More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
The Department of Labor’s Employee Benefits Security Administration (EBSA) announced Wednesday that it was extending the interim final rule deadline on its plan level fee disclosure rule, 408(b)(2), to April 1, 2012.
Brad Campbell, former head of EBSA who’s now counsel with the law firm Schiff Harden in Washington, says that by extending the deadline EBSA is “bowing to pressure from many in the regulated community who expressed concern that there would not be enough time to comply with the likely changes in the Final 408(b)(2) rule, [which is] expected in September, if the deadline remained January 1, 2012.”
Jason Roberts, founder and CEO of the Pension Resource Institute, adds that “covered” service providers under 408(b)(2)—which includes BDs, RIAs, TPAs and recordkeepers--will now have until April 1st to provide written disclosures to their ERISA-covered retirement plan clients.
The disclosures, he explains, “must set forth the services to be provided, all direct and indirect compensation received by the service provider (and any affiliates), a statement indicating which if any services are rendered as a fiduciary under ERISA or the Advisers Act and any penalties for termination (including how any prepaid fees will be reimbursed).”
Campbell notes that the final extension rule released by EBSA on Wednesday also amends the Final 404(a)(5) participant disclosure rule to provide a new transition rule. “Though the effective date is still plan years starting on or after November 1, 2011, the first disclosure to participants will not be required until either 60 days after the effective date of the participant disclosure rule OR until 60 days after the effective date of the Interim Final or Final 408(b)(2) rule,” Campbell explains.