Compliance October 21, 2010

Former EBSA Secretary Questions Fiduciary Proposal

The former Assistant Secretary of the Department of Labor’s (DoL) Employee Benefit Security Administration (EBSA) said the fiduciary definition proposal by the DoL is addressing issues already addressed in recently issued fee disclosure regulations.
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Calling the proposal a “bull-in-a-china-shop” approach, Bradford P. Campbell, now an attorney with Schiff Hardin LLP, told PLANADVISER: “The undisclosed conflicts DoL cites as justification for the proposal already are prohibited by the new 408(b)(2) regulation.  It seems premature to turn a sweeping new class of service providers into ERISA fiduciaries when the new disclosure rules addressing the root of the problem haven’t even had a chance to go into effect yet.” 

Campbell added that he thinks the cost impact on ESOPs of making appraisers fiduciaries will be significant, and that the proposal raises questions for broker/dealers and agents serving ERISA plans. “Non-fiduciary advice provided under the current rule would appear, under the proposal, to either make broker/dealers and agents ERISA fiduciaries, or require them to tell plan clients that their interests are ‘adverse’ because they are selling a product,” he stated. 

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The proposed rule more broadly defines the circumstances under which a person is considered to be a fiduciary by reason of giving investment advice to an employee benefit plan or a plan’s participants (see “DoL Broadens Fiduciary Net“).  
 

Deals & People October 21, 2010

FINRA Names Brad Bennett as Head of Enforcement Division

The Financial Industry Regulatory Authority (FINRA) has chosen J. Bradley Bennett as the new Head of Enforcement.  
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Bennett is currently a partner at the Baker Botts law firm in Washington, D.C., and will start at FINRA on January 1, 2011.  He will take over from James Shorris, who has been the interim Chief of Enforcement since Susan Merrill left the organization last March. 

“Brad will bring extensive knowledge and experience in dealing with violations of securities rules to FINRA at this critical time,” said Richard Ketchum, Chairman and CEO of FINRA.  “It is imperative that FINRA aggressively deal with wrongdoing in the industry to help rebuild investor trust and confidence in the markets.” 

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At FINRA, Bennett will be responsible for the management of approximately 300 enforcement staff in 17 offices across the United States and report to FINRA Vice Chairman Stephen Luparello. 

Bennett has been at Baker Botts since 2001, where he specializes in financial and securities law violations. Before joining Baker Botts, he was an attorney at Miller, Cassidy, Larocca & Lewin. He started his career at the Securities and Exchange Commission as a senior attorney in the Division of Enforcement.  He is an adjunct professor of securities regulation at Catholic University’s Columbus School of Law. 

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