Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Friday, March 4, 2011

DOL Holds Hearings on Expanded Fiduciary Definition

The Department of Labor held hearings on March 1-2, 2011, on its proposed rule to expand the definition of fiduciary applicable to advisers that provide investment advice to an employee benefit plan or its participants.  The proposal would amend a thirty-five year old rule that limits the types of investment advice relationships that give rise to fiduciary duties on the part of the investment advisor.  Specifically, the current regulation creates a 5-part test that must be satisfied in order for a person to be considered a fiduciary by reason of giving investment advice. According the DOL, the changes set forth in the proposed regulation are intended to more closely conform such determinations to the statutory definition, as well as take into account the significant changes in both the financial services industry and the expectations of plan officials and participants who receive investment advice.


Testimony of Kenneth E. Bentsen, Jr. on behalf SIFMA (proposed "regulation is far broader than the aims it seeks to address" and "would appear to be in conflict with recent action by Congress")

Testimony of Paul Schott Stevens, President and CEO, Investment Company Institute ("need to make very clear the line between commonplace financial market interactions and true advisory relationships")

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