July 02, 2020

Talking Through the DOL’s Proposed Prohibited Transaction Exemption

On June 29, the Department of Labor (DOL) issued a proposed prohibited transaction exemption, filling the void left when the Fifth Circuit vacated the Obama-era 2016 DOL regulation in 2018. While the new proposed rule is primarily a class exemption that harmonizes ERISA conditions for receiving commissions and other variable compensation with existing securities law standards, it also does a lot more. In this podcast, Faegre Drinker’s Jim Jorden and Brad Campbell dive into the details of this new proposed rule and the issues it presents for insurance producers, carriers and intermediaries.

In this recording, Jim and Brad provide context, insight and actionable advice for stakeholders on the following questions (and more) related to the DOL’s proposed exemption.

  • What is the most important change proposed in this new prohibited transaction exemption?
  • Under the new proposed fiduciary rule, more rollover recommendations may now be viewed as fiduciary advice. How does the DOL support this new interpretation? What issues does the revised analysis pose for insurance producers, carriers and intermediaries?
  • The new class exemption permits reasonable compensation for financial institutions (banks, insurance companies, RIAs and BDs) and investment professionals (employees, agents and representatives of financial institutions licensed under federal or state laws) who make investment recommendations as ERISA fiduciaries to retirement investors (plan or IRA fiduciaries, participants or beneficiaries). It also permits certain principal transactions. What conditions must be met for parties to receive the benefit of the exemption?
  • How might the obligations proposed under the new exemption with respect to insurance company sales review, supervision and compliance be implemented?
  • How long do stakeholders have to comment on this proposed rule?

In our next podcast, we will get into the details of what’s being imposed on both the life insurance and brokerage industries.


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