The Definition of Fiduciary: Back to the DOL Drawing Board

“Democrat and Republican lawmakers don’t agree on much, but many of them have protested to the [Department of Labor] about this fiduciary definition change because Wall Street money does go a long way.” (From The Changing Definition of Plan Fiduciary and Why Plan Sponsors Should Care by The Rosenbaum Law Firm P.C.) 

Under intense pressure from Congress, industry groups, and the public, the Department of Labor recently announced that it would withdraw its controversial proposed regulations expanding the definition of “fiduciary” under the Employee Retirement Income Security Act (“ERISA”). For your reference, a roundup of commentary and analysis on the DOL’s move, from lawyers and law firms on JD Supra:

DOL to Revise Definition of Benefit Plan “Fiduciary” (Katten Muchin Rosenman LLP)

“The DOL’s original proposal broadened the scope of service providers who would be classified as fiduciaries… Significantly, the original proposal’s elimination of [certain] requirements would likely have caused an investment advice provider that appraised plan assets just one time to become a plan fiduciary.”  Read more»

Proposed ERISA Regulations Defining Fiduciary to Be Withdrawn and Modified (Morrison & Foerster LLP)

“The DOL’s announcement provides that the DOL anticipates revising the current proposed regulations, including (i) clarifying that fiduciary advice is limited to individualized advice directed to specific parties, (ii) responding to concerns about the application of the regulations to routine appraisals, and (iii) clarifying the limits of the rule’s application to arm’s-length commercial transactions, such as swap transactions.” Read more»

DOL to Re-Propose Rule on Definition of Fiduciary (Reed Smith)

“Additionally, in responding to concerns about potentially overlapping or conflicting fiduciary regulations under ERISA and the Dodd-Frank Wall Street Reform and Consumer Protection Act, the DOL indicated it will continue to work with other regulatory agencies to ensure there would not be inconsistent standards for firms providing financial services to ERISA plans and IRAs.” Read more»

DOL Announces Intent to Repropose Rule on Definition of “Fiduciary” (Morgan Lewis)

“The open question is how effectively, and to what extent, the reproposal will address the significant concerns raised by the comments, including how flexible the terms and conditions will be in any new or amended exemptions designed to address those concerns, and whether IRAs will be treated differently from ERISA-covered plans. The regulatory process also could be affected by the fact that 2012 is an election year, which can often result in delays of controversial regulations.” Read more»

U.S. Department of Labor to Reconsider Proposed Regulation Impacting ESOP Appraisers (Sheppard Mullin Richter & Hampton LLP)

“The DOL has stated that the purpose for the re-proposal is to allow more time for more input from those affected by the proposed regulation. Certainly, those with a view on the impact of the proposals should review the re-proposal when it becomes available and be prepared to provide their comments and insights.” Read more»


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