PLANADVISER - January/February 2019 - 12

Legislative and Judicial Actions
compliance news
SEC Reg BI Called 'A 2019 Priority'
During a recent speech, Securities
and Exchange Commission (SEC)
Chairman Jay Clayton made it
a point to say the agency is
aiming to finish work on its
Regulation
Best
Interest
(Reg BI) proposal this year.
For retirement industry
fiduciary advisers, the
SEC's introduction last
April of its proposed Reg
BI was one of the seminal
moments of the year.
Coming fairly soon after the
defeat of the Department of
Labor (DOL)'s fiduciary rulemaking
process in appellate
court, the SEC's new rulemaking
effort quickly took a central place in
many advisers' thoughts as to important
regulatory changes on the horizon.
" These proposals, individually and
collectively, are designed to enhance
retail investor protection and decisionmaking
by elevating the broker/dealer
[B/D] standard of conduct and reaffirming-and
in some cases clarifying-
the fiduciary standard for investment
advisers, as well as requiring more
candid and plain language disclosures, "
Clayton said.
New Multiemployer Pension Bill
House Ways and Means Committee
Chairman Richard Neal, D-Massachusetts,
has introduced his first bill
of the 116th U.S. Congress, dubbed
the Rehabilitation for Multiemployer
Pensions Act. The legislation is related
to efforts undertaken in the previous
Congress to address the severe funding
shortfall measured among some union
multiemployer pension plans.
According to Neal and eight bipartisan
co-sponsors, there are some
1,400 multiemployer plans in the U.S.,
covering about 10 million people. The
legislation is aimed at supporting the
1.5 million who are in plans that are
quickly running out of money.
" Although multiemployer pension
plans have been successful historically,
today,
a significant number of
[them] have funding problems, and
many are almost certain to run out of
money, " Neal says. " If they do, retirees,
workers and their families would lose
benefits earned over a lifetime of work,
through no fault of their own. "
Empower Suit Voluntarily Dismissed
The U.S. District Court for the District
of Colorado has dismissed an Employee
Retirement Income Security Act (ERISA)
lawsuit targeting Great-West, now doing
business as Empower Retirement.
The decision notes that this
outcome was reached voluntarily by
the plaintiffs and defendants. Both
parties agreed to dismiss this action,
pursuant to Federal Rule of Civil Procedure
41(a), with each party to bear its
own attorneys' fees, costs and other
expenses of litigation.
The underlying lawsuit alleged
that Empower Retirement entered
into revenue-sharing agreements and
similar arrangements with various
mutual funds-as well as other investment
advisers, instruments or vehicles-leading
it to receive revenuesharing
payments for its own benefit
in violation of ERISA. Plaintiffs
suggested in the lawsuit that the
revenue sharing represented
" kickback payments " and that
they were part of a " payto-play
scheme " in which
Empower received various
types of mutual fund fees,
including 12b-1 fees.
A Look at Recent Cases
Mayer Brown partners
Nancy Ross and Laura
Hammargren, of the Chicago
office, and Brian Netter, of the
Washington, D.C., office, hosted
a webcast recently to discuss
the Employee Retirement Income
Security Act (ERISA) litigation landscape
and the ongoing compliance
risks facing benefit plan fiduciaries.
In 2016 and 2017, over 100
complaints were filed in federal courts
targeting 401(k) plans, the attorneys
said. The results of these complaints
have been both positive and negative
from the perspective of plan fiduciaries,
Hammargren said. " The most positive
outcome has been overall improvements
in transparency, and the most
negative is that plans are offering less
diverse investments-they are taking
a more conservative approach to
designing their plan menus, " she said.
Georgetown Defeats ERISA Suit
The U.S. District Court for the District
of Columbia has ruled in favor of the
defendants in an Employee Retirement
Income Security Act (ERISA) fiduciary
breach lawsuit filed against Georgetown
University regarding
its two
403(b) plans.
The text of the defeated complaint
closely echoed charges filed previously
against other large universities' 403(b)
retirement plans. Plaintiffs suggested
that instead of leveraging the Georgetown
plans' substantial bargaining
power to benefit participants and
10 | planadviser.com January-February 2019
Art by Jennifer Rostowsky
http://www.planadviserdigital.com/planadviser/january_february_2019/TrackLink.action?pageName=10&exitLink=http%3A%2F%2Fplanadviser.com
PLANADVISER - January/February 2019

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