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TIAA-CREF Comment Letter to SEC on Duties of Brokers, Dealers and Investment Advisers (PDF)

"TC Services continues to support a uniform standard of conduct for broker-dealers and investment advisers when providing personalized advice about securities to retail customers.... [We] believe a uniform standard will benefit investors. We agree the distinctions between the suitability standard to which broker-dealers are subject and the fiduciary standard to which investment advisers are subject are not consistently appreciated and understood by investors. At the same time, we believe it is of paramount importance that the Commission establish a common understanding of the framework for such a uniform standard. We support a uniform standard which imposes a duty to act in the best interests of the customer through a duty of loyalty and a duty of care when providing advice about securities, but which also recognizes the value of episodic advice and the nature of such relationships."

District Court Finds That Rollover Solicitations to ERISA Plan Participants Are Not Fiduciary Acts

"[The court] rejected claims that TIAA-CREF acted as an ERISA fiduciary in connection with soliciting, as part of a sales campaign, participants in employer-sponsored retirement plans for which TIAA-CREF served as recordkeeper to roll their balances out of the plans and into individual, fee-paying TIAA-CREF products. While the case deals with events that occurred prior to the DOL's most recent pronouncements, the decision provides a lengthy, fully reasoned analysis of ERISA's governing statutory and regulatory provisions and may affect how courts assess both current conduct and DOL's restrictive position." [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. Sep. 27, 2022)]

SEC Announces $97 Million Settlement with TIAA Subsidiary Over Retirement Rollover Recommendations

"The [SEC] today announced that TIAA-CREF Individual & Institutional Services LLC (TC Services), a subsidiary of Teachers Insurance and Annuity Association of America (TIAA), will pay $97 million to settle charges of inaccurate and misleading statements and a failure to adequately disclose conflicts of interest to thousands of participants in TIAA record-kept employer-sponsored retirement plans. The $97 million will be distributed to investors affected by the misconduct and settles both the SEC's case and a parallel action announced today by the Office of the New York Attorney General (NYAG)."

Deference Declined: Fiduciary Status for Rollovers Not a Given, and New Developments in Uses of Plan-Related Data Under ERISA

"A September 27, 2022 decision by the Southern District of New York addresses several key theories recently advanced by the plaintiffs’ bar in ERISA-based lawsuits against plan service providers.... [T]he decision ... marks something of a setback to DOL in its multi-year effort to expand the scope of those deemed to function as investment advice fiduciaries in a manner that would broadly include providers of rollover recommendations ... The decision also further develops the nascent body of case law addressing the status of participant data as a plan asset and the potential consequences of uses of that data by service providers[.]" [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. Sep. 27, 2022)]

TIAA Faces New Managed Account Rollover Complaint Months After Settling SEC Charges

"A new lawsuit suggests the individual advisory program TIAA clients were rolled into was significantly more expensive and generated hundreds of millions of dollars in fees for TIAA -- without providing commensurate performance benefits." [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. complaint filed Oct. 11, 2021)]

Court Finds No ERISA Liability for Plan Provider Who Delivered Self-Interested Rollover Advice

"Although the Court declined to impose ERISA's fiduciary obligations onto TIAA, the decision proved informative. First, the plaintiffs' bar is targeting service providers, and potentially plan sponsors, for representations and fees relating to rollovers. Second, much of the Court's reasoning was based on whether to apply retroactive effect to current DOL guidance, and had that guidance applied, the outcome may have been different." [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. Sep. 27, 2022)]

New York District Court Interpretation of ERISA's Advice Fiduciary Rule Is at Odds with DOL's

"The 2020 guidance [in PTE 2020-02] notes that the analysis under [ERISA's advice fiduciary language] and the 1975 regulations may take into account the nature of the relationship after assets have been rolled out of the plan and into an IRA.… [T]he Court finds that the better reading of the statute and regulations takes into account only advice given while the assets are, in fact, plan assets when deciding whether TIAA rendered 'investment advice' on a 'regular basis.' " [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. Sep. 27, 2022)]

District Court Holds That TIAA Was Not Acting as a Fiduciary in Soliciting Rollovers

"Under its interpretation of ERISA's functional fiduciary guidelines, the court held that the funds taken out of the ERISA plans for rollover purposes were no longer plan assets and 'TIAA's pitch to plan members to roll assets out of their plans and into Portfolio Advisor necessarily did not create a fiduciary relationship.' ... With regard to TIAA's use of participants' personal information gleaned through its position as administrator of the ERISA plans, the court concluded that 'plan assets' include money and invested capital, but not participant information." [Carfora v. Teachers Insurance and Annuity Association of America, and TIAA-CREF Individual & Institutional Services, LLC, No. 21-8384 (S.D.N.Y. Sep. 27, 2022)]

Viewing a Retirement Plan Rollover Case Through the Prism of Regulation Best Interest

"[A] subsidiary of [TIAA] agreed to pay $97 million to settle [SEC] charges of misleading statements and inadequate disclosures relating to rollover recommendations to participants in TIAA record-kept employer-sponsored retirement plans.... [T]he underlying allegations provide a useful framework to review Regulation BI's four core obligations and how regulators may view misleading statements, inadequate conflict disclosures, and rollover recommendations that are alleged not to be in the best interest of a retail customer." [In the Matter of TIAA-CREF Individual & Institutional Services LLC, SEC Administrative Proceeding File No. 3-20392, Jul. 13, 2021]