21 Pages Posted: 26 Mar 2017 Last revised: 12 Apr 2017
Date Written: March 15, 2017
Now that the Department of Labor has adopted new regulations for how financial institutions deal with retirement investors under Employee Retirement Income Security Act of 1974, financial institutions have a lot of landscaping to do as it relates to disclosures. This article serves as a practical guide for anyone involved in the process of updating new rules as it relates to the new regulations.
The new rules come as no shock to most; they have been debated for some time. The rules define what a fiduciary is under ERISA and the rules also give a Best Interest Contract Exemption. Because this is a complex matter, it is important that financial institutions and attorneys alike have a practical guide to advise them as their mutual fund disclosures are updated. This article will examine how existing disclosures as it relate to potential conflicts of interest my fare under the new prohibition on misleading communications.
The Introduction of this article gives a detailed look at the new rules and how they have changed from the 1975 regulations. Part 1 discusses the possible areas where conflicts of interest that must be disclosed will be found in mutual fund disclosures.
Part 2 gives a detailed analysis of 15 mutual fund disclosures from various financial advisors. This analysis assessed each area of potential conflict of interest as well as whether the disclosures would be materially misleading under the new rules.
Keywords: ERISA Mutual Funds Disclosures DOL Department of Labor New Rules Fiduciary Best Interst Contract Exemption
JEL Classification: K30, K22, K10, K20, J26, J32, J33
Suggested Citation: Suggested Citation
Hickman, Rodgrick, How Much Is Enough for a Fiduciary? How Much Does a Mutual Fund Company Have to Disclose in Its Mutual Fund Disclosures Under the Department of Labor’s New Best Interest Contract Exemption for Funds Governed by ERISA (March 15, 2017). Available at SSRN: https://ssrn.com/abstract=2940233