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Regulation and Compliance > State Regulation

Labor Nixes Paper-Based ERISA Advisor Filing

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NU Online News Service, Dec. 12, 2003, 5:25 p.m. EST – The U.S. Department of Labor wants small firms that manage benefit plan investments to register electronically.[@@]

The department has proposed a regulation that would require state-registered investment managers to use the Investment Adviser Registration Depository system to satisfy Employee Retirement Income Security Act filing requirements, according to a notice published earlier this week in the Federal Register.

The U.S. Securities and Exchange Commission and state securities regulators set up the IARD system so that they could receive state registration information electronically and publish the information on the Web.

Investment firms that manage more than $25 million in assets already register with the SEC electronically, and the Labor Department uses the electronic registrations to keep tabs on those firms.

The Labor Department’s proposed regulation would apply only to smaller managers. Under current law, those advisors register with securities regulators in their home states.

Most states already require small investment managers to register through the IARD, according to a discussion of the proposed Labor Department regulation written by Florence Novellino, an official with the Employee Benefits Security Administration.

But California, Florida, Kentucky, South Carolina and West Virginia still do not require small managers to use the IARD, Novellino writes.

Today, small ERISA investment managers in non-IARD states must submit paper copies of their state securities registrations with the Labor Department, Novellino reports.

The Labor Department estimates that requiring all small ERISA investment managers to register through the IARD system would affect about 500 firms. The change would cost those firms an average of about $800 each in the first year and about $100 per year in later years, the department predicts.

Novellino points out that ERISA plan fiduciaries need good information about ERISA plan investment managers because ERISA exempts plan fiduciaries from liability for the acts or omissions of qualified investment managers.

Putting registration information about all ERISA plan managers on the IARD “will help plan fiduciaries more efficiently locate information needed to determine whether advisers they may consider appointing are eligible to be an investment manager under ERISA,” Novellino writes.

Putting all ERISA investment manager information on the IARD also should help the small managers, by reducing paper handling, filing and mailing costs, Novellino writes.

The comment period for the proposed regulation will end Feb. 9, 2004.

The Labor Department has posted the proposed regulation at //


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