PLANADVISER - July/August 2019 - 12

Legislative and Judicial Actions
compliance news
FINRA Share-Class Sweep
Highlights Importance of
Cooperation
The Financial Industry Regulatory
Authority (FINRA) announced the
final results of its mutual fund waiver
initiative-the
multiyear effort
agency's
aggressive
to ensure member
firms appropriately credit clients with
the sales charge waivers due to them.
According to Susan Schroeder,
an executive vice president
in
FINRA's
enforcement
department,
the initiative resulted
in 56 settlements reached
with member firms,
totaling
$89 million in
restitution across some
110,000
charitable and
retirement accounts.
Schroeder
says
all
of the firms failed to
waive mutual fund sales
charges for the eligible
accounts and to reasonably
supervise the sale
of mutual funds offering
sales
of U.S. Secretary of Labor.
According to news reports, Trump
has already offered Scalia the job and
he has accepted. Department of Labor
(DOL) Secretary Alexander Acosta
resigned following controversy over
his role in financier Jeffrey Epstein's
plea deal for crimes committed when
Acosta was a U.S. attorney in Florida.
as pro-worker should feel betrayed. "
If confirmed as DOL secretary, the
fate of the department's fiduciary rule
will be in question. The DOL has said
a new rule could be issued by the end
of the year. However, Scalia was part of
the team that defended the Chamber
of Commerce in its lawsuit against the
previous DOL fiduciary rule. That rule
was vacated by the 5th U.S. Circuit
Court of Appeals.
Regs Would Provide
Exception to 'One
Bad Apple'
The IRS has issued a notice
of proposed rulemaking
(NPRM) relating to the
tax qualification of plans
maintained
by more
than one employer.
These plans, maintained
pursuant to
Section 413(c) of the
Internal
charge waivers. By
way of context, Class A shares
typically have lower fees than
do Class B or C shares but require
that customers pay those upfront.
Many mutual funds waive their
upfront charges on A shares for certain
types of retirement accounts, and some
waive them for charities.
According to FINRA, notwithstanding
the common availability of
such waivers, firms often neglect to
apply them to mutual fund sales to
eligible customers. FINRA enforcement
staff say these sales disadvantage
the customer by causing it to pay
fees that are higher than necessary.
Trump Announces Nominee
For Labor Secretary
President Donald Trump tweeted that
he plans to nominate Eugene Scalia,
son of late Assistant Supreme Court
Justice Antonin Scalia, for the position
Revenue Code
(IRC), are often referred
to as multiple employer
plans, or MEPs. The
proposed regulations would
provide an exception, if certain
requirements are met, to how
the IRS applies what it formally
calls the " unified plan rule " and what
Scalia is currently a partner in the
Washington, D.C., office of the law
firm Gibson, Dunn & Crutcher. He was
previously solicitor of the DOL, a job
he filled through a recess appointment
by then President George W.
Bush-Scalia had not been confirmed
by the Senate, at the time controlled
by Democrats.
He may likely face confirmation
issues again. According to news
reports, Senate Minority Leader Chuck
Schumer, D-New York, said, " President
Trump has again chosen someone who
has proven to put corporate interests
over those of worker rights. Workers
and union members who believed
candidate Trump when he campaigned
the industry calls the " one bad apple
rule. " This would protect a defined
contribution (DC) MEP if one of the
participating employers fails to satisfy
a
qualification requirement,
or
to
supply information needed to show
compliance with it.
The IRS explains that, currently,
whether a MEP qualifies is based on the
compliance of all employer members.
Consequently, IRC Section 1.413-2(a)
(3)(iv) provides that " the failure by one
employer maintaining the plan (or by
the plan itself) to satisfy an applicable
qualification requirement will result
in the disqualification of the MEP for
all employers maintaining the plan. "
Section 1.416-1, Q&A G-2, includes
a similar rule. Here, a MEP's failure
12 | planadviser.com July-August 2019
Art by Lia Tuia
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PLANADVISER - July/August 2019

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