ERISA

Potential implications of proposed MEP regulations for advisers

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

Advisers navigate risk associated with rollover recommendations

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

All eyes on China

Wellington Management provides some interesting insights on the ascendancy of China A-Shares and how investors should be thinking about them. Fiduciaries may wish to consider my detailed ERISA analysis on the Shanghai-Hong Kong Stock Connect.

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

House unveils tax reform 2.0 with some retirement provisions

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

International investing considerations for ERISA fiduciaries

Section 404(b) of ERISA provides that a fiduciary may not maintain the indicia of ownership of plan assets outside the jurisdiction of the U.S. district courts. But, clearly, investments in non-U.S. securities may be entirely reasonable and prudent for an ERISA plan’s participants and beneficiaries. The DOL’s regulation (29 CFR 2550.404b-1) sought to both ensure the U.S. district courts’ jurisdictional arm reached plan assets while expressly recognizing and preserving the importance of international investments, particularly for diversification purposes.

Fiduciaries have three decision-making points.

  1. Are the proposed investments qualifying assets (e.g., securities issued by a company that is neither organized in the United States nor has its place of business in the United States) under the DOL regulation?
  2. What are, in fact, the indicia of ownership of the international investments?
  3. Which pathway is the fiduciary taking to ensure that it complies with Section 404(b) of ERISA?

It is often not a straightforward decision as to what exactly are the plan’s indicia of ownership of particular non-U.S. investments. The most classic example would be stock and bond certificates. But in other types of investments, such as privately offered securities, subscription documents and limited partnership agreements may be enough. Still in other cases, trade confirmations or account statements may be the best indicia of the plan’s ownership in the investment. There is, unfortunately, not always a simple answer to what exactly are the indicia of ownership of a particular investment.

There are essentially four pathways for the fiduciary to satisfy its duties under Section 404(b) of ERISA under the DOL regulation, each of which are subject to myriad conditions. The first and most common method is where the fiduciary that has management and control over (i.e., decision-making authority to purchase, hold or dispose of) the non-U.S. plan assets is a U.S. bank, insurance company or investment adviser. A second pathway is where the indicia of ownership are maintained in a global custodial relationship. However, one key condition is that the U.S. bank-custodian needs to be liable to the plan as if it retained physical possession over the indicia of ownership in the U.S. Yet a third pathway is where the indicia of ownership are maintained by a broker-dealer registered under the Exchange Act and in the custody of a “satisfactory control location,” as defined under U.S. securities laws. The fourth and final pathway is where a US. Bank or broker-dealer registered under the Exchange Act physically possesses the indicia of ownership.

ERISA fiduciaries should consider the requirements under Section 404(b) as they apply to international investments. From a practical standpoint, investment managers, when negotiating their investment management agreements, should be on the lookout for attempts to impose upon them the duty to ensure compliance with Section 404(b) of ERISA, rather than the plan’s custodian, which may be the more appropriate party.

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

401(k) legislation coming?

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

CIT growth continues

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

Trump White House asks DOL to explore e-delivery of 401(k) disclosure materials

President Donald Trump’s Executive Order, which he signed last Friday, contains a provision that requires the Department of Labor to prepare an analysis of allowing the electronic delivery of participant disclosures. It reads:

“(c)  Improving the Effectiveness of and Reducing the Cost of Furnishing Required Notices and Disclosures.  Within 1 year of the date of this order, the Secretary of Labor shall, in consultation with the Secretary of the Treasury, complete a review of actions that could be taken through regulation or guidance, or both, to make retirement plan disclosures required under ERISA and the Internal Revenue Code of 1986 more understandable and useful for participants and beneficiaries, while also reducing the costs and burdens they impose on employers and other plan fiduciaries responsible for their production and distribution.  This review shall include an exploration of the potential for broader use of electronic delivery as a way to improve the effectiveness of disclosures and to reduce their associated costs and burdens.  If the Secretary of Labor finds that action should be taken, the Secretary shall, in consultation with the Secretary of the Treasury, consider proposing appropriate regulations or guidance, consistent with applicable law and the policy set forth in section 1 of this order.”

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

White House retirement security announcement coming Friday

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

NYU prevails in ERISA suit

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.