June 27, 2022

Volume XII, Number 178

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June 24, 2022

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Department of Labor Sends Fiduciary Rule to OMB for Review

DOL has indicated that the final rule will be released in the first half of the year.

The US Department of Labor (DOL) sent its final Conflict of Interest Rule—Investment Advice (with related exemptions and amendments to existing exemptions) to the President’s Office of Management and Budget (OMB) for review. This timing is consistent with the DOL’s indications that it will release the final rule in the first half of 2016.

OMB received the final rule on January 28. The OMB review period is limited by Executive Order to 90 days, subject to extensions, but the actual review time could be significantly shorter. For example, a 60-day review period could result in the final rule being released in early April.

Released in April 2015, the proposed rule:

  • redefines fiduciary “investment advice” for purposes of the Employee Retirement Income Security Act (ERISA) standards of fiduciary conduct and the prohibited transaction rules under ERISA and section 4975 of the Internal Revenue Code (the Code);  

  • includes a new “Best Interest Contract Exemption,” which the DOL indicated was intended to preserve common compensation practices while requiring those who provide fiduciary investment advice to ERISA plans and individual retirement accounts (IRAs) to adhere to a “best interest” standard of care, among other things;  

  • includes a new exemption that provides fiduciaries relief for engaging in certain principal transactions; and

  • proposes amendments to current exemptions and guidance that would affect transactions with affiliated broker-dealers, investments in affiliated mutual funds, offerings of certain annuity products, and IRA rollovers, among other transactions.

Copyright © 2022 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume VI, Number 29
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About this Author

Daniel Kleinman, Morgan Lewis, Labor and employment lawyer
Partner

Daniel R. Kleinman advises businesses on the fiduciary responsibilities provisions (Title I) of the Employee Retirement Income Security Act (ERISA). He also counsels these clients on related tax, corporate, and securities laws in connection with the structuring and marketing of investment products (including private equity and hedge funds) and financial services to employee benefits plans. Additionally, Daniel handles issues related to the regulation of broker-dealers and investment advisers under US federal and state securities laws.

202-739-5143
Michael Richman, Employment attorney, Morgan Lewis
Partner

Michael B. Richman counsels clients on the fiduciary responsibility rules under the Employee Retirement Income Security Act (ERISA), including the ERISA prohibited transaction rules. He advises plan sponsors on investment matters for defined benefit and defined contribution plans. He also counsels banks, investment adviser firms, and broker-dealer firms on ERISA compliance for ERISA plan separately-managed accounts, collective investment funds, private funds, and other arrangements. Additionally, he provides guidance to IRA custodians on permissible IRA investments and...

202-739-5036
Lindsay Jackson, Morgan Lewis, Employment attorney
Partner

Lindsay B. Jackson counsels financial services clients on issues that arise under the Employee Retirement Income Security Act (ERISA) fiduciary responsibility and prohibited transaction rules. Clients turn to her for guidance on ERISA and IRC compliance when providing services to plans and IRAs. Lindsay also negotiates private fund investments and other service provider agreements on behalf of plans and plan asset entities. She advises clients involved in US Department of Labor and SEC examinations and investigations.

202-739-5120
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