PLANADVISER - November/December 2022 - 9

report and must be filed semiannually
with the SEC.
" Shareholder reports are among
the most important documents that
fund investors receive. These reports,
however, often are more than 100
pages in length. As a result, a retail
investor looking to understand the
performance,
fees and other operations
of a mutual fund or exchangetraded
fund may need to sift through
extensive financial information, " says
SEC Chair Gary Gensler. " Today's final
rules will require fund companies to
share a concise set of materials that
get to the heart of the matter. Further,
today's
final
rules are designed to
promote transparent and balanced
presentations of fees and expenses in
investment company advertisements. "
The SEC has also adopted amendments
to investment company advertising
rules requiring that fee and
expense presentations in registered
investment and business development
company ads and sales literature be
consistent with relevant prospectus fee
table presentations and be reasonably
current. The amendments also address
representations of fees and expenses
that could be materially misleading.
The amendments will become
effective 60 days after publication in
the Federal Register, though the SEC
will provide an 18-month transition
period after the effective date to give
mutual funds and ETFs adequate time
to adjust their shareholder report and
transmission practices. The agency
will also provide an 18-month transition
period to comply with the amendments
to the advertising rules. The
rule amendments that address representations
of fees and expenses that
could be materially misleading will
apply on the effective date.
DOL Clears Up Question
About Plan Sponsor PEP
Member Responsibilities
Plan
sponsors
that
join
The letter, in reply to a question
from the Surety & Fidelity Association
of America, clarified the levels of
responsibility and costs that plan sponsors
participating in a pooled employer
plan may offload or avoid when joining
a PEP arrangement managed by a PPP,
explains Josh Lichtenstein, partner
and head of the ERISA [Employee
Retirement Income Security Act] fiduciary
practice at Ropes & Gray.
" The Department of Labor, I take it
from the response ... did not view this
as a controversial answer, " says Lichtenstein.
Pooled
employer plans were
created by Congress in 2019 in the
Setting Every Community Up for
Retirement Enhancement, or SECURE,
Act. The plans allow unrelated businesses
to participate in one retirement
plan managed by a pooled plan
provider. The PPP is the plan fiduciary,
with discretion for plan administration
and investments.
" [Fidelity bonds are] not terribly
expensive, but there's a cost involved
with them, " Lichtenstein notes. " And,
if you don't already have one, then
there's also the time involved in going
out and obtaining it: You have to go to
an insurer, you have to get the fidelity
bond contract, you have to read over
it and make sure everything is appropriate
and that you're comfortable
with everything. While it's not a huge
undertaking to get a fidelity bond, it is
a process, and so saving plan sponsors
in PEPs from that is one further argument
in favor of [them]. "
The letter " make[s] it clear that the
DOL thinks that interpretation of the
new rules with respect to PEPs under
the SECURE Act follows
from the
department's long-held views under
[ERISA] Section 412 more generally for
fidelity bonds, " Lichtenstein adds.
" The PEP provider is the adminpooled
employer
plans managed by a pooled
plan provider are not, in most cases,
legally liable as the plan administrator
and thus not required to purchase a
fidelity bond, the Department of Labor
wrote in an information letter.
istrator of the plan, [and] the plan
sponsor and the employees of the
sponsor shouldn't be viewed as
handling plan funds or other property
as they take the money from the plan
participants and remit it to the PEP
provider so the provider can actually
have it invested in the [participants']
accounts, " he says. " That should not
be viewed as handling plan funds
or other property in a manner that
would require the fidelity bond, so
it saves the sponsor from the cost of
buying its own fidelity bond ... just the
bond that the PEP provider has should
be sufficient. "
The letter also clarified that the
pooled plan provider " has the ultimate
responsibility
to have
that
fidelity
surety bond, " Lichtenstein says.
Plan sponsors that are now in a
pooled employer plan and the pooled
plan provider must protect the plan
against loss " by reason of acts of fraud
or dishonesty on the part of individuals
required to be bonded, whether they
act directly or through connivance with
others, " according to DOL regulations.
SEC Collects Big Time on
Enforcement Actions
The Securities and Exchange Commission
has collected a record $6.44 billion
in disgorgement and penalties during
the fiscal year that ended September
30, up from $3.85 billion last year, and
easily surpassed the former record of
$4.68 billion set in fiscal 2020.
The regulator raked in close to
$4.2 billion in civil penalties, nearly
three times the $1.46 billion collected
the previous fiscal year. However,
disgorgement totals were down for
the third straight year to about $2.24
billion, from nearly $2.40 billion in
fiscal 2021 and $3.59 billion the year
before that. In June 2020, the Supreme
Court vacated a $26.4 million
disgorgement fine the SEC had levied
and limited the scope of what it may
demand via disgorgement.
But the regulator has more than
made up for that with increased penalties.
It said it filed 760 enforcement
actions in fiscal 2022, up from 697 the
year before. Among the enforcement
actions, 462 were new or stand-alone
actions, up from 434 in fiscal 2021;
169 were follow-on administrative
proceedings seeking to bar or suspend
individuals
from certain functions
in the securities markets, up from
143; and 129 actions were against
issuers allegedly delinquent in making
required SEC filings, up from 120 in
fiscal 2021. -PA
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PLANADVISER - November/December 2022

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