As discussed in a previous Jacko Law Group, PC Legal Risk Management Tip, in October of last year the Department of Labor (the “DOL”) published a proposed rule that would amend the definition of “fiduciary”, and would significantly expand the categories of persons who would be deemed to be fiduciaries subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). On Monday, however, the DOL announced that it will re-propose the rule, and stated that this decision was in part a response to requests from the public, including members of Congress and the financial services industry, that the DOL allow an opportunity for more input on the proposed rule. Some members of the financial services industry expressed concern that the originally proposed rule would limit service providers’ ability to provide advice to retirement plans. For instance, The Securities Industry and Financial Markets Association (“SIFMA”) stated that the originally proposed rule would ultimately harm investors by raising the cost of saving and would cause retirement plan service providers difficulty in receiving fees or commissions. To that end, in drafting the re-proposed rule the DOL will look to address concerns about the impact of the new definition on the current fee practices of brokers and advisers, and clarify the continued applicability of exemptions that have long been in existence that allow brokers to receive commissions in connection with mutual funds, stocks and insurance products. The re-proposed rule is expected to be issued in early 2012. For additional information please contact the JLG team at (619) 298-2880.
Jacko Law Group, PC
Department of Labor to Re-Propose Definition of "Fiduciary"
Blog Investment Adviser Regulatory Counsel (SEC & State)
September 23, 2011