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from The Advisor's Professional Library- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIA’s failure to stay within the scope of the Section 28(e) safe harbor may violate the advisor’s fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients’ transactions.
While rumors are flying that the Department of Labor’s Employee Benefits Security Administration plans to push back the April 1 deadline for compliance with DOL’s 408(b)2 and 404(a) fee disclosure regulations, a Labor Department spokesman told AdvisorOne on Thursday that DOL “has not signaled” that the deadline will be extended.
“We have high degree of confidence that the final rule mandating service provider-to-employer/plan sponsor fee disclosure will be published by the end of this month,” a DOL spokesperson told AdvisorOne in an email message. “The department is sympathetic to the concerns expressed by the industry regarding the applicability dates, but has not signaled that the applicability dates will be extended.”
Like other industry officials, Craig Hoffman, general counsel and director of regulatory affairs for the American Society of Pension Professionals and Actuaries, told DOL in a Dec. 19 letter that while ASPPA supports DOL’s efforts to improve fee disclosure for individual retirement plans, “unfortunately the application of both the interim 408(b)(2) and 404(a) regulations is only three months away and the DOL has not issued the final guidance needed to create systems to comply with the regulations.”
Hoffman urged DOL to extend the deadline for complying with 408(b)2 and 404(a) fee disclosure regulations as the department had yet to issue final guidance on either. As the DOL spokesperson stated, that final guidance should be out by the end of January.
EBSA announced in July that it was extending the interim final rule deadline on its plan level fee disclosure rule, 408(b)(2), to April 1, 2012. But Hoffman told DOL that the effective date for the fee disclosure regs should be “no earlier than one year after the 408(b)(2) regulation is published in final form.”
Fred Reish (left), partner and chair of the Financial Services ERISA Team at Drinker Biddle & Reath in Los Angeles, says that “at this point, though, I think the DOL has to delay the effective date because it is too late for providers to adjust their disclosure procedures and materials by April 1 to take into account any change; it’s just impossible.” An extension of at least six months, he says, "would allow the work to be completed in an orderly and thoughtful manner."
That should also mean, Reish says, “that the participant disclosures under 404a-5 will be extended, since they are effective 60 days after the 408(b)(2) regulation is effective.”
