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Investment Advice Fiduciary Definition Disclosure Department of Labor Employee Benefit Security Administration Trust Regulatory News A.M. Publishing Garbo Investment Advice, Fiduciary Definition Rule … Recalled

(Sept. 20, 2011 --Chicago, IL) -- The U.S. Department of Labor's Employee Benefits Security Administration announced yesterday that it was re-calling its 2010 rule clarifying when a person providing investment advice becomes a fiduciary under ERISA. A new rule is expected to be issued in early 2012, according to the DOL.

Both opponents and proponents of the 2010 rule are praising the DOL decision.

Former EBSA-head Bradford Campbell believes the agency "rushed" this rule and is praising the decision to re-propose it. His rule, drafted under the last days of the Bush Administration, was withdrawn under the Obama Administration.

Representative George Miller (D-Calif.), who formerly chaired the House Education and Workforce Committee, also welcomes a new drafting of the rule. "The simple fact is that bad investment advice threatens the retirement security of middle class Americans," asserts Miller. While "the DOL deserves a lot of credit for its efforts to hold advisers to the fiduciary standard Congress intended," he adds that the agency needs to "move forward without delay on reproposal."

The new proposal, according to the DOL, will clarify that fiduciary advice is limited to individualized advice directed to specific parties. The agency says this revision responds to concerns about the application of the regulation to routine appraisals. Regulators will also clarify the limits of the rule's application to arm's length commercial transactions, such as swap transactions.

Current fee practices of brokers and advisers are also expected to be addressed under the new proposal. Other issues to be included are clarifying the continued applicability of long-standing exemptions that allow brokers to receive commissions in connection with mutual funds, stocks and insurance products.

"The agency," say regulators, "will carefully craft new or amended exemptions that can best preserve beneficial fee practices, while at the same time protecting plan participants and individual retirement account owners from abusive practices and conflicted advice.

For more on this topic, see the upcoming issue of Trust Regulatory News.

No statement in this issue is offered as or should be construed as legal opinion or advice or as an indicator of future performance.
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