More On Legal & Compliancefrom The Advisor's Professional Library
The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) plans to hold a public hearing on March 1 in Washington on its proposed amendments to the term “fiduciary.” If necessary, EBSA says the hearing will also be held on March 2, and a formal notice with details on the hearing and those who will testify will be issued in early January. The Securities and Exchange Commission (SEC) is due to deliver its report on fiduciary duty to Congress on Jan. 21.
EBSA says it will also be accepting public comments on its fiduciary amendments until Feb. 3, 2011, two weeks after the close of the Jan. 20, 2011 comment period provided in the proposed regulation.
“We recognize the significance of the proposed rule for plans, participants, beneficiaries and many plan service providers and therefore believe the steps we are announcing today will ensure broad consideration of all the issues and interests in this regulation,” said EBSA Assistant Secretary Phyllis Borzi, in a statement. “For this process to work efficiently, however, all comments must be submitted no later than February 3.”
Borzi said in a Oct. 21, 2010, speech that fiduciary status is fundamental to ERISA’s framework for protecting the interests of plan participants and the statute contains a broad functional test for determining who is a fiduciary” when providing investment advice. While ERISA is “very simple and straightforward” about who’s a fiduciary in stating that it’s “someone who renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other properties of the plan,” a 1975 regulation issued by DOL and certain interpretations since then have taken “a much narrower approach” to defining fiduciary, Borzi continued.
The current rule regarding fiduciary, Borzi said, “simply is not working.” The “dramatic evolution in the marketplace” coupled with “the enforcement activities that the DOL has undertaken both in our investigations and our litigation over the past three decades have made it perfectly clear that these arcane rules really interfere with the ability of the Department and fiduciaries to understand where the lines are being drawn, and to protect beneficiaries and participants.”
Officials at seven of the DOL’s agencies will host live Web chats to discuss their respective regulatory agendas during the first week of January 2011. EBSA will hold its web chat from 2:00 to 3:00 pm EST on Tuesday, Jan. 4. To participate in the Web chats, visit https://www.dol.gov/regulations/.