More On Legal & Compliancefrom The Advisor's Professional Library
- Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors. When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
Sen. Claire McCaskill, D-Mo., is pressing the Department of Labor’s Employee Benefits Security Administration (EBSA) to re-open the dialogue EBSA started with industry trade groups regarding its data request on its fiduciary re-proposal so that both parties can “design an informative but achievable data request.”
“While I am glad that EBSA is seeking hard data to inform its rulemaking, I am worried that the EBSA and the industry do not seem to have a constructive relationship,” McCaskill told EBSA head Phyllis Borzi in a April 23 letter.
McCaskill told Borzi that industry trade groups have told her that EBSA has “rebuffed their offers for a continued dialogue.” The stakeholders, she told Borzi, have “confirmed that they are ready to work with the EBSA to design information request to provide data that will meet the EBSA’s needs without unjustifiable cost of undue administrative burden,” McCaskill wrote.
An EBSA spokerperson told AdvisorOne that Borzi (left) has received the McCaskill letter and that EBSA “will be responding” to the Senator. However, the spokesperson would not comment on whether EBSA had rebuffed industry groups’ attempts to re-open the dialogue.
EBSA has been disappointed that industry trade groups could not provide more data by its Feb. 24 deadline to fulfill the department’s request regarding what impact the conflicts of interest faced by brokers and advisors who advise on IRAs have on IRA investors.
When EBSA released its original rule proposal on fiduciary duty under ERISA in October 2010, EBSA received comments suggesting that it had not adequately demonstrated or quantified the harm that can arise when investment advisors’ interests conflict with those of the IRA owners they advise.
In response to the comments, EBSA began examining a wide array of evidence and developing a robust economic analysis, and sent out two data requests: one issued on Dec. 16 for the data underlying the Oliver Wyman report; and the second was a request from EBSA’s Office of Policy Research on Dec. 15 that industry trade groups voluntarily assist EBSA in its expanded “regulatory impact analysis” to assess the impact of the department’s reproposed fiduciary rule on ERISA plans and IRAs. That data request was due to EBSA by Feb. 24.