August 8, 2020

Volume X, Number 221

August 07, 2020

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August 06, 2020

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Talking Through the DOL’s Proposed Prohibited Transaction Exemption: An Insurance Podcast [PODCAST]

On June 29, the Department of Labor (DOL) issued a proposed prohibited transaction exemption, filling the void left when the Fifth Circuit vacated the Obama-era 2016 DOL regulation in 2018. While the new proposed rule is primarily a class exemption that harmonizes ERISA conditions for receiving commissions and other variable compensation with existing securities law standards, it also does a lot more. In the first installment of a new podcast series, Faegre Drinker’s Jim Jorden and Brad Campbell dive into the details of this new proposed rule and the issues it presents for insurance producers, carriers and intermediaries.

In this recording, Jim and Brad provide context, insight and actionable advice for stakeholders on the following questions (and more) related to the DOL’s proposed exemption.

  • What is the most important change proposed in this new prohibited transaction exemption?

  • Under the new proposed fiduciary rule, more rollover recommendations may now be viewed as fiduciary advice. How does the DOL support this new interpretation? What issues does the revised analysis pose for insurance producers, carriers and intermediaries?

  • The new class exemption permits reasonable compensation for financial institutions (banks, insurance companies, RIAs and BDs) and investment professionals (employees, agents and representatives of financial institutions licensed under federal or state laws) who make investment recommendations as ERISA fiduciaries to retirement investors (plan or IRA fiduciaries, participants or beneficiaries). It also permits certain principal transactions. What conditions must be met for parties to receive the benefit of the exemption?

  • How might the obligations proposed under the new exemption with respect to insurance company sales review, supervision and compliance be implemented?

  • How long do stakeholders have to comment on this proposed rule?

In our second podcast next week, we will get into the details of what’s being imposed on both the life insurance and brokerage industries.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 184

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About this Author

James F. Jorden Securities Litigation Drinker Biddle Law Firm
Partner

James F. Jorden represents many of the country’s largest financial institutions in securities, corporate, and pension litigation. He is experienced in national class action litigation, having served as lead or associate counsel in more than 100 securities, insurance, RICO, and other class actions. Over the past 20 years, Jim has been lead trial counsel in more than 50 individual cases in federal and state courts throughout the United States. He has argued before the United States Supreme Court, eight of the U.S. circuit courts, and numerous state courts of...

202-230-5228
Bradford Campbell Labor & Employment Attorney Faegre Drinker Biddle & Reath Washington, D.C.
Partner

Bradford Campbell is a nationally recognized figure in employer-sponsored retirement plans who leverages his prior experience as the U.S. Assistant Secretary of Labor for Employee Benefits to advise clients across a broad range of issues related to the Employee Retirement Income Security Act (ERISA). As ERISA’s former “top cop” and primary regulator, Brad has detailed and wide-ranging knowledge of the structure and operation of ERISA plans, insight that he applies to client engagements.

Brad advises financial service providers and plan sponsors, particularly in relation to ERISA Title I issues, such as fiduciary conduct and prohibited transactions as well as developing policy issues. A prominent voice in the debates over fiduciary and best-interest regulations, Brad has testified before various congressional committees more than a dozen times. He provides clients with analysis, commentary, and strategic and legal advice on significant updates and assists them in offering comments on proposed regulations.

He also helps clients develop products and compliance systems that meet the requirements for qualified retirement plans and IRAs, as well as fiduciary training programs for plan officials. Brad assists clients in requesting prohibited transaction exemptions and advisory opinions for activities related to employee benefits plans. Brad has a track record of successfully resolving Department of Labor (DOL) and Internal Revenue Service (IRS) investigations and audits for large service providers and plan sponsors, and serves as an expert witness in ERISA litigation.

Brad is a contributor to the firm’s Broker-Dealer Law Blog, which provides practical insights into litigation, regulatory, compliance and fiduciary issues impacting broker-dealers, and is a frequent speaker and commentator in the media, including the Wall Street Journal, Fox Business News and numerous trade press publications.

Government Experience

Brad is the former Assistant Secretary of Labor for Employee Benefits, head of the Employee Benefits Security Administration (EBSA). Prior to serving in that role, he held other senior government positions, including as Deputy Assistant Secretary of Labor for Employee Benefits, senior DOL legislative officer, legislative director for U.S. Rep. Ernest Fletcher, and senior legislative assistant for U.S. Rep. and later Securities and Exchange Commission Chair Christopher Cox.

During his years in government, Brad played a key role in the Pension Protection Act and other significant ERISA retirement and health reforms, and his regulatory and policy decisions have had a fundamental impact on the structure and operation of ERISA plans, including promulgating the final rule establishing Qualified Default Investment Alternatives (QDIA) facilitating automatic enrollment retirement plans.

Services & Industries

  • Benefits and Executive Compensation 
  • ESOPs 
  • Retirement Plans 
  • Mergers and Acquisitions 
  • ERISA Litigation 
  • Investment Management Compliance 
  • Financial Services
202-230-5159