On March 1 and 2,2011 the Department of Labor held public comment hearings on its new proposed regulations defining a fiduciary for purposes of employee benefit plans. It is likely the new regulations will cause many who provide financial services to employee benefit plans to be a fiduciary with respect to the plan. The new regulations will result in fiduciary status for those who do any of the following:
1. Provide advice, appraisals or fairness opinions as to the value of investments, make recommendations as to buying, selling or holding assets, or recommendations as to the management of securities or other property.
2. Acknowledge fiduciary status for purposes of providing advice regardless of whether the person meets other requirements of the regulation.
3. Is an investment advisor under Section 202(a)(11) of the Investment Advisors Act of 1940.
4. Provide advice or make recommendations pursuant to an agreement, arrangement or understanding, written or otherwise, with the plan, a plan fiduciary or a plan participant or beneficiary, where the advice may be considered in making investment or management decisions with respect to plan assets, and the advice will be individualized to the needs of the plan, a plan fiduciary or a participant or beneficiary.
The proposed regulations may be found at the Federal Register.
Each case a business or individual may face is unique and may require legal advice. If you would like additional information regarding the content of this article, please contact a member of our Labor and Employment Department.
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