Alert September 20, 2011

DOL to Re-Propose Amendment to Regulation Defining “Investment Advice” for purposes of Fiduciary Status under ERISA

The DOL issued a press release announcing that it will repropose an amendment to the rule that defines “investment advice” for purposes of determining fiduciary status under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  It has been nearly a year since the DOL’s prior proposal to amend the definition of “investment advice,” which was discussed in the November 23, 2010 Financial Services Alert.  According to its press release, the DOL anticipates that the re-proposed amendment will seek to revise the rule by “clarifying that fiduciary advice is limited to individualized advice directed to specific parties, responding to concerns about the application of the regulation to routine appraisals and clarifying the limits of the rule’s application to arm’s length commercial transactions, such as swap transactions.”  The DOL also anticipates providing “exemptions addressing concerns about the impact of the new regulation on the current fee practices of brokers and advisers, and clarifying the continued applicability of exemptions that have long been in existence that allow brokers to receive commissions in connection with mutual funds, stocks and insurance products.”  The DOL expects to issue its new proposal in early 2012.