated the Department's "five-part test" as outlined in its 1975 regulation defining investment advice fiduciaries under the Code and ERISA. Also, the Notice affirms that advice about rolling a distribution to an IRA or another plan can be considered fiduciary investment advice if the five-part test is met and the rollover is part of an ongoing investment relationship, even if the rollover is the first action of that relationship.
Source: Hallbenefitslaw.com, October 2020
The DOL's recently released fiduciary rule imposes higher standards on fiduciaries giving rollover advice. However, fewer advisors would be subject to a fiduciary standard than under the Obama administration's Fiduciary Rule. The new rule is similar to the SEC's Reg BI which recently became effective for retail accounts. Here's what would and would not change under the new standards for rollover advice.
Source: Penchecks.com, October 2020
The main theme of the DOL's new rule proposal is in alignment with other regulators -- the SEC and FINRA in particular -- but the agency is not surrendering its jurisdiction over tax-qualified retirement plans.
Source: Planadviser.com, September 2020
The Department of Labor heard from an array of witnesses on its proposed fiduciary advice rulemaking package, ranging from calls to withdraw the proposal altogether to making significant changes before proceeding. In the nearly six-hour-long virtual hearing -- which experienced a few technical difficulties -- the DOL heard from six panels comprised of 21 witnesses where the arguments could generally be broken into four groups.
Source: Napa-net.org, September 2020
The Employee Benefits Security Administration announced that it will hold a public hearing on its new fiduciary rule proposal. The hearing is being held "to consider issues attendant to adopting a proposed prohibited transaction exemption on Improving Investment Advice for Workers and Retirees."
Source: Napa-net.org, August 2020
2020 has seen several fiduciary and best interest advice regulations advance at both the federal and state levels. Firms subject to these regulations face challenges in dealing with rules that impose a host of new obligations, and that may overlap and conflict with one another. Eversheds Sutherland developed this chart to help firms take stock of the evolving framework and aid firms in putting the pieces together. This most recent version of the chart is updated to reflect the Labor Department's formal reinstatement and the new interpretation of its 1975 ERISA five-part fiduciary definition.
Source: Eversheds-Sutherland.com, August 2020
Just as broker-dealers and investment advisers finalized their initial implementation plans for the SEC Form CRS and Regulation Best Interest, the DOL announced a final rule and proposed class exemption as the next step in the now 10-year-long "DOL Fiduciary Rule" saga.
Source: Morganlewis.com, August 2020
In this Bloomberg Tax article, Groom associate Anthony Onuoha first discusses the historical timeline that provided the impetus for the Proposed Class Exemption. Then, he provides a broad overview of the Proposed Class Exemption along with key takeaways.
Source: Groom.com, August 2020
Much of the financial services industry's commentary about the proposal has been positive, with various commenters voicing appreciation that multiple national-level conflicts of interest rules are now aligned. Not everyone is pleased with the DOL's proposal, however.
Source: Planadviser.com, August 2020
The DOL released final regulations that reinstate its definition of who is a fiduciary because of providing investment advice to Retirement Plans, which reflect a "5-Part Test" that had been in effect from 1975 until its modification by the 2016 Fiduciary Rule. The final regulation adds several new interpretations and clarifications to the longstanding 5-Part Test. The DOL's new approach has no impact on existing standards for financial institutions or investment professionals with discretionary authority over Retirement Plans.
Source: Kilpatricktownsend.com, August 2020
The DOL has proposed a new prohibited transaction exemption from the rules of ERISA and the Internal Revenue Code that would allow qualifying investment advice fiduciaries to receive what would otherwise be prohibited compensation. These rules are important for plan administrative, investment, and other service providers to 401k and other retirement plans. In general, employers are typically not the fiduciary involved in a potential prohibited transaction related to investment advice, but employers should always be alert to services being marketed by plan vendors by reviewing the information provided to participants related to plan distributions and IRA rollovers.
Source: Frostbrowntodd.com, August 2020
The DOL issued a proposed prohibited transaction exemption that would permit "investment advice fiduciaries" to receive compensation in exchange for providing investment advice to retirement plans and their participants and beneficiaries. Among other things, the proposal generally would reinstate the "five-part test" for determining who is a fiduciary within this context. The revised proposal represents the latest in a soap opera-like series of events involving initial proposed and final DOL regulations, explosive reaction, and their eventual overturning by a federal court of appeals.
Source: Compliancedashboard.net, July 2020
The DOL guidance officially removed the stricter fiduciary rule from 2016 that was struck down by a federal court. The DOL issued a new proposal for a broader and more flexible "prohibited transaction exemption" that would allow investment advisors to charge fees for investment advice they will profit from without violating the ERISA fiduciary standards. The guidance reinstates a 1975 rule that established a five-part test for determining when an investment advisor acts as a fiduciary in advising retirement plan participants.
Source: Hansonbridgett.com, July 2020
The DOL proposed a new class exemption that permits investment advice fiduciaries to engage in otherwise prohibited transactions and receive compensation (including commissions, trailing fees, 12b-1 fees and revenue sharing) as long as certain conditions, including "Impartial Conduct Standards," are satisfied. The proposed rule does not attempt to expand the definition of a fiduciary but rather reaffirms that the definition of what it means to be a fiduciary is tied to the historic "five-part test."
Source: Icemiller.com, July 2020
The DOL's new fiduciary rule package, issued on June 29, 2020, has three important components. This article describes in more detail the rules for determining whether a person is a fiduciary (including by way of providing "investment advice" under the "five-part test"), the DOL's views on the "five-part test" and rollover advice, the consequences of being a fiduciary, and the proposed exemption.
Source: Erisapracticecenter.com, July 2020
The DOL's Fiduciary Rule Prohibited Transaction Exemption May Only Be Needed In Limited Plan Circumstances
Attempting to assess the impact of DOL's newly proposed fiduciary "prohibited transaction exemption" is almost like trying to figure out a Rubik Cube, given all of the moving pieces. But ultimately there may not be many parties who actually will need it. Consider these points when trying to figure out how this new rule affects things.
Source: Businessofbenefits.com, July 2020
The proposed exemption is intended to help workers and retirees by preserving the wide availability of investment advice arrangements and products for retirement investors. The proposed exemption is expected to be well-received by "investment advice fiduciaries," because it is broader and more flexible than the DOL's pre-existing prohibited transaction class exemptions which generally provide relief for more discrete transactions. Here are five things you should know about the proposed exemption.
Source: Troutman.com, July 2020
The new regulation and the proposed exemption are intended to replace the so-called "fiduciary rule" that was issued by the DOL in 2016, which was vacated by the Fifth Circuit Court of Appeals in 2018. Here some key take-aways.
Source: Paulhastings.com, July 2020
Investment advisers, broker-dealers, banks, insurance companies, and other financial services firms, which interface with ERISA-covered plans and IRAs, should especially take note. The provision of "investment advice" to ERISA-covered plans and IRAs triggers a need to comply with stringent fiduciary duties and a complex web of prohibited transaction rules (depending on the nature of the advice recipient).
Source: Fiduciarygovernanceblog.com, July 2020
The DOL has issued a notice of a proposed class exemption from certain prohibited transaction restrictions under ERISA and the Internal Revenue Code relating to the provision of investment advice to participants in retirement plans and individual retirement accounts and annuities. The proposal accompanies a technical amendment to conform DOL regulations to a 2018 Court of Appeals' decision that vacated the DOL's 2016 fiduciary rule.
Source: Bradley.com, July 2020
The proposed exemption would create a pathway allowing investment advice fiduciaries under ERISA and the Internal Revenue Code to (i) receive compensation, including that which derives from rendering advice to roll over assets from employee benefit plans to IRAs, and (ii) engage in certain principal transactions that would otherwise violate the prohibited transaction provisions of ERISA and the Code. The proposed exemption would apply to registered investment advisers, broker-dealers, banks, insurance companies, and their employees, agents, and representatives who are investment advice fiduciaries.
Source: Wagnerlawgroup.com, July 2020
The DOL proposed a new exemption from the prohibited transaction provisions of ERISA in connection with the provision of investment advice. The proposed exemption is the DOL's response to the vacatur of its prior fiduciary rule and reflects its desire to harmonize its approach with that of the Securities and Exchange Commission.
Source: Groom.com, July 2020
The DOL issued a release proposing an important new initiative for retirement accounts that are subject to ERISA or Section 4975 of the Internal Revenue Code of 1986. This Release continues the decade-long saga that began with the DOL's highly controversial effort to remake the 1975 fiduciary rule, which many saw as dramatically extending ERISA's reach, even affecting the way financial services organizations conducted their general (non-ERISA) business.
Source: Dechert.com, July 2020
The DOL is proposing a new regulation to govern investment advice in retirement accounts to replace a rule that was vacated more than two years ago by a federal appeals court. The proposed regulation would provide exemptions under federal retirement law that would allow fiduciaries to receive compensation for advice that would otherwise be prohibited, such as third party payments, as long as they act in a retirement savers' best interests.
Source: Investmentnews.com (registration may be required), June 2020
The DOL has finally unveiled its much anticipated fiduciary rule, though it's a mixed bag and has a certain "back to the future" feel, along with some new implications for recordkeepers, Pooled Employer Plans, and rollover advice. Titled "Improving Investment Advice for Workers & Retirees," the proposal -- and it's just that at this point -- proposes a new prohibited transaction class exemption that would be available for investment advice fiduciaries.
Source: Asppa.org, June 2020
The DOL said that it will propose a new fiduciary standard based on a temporary policy put in place after the 5th Circuit Court of Appeals vacated the DOL's previous rule in March 2018, and it will now allow investment advice fiduciaries to receive certain forms of compensation once prohibited. The proposal would also allow investment advice fiduciaries to give "more choices for retirement using Impartial Conduct Standards."
Source: 401kspecialistmag.com, June 2020
The DOL has proposed an exemption allowing investment professionals acting in their clients' best interest to receive compensation for advice that would otherwise be prohibited, such as rollover recommendations. Under ERISA, investment fiduciaries are generally prohibited from receiving compensation for transactions involving employee benefit plans and IRAs, according to the proposal. But the proposal released on Monday would change that.
Source: Ai-cio.com, June 2020
The famous DOL fiduciary rule died in 2018 and stayed dead. Now suddenly the DOL is sending a new version to OMB for a final look. What sparked its Lazarus-like reappearance is a mystery. There's less mystery about what the document contains, though nobody has seen it. This article catches us up on two lost years for the DOL rule and removes most of the mystery cloaking the sudden change, and why it'll look much like what Wall Street wants, with a key exception.
Source: Riabiz.com, June 2020
A long-awaited rewrite of a DOL rule that would raise investment advice standards for retirement accounts has taken the first step toward public release. On Monday, the DOL sent the proposed revision of its fiduciary rule to the Office of Management and Budget. The measure was supposed to be released in December, according to the DOL regulatory calendar.
Source: Investmentnews.com (registration may be required), June 2020
The DOL has filed for review a draft regulation with the Office of Management and Budget. The actual language of the proposed rule is not yet available, as it must first be analyzed by OMB, but sources are speculating that this proposal likely represents the DOL's new fiduciary rule and that the "exemption" referenced in the title of the rule will be related to the Regulation Best Interest package currently being implemented by the SEC.
Source: Planadviser.com, June 2020
If you were wondering what the DOL was planning to do about its reported revision of the fiduciary rule, wonder no more. A proposal has just been submitted to the Office of Management and Budget for review. While the text of the proposal is not yet available, the title, "Improving Investment Advice for Workers & Retirees Exemption," suggests that it involves a prohibited transaction exemption that could potentially replace the Best Interest Contract Exemption (BICE) that was thrown out by the 5th U.S. Circuit Court of Appeals' in June 2018.
Source: Ntsa-net.org, June 2020
The fiduciary rule issued by the Department of Labor during the Obama administration was struck down in the courts, creating uncertainty that still exists. A recent ASPPA webcast discussed federal efforts to regulate fiduciary activity, as well as the demise of the fiduciary rule and what that means. This article highlights of the webcast.
Source: Asppa.org, April 2020
The Department of Labor has included the proposal of a new fiduciary rule on its Regulatory Agenda. The Agenda indicated that it would be issued in December of last year. But, of course, it hasn't. That raises the question of, if we get a proposed regulation in the near future, will it ever become a final rule?
Source: Fredreish.com, March 2020
On January 10, 2020, the staff of the SEC updated its frequently asked questions on Regulation Best Interest. While much of the information within the FAQs is not new and was taken from the SEC's Adopting Release, the FAQs are significant for three reasons.
Source: Groom.com, January 2020
The SEC's Final Interpretation Regarding Standard of Conduct for Investment Advisers "clarifies" the fiduciary duty of Investment Advisers in a succinct 42 pages. The Commission states that the Interpretation should affirm an IA's understanding of fiduciary duty, reduce uncertainty and facilitate compliance. Though REG BI may not apply to internal pension fiduciaries, it will apply to IAs handling 401k rollovers, not just with respect to investment advice, but also with respect to the advice to roll over the 401k.
Source: Cohenbuckmann.com, October 2019
The presidential candidate released a 14-page proposal on Oct. 3, "Empowering American Workers and Raising Wages," that essentially calls for restoring worker protections and labor union rights by "returning power to working people." The proposal singles out the Department of Labor's conflict-of-interest rule that was vacated last year by the 5th U.S. Circuit Court of Appeals.
Source: Asppa.org, October 2019
As early as this fall, we may see the DOL issue new guidance on rollovers (a significant and uncertain issue in the wake of the Fiduciary Rule's demise) and, in all likelihood, a proposed class exemption applicable to broker-dealers, which, at its heart, could condition relief on adherence to new Regulation Best Interest. It is not anticipated that the DOL will reformulate the ways in which one becomes an investment advice fiduciary under ERISA.
Source: Fiduciarygovernanceblog.com, September 2019
On September 11, 2019, XY Planning Network filed a lawsuit against the United States Securities and Exchange Commission to invalidate its new fiduciary standards, known as the Regulation Best Interest Rule. The plaintiffs argue that the regulation fails to meet standards imposed under the Investment Advisers Act of 1940, and frustrates the intent of the Dodd-Frank Act.
Source: Ascensus.com, September 2019
The Department of Labor is set to finalize its new fiduciary rule by the end of 2019. The rule covers those giving advice regarding retirement accounts regulated by ERISA. At this point, we have little information on what the rule is likely to look like, but there are some clues in place.
Source: Hallbenefitslaw.com, September 2019
Over the summer, the SEC finalized Regulation Best Interest. It becomes effective this week. In a June 5, 2019 SEC Press Release, issued by the SEC, Jay Clayton, SEC Chairman, stated, "This rulemaking package will bring the legal requirements and mandated disclosures for broker-dealers and investment advisers in line with reasonable investor expectations, while simultaneously preserving retail investors' access to a range of products and services at a reasonable cost." Although it has received mixed reviews, it is clear Reg BI will impact investors, the industry, and, although many might not expect it, retirement plan sponsors.
Source: Fiduciarynews.com, September 2019
On September 9, 2019, the states of New York, California, Connecticut, Delaware, Maine, New Mexico and Oregon, and the District of Columbia filed a complaint for declaratory and injunctive relief against the SEC challenging Reg BI. Based on their public complaints since the proposed releases, some expected certain investor advocacy groups to attempt to take the lead in challenging this rulemaking effort by the SEC. Ultimately, the States have elected to the lead the charge.
Source: Brokerdealerlawblog.com, September 2019
This year has seen a number of fiduciary and best interest investment advice regulations at both the federal and state levels. Firms subject to these regulations will face challenges in dealing with rules that will impose a host of new obligations, and that may overlap and conflict with one another. This chart is intended to help firms take stock of the evolving framework and aid firms in putting the pieces together.
Source: Eversheds-Sutherland.com, August 2019
High-level Democrats in the Senate and House of Representatives have asked a congressional watchdog to study the fallout from the now-defunct Department of Labor fiduciary rule, including the regulation's effect on a wide range of business practices and how those practices have changed since the rule was killed in court.
Source: Investmentnews.com (registration may be required), June 2019
This article considers how the SEC's new, detailed, and significantly higher standard of conduct rules for brokers may affect plan sponsor fiduciaries. In light of the new (and significantly elevated and detailed) broker standard of conduct rules, the application of the plan fiduciary's duty to monitor "whether the adviser continues to meet applicable federal and state securities law requirements" deserves special attention.
Source: Octoberthree.com, June 2019
The form and substance of the Department of Labor's new fiduciary rule, set to be unveiled by the end of the year, is anybody's guess. But there are a few clues, and attorneys who specialize in fiduciary and retirement law have mined them to offer some likely scenarios.
Source: Investmentnews.com (registration may be required), June 2019
The Department of Labor will propose a new fiduciary rule in December, the opening salvo in what will likely prove to be another contentious battle to overhaul investment advice standards in retirement accounts.
Source: Investmentnews.com (registration may be required), May 2019
By all accounts, 2019 will see the advancement of a number of fiduciary and best interest investment advice regulations at both the federal and state levels. Firms subject to these regulations will face challenges in dealing with rules that will impose a host of new obligations, and that may overlap and conflict with one another. This 6-page chart is intended to help firms take stock of the evolving framework and aid firms in putting the pieces together.
Source: Sutherland.com, May 2019
Labor Secretary Alexander Acosta signaled that the Labor Department will issue new fiduciary-related rules. In an exchange during an oversight hearing held by the House Education and Labor Committee, Rep. Marcia Fudge questioned Acosta on Labor's fiduciary plans. Acosta said that Labor is collaborating with the Securities and Exchange Commission as it works on its advice-standards package, which includes Regulation Best Interest, and that "based on our collaborative work, we will be issuing new rules in this area."
Source: Thinkadvisor.com, May 2019
Michael Barry, president of O3 Plan Advisory Services LLC, discusses the inconsistencies in the Department of Labor's theory of retirement plan sponsor fiduciary responsibility, especially with respect to participant choice, and the consequences of its failure to provide clear guidance.
Source: Plansponsor.com, May 2019
Although DOL and the IRS will not bring enforcement actions against fiduciaries working diligently and in good faith to comply with the impartial conduct standards, FAB 2018-02 does not address the rights or obligations of other parties. It is possible that participants in plans subject to ERISA, along with plan fiduciaries, may be able to bring claims against a fiduciary that is engaging in transactions without an applicable exemption.
Source: Klgates.com, May 2019
Drinker Biddle & Reath has updated their state fiduciary/best interest developments chart. They note that they are still waiting for finalization of the Nevada rules on the fiduciary duty for broker-dealers and investment advisors and the effective date of the New York rules on the sale of annuities and life insurance. In the meantime, though, Maryland and Massachusetts have stepped in with new developments.
Source: Brokerdealerlawblog.com, April 2019
For advisors who are fiduciaries, the loss of the BIC Exemption -- which permitted the receipt of "conflicted compensation" when an advisor satisfied best interest and disclosure requirements -- is problematic. Fortunately, the DOL recognized that problem and provided relief in Field Assistance Bulletin 2018-02. While this relief is significant, it is not without limitations.
Source: Brokerdealerlawblog.com, April 2019
In June 2018, the US Court of Appeals for the Fifth Circuit officially ordered the DOL to vacate the so-called DOL Fiduciary Rule and its related exemptions. As a result of this order and the DO's decision not to appeal, the DOL Fiduciary Rule is regarded as effectively repealed, leaving just the formality of removing it from the Code of Federal Regulations. But the rule continues to influence developments not only in the retirement area, but also beyond.
Source: Morganlewis.com, April 2019
If you need a convenient, "all-in-one-place" overview of what's happening at the state level, Drinker Biddle's got it. The Best Interest Compliance Team at the legal powerhouse put together the following list of bills, proposals, regs and requirements now put forth involving fiduciary and related matters.
Source: 401kspecialistmag.com, March 2019
A number of states are seeking to impose fiduciary or best interest requirements on broker-dealers, investment advisers, financial planners and/or insurance brokers and producers in their dealings with customers. While the rules vary from state to state, they are in addition to -- and sometimes inconsistent with -- federal requirements being considered by the SEC or by the Department of Labor for retirement investment advice. This chart summarizes the activities in each state.
Source: Brokerdealerlawblog.com, March 2019
This article discusses a novel approach for compliance with the fiduciary standard for the selection of investments for 401k plans. All the more interesting, the approach was part of an opinion of the U.S. First Circuit Court of Appeals.
Source: 401kspecialistmag.com, February 2019
On January 18, the Nevada Securities Division released its long-awaited proposed draft regulation. Under the proposed regulation, a broker-dealer and sales representative are presumed to owe a fiduciary duty to the client.
Source: Fiduciarygovernanceblog.com, January 2019
The Securities and Exchange Commission's advice standards package and the Labor Department's revised fiduciary rule are both expected to be finalized by September 2019, ThinkAdvisor writes. As part of the SEC package, there will be changes to Regulation Best Interest and the Customer Relationship Summary, according to SEC Chairman Jay Clayton, the publication writes.
Source: Thewealthadvisor.com, December 2018
When the Labor Department proposed its fiduciary rule in 2015, its key objective was to reduce the effect of conflicts of interest on the advice investors rely on to save for retirement. When we examine the data, we see that the DOL fiduciary rule proposal was successful in mitigating lower returns resulting from conflicted advice in the two years after the rule was proposed. Now as the Labor Department rule has been struck down by the courts, the question is, will the SEC turn its Regulation Best Interest proposal into a workable regulation that maintains these positive trends for investors?
Source: Morningstar.com, December 2018
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