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Benefits in the News > By Subject >

Fiduciary duties of trustees, directors, others


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Recent Headlines

Nationwide Accused of Charging Excessive 401(k) Fees
"The lawsuit, filed June 27 by a participant in a small 401(k) plan sponsored by Andrus Wagstaff PC, says Nationwide's practice of charging a flat, 1 percent fee for administrative services allowed the company to collect fees that were nearly 10 times the median fee throughout the industry." (Bloomberg BNA)
Prohibited Transactions for Fiduciaries After DOL Rule Change
"One viable recommendation for reducing legal risk is to adopt a third-party verification system. A third-party verification (TPV) service would allow plan providers to ensure a customer understands the recommendation for a rollover or change in investment. This includes understanding the fees and costs associated with a financial transaction, compensation for the advisor, benefits, and risk of the investment, and the reasons for making the transaction. A TPV could also provide documentation of the client's understanding should litigation arise." (Butterfield Schechter LLP)
SEC Chairman Promises Action on Fiduciary Rule
"SEC Chairman Jay Clayton pledged to move forward on the fiduciary rule in a 'coordinated' process with the [DOL].... The SEC and Labor Department must work together on 'the very complicated issue' of the rule, he said.... 'What's happening at the [DOL] is going to affect the markets we regulate, and vice versa.' " (Financial Planning)
LPL Bars Brokers from 401(k) Rollover Advice
"LPL Financial's hybrid advisors will no longer be able to make 401(k) rollover recommendations when acting as brokers, InvestmentNews reports. The move will expose advisors and LPL to less risk under the [DOL's] fiduciary rule, which treats rollover recommendations as fiduciary advice and went into partial effect June 9, according to the publication. LPL's hybrid advisors will still be able to recommend rollovers if that advice is limited to their company's advice side of the business and meets certain conditions, according to an internal memo seen by InvestmentNews." (Financial Advisor IQ)
What Every Investment Committee Member Needs to Know
"Fiduciary responsibility -- what does it mean to do the right thing? ... How to construct a successful investment committee ... Diverse committees achieve better decisions than less diversified ones ... Focus on what you can control -- the investing fundamentals." (Vanguard)
Public Fund Trustees Facing Host of Difficult Challenges
"Every public pension system and trustee is unique, and only the pension system itself can determine what governance approach works best for it ... However, common questions must be asked ... [G]ood governance is a four-legged stool ... The first leg is setting the direction of the organization, followed by directing staff and prudently delegating, overseeing what has been delegated, and correcting course when needed." (Pensions & Investments)
Impact of the DOL Fiduciary Rule on Independent Insurance Agents
"[S]uggesting that an investor take money out of his IRA to purchase a life insurance policy would be fiduciary advice.... [The prudence requirement] does not require agents to guarantee a future outcome. But it does require agents to go through a thorough and well-documented series of steps.... The 'impartial conduct standards' require that the agent act in the best interest of the client and not make misleading statements in any information provided to the client." (Drinker Biddle)
[Opinion] GE Botches Its Pension Math?
"Is the solution to GE's pension woes more hedge funds and more private equity funds? ... [M]ore alternative investments won't cure America's growing pension crisis.... [T]he time has come to enhance Social Security to adopt a similar model to what we have in Canada with CPP assets being managed by the CPPIB. In order to to do this properly, they need to get the governance right." (Pension Pulse)
Voya's Win in 401(k) Fee Suit Involving Financial Engines Bodes Well for Other Record Keepers
" 'The court here has said that an entity can be a fiduciary for some purposes and not others, and with respect to this fee issue, Voya was not a fiduciary,' [attorney John Utz] said. 'It was not a fiduciary because it wasn't acting as a fiduciary in negotiating fees, and ... once the arrangement was in place, there was not anything Voya could do to control its compensation.' Voya, for example, couldn't control the number of participants using the personalized advice services offered in the Nestle 401(k) plan." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ] (Pensions & Investments)
Voya Scores Win in ERISA Suit Over Robo-Adviser Fees
"The investor, a participant in Nestle USA Inc.'s 401(k) plan who filed a proposed class action, can't use [ERISA] to challenge Voya's fees, a federal judge ruled June 20. That's because Voya wasn't acting as an ERISA fiduciary when it negotiated the fees for Financial Engines' advisory services, the judge said." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ] (Bloomberg BNA)
Task Force Develops Small Plan RFP Template
"[A] special joint NAPA/CIkR task force has developed a template designed to make it easier to obtain a consistent, apples-to-apples comparison of service features from 401(k) recordkeepers.... The NAPA Recordkeeping Platform Assessment Template deals with three key service aspects: [1] Administration Fee Detail (including per-participant, asset-based, and participant and document services); [2] Plan Service Highlights (including data submission, reporting and testing, and call center services); [3] Investment Program Overview (including fund menu requirements, and revenue-sharing methodology)." (American Society of Pension Professionals & Actuaries [ASPPA])
Tide Is Turning Against Discretionary Authority and the Abuse-of-Discretion Standard of Review (PDF)
"[L]egislators, courts, and regulators have all moved to severely limit the discretion of plan administrators and walk back the deference traditionally afforded their decisions under the deferential, abuse -of-discretion standard of review.... Because of the Orzechowski decision, ERISA plans in California, and maybe elsewhere in the Ninth Circuit, that rely on a 'policy, contract, certificate, or agreement' have now lost the benefit of deferential judicial review.... The Second Circuit has abandoned the 'substantial compliance' doctrine and held that even minor violations of the [DOL] claim regulations deprive a plan administrator of the abuse-of-discretion standard of review." (Groom Law Group)
Tenth Circuit: Plaintiff Bears the Burden of Proving Causation in ERISA Breach of Fiduciary Duty Cases
"The Tenth Circuit reasoned that the statute limits liability to losses 'resulting from' a breach of fiduciary duty, which dictates that the burden remains with the plaintiff at all times, since the plain language of the statute makes causation an element of the claim. This holding is in line with Second, Sixth, Ninth, and Eleventh Circuit Courts of Appeals." [Pioneer Centres Holding Co. Employee Stock Ownership Trust v. Alerus Financial, N.A., No. 15-1227 (10th Cir. June 5, 2017] (Littler)
Putnam, Fidelity Win 401(k) Lawsuits
"A federal judge shot down plaintiffs' arguments that Putnam breached its fiduciary duty to its own 401(k) plan participants by "stuffing" the plan with Putnam-affiliated investment funds, without regard to cost, performance or other metrics.... The Fidelity lawsuit, Ellis et al. vs. Fidelity Management Trust Co., concerned the firm's alleged mismanagement of a stable value fund. Plaintiffs claimed the fund's low investment returns and high fees made it an imprudent investment for 401(k) plan participants." (Pensions & Investments)
[Opinion] The CFP Board's Thunderbolt Fiduciary Play Should Proceed and Likely Will
"In what may be a giant step forward for investors and the advice business, the Certified Financial Planner Board of Standards is proposing to make its CFP certificants 'fiduciaries at all times.' It may also be death knell of sorts for the suitability standard that allows financial advisors greater latitude in choosing how and when investors' interests get put ahead of their own." (RIABiz)
Identifying Plan Assets Is Not as Easy as It Seems
"[T]he DOL has indicated that plan assets are to be identified on the basis of ordinary notions of property rights under non-ERISA law and to include any property -- tangible or intangible -- in which a plan has a beneficial ownership interest ... Federal courts have accepted this definition as a reasonable one ... although it may still be difficult to apply -- for example, in determining whether the data of participants that plans obtain is a plan asset, an issue that is relevant in determining the presence of fiduciary obligations in the context of cybersecurity. Recent court cases illustrate this principle." (Marcia Wagner, via planadviser)
The Quandary of Publicly Traded Employer Stock in a 401(k) Plan (PDF)
"[In] the wake of a series of high-profile employee lawsuits seeking recovery against Enron, Lehman Brothers, and other employers for losses from 401(k) investments in employer stock, such funds can ... seem a recipe for disaster. This article examines the quandary that employer stock funds pose for plan sponsors, who must navigate ERISA's careful balance of [1] ensuring fair and prompt enforcement of employee rights under employer-provided retirement plans while [2] encouraging employer creation of these plans." (McDermott Will & Emery, via Bloomberg BNA Pension & Benefits Daily)
Non-Delay of DOL Fiduciary Conflict of Interest Rule Has Impact on HSA Custodians and Trustees
"Despite the transition relief, DOL appears to expect some diligence to ensure compliance with the Impartial Conduct Standards.... [T]he DOL expects 'compliance with the Impartial Conduct Standards between June 9, 2017 and January 1, 2018, will be substantial, even if there is some reduction in compliance relative to the baseline.' However, the DOL 'is uncertain about the magnitude of this reduction and will consider this line of questions as part of its review'." (Alston & Bird, LLP, via Employers Council on Flexible Compensation [ECFC])
[Opinion] Interesting Angles on the DOL's Fiduciary Rule, Part 52
"[It] will be virtually impossible for the DOL and SEC to collaborate on the development of a common, or at least compatible, definition of fiduciary advice and standard of care before December 31.... [A] proposed regulation would probably need to be published in early to mid-September.... That seems almost impossible -- partially because of the need for coordination and partially because the SEC hasn't previously proposed guidance on these issues.... As a result, [this author's] view is that the DOL will extend the transition period, perhaps for as much as a year. That would allow time for the two agencies to work together in a thoughtful manner and at a reasonable pace." (FredReish.com)
[Discussion] Hiring Company Owner's Step-son as Plan's Financial Advisor
"Husband owns 100% of the company. Wife works at the company and is a co-trustee of the plan. She would like to hire her son from a prior marriage (who has not been adopted by her husband) as the financial advisor for the company's 401(k) plan. Several other unrelated individuals are compnay employees. He would receive commissions and fees, of course. The plan allows participants to self-direct the investment of their accounts. Assuming the commissions and fees are reasonable, is this allowed?" (BenefitsLink Message Boards)
[Discussion] What Information Do You Use to Evaluate Investment Funds?
"When a retirement plan's fiduciary (whether it's the plan's sponsor/administrator, a section 3(38) manager, or a section 3(21) advisor) evaluates investment funds to consider which should be added to or removed from a plan's menu for participant-directed investment, which sources of information should the fiduciary use? Does a fiduciary look at the Beta, R2, Sharpe Ratio, Standard Deviation? How does these measures aid, or distract from, one's analysis? Does the fiduciary use Morningstar? Lipper? Bloomberg? Litman Gregory? Zacks? Zephyr? Others? Which sources do you like, and why?" (BenefitsLink Message Boards)
Allianz Workers Win Class Certification in Suit Over 401(k) In-House Funds
"U.S. District Judge Josephine L. Staton June 15 conditionally granted the plan participants' motion for class certification. Participants sufficiently showed they have standing to continue as a class by producing evidence suggesting that Allianz managed and selected funds for the plan based on whether the funds would benefit the company rather than the participants[.]" (Bloomberg BNA)
What Are the Best Funds for Your 401(k) Plan?
"Whether you are considering an off-the-shelf design to keep costs low, or you prefer a more customized plan (that may cost more), you will need to understand the risks and potential benefits associated with the different approaches to investment offerings.... Here are 14 things to consider when considering which investment options are the best 401(k) funds for your plan." (ForUsAll)
States Pushing Fiduciary Rule Standards (With Success)
"Nevada surprised industry insiders by quickly debating and passing Senate Bill 383 revising the Nevada Securities Act to stiffen the fiduciary standard. The bill states that any 'broker-dealer, sales representative, investment advisor or representative of an investment advisor shall not violate the fiduciary duty toward a client' imposed in a separate statute. That separate statute imposes the 'duty of a fiduciary' on all financial planners.... Other states, such as New York and California, are considering fiduciary statutes of their own." (InsuranceNewsNet.com)
[Discussion] 408(b)(2) Disclosures and the Fiduciary Rule
"Is the fact that the fiduciary rule is now in effect changing your approach to your 408(b)(2) disclosures (or lack of them)? Or do you do 408(b)(2) disclosures for all clients regardless of covered service provider status?" (BenefitsLink Message Boards)
[Guidance Overview] With the Tip of a Hat, a Fund Manager Can Be an ERISA Fiduciary
"[F]und managers [should] consider taking the following actions immediately to limit their potential liability exposure and to evidence their good faith compliance with the final regulation: [1] Revise private placement memorandums and subscription documents to incorporate statements disclaiming the provision of investment advice to benefit plan investors, [2] Adopt universal policies regarding permissible marketing and promotional activities, and [3] Require written representations of independent fiduciaries to satisfy regulatory exemption." (Winstead PC)
Warning, Employers: Liability Lurks in Your 401(k) Plan and the New DOL Rule Won't Protect You
"[A] business owner has a legal fiduciary obligation to make sure the plan is set up, monitored and managed for the 'sole benefit' of the employees. For most business owners, this is shocking news, as they often think that the provider or local broker is responsible to make sure things run smoothly. Not so." (Entrepreneur)
Fiduciary Reforms Will Impact Expanding HSA Market
"[T]he jury is actually still out regarding the question of whether the employers will become fiduciaries to their HSA-using employees. Advisers making investment recommendations for individuals using HSAs will likely take on some new level of fiduciary responsibility ... but as it pertains to an employer's own fiduciary exposure, [the] consensus within the industry is that the new regulations 'probably do not automatically require employers offering HSA plans to be considered fiduciaries.' " (planadviser)
Another Money Manager's Investment Menu Draws Lawsuit by Its Employees
"While it is not unusual for such lawsuits to spend time and space (and tables) outlining gaps in performance and fees, this one takes the menu on one fund after another -- through 26 core funds, then to (and through) a half dozen of the portfolio series 'funds of funds,' then through the entire series of target-date funds (all the way through 2060) and then to each of the Collective Investment Trust (CIT) offered by the program -- along the way making the case that the fees charged were 'well in excess of the fees' charged by the unaffiliated companies for comparable funds." (National Association of Plan Advisors [NAPA])
[Guidance Overview] Nevada Imposes Statutory Fiduciary Duty on Broker-Dealers
"A new fiduciary duty will become applicable July 1, 2017, for broker-dealers and investment advisers operating in Nevada ... [Nevada] Senate Bill 383 ... revises the Nevada Securities Act to mandate that any 'broker-dealer, sales representative, investment adviser or representative of an investment adviser shall not violate the fiduciary duty toward a client' imposed ... [by] NRS 628A.010, [which] imposes the 'duty of a fiduciary' on all financial planners. Senate Bill 383 also modifies the definition of 'financial planner' to remove from the exclusion for broker-dealers, their representatives, investment advisers, and their representatives." (Greensfelder)
Thoughts and Questions on the DOL Fiduciary Rule and Its Impacts
"[M]ost of the problems exist when a person tries to wear two hats. In the end, you either represent the manufacturer of a product well (in an arms-length relationship, typically), or you represent the client well (as a fiduciary).... Do the factors you apply in selecting investment products (to implement your strategy) flow from either common sense or do they possess academic support? Are you examining all of the fees and costs of the fund at hand? Are you comparing the product to all others in the marketplace?" (Ron A. Rhoades, JD, CFP)
[Opinion] Why an RIA's Willingness to Get Fired by Clients Is a Mandatory Mindset
"Advisors prove their worth when they make good advice happen bolstered by the implicit, and sometimes explicit, threat that if something's gotta give, it's the advisor's lucrative arrangement with the client. You have two choices: Take my advice or fire me.... It's always been good business yet because of the DOL rule, managed assets under fiduciary care are set to skyrocket. It'll be better for advisors to grow a spine today than explain in court why they didn't later down the road." (RIABiz)
Northrop Grumman Settles 401(k) Fee Class Action for $16.8M
"The deal ... resolves claims by a class of more than 100,000 people who participated in Northrop's retirement plans between 2000 and 2009. The lawsuit accused Northrop of forcing 401(k) plan participants to pay excessive administrative fees -- some of which went directly to Northrop. This is the latest multimillion-dollar settlement over 401(k) plan fees to be negotiated by St. Louis-based Schlichter Bogard & Denton." (Bloomberg BNA)
How to Evaluate Your 401(k) Investment Advisor
"You should not continue to work with a 401k investment advisor who will not sign on to your plan as a fiduciary.... Production of reports, investment option performance evaluation, fund searches, Investment Policy Statement (IPS) maintenance and fiduciary compliance consulting are all core investment advisory services. In addition, your 401k investment advisor should be a key player in coordinating your employee education sessions; managing your recordkeeper, trustee, custodian and other providers; benchmarking your plan; helping with plan design issues; and implementing your financial wellness education solution." (Lawton Retirement Plan Consultants)
[Guidance Overview] DOL Fiduciary Rule Goes Into Effect
"With respect to existing Benefit Plan Investors, fund managers may consider sending out a notice or supplement ... to obtain the appropriate representations for reliance on a carve-out.... [F]or self-directed ERISA Plans and IRAs whose owners are not represented by a sophisticated independent fiduciary, any recommendations to such investors will not fall into one of the carve-out categories. Thus, fund managers may want to suspend taking investments (or additional investments) from such investors until further guidance is issued." (Haynes and Boone, LLP)
Interesting Angles on the DOL's Fiduciary Rule, Part 51
"The first step of a best interest, or prudent process, is to determine the information that is 'relevant' to making a decision that is 'informed.' In other words, what would a person who is knowledgeable about such matters, and who is unbiased and loyal to the IRA owner, want to review in order to develop a recommendation? Unfortunately, there aren't any specific guidelines in the fiduciary regulation or BICE." (FredReish.com)
Merrill Lynch Settles Suit with Small 401(k) Class
"The deal features a 'corrective remediation payment' totaling at least $8.8 million ('equal to the deficient remediation payments and interest sought by Plaintiffs from the outset') and a 'disgorgement payment' of $16.2 million. Class counsel will request attorney's fees equal to 35% of the settlement payment, or $8.75 million.... Most of the mutual funds available on Merrill Lynch's retail platform offered waivers on up-front sales charges for retirement plans; however, the firm failed to apply those waivers." (National Association of Plan Advisors [NAPA])
The Lawyer on a Quest to Lower Your 401(k) Fees
"When Jerome Schlichter started filing 401(k)-fee lawsuits against big companies a decade ago, the personal-injury lawyer from St. Louis wasn't taken seriously.... Companies now are so worried about suits alleging mismanagement of these retirement plans that 401(k) industry consultants have coined a term for the threat: 'getting Schlichterized.' ... Last year, law firms filed more than 25 fee cases against 401(k)-type plans ... That includes 14 from Mr. Schlichter's firm against employers including elite universities.... Consumer advocates say the litigation has saved 401(k) participants nationwide billions of dollars by helping to push down 401(k) fees, which declined 17% from 2009 to 2014[.]" (The Wall Street Journal; subscription may be required)
Merrill Lynch to Pay $25M in Lawsuit Over Fees in Small 401(k)s
"Merrill Lynch, Pierce, Fenner & Smith Inc. will pay $25 million to settle a lawsuit that accused the broker-dealer firm of profiting from excessive fees charged to small 401(k) plans... The deal features a 'corrective remediation payment' totaling at least $8.8 million and a 'disgorgement payment' of $16.2 million, the motion said. Class counsel will request attorneys' fees equal to 35 percent of the settlement payment, or $8.75 million, the motion said." (Bloomberg BNA)
Washington University Is 15th School Sued Over Retirement Plan
"The lawsuit, filed June 8 in the U.S. District Court for the Eastern District of Missouri, says the university's retirement plan overpaid for administrative and record-keeping services and offered 'historically underperforming' investment options. The lawsuit takes particular aim at the plan's reliance on two companies -- TIAA and Vanguard -- for record-keeping services. The use of multiple record keepers confuses investors and leads to higher fees, the lawsuit claims." (Bloomberg BNA)
The 401(k) Plan Investment Policy Statement
"Seven things to consider including in your investment policy statement: [1] Plan purpose ... [2] Investment objectives/capabilities ... [3] Guidance on monitoring investments ... [4] What assets classes will be included ... [5] Instructions on how to select investments/Approach to performance and measurement ... [6] Establishment of default fund ... [7] Participant education." (ForUsAll)
[Guidance Overview] DOL Fiduciary Rule: June 9 and Beyond
"During the transition period, BIC Advisers ... will only have to comply with the impartial conduct standards to receive relief from the prohibited transaction rules under either the BIC Exemption or BIC Light.... The full BIC Exemption requires a written contract ... for advice provided by BIC Advisers to IRA owners. The contract requirement does not apply to advice for ERISA Plans." (Kilpatrick Townsend)
Fact Sheet for H.R. 2823, the Affordable Retirement Advice for Savers Act (PDF)
"The bill defines 'investment advice' more broadly than DOL's 1975 regulation, expanding the universe of activities that are subject to fiduciary liability. Under the bill, a fiduciary relationship occurs any time an advisor provides one of a broad array of recommendations relating to retirement accounts.... [H.R. 2823] [1] Ensures personalized advice about investments, distributions, or hiring other advisors triggers fiduciary obligations. [2] Requires financial professionals who advise IRAs to act in the best interests of their clients.... [3] Preserves the ability of retirement savers to receive financial education, such as examples of investment alternatives that fit within asset classes." (Committee on Education and the Workforce, U.S. House of Representatives)
[Opinion] People in States Represented by the Cosponsors of the Choice Act Lose $12.1 Billion Each Year Due to Conflicted Retirement Advice
"Representatives who voted for the CHOICE Act have chosen to side with unscrupulous actors in the financial industry, who have profited handsomely from loopholes that allowed them to fleece retirement savers. [A map and table] show how much retirement savers lose annually in each state as a result of receiving conflicted advice." (Economic Policy Institute)
[Opinion] Legislation Enhances Consumer Protection for Retirement Savers
"H.R. 2823, the Affordable Retirement Advice for Savers Act, [and] S. 1321, the Affordable Retirement Advice Protection Act ... address the overly burdensome and complex [DOL] fiduciary rule, and replace it with a law that strengthens protections for retirement savers by requiring financial advisors to serve their clients' best interests. IRI strongly supports both bills[.]" (Insured Retirement Institute [IRI])
Defining 'Reasonable Comp' Under the DOL Fiduciary Rule
"The best way for financial advisors to think about 'reasonable compensation' in the fiduciary sense is to imagine a scatter graph. And the best place to be on that graph is the dot in the middle of the pack of other dots.... Consulting firms and benchmarking companies have plenty of data that will help guide advisors stay in the middle of the scatter graph pack." (InsuranceNewsNet.com)
DOL Fiduciary Rule Starts to Take Effect Today
"Unless the new fiduciary rule is repealed or replaced, it's critical for 401(k) plan sponsors to take it seriously. They should assess their current relationships and determine the relative risks associated with them in light of the fee provisions that the fiduciary rule addresses. While plan sponsors won't be able to determine the exact nature of their potential liability, they will at least be in a position to take an inventory of their possible exposure." (Society for Human Resource Management [SHRM])
Quantifying the Impartial Conduct Standards Under the DOL Fiduciary Rule
"While the 'misleading statements' standard is self-explanatory, it has been suggested that it will be left to the courts and attorneys to define the meaning of 'best interest' and 'reasonable compensation.' ... [J]ust as the courts look to the Restatement (Third) of Trusts to interpret fiduciary law, advisers and other investment fiduciaries can, and should, look to the Restatement for guidance as the interpretation of both terms." (The Prudent Investment Adviser Rules)
[Discussion] Fiduciary Rule as Applied to Rollover IRA Service Providers
"Does the new Fiduciary Rule includes a duty to monitor IRA service providers that might take rollovers from plan participants?" (BenefitsLink Message Boards)
[Guidance Overview] Impact of the DOL Fiduciary Rule on Unregistered Investment Funds
"As a practical matter, fund sponsors marketing to large plans, and IRAs and smaller plans with a professional adviser, will not be impacted by the new Fiduciary Rule by satisfying the [Investment Fund] Exception ... However, fund sponsors that market to IRAs and smaller plans without a professional adviser will need to consider whether they will continue to market to such investors." (Goodwin Procter)
House Committee Leaders Move to Overturn Flawed Fiduciary Rule, Strengthen Protections for Retirement Savers
"Rep. Phil Roe (R-TN), member of the House Committee on Education and the Workforce, and Rep. Peter Roskam (R-IL), chairman of the Ways and Means Subcommittee on Tax Policy, today introduced the Affordable Retirement Advice for Savers Act (H.R. 2823). The legislation would protect access to affordable retirement advice by overturning the Obama administration's flawed fiduciary rule while ensuring retirement advisors serve the best interests of their clients." (Committee on Education and the Workforce, U.S. House of Representatives)
[Guidance Overview] DOL Fiduciary Rule: Ready, Set, Go! But How Far?
"What conditions apply under the new exemptions on June 9? ... Is the requirement to 'levelize' compensation required under the 'impartial conduct standards'? ... When do the rule and exemptions become applicable? ... What other topics do the FAQs cover? ... What does the nonenforcement policy cover? ... Is the DOL still considering changes to the rule and exemptions?" (Morgan Lewis)
[Discussion] ROBS Promoter Is Fiduciary Under New DOL Rule?
"Under the new DOL Fiduciary Rule, wouldn't a promoter of a ROBS plan (Rollover as Business Start-Up) be a fiduciary? They are being paid a fee to recommend the client move funds from an IRA to a qualified plan for the purpose of purchasing employer stock." (BenefitsLink Message Boards)
'Last Minute' Fiduciary Rule Check-In: What Plans and Arrangements Are Covered
"Some plans are not subject to the Rule, and some arrangements that are not actually IRAs are treated as if they were IRAs and therefore subject to the Rule. So, how are 'plans' and 'IRAs' defined?" (Drinker Biddle)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 50
"[T]he non-enforcement policy requires that financial institutions, such as broker-dealers and RIAs, make a 'diligent and good-faith' effort to comply with BICE. Since this additional requirement is imposed as a condition of BICE, it seems difficult to imagine that the non-enforcement policy would be available to a broker-dealer or RIA who did not adopt appropriate policies, procedures, practices and supervision. Then, the question is, what is 'appropriate'? The quoted language provides several alternatives." (FredReish.com)
ESOP Loses 10th Circuit Appeal Against Trustee
"In rejecting an appeal brought by Pioneer Centres Holding Co.'s employee stock plan, the U.S. Court of Appeals for the Tenth Circuit on June 5 refused to adopt a burden-shifting framework in cases alleging fiduciary breach under [ERISA]. As a result, the court rejected the stock plan's claims against Alerus Financial, finding no evidence that any action by Alerus caused Land Rover to withhold its consent for the proposed stock deal, which caused the deal to fail." [Pioneer Centres Holding Co. Employee Stock Ownership Plan v. Alerus Financial, N.A., No. 15-1227 (10th Cir. June 5, 2017] (Bloomberg BNA)
House Bill Would Repeal Fiduciary Rule, Part of Dodd-Frank
"A bill repealing some of the major provisions of Dodd-Frank and the DOL's fiduciary rule will move to the House floor for a vote this week, something that did not happen in previous sessions for similar legislation. That said, even if the House passes it, its chances in the Senate are bleak." (American Society of Pension Professionals & Actuaries [ASPPA])
Fiduciary Responsibilities -- and Potential Liabilities -- Extend to Health Plans
"[H]ealth plans in particular are ... ripe for fiduciary liability, mainly arising from well-recognized waste in the system.... Key action-items can include: [1] Incentivizing wise decisions about health care consumption through consumer-driven models such as the HDHP/HSA.... [2] Considering the pros and cons of a self-insured group health plan.... [3] Documenting the plan accurately and in accordance with ERISA." (Poyner Spruill LLP)
[Discussion] Normal Duration of Out-of-Market Cash Position During Blackout Period
"Does anyone have a sense for what a normal number of days would be not for the blackout itself, but to be out of the market in cash? I know plans typically go into blackout before the liquidation date to ensure everything has a chance to settle, and on the other end it often stays in blackout until everything is completely up and running which at times is after the repurchase. I'm looking for a typical amount of time to be sitting in cash." (BenefitsLink Message Boards)
DOL Fiduciary Rule to Take Effect -- At Least for Now
"A private fund manager will not be a fiduciary when it markets its fund to a plan committee that the fund manager reasonably believes holds or has under management and control total assets in excess of $50 million ... [T]he private fund manager [must] know or reasonably believe that: (a) the plan committee is capable of evaluating investment risks independently, both in general and with regard to the private fund's investment program and strategies; and (b) that the plan committee is a fiduciary with respect to the transaction and is exercising independent judgment in evaluating the transaction." (Schulte Roth & Zabel LLP)

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