On January 17, 2012, the DOL issued a letter confirming that the Commodity Futures Trading Commission (CFTC) business conduct standards do not conflict with the current ERISA fiduciary investment advice regulation. The CFTC approved its final regulations relating to business conduct of major swap participants and swap dealers when interacting with counterparties, including ERISA plans, on January 11, 2012.

Many ERISA plans routinely use swaps to hedge or mitigate defined benefit plan funding and investment risks. There was a concern within the employee benefits community that the CFTC's business conduct standards could possibly cause swap dealers or major swap participants to engage in activities that would make them fiduciaries under the DOL's current five-part test defining fiduciary advice. Several organizations urged the CFTC to clarify this possible conflict, noting that without the availability of swap trades for ERISA plans, defined benefit pension funding obligations could become more volatile.

In the DOL's letter to the CFTC, the DOL stated that the final business conduct standards do not compel major swap participants or swap dealers to engage in activities that would qualify them as fiduciaries using the five-part test for fiduciary advice. The DOL further stated that it will ensure any changes to the current ERISA fiduciary investment advice regulation are carefully harmonized with the final business conduct standards.

For more information on fiduciary duties under ERISA, see Practice Note, ERISA Fiduciary Duties: Overview.