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Dechert Comment Letter to SEC Regarding Standard of Conduct for Investment Advisers (PDF)

"[U]nless the standards provide appropriate flexibility to accommodate the vast diversity of advisers and clients, and allow for evolving and differing business models, they will harm advisers and clients, damage the industry, and stymie innovation. If the Commission decides to move forward with a final interpretation and does not withdraw the IA Proposal, we believe that the Commission must address a number of concerns."

Text of Brief by Cambridge Financial Services, LLP Urging Supreme Court to Overturn Ninth Circuit Decision in Tibble v. Edison (PDF)

"CFS's experience in advising and counseling ERISA fiduciaries and its knowledge and understanding of prevailing and evolving best practices and 3 standards of care yields four key observations: [1] many plan fiduciaries, especially among large plans, already follow good monitoring practices, meaning that reversing the Ninth Circuit will not result in increased costs for these fiduciaries or their employers; [2] the cost of regular monitoring includes a small amount for 'benchmarking' plan fees in all service categories -- investment, administration, trustee, consulting, and the like, and is, in many cases, largely born by plan participants, not employers or fiduciaries; [3] the Ninth Circuit's decision threatens to erode the past decade's progress on fee reductions in defined contribution plans, driven in part by private lawsuits, which has saved plan participants billions of dollars ; and [4] the Ninth Circuit's standard of 'material' changed circumstances is unworkable and illogical."

Katten Muchin Rosenman LLP Comment Letter to IRS on Proposed Regs Regarding Calculation of UBTI for VEBAs (PDF)

"[U]nless Q&A-5 is revised, VEBAs which have been operating in a permissible manner will find that their investment income which was earned during the current year in which the regulation is promulgated, and perhaps even prior to the date that the regulation is enacted, will be subject to tax. I respectfully request that Q&A-5 be revised to provide that the effective date of the regulation be the first taxable year STARTING (not ENDING) on or after the date of publication of the final regulation[.]" [Editor's note: The author was the principal author of the 1980 proposed VEBA regulations.]

Davis & Harman LLP Comment Letter to SEC on Standards of Conduct and Other Obligations of Broker-Dealers and Investment Advisers (PDF)

"Because it is not possible to determine the effects of possible SEC reforms without taking into account the interaction with possible DOL reforms significantly affecting the same conduct and the same IRA market, the responses to the SEC Request will virtually all be incorrect as soon as the DOL acts, thus rendering the SEC's administrative record unhelpful.... [T]here is complete overlap between the two projects with respect to investment services provided to IRA owners. Since IRA assets were approximately $4.9 trillion as of the end of 2011, the degree of overlap between the two projects is enormous."

Will the Trump Administration Re-'Order' 401(k) Plan 'Alternatives'? Part 2 (PDF)

"This Part 2 focuses on the tensions inherent in the law that historically have served as substantial headwinds for 401(k) plan access to such strategies and provides a deeper dive into currently available pathways with a focus on recent [SEC] reforms and traditional operational constraints that continue to make some strategies highly challenging under [ERISA]."

Will the Trump Administration Re-'Order' 401(k) Plan 'Alternatives'? (PDF)

"This [article] provides an overview of President Trump's recent Executive Order directing regulatory agencies to take action to enhance 401(k) plan access to such strategies, and continues by summarizing some prior history, moves on to outline concerns of plan fiduciaries and then offers some of the reasons proponents and opponents have concerning alternative assets in 401(k) plans."

Did You Send Your QPAM-a-Gram Yet? Show the DOL You Care Enough to Send the Very Best

"Managers currently relying on the QPAM Exemption (or expected to be relying on the QPAM Exemption) and wishing to continue to do so in respect of managing assets subject to the fiduciary responsibility provisions of [ERISA] or the prohibited transaction rules of Section 4975 of the Internal Revenue Code ... must provide notice to the DOL via email by September 14, 2024. The notice required is brief ... The notice must be provided on an entity-by-entity basis[.]"

Texas Court Issues DOL Fiduciary Stay

"[T]he Stay is not limited to the plaintiffs in the case or the jurisdiction of the Eastern District of Texas but, rather, applies nationwide....[T]he Stay does not impact the effective date of ... amendments to [PTE 2020-02] (which are scheduled to become effective September 23, 2024) ... [U]ntil further court action, the 2024 Fiduciary Rule and amendments to [PTE 84-24] will not become effective and the 1975 rule (the so called 'five part test') remains in effect." [FACC. v. DOL, No. 24-0163 (E.D. Tex. Jul. 25, 2024)]

Not Quite QPAMdemonium: DOL Issues Final Changes to the QPAM Exemption

"The Final Amendment imposes a variety of new requirements with potential impacts on both investment managers currently relying on (or those considering relying on) the QPAM Exemption and financial firms ... [F]or most market participants -- whether most large well-established investment managers managing Plan assets or financial counterparties and service providers with whom they trade -- Plan related business should not be substantially impacted."

New Halloween Fiduciary Proposal May Be a Real Scream

"[M]any of the concepts embedded in the Release's proposed new definition, as well as changes to several existing PTCEs may seem eerily reminiscent of the 2016 Fiduciary Rule.... [This article offers] initial reactions -- subject to revision and clarification -- as to what [the authors] believe would be the principal commercial impacts of the Release."

DOL Will Not Pursue Appeal of Federal Court Rollover Ruling, But Will the 'Regular Basis' of Fiduciary Rule Developments Continue?

"While the ASA decision is the second vacatur issued by a Federal court concerning the DOL's attempts to recraft the definition or interpretation of what it takes to be an 'investment advice' fiduciary, it is also the second Federal case to cast doubts on the DOL's analysis in its 2020 interpretation of the Five-Part Test. Nevertheless, there are indications that the DOL is set to propose yet another regulation to amend the Five Part Test -- perhaps during this year." [American Securities Association v. DOL, No. 22-0330 (M.D. Fla. Feb. 13, 2023; stipulation as to voluntary dismissal filed May 16, 2023; 11th Cir. No. 23-11266)]

The Latest in the 'Regular Basis' of DOL Fiduciary Rule Developments: Federal Court Vacates Certain Provisions Applicable to Rollover Advice

"Along with a September 2022 case in the Southern District of New York, the ASA Decision casts doubt on the DOL's 2020 interpretation of the 1975 Rule ... Additionally noteworthy is the fact that the ASA Decision marks the second vacatur that a Federal court has issued in connection with the DOL's efforts to recraft or interpret the investment advice fiduciary rule codified as the 1975 Rule[.]" [American Securities Association v. DOL, No. 22-0330 (M.D. Fla. Feb. 13, 2023)]

DOL Proposes Significant Changes to QPAM Exemption

"The proposal would generally: [1] Substantially expand disqualification events.... [2] Impose a one-year winding-down period for the QPAM -- triggered on covered conviction or prohibited misconduct.... [3] Require written assurances and indemnities to plan clients.... [4] Mandate QPAM registration with the DOL for national database.... [5] Impose recordkeeping requirements on QPAM exemption compliance and compel access by regulators, plans and participants and beneficiaries.... [6] Offer new color on QPAM as required decision-maker.... [7] Increase client assets under management and shareholder equity thresholds."

More ESGcitement from the DOL: New Proposed Investment/Proxy ERISA Regs (PDF)

15 pages. "Some may be reading the Proposed Regulation's operative language as requiring fiduciaries to consider certain ESG and ESG-type factors when making their investment and investment-related decisions.... Competing policy objectives may well be at play here, with those favoring a more expansive use of ESG factors to advance a climate-based agenda confronting the very real legal safeguards imposed by ERISA in connection with Plans' economic returns."

DOL Issues Limited Relief Regarding New Fiduciary Exemption

"[To] the extent that financial institutions had planned to complete their required retrospective reviews on or before the previous December 20, 2021 deadline on a special (e.g., non-calendar) schedule, they may wish to reconsider that choice in light of [FAB 2021-02], which, by providing general transition relief through January 31, 2021, now extends the relief to beyond the end of calendar-year 2021."

DOL Issues New Cybersecurity Guidance Under ERISA

"The DOL guidance is multi-pronged and directed at all aspects of the retirement ecosystem. It provides guidance on cybersecurity best practices for plan sponsors, fiduciaries, record-keepers and participants and is designed to protect plan assets and reduce the risks of cybersecurity threats."

Dealing with IRA and Plan Rollovers (PDF)

22 presentation slides. "A prohibited transaction exemption will be required for a rollover to the extent the person is an investment advice fiduciary. Investment advice must meet all prongs of a 'Five-Part Test' to result in investment advice fiduciary status. Certain recommendations may constitute investment advice for these purposes."

DOL Issues Final Fiduciary Exemption with New Commentary

"The Release gives rise to at least three broad important considerations: [1] Change in administration, impacts to effective date and scheduled revocation of FAB 2018-02.... [2] DOL's interpretation of five-part test and impact on rollovers.... [3] The conditions of the final exemption."

A Look at the Current State of ERISA Class Action Litigation

"2020 was set to be a landmark year for ERISA litigation in the Supreme Court. Going into its 2019 term, the Supreme Court expressed a renewed interest in ERISA litigation, granting certiorari in three cases and delaying a fourth until its October 2020 term. But overall, the Court's decisions provided more questions than answers."

ESG: An Overview for Asset Managers (PDF)

16 pages. "ESG standards used by investors and managers are currently influenced by a variety of public and private organizations and initiatives. There is little guidance from governments or regulators on the best approach to implementing ESG standards, although ESG is now attracting greater focus from legislators and regulators ... This article focuses on ESG matters, which are distinct from (but of course related to) impact investment. The former is ultimately a risk framework used as a tool in the investment and monitoring process, whereas the lattergoes a step further and requires social and/or environmental matters to form part of the investment strategy, with the positive intention of making a measureable impact."