IDEAS
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Legislative Intelligence Updates FAQs
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If you do not find the answer to your specific question below, please e-mail your question.
This material is provided by Morgan, Lewis & Bockius LLP as general information. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does it create an attorney-client relationship.
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I’m looking for clarification as to whether the new rules would affect the following situation. A local administrator, who is a registered rep. through a local broker dealer, has been involved in servicing a retirement plan for years. He specifically states he is not associated with any investment firms, banks etc. and has been receiving fees for years from a mutual fund company that invests the plan. How do these new rules affect someone in this situation? |
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This individual could become subject to the new service provider disclosure rules on their effective date of July 16, 2011, to the extent he is a "covered" service provider dealing with a "covered" plan. The threshold issue is whether he is a "covered service provider." Because this person is providing services to the plan as an administrator, he would be a "service provider" to the plan. He would be a "covered" service provider if he provides those services as an ERISA fiduciary or a registered investment adviser, or as a record keeper or broker in connection with the offering of a platform of designated investment alternatives for a participant-directed plan (which may be the case because of his status as a broker in conjunction with his relationship with the mutual fund family). Even if he does not provide any of the above services, he would be covered if he receives indirect compensation for providing specified services, including consulting, investment advisory (for plan participants), recordkeeping, securities or other investment brokerage or third-party administration. Since he is receiving indirect compensation, he would be covered if he is providing one or more of these services. |
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In reference to the August 2011 Legislative Intelligence update on retail foreign exchange currency (forex) transactions and the regulatory scrutiny they have recently received, what does this mean for ETFs from Wisdom Tree, etc.? |
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ETFs, which are registered investment companies (or mutual funds), should not be affected by the rule changes relating to off-exchange retail forex because the ETFs would be considered “eligible contract participants” and not retail customers (regardless of the status of any investors in the ETFs).
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Legislative Intelligence FAQs
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