Broker-dealer that sponsors 401k plan serving as their own broker

[Laura Harrington]

If a broker-dealer sponsors a qualified plan that covers employees of the broker-dealer, can they serve as their own broker of record for the plan?

The plan is self-directed. The broker of record for the plan does not actually execute any of the trades as the TPA firm uses a trading platform to do all of the trading. In a typical arrangement the broker of record for the plan would receive a piece of the 12b-1 fees, commissions, etc.

Does this qualify for one of the PT exemptions if no commissions, trailers, etc. are paid to the brokerage firm?

Laura

[Jim Chad]

I see so many firms do it, that I have to beleive it is legal ....at least for some of them.

Here is what I am thinking. If a firm the size and quality of Wachovia is doing it, I would think that they have had their legal department research something so obvious. Maybe it is a class exemption or maybe they filed for an exemption.

If it is not a class exemption, some of the very small firms might be on shaky ground if they have not filed.

[jpod]

Why would a pt exemption be needed if nobody on the inside is collecting any fees or otherwise obtaining some advantage from the arrangement?

[Guest Sara H]

What if a bank with a trust department wants to use one of their own employees as the plan's investment advisor rather than paying an outside advisor. No commissions would be paid to the rep since he is already an employee of the bank. Is this allowed?