The Department of Labor (DOL) proposed a carve-out for certain swap dealers and other parties from a rule that would broaden the type of advice that constitutes fiduciary investment advice to ERISA-governed employee benefit plans and IRAs.
The ERISA plan or IRA must be represented by a fiduciary of the SD, SBSD, MSP or MSBSP.
Before providing any recommendations regarding the transaction, the SD, SBSD, MSP or MSBSP must obtain a written representation from the independent plan fiduciary that the fiduciary will not rely on the recommendations provided by the SD, SBSD, MSP or MSBSP. Recommendations covered by the rule include the rendering of any of the following kinds of advice in exchange for a fee or other compensation:
recommendations as to the advisability of acquiring, holding, disposing or exchanging securities or other property, including recommendations to take a distribution of benefits or recommendations as to the investment of securities or other property to be rolled over or otherwise distributed from the plan or IRA;
recommendations as to the management of securities or other property, including recommendations as to the management of securities or other property to be rolled over or otherwise distributed from the plan or IRA;
appraisals, fairness opinions or similar statements (whether verbal or written) concerning the value of securities or other property if provided in connection with a specific transaction or transactions involving the acquisition, disposition or exchange, of such securities or other property by the plan or IRA; and
recommendations of persons who are also going to receive a fee or other compensation for providing any of these types of advice.
If an SD or SBSD provides any recommendations regarding the transaction, it must not be acting as an advisor to the plan, within the meaning of the applicable CFTC or SEC business conduct standards.
The DOL is requesting public comment on the proposed regulation. Comments are due on or before July 21, 2015. Electronic submission (the preferred method) should be submitted via the Federal eRulemaking Portal (http://www.regulations.gov) or by e-mail ([email protected]). Comments submitted by mail should be addressed to the Office of Regulations and Interpretations, Employee Benefits Security Administration, Attn: Conflict of Interest Rule, Room N–5655, US Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210. All submissions must include the agency name (Department of Labor) and must be identified by the Regulatory Identifier Number (RIN) for the rulemaking (RIN 1210–AB32).