Regulatory Compliance

Regulatory Compliance covers compliance with ethical codes of conduct as well as those promulgated by FINRA and the SEC. Much of the interaction a plan advisor has with plan sponsors and participants is governed by ERISA and agencies like the Department of Labor. But as registered reps or investment advisory reps, their conduct and activity are also regulated by FINRA and the SEC. In turn, broker dealers and registered investment advisors must also adhere to the rules relating to retirement plans, as well as their representatives’ interaction with the investing public. 

Regulatory Compliance

Regulatory Compliance

By Warren Cormier6/6/2013 • 0 Comments

Speaking with plan sponsors and record keepers across the DC industry, one would conclude that the much-anticipated fee disclosure to participants was a non-event. Some likened it to the Y2K of the DC industry. The just-completed Boston Research Group annual national survey of 7,000 active DC participants looked into participants’ awareness and reaction to fee disclosure in great detail. READ MORE

By Fred Barstein6/5/2013 • 0 Comments

The DOL’s Employee Benefits Security Administration announced that it has approved a process for JP Morgan, acting as custodian, and ADP as record keeper, to terminate and wind up 180 abandoned plans. The EBSA is also getting active with plans of bankrupt companies, as we recently reported, with a lawsuit filed in New York. READ MORE

By Fred Barstein5/30/2013 • 0 Comments

As an indication that the DOL’s EBSA will be more active in bankruptcy cases where an ERISA plan is abandoned, the agency has filed suit in the Northern District of New York to have an independent fiduciary be appointed to administer the plan and distribute assets. The defunct Syracuse construction company’s assets were sold in 2008 in auction and went bankrupt in January 2010, but no one assumed responsibility for the plan. READ MORE

By Fred Barstein5/29/2013 • 3 Comments

Look for EBSA, the DOL group that enforces ERISA, to be even more assertive based on comments from an EBSA regional director in Philadelphia as well as the agency’s Assistant Secretary herself, Phyllis Borzi. And while the DOL may begin an investigation on one issue, it may expand beyond that if it finds something of interest. READ MORE

By John Ortman5/23/2013 • 1 Comments

Gina Gurgiolo of the Multnomah Group offers a sprightly rundown of the most common Form 5500 audit traps — that is, responses on the 5500 that are most likely to draw attention from the IRS or DOL. Also featured: tips on how to avoid falling into one of these traps. READ MORE

By Fred Barstein5/23/2013 • 0 Comments

Looks like another entity may be weighing in on the redefinition of fiduciary issue. FINRA’s CEO Richard Ketchum stated at the group’s annual meeting this week that the SEC should act quickly to create a uniform fiduciary rule and that, in the absence of progress, his group would look to set additional disclosure rules for FINRA firms. READ MORE

By Fred Barstein5/20/2013 • 0 Comments

If new SEC Chair Mary Jo White has her way, enforcement at the SEC could increase “substantially” next year — that is, if her 2014 budget request to increase funding by 33% is approved. In testimony before the House Committee on Financial Services, White cited the need to increase the 8% of advisors that the agency is able to examine — a number that is significantly lower than the percentage of advisors examined by FINRA, an SRO. READ MORE

By NAPA Net Staff5/20/2013 • 0 Comments

Advisors have an opportunity to add significant value by helping plan sponsor clients develop a prudent 408(b)(2) disclosure review process. This process is crucial because a failure to properly evaluate the required disclosures from a “covered service provider” (CSP) causes the responsible plan fiduciary (often the plan sponsor or committee) to become a party to a non-exempt prohibited transaction. What should this process entail? Our friends at Drinker Biddle & Reath offer some tips. READ MORE

By Fred Barstein5/13/2013 • 0 Comments

It’s hard enough to save enough for retirement, but even those who are fortunate enough to have a DB plan are at risk from companies willing to buy their pensions in exchange for a lump sum. The SEC and FINRA recently issued an investor alert not only for pensioners but also for people investing in these products. READ MORE

By Fred Barstein5/8/2013 • 1 Comments

The DOL’s EBSA has come out with an advanced notice of proposed rule making (ANPRM) that would require DC participant statements to convert account balances into a stream of monthly income. The notice is slated for publication in the Federal Register today. Issues facing the industry if the proposed rule is implemented include increased work and costs and potential litigation from participants if the projected stream of income is not realized, since some participants are likely to assume it is a promise or guarantee. READ MORE

By Fred Barstein5/1/2013 • 0 Comments

Speaking remotely to the annual conference of the Investment Management Consultants Association in Seattle, the EBSA’s Phyllis Borzi hinted that the DOL’s proposed rules redefining a fiduciary could include exemptions for different types of business practices — which many assume to be the commission model. The exemptions, if there are any, will come with disclosure and transparency. READ MORE

By Jennifer McKibben4/23/2013 • 0 Comments

Amid the hype over providing disclosure to financial consumers, it’s important to identify when disclosure can be helpful and beneficial versus when it can hurt and confuse the client. In an article in the April issue of Research magazine, AdvisorOne’s Bob Clark notes, Michael Finke of Texas Tech argues that disclosure can not only fail to help consumers but also contribute to declines in the quality of the products and advice they receive. READ MORE

By Fred Barstein4/18/2013 • 0 Comments

In response to the Congressional Black Caucus’ concerns about the DOL’s proposed definition of fiduciary, EBSA Assistant Secretary Phyllis Borzi defended her proposal at a congressional briefing this week. Accompanying her at the briefing were representatives from AARP, AFL-CIO and the Plan Sponsor Council of America (PSCA), apparently to show support for DOL’s proposal. READ MORE

By Fred Barstein4/16/2013 • 0 Comments

Once a spokesperson for fiduciary advisors, Matthew Hutcheson was convicted Monday of 17 counts of wire fraud for dipping into two pension funds to remodel his home, buy cars and make a down payment on a failed Idaho resort. Each count carries 20 years. The jury, which took just a few hours to convict, was not convinced by Hutcheson’s defense that the resort was an investment that would ultimately benefit his clients and that the homes and cars were needed to woo investors he was ultimately never able to recruit. READ MORE

By Jennifer McKibben4/12/2013 • 0 Comments

In the midst of a leadership change, the SEC is working on proposed new rules to reduce risk in money market funds. The proposal is set to be released in the next two months. SEC staff is working through the technical details of the proposal, which failed to move forward last year under SEC chairman Mary Schapiro. READ MORE

By Fred Barstein4/12/2013 • 1 Comments

In President Obama's FY 2014 budget proposal submitted to Congress April 10, the SEC is requesting an additional $250 million, much of which would be used to hire an additional 325 examiners. In 2012, the SEC examined only 8% of the RIA firms under their jurisdiction, compared with 45%-55% of the nation’s 4,600 broker dealers that FINRA examined. READ MORE

By Fred Barstein4/10/2013 • 0 Comments

Drinker Biddle partner (and former EBSA Assistant Secretary) Brad Campbell covered a wide range of issues that might affect plan advisors at the CUNA Mutual/CPI Retirement Academy in St. Louis on April 9. Along with Obama’s budget proposal to “tax the rich” and the looming debate over the definition of fiduciary, Campbell addressed model portfolios, TDFs, 408(b)(2), lifetime income and abandoned plans. READ MORE

By NAPA Net Staff4/2/2013 • 0 Comments

In her latest biweekly update, EBSA’s Phyllis Borzi cautions workers in employer sponsored retirement plans to be wary of hidden fees and conflicts of interests by advisors who may put their own interests ahead of their clients, thereby lowering account balances. READ MORE

By NAPA Net Staff3/18/2013 • 0 Comments

Will the move toward a common fiduciary standard for all advisors under new authority granted to the SEC result in a move toward a common regulator as well? It seems that if FINRA Chief Executive Richard Ketchum has his way, the answer would be yes. While supporting a common fiduciary standard for RIAs and registered reps, Ketchum noted recently that RIAs are not being examined regularly and vigorously implied that FINRA could do the job. READ MORE

By NAPA Net Staff3/11/2013 • 0 Comments

Once again, the SEC is going to take a look at 12(b)1 and other distribution fees, making it a priority in the next few months. According to a Deputy Director from the Commission’s Office of Compliance Examinations and Inspections, the fees under scrutiny will include 12(b)(1), Sub TA, revenue sharing and conference support. READ MORE

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