On September 19, 2011, the U.S. Department of Labor's Employee Benefits Security Administration announced that it will revise and repropose its controversial rule amending the definition of fiduciary under the Employee Retirement Income Security Act (ERISA) in early 2012. The original proposal would have subjected a number of additional entities/persons, including certain SEC-registered investment advisers and appraisers of plan assets, to the fiduciary duties and requirements set forth in ERISA. A recent article by attorneys at Morgan Lewis analyzes what this latest development means for the rule, and concludes that:
- The scope of the rule will likely be revisited to address concerns about who is considered a fiduciary under ERISA, including addressing concerns that (a) the proposal treats certain persons as fiduciaries without regard to whether the advice they provide is individualized to a particular plan or plan participant and (b) the proposal's "seller's exception" is too limited to effectively exempt sellers in routine transactions;
- The new rule will likely still cover IRAs;
- The Department of Labor will take the economic analysis (i.e., cost-benefit analysis) of the rule seriously; and
- The Department of Labor and other agencies, including the SEC, may use the extended time period to coordinate with each other to avoid inconsistent standards for firms providing financial services to ERISA plans and IRAs.
A link to the article can be found here.