DOL Proposes New Definition of ERISA Fiduciary

The Department of Labor's Employee Benefits Security Administration ("EBSA") has announced a proposed rule under ERISA that purports to protect beneficiaries of pension plans and individual retirement accounts by more broadly defining 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. The proposal amends a thirty-five year old rule that may, according to EBSA, inappropriately limit the types of investment advice relationships that give rise to fiduciary duties on the part of the investment advisor. According to EBSA, the proposed rule takes account of significant changes in both the financial industry and the expectations of plan officials and participants who receive investment advice and is designed to protect participants from conflicts of interest and self-dealing by giving a broader and clearer understanding of when persons providing such advice are subject to ERISA’s fiduciary standards. By way of example, the proposed rule purports to define certain advisers as fiduciaries even if they do not provide advice on a “regular basis.” The full text of the proposed rule may be found at www.dol.gov.