- as to the value of securities or other property, or make recommendations as to the advisability of investing in, purchasing or selling securities or other property;
on a regular basis;
- pursuant to a mutual agreement, arrangement or understanding, with the plan or a plan fiduciary;
- that will serve as a primary basis for investment decisions with respect to plan assets; and
- that will be individualized based on the particular needs of the plan or IRA.
In the April 2015 proposed rule, the definition of fiduciary is expanded. If a person meets this definition below, s/he is considered a fiduciary:
- provides investment or investment management recommendations or appraisals to an employee benefit plan, a plan fiduciary, participant or beneficiary, or an IRA owner or fiduciary, including advice regarding rollovers and distributions from ERISA plans and IRAs;
- for a fee or other direct or indirect compensation; and
- either (a) acknowledges the fiduciary nature of the advice, or (b) acts pursuant to an agreement, arrangement, or understanding with the advice recipient that the advice is individualized to, or specifically directed to, the recipient for consideration in making investment or management decisions regarding plan assets.
Exceptions, or carve-outs, are provided:
- statements or recommendations made to a “large plan investor with financial expertise” by a counterparty acting in an arm’s length transaction;
- offers or recommendations to plan fiduciaries of ERISA plans to enter into a swap or security-based swap that is regulated under the Securities Exchange Act or the Commodity Exchange Act;
- statements or recommendations provided to a plan fiduciary of an ERISA plan by an employee of the plan sponsor if the employee receives no fee beyond his or her normal compensation;
- marketing or making available a platform of investment alternatives to be selected by a plan fiduciary for an ERISA participant-directed individual account plan;
- the identification of investment alternatives that meet objective criteria specified by a plan fiduciary of an ERISA plan or the provision of objective financial data to such fiduciary;
- the provision of an appraisal, fairness opinion or a statement of value to an ESOP regarding employer securities, to a collective investment vehicle holding plan assets, or to a plan for meeting reporting and disclosure requirements; and
- information and materials that constitute “investment education” or “retirement education.”
A comment period expired in June with an expected final hearing date in late July 2015.
The DOL specifically carves out valuation analysts from the role of a fiduciary. At JBVal, we always consider it our mission of providing a defensible valuation that is fair to all to include all participants in the ESOP, as well as its Trustees and the company that sponsors it.