The final 408(b)(2) regulation requires detailed disclosures from investment managers providing covered services to ERISA retirement plans. Covered services include investment management services directly to ERISA plans, services to Plan Asset Vehicles, and services by registered investment advisors. The disclosures must provide information on services, direct and indirect compensation, fiduciary status, and registration status. Failure to comply could result in excise taxes, refunding compensation plus interest, and penalties. The regulation also requires additional investment information disclosures for investments designated as participant-directed investment alternatives in 401(k) plans. Responsible plan fiduciaries must terminate contracts if required information is not provided regarding future services after a 90 day period.
This document provides an overview of an SMSF session covering topics like SMSF registration and rollovers, acquisition of related party assets, payment of benefits, contributions, limited recourse borrowing arrangements, in-house assets, and the government's response to the Cooper Review. Key points include new SMSF registration requirements under Stronger Super, rules around acquiring assets from related parties, determining when a benefit has been "cashed," updates to limited recourse borrowing arrangements, and potential changes to in-house asset and collectibles rules.
This document provides notes to the accounts of Karnataka Bank Ltd. for the year ending 2010. It includes information on reconciliation of branch adjustments, prior period items, share issue expenses, employee benefits, segment reporting, related party transactions, accounting for taxes, impairment of assets, provisions and contingencies, and additional disclosures on risk exposures in derivatives and employee stock options as required by applicable accounting standards and RBI guidelines.
This chapter discusses financial difficulties faced by companies and alternatives available to address them. It covers reasons for financial difficulties, alternative courses of action like debt restructuring and bankruptcy, and different types of bankruptcy proceedings. Under Chapter 11 reorganization, a company receives protection from creditors to restructure its debts and operations while continuing as a business. In Chapter 7 liquidation, a trustee sells the company's assets and uses proceeds to pay creditors, resulting in the business ceasing operations. The chapter provides accounting guidance for companies in financial difficulty or bankruptcy proceedings.
Brookfield Infrastructure Partners L.P. is proposing to acquire Asciano Limited for approximately $6.6 billion. Under the terms of the proposed transaction, Asciano shareholders will receive $6.94 in cash and 0.0387 Brookfield Infrastructure partnership units valued at $2.21 per share for each Asciano share held. The implied offer price of $9.15 per share represents a premium of approximately 39% over Asciano's 30-day average share price prior to the initial announcement. The acquisition will create a world-class rail and port logistics platform and is expected to be accretive to Brookfield Infrastructure's funds from operations per unit. Brookfield Infrastructure will invest $2.8 billion for
The SARFAESI Act allows banks to auction residential and commercial property to recover loans from borrowers who have defaulted on repayments. It aims to help banks reduce non-performing assets. Banks can seize collateral like land for secured loans without court intervention. The Act provides three methods for asset recovery - securitization, asset reconstruction, and enforcement of security interests. It established regulations for securitization companies and allows borrowers to appeal repossession decisions in Debt Recovery Tribunals.
This document discusses guidance provided in the final 2007 Section 415 regulations regarding the use of post-severance payments for qualified retirement plan purposes. The regulations specify that certain post-employment payments meeting certain criteria must be included in Section 415 compensation, such as regular wages for work performed or commissions/bonuses earned prior to termination but paid within 2.5 months after severance. The regulations also provide that employers may optionally include other post-severance payments as Section 415 compensation, such as payments for unused leave. However, pure severance payments not related to prior services are excluded.
This document provides an overview of an SMSF session covering topics like SMSF registration and rollovers, acquisition of related party assets, payment of benefits, contributions, limited recourse borrowing arrangements, in-house assets, and the government's response to the Cooper Review. Key points include new SMSF registration requirements under Stronger Super, rules around acquiring assets from related parties, determining when a benefit has been "cashed," updates to limited recourse borrowing arrangements, and potential changes to in-house asset and collectibles rules.
This document provides notes to the accounts of Karnataka Bank Ltd. for the year ending 2010. It includes information on reconciliation of branch adjustments, prior period items, share issue expenses, employee benefits, segment reporting, related party transactions, accounting for taxes, impairment of assets, provisions and contingencies, and additional disclosures on risk exposures in derivatives and employee stock options as required by applicable accounting standards and RBI guidelines.
This chapter discusses financial difficulties faced by companies and alternatives available to address them. It covers reasons for financial difficulties, alternative courses of action like debt restructuring and bankruptcy, and different types of bankruptcy proceedings. Under Chapter 11 reorganization, a company receives protection from creditors to restructure its debts and operations while continuing as a business. In Chapter 7 liquidation, a trustee sells the company's assets and uses proceeds to pay creditors, resulting in the business ceasing operations. The chapter provides accounting guidance for companies in financial difficulty or bankruptcy proceedings.
Brookfield Infrastructure Partners L.P. is proposing to acquire Asciano Limited for approximately $6.6 billion. Under the terms of the proposed transaction, Asciano shareholders will receive $6.94 in cash and 0.0387 Brookfield Infrastructure partnership units valued at $2.21 per share for each Asciano share held. The implied offer price of $9.15 per share represents a premium of approximately 39% over Asciano's 30-day average share price prior to the initial announcement. The acquisition will create a world-class rail and port logistics platform and is expected to be accretive to Brookfield Infrastructure's funds from operations per unit. Brookfield Infrastructure will invest $2.8 billion for
The SARFAESI Act allows banks to auction residential and commercial property to recover loans from borrowers who have defaulted on repayments. It aims to help banks reduce non-performing assets. Banks can seize collateral like land for secured loans without court intervention. The Act provides three methods for asset recovery - securitization, asset reconstruction, and enforcement of security interests. It established regulations for securitization companies and allows borrowers to appeal repossession decisions in Debt Recovery Tribunals.
This document discusses guidance provided in the final 2007 Section 415 regulations regarding the use of post-severance payments for qualified retirement plan purposes. The regulations specify that certain post-employment payments meeting certain criteria must be included in Section 415 compensation, such as regular wages for work performed or commissions/bonuses earned prior to termination but paid within 2.5 months after severance. The regulations also provide that employers may optionally include other post-severance payments as Section 415 compensation, such as payments for unused leave. However, pure severance payments not related to prior services are excluded.
Note on Securitisation and Reconstruction of Financial Assets and Enforcement...aarthianand
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) allows banks and financial institutions to recover non-performing assets without court intervention through securitization, asset reconstruction, or enforcing security. The Act defines banks, financial institutions, secured creditors, and borrowers. To use SARFAESI powers, an institution must fall under the definition of a bank or financial institution, which includes certain public institutions and those notified by the central government. The Ministry of Corporate Affairs also provides guidelines for an institution to be declared a public financial institution.
Powerpoint slides on Securitization Act 2002. This a financial term. This powerpoint will create good awareness regarding securitization. how this does happen, who have right to do this process etc. people get to know how do banks manage their NPAs.
This document provides an overview of the accounting and statutory requirements for banking companies in India. It discusses key provisions of the Banking Regulation Act of 1949 regarding minimum capital and reserves, restrictions on commissions and dividends, statutory reserves, cash reserves, restrictions on loans and advances, books of accounts, provisioning of non-performing assets, and preparation of final accounts using the prescribed formats in the Third Schedule of the Act. The document also outlines the various types of business activities permitted for banks and restrictions placed on certain activities.
The document discusses plan expenses and fees that retirement plan sponsors must understand and evaluate. It explains that as fiduciaries, sponsors are responsible for ensuring fees are reasonable and services necessary. It provides an overview of the main types of plan fees including administrative, individual service, and investment fees. It also discusses hidden fees and how fees can substantially impact retirement savings over time. The document advises sponsors to establish an objective process to evaluate fees and services when selecting and monitoring service providers and investment options.
United Health Group [PDF Document] Notes to the Consolidated Financial Statem...finance3
UnitedHealth Group provides health insurance and well-being services. It prepares consolidated financial statements according to GAAP. Key aspects include using estimates for medical costs and revenues, recognizing premium revenues over the period members are entitled to services, developing estimates for incurred but not reported medical costs, and classifying investments as available for sale at fair value or held to maturity at amortized cost. The document also describes accounting policies for goodwill, stock compensation, derivatives, and recent accounting standard adoptions. In February 2004, UnitedHealth acquired Mid Atlantic Medical Services in a stock and cash transaction valued at $2.7 billion.
Solution Manual Advanced Financial Accounting by Baker 9th Edition Chapter 18Saskia Ahmad
This document provides answers to 18 questions about governmental accounting. It discusses topics like the purpose and accounting of special revenue funds, debt service funds, capital projects funds, and internal service funds. It also covers the differences between the accrual and modified accrual bases of accounting, requirements for major and non-major funds, component units, and reconciliation between fund-level and government-wide financial statements. Key financial statements for different fund types are identified. The role of the budgetary comparison schedule in required supplementary information is explained. Presentation of long-term assets, infrastructure, and debt on the government-wide statements is summarized.
FASB Update - presented by McGladrey at June 2011 NYSSCPA Private Company Acc...Brian Marshall
The document summarizes recent updates from the FASB, including significant accounting standards updates issued in 2010-2011. It discusses updates related to disclosures about credit quality and troubled debt restructurings, consolidation of repurchase agreements, impairment testing of goodwill, and accounting for costs of acquiring insurance contracts. The document also provides an overview of the FASB's priorities and recent board member changes.
The SARFAESI Act allows banks and financial institutions to recover non-performing assets (NPAs) through securitization or asset reconstruction. It established provisions for registration and regulation of securitization companies and asset reconstruction companies. These companies can acquire financial assets from banks, issue security receipts to qualified institutional buyers, and employ measures to resolve NPAs such as debt restructuring, taking possession of collateral, and changing borrower management. However, issues with the SARFAESI Act include a thin investor base limited to qualified buyers and investor appetite focused only on short-term, highly-rated securities.
Capstone Financial 408(b)(2) disclosures and agreementsdavidm10182
The document discusses the new 408(b)(2) regulation which requires plan service providers to disclose fees, compensation, and conflicts of interest to plan sponsors by April 2012. Plan sponsors will now be liable for evaluating the reasonableness of all plan expenses and ensuring participants are not paying excessive fees. The regulation requires detailed disclosure of all direct and indirect fees on participant statements. Plan sponsors must review these disclosures, evaluate service providers, and make changes to ensure the plan is operating in the best interests of participants and not in breach of fiduciary duties.
The document summarizes the Department of Labor's new regulations requiring retirement plan sponsors to provide annual fee disclosures to participants beginning in August 2012. The regulations aim to provide participants with information to make informed decisions but may be difficult for most participants to understand due to technical language and complexity. While the regulations impose high costs of $425 million initially and $2.7 billion over 10 years to comply, the Department expects fees charged by service providers to decrease by $14.9 billion as increased transparency creates pressure to lower costs. However, surveys suggest most participants will be confused by the disclosures and fee compression was likely an intended consequence of the regulations.
The document discusses consolidated financial statements and the reporting entity. It provides answers to questions about consolidated financial statements and when they should be prepared. Key points include:
- Consolidated financial statements present the financial position and results of a parent company and its subsidiaries as if they were a single entity.
- They provide a better understanding of the total resources and revenue under a parent's control.
- Consolidation is appropriate when a parent has control over a majority of another entity's voting shares. Control is the primary criterion for consolidation.
- Noncontrolling shareholders may find separate subsidiary statements more useful than consolidated statements.
The SARFAESI Act 2002 aims to allow banks and financial institutions to realize secured assets of borrowers in an expeditious manner upon default. Key aspects include allowing asset reconstruction and securitization, enforcement of security interests without court intervention, and establishing a central registry for registration of transactions. It applies to all banks, financial institutions, and housing finance companies. Various terms related to loans, securities, and recovery processes are also defined in the document.
Asset Reconstruction company means acquisition by any securitization company or reconstruction company of any right or interest of any bank or financial institution in any financial assistance for the purpose of realization of such financial assistance. Asset Reconstruction company is a company registered under section 3 of the Securitization & Reconstruction of financial assets & Enforcement of security interest ( SARFAESI ) Act 2002.
It is regulated by RBI as a Non – banking Financial company
RBI has exempted ARCs from the compliances under section 45- 1A ( Requirement of registration & net owned fund ) , Section 45 – 1B ( Maintenance of liquid assets ) , Section 45 – 1C ( Creation of reserve fund ) of the Reserve Bank Act, 1934 .
ARC Functions like an AMC within the guidelines issued by RBI.
The ARC transfers the acquired asset to one or more trusts at the price at which the financial assets were acquired from the originator
https://enterslice.com/nbfc-registration.html
The Intersection of Bankruptcy and... Labor/Employment Law (Series: Bankruptc...Financial Poise
Even before a company files for bankruptcy protection, multiple employment and labor issues can arise. This webinar addresses the ramifications of the failure of a debtor to comply with the Worker Adjustment and Retraining Notification Act (WARN), which requires employers to provide written notice in advance of covered plant closings and mass layoffs under certain conditions and may subject the debtor to liability. It also examines employee wage and claim issues that are often triggered by the filing for bankruptcy protection, as well as the special treatment provided by the Bankruptcy Code for collective bargaining agreements and retiree health care benefits, which makes modification or rejection of such agreements more difficult during the bankruptcy proceeding.
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/bankruptcy-and-labor-employment-law-2020/
Union Cabinet on 17th July 2019 approved the proposal to carry out eight amendments to the Insolvency and Bankruptcy Code, 2016. The Insolvency and Bankruptcy Code Amendment Bill, 2019 requires the approval of both the houses of Parliament. It aims to fill in the crucial gaps in the framework of CIRP to provide clarity in its implementation.
Important considerations regarding the amendments of IBC (Insolvency and Bankruptcy Code Amendment Bill, 2019)
This document provides answers to questions about accounting for not-for-profit entities. It discusses how different types of not-for-profits, like hospitals, voluntary health organizations, and other nonprofits, account for donations, contributed services, and restricted contributions. It also provides examples of how specific transactions would be recorded, such as donations of cash or capital assets. Additionally, it discusses accounting requirements for public versus private colleges and differences in how governmental and standards-setting bodies provide guidance for different types of not-for-profits.
This document provides a summary of the SARFAESI Act of 2002 and the evolution of debt recovery systems in the Indian banking sector. It discusses how non-performing assets piled up in the sector due to inadequate debt recovery mechanisms and long civil court processes. This led to various committees and reforms over time to improve recovery of debts, including the establishment of Debt Recovery Tribunals, introduction of prudential norms, and reductions in statutory reserve requirements. A key reform was the enactment of the SARFAESI Act in 2002, which allowed banks and financial institutions to enforce security interests without court intervention.
The new SEBI listing regulations replace the previous listing agreement and aim to increase transparency through additional disclosures on key events like acquisitions and family agreements. The regulations divide requirements into substantive provisions and procedural schedules. They cover periodic disclosures, corporate governance principles, and obligations for different security types. The regulations increase disclosures for related party transactions, unlisted subsidiaries, and board decisions. They also specify conditions for reclassifying promoters as public shareholders. The alignment with the Companies Act of 2013 removes ambiguities but increases compliance burden for listed companies.
Capstone financial 401k rules and regulationsdavidm10182
The document discusses new Department of Labor regulations requiring plan service providers to disclose compensation and potential conflicts of interest to fiduciaries by April 2012. It notes that fiduciaries will now be responsible for evaluating the reasonableness of all plan expenses, including fees from service providers, investments, and administrative costs. The regulations aim to increase transparency around retirement plan fees and ensure fiduciaries have the information needed to prudently manage their plans.
Retirement plan fiduciaries have a responsibility for the prudent selection and monitoring of plan investments. If your investment selection decisions are based solely on investment style, fees and historical returns, you may be missing the larger picture. In this presentation, we present a rigorous, multi-step process for selecting investment managers to serve your plan’s and participant’s needs. Using a use case scenario, we will demonstrate how to define the “Investment Universe”, the use and limitations of quantitative analysis, conducting proper qualitative due diligence, and the selection of a prudent investment for a participant-directed defined contribution retirement plan.
ERISA Retirement Service Providers November 2012fredreish
This newsletter provides information for service providers to ERISA-governed retirement plans. It focuses on recent legal issues impacting these service providers. Now that service providers have disclosed their services, status, and compensation to plan sponsors, as required under 408(b)(2), plan sponsors must review and evaluate these disclosures. However, many sponsors lack the expertise to properly do this. As a result, service providers will need to help their sponsor clients with this process. Additionally, the Department of Labor recently issued guidance on disclosure requirements for investments made through brokerage windows but then retreated from this position due to criticism. While the guidance was revised, the issue is not fully resolved and plans/providers should consider why the DOL pursued
Note on Securitisation and Reconstruction of Financial Assets and Enforcement...aarthianand
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) allows banks and financial institutions to recover non-performing assets without court intervention through securitization, asset reconstruction, or enforcing security. The Act defines banks, financial institutions, secured creditors, and borrowers. To use SARFAESI powers, an institution must fall under the definition of a bank or financial institution, which includes certain public institutions and those notified by the central government. The Ministry of Corporate Affairs also provides guidelines for an institution to be declared a public financial institution.
Powerpoint slides on Securitization Act 2002. This a financial term. This powerpoint will create good awareness regarding securitization. how this does happen, who have right to do this process etc. people get to know how do banks manage their NPAs.
This document provides an overview of the accounting and statutory requirements for banking companies in India. It discusses key provisions of the Banking Regulation Act of 1949 regarding minimum capital and reserves, restrictions on commissions and dividends, statutory reserves, cash reserves, restrictions on loans and advances, books of accounts, provisioning of non-performing assets, and preparation of final accounts using the prescribed formats in the Third Schedule of the Act. The document also outlines the various types of business activities permitted for banks and restrictions placed on certain activities.
The document discusses plan expenses and fees that retirement plan sponsors must understand and evaluate. It explains that as fiduciaries, sponsors are responsible for ensuring fees are reasonable and services necessary. It provides an overview of the main types of plan fees including administrative, individual service, and investment fees. It also discusses hidden fees and how fees can substantially impact retirement savings over time. The document advises sponsors to establish an objective process to evaluate fees and services when selecting and monitoring service providers and investment options.
United Health Group [PDF Document] Notes to the Consolidated Financial Statem...finance3
UnitedHealth Group provides health insurance and well-being services. It prepares consolidated financial statements according to GAAP. Key aspects include using estimates for medical costs and revenues, recognizing premium revenues over the period members are entitled to services, developing estimates for incurred but not reported medical costs, and classifying investments as available for sale at fair value or held to maturity at amortized cost. The document also describes accounting policies for goodwill, stock compensation, derivatives, and recent accounting standard adoptions. In February 2004, UnitedHealth acquired Mid Atlantic Medical Services in a stock and cash transaction valued at $2.7 billion.
Solution Manual Advanced Financial Accounting by Baker 9th Edition Chapter 18Saskia Ahmad
This document provides answers to 18 questions about governmental accounting. It discusses topics like the purpose and accounting of special revenue funds, debt service funds, capital projects funds, and internal service funds. It also covers the differences between the accrual and modified accrual bases of accounting, requirements for major and non-major funds, component units, and reconciliation between fund-level and government-wide financial statements. Key financial statements for different fund types are identified. The role of the budgetary comparison schedule in required supplementary information is explained. Presentation of long-term assets, infrastructure, and debt on the government-wide statements is summarized.
FASB Update - presented by McGladrey at June 2011 NYSSCPA Private Company Acc...Brian Marshall
The document summarizes recent updates from the FASB, including significant accounting standards updates issued in 2010-2011. It discusses updates related to disclosures about credit quality and troubled debt restructurings, consolidation of repurchase agreements, impairment testing of goodwill, and accounting for costs of acquiring insurance contracts. The document also provides an overview of the FASB's priorities and recent board member changes.
The SARFAESI Act allows banks and financial institutions to recover non-performing assets (NPAs) through securitization or asset reconstruction. It established provisions for registration and regulation of securitization companies and asset reconstruction companies. These companies can acquire financial assets from banks, issue security receipts to qualified institutional buyers, and employ measures to resolve NPAs such as debt restructuring, taking possession of collateral, and changing borrower management. However, issues with the SARFAESI Act include a thin investor base limited to qualified buyers and investor appetite focused only on short-term, highly-rated securities.
Capstone Financial 408(b)(2) disclosures and agreementsdavidm10182
The document discusses the new 408(b)(2) regulation which requires plan service providers to disclose fees, compensation, and conflicts of interest to plan sponsors by April 2012. Plan sponsors will now be liable for evaluating the reasonableness of all plan expenses and ensuring participants are not paying excessive fees. The regulation requires detailed disclosure of all direct and indirect fees on participant statements. Plan sponsors must review these disclosures, evaluate service providers, and make changes to ensure the plan is operating in the best interests of participants and not in breach of fiduciary duties.
The document summarizes the Department of Labor's new regulations requiring retirement plan sponsors to provide annual fee disclosures to participants beginning in August 2012. The regulations aim to provide participants with information to make informed decisions but may be difficult for most participants to understand due to technical language and complexity. While the regulations impose high costs of $425 million initially and $2.7 billion over 10 years to comply, the Department expects fees charged by service providers to decrease by $14.9 billion as increased transparency creates pressure to lower costs. However, surveys suggest most participants will be confused by the disclosures and fee compression was likely an intended consequence of the regulations.
The document discusses consolidated financial statements and the reporting entity. It provides answers to questions about consolidated financial statements and when they should be prepared. Key points include:
- Consolidated financial statements present the financial position and results of a parent company and its subsidiaries as if they were a single entity.
- They provide a better understanding of the total resources and revenue under a parent's control.
- Consolidation is appropriate when a parent has control over a majority of another entity's voting shares. Control is the primary criterion for consolidation.
- Noncontrolling shareholders may find separate subsidiary statements more useful than consolidated statements.
The SARFAESI Act 2002 aims to allow banks and financial institutions to realize secured assets of borrowers in an expeditious manner upon default. Key aspects include allowing asset reconstruction and securitization, enforcement of security interests without court intervention, and establishing a central registry for registration of transactions. It applies to all banks, financial institutions, and housing finance companies. Various terms related to loans, securities, and recovery processes are also defined in the document.
Asset Reconstruction company means acquisition by any securitization company or reconstruction company of any right or interest of any bank or financial institution in any financial assistance for the purpose of realization of such financial assistance. Asset Reconstruction company is a company registered under section 3 of the Securitization & Reconstruction of financial assets & Enforcement of security interest ( SARFAESI ) Act 2002.
It is regulated by RBI as a Non – banking Financial company
RBI has exempted ARCs from the compliances under section 45- 1A ( Requirement of registration & net owned fund ) , Section 45 – 1B ( Maintenance of liquid assets ) , Section 45 – 1C ( Creation of reserve fund ) of the Reserve Bank Act, 1934 .
ARC Functions like an AMC within the guidelines issued by RBI.
The ARC transfers the acquired asset to one or more trusts at the price at which the financial assets were acquired from the originator
https://enterslice.com/nbfc-registration.html
The Intersection of Bankruptcy and... Labor/Employment Law (Series: Bankruptc...Financial Poise
Even before a company files for bankruptcy protection, multiple employment and labor issues can arise. This webinar addresses the ramifications of the failure of a debtor to comply with the Worker Adjustment and Retraining Notification Act (WARN), which requires employers to provide written notice in advance of covered plant closings and mass layoffs under certain conditions and may subject the debtor to liability. It also examines employee wage and claim issues that are often triggered by the filing for bankruptcy protection, as well as the special treatment provided by the Bankruptcy Code for collective bargaining agreements and retiree health care benefits, which makes modification or rejection of such agreements more difficult during the bankruptcy proceeding.
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/bankruptcy-and-labor-employment-law-2020/
Union Cabinet on 17th July 2019 approved the proposal to carry out eight amendments to the Insolvency and Bankruptcy Code, 2016. The Insolvency and Bankruptcy Code Amendment Bill, 2019 requires the approval of both the houses of Parliament. It aims to fill in the crucial gaps in the framework of CIRP to provide clarity in its implementation.
Important considerations regarding the amendments of IBC (Insolvency and Bankruptcy Code Amendment Bill, 2019)
This document provides answers to questions about accounting for not-for-profit entities. It discusses how different types of not-for-profits, like hospitals, voluntary health organizations, and other nonprofits, account for donations, contributed services, and restricted contributions. It also provides examples of how specific transactions would be recorded, such as donations of cash or capital assets. Additionally, it discusses accounting requirements for public versus private colleges and differences in how governmental and standards-setting bodies provide guidance for different types of not-for-profits.
This document provides a summary of the SARFAESI Act of 2002 and the evolution of debt recovery systems in the Indian banking sector. It discusses how non-performing assets piled up in the sector due to inadequate debt recovery mechanisms and long civil court processes. This led to various committees and reforms over time to improve recovery of debts, including the establishment of Debt Recovery Tribunals, introduction of prudential norms, and reductions in statutory reserve requirements. A key reform was the enactment of the SARFAESI Act in 2002, which allowed banks and financial institutions to enforce security interests without court intervention.
The new SEBI listing regulations replace the previous listing agreement and aim to increase transparency through additional disclosures on key events like acquisitions and family agreements. The regulations divide requirements into substantive provisions and procedural schedules. They cover periodic disclosures, corporate governance principles, and obligations for different security types. The regulations increase disclosures for related party transactions, unlisted subsidiaries, and board decisions. They also specify conditions for reclassifying promoters as public shareholders. The alignment with the Companies Act of 2013 removes ambiguities but increases compliance burden for listed companies.
Capstone financial 401k rules and regulationsdavidm10182
The document discusses new Department of Labor regulations requiring plan service providers to disclose compensation and potential conflicts of interest to fiduciaries by April 2012. It notes that fiduciaries will now be responsible for evaluating the reasonableness of all plan expenses, including fees from service providers, investments, and administrative costs. The regulations aim to increase transparency around retirement plan fees and ensure fiduciaries have the information needed to prudently manage their plans.
Retirement plan fiduciaries have a responsibility for the prudent selection and monitoring of plan investments. If your investment selection decisions are based solely on investment style, fees and historical returns, you may be missing the larger picture. In this presentation, we present a rigorous, multi-step process for selecting investment managers to serve your plan’s and participant’s needs. Using a use case scenario, we will demonstrate how to define the “Investment Universe”, the use and limitations of quantitative analysis, conducting proper qualitative due diligence, and the selection of a prudent investment for a participant-directed defined contribution retirement plan.
ERISA Retirement Service Providers November 2012fredreish
This newsletter provides information for service providers to ERISA-governed retirement plans. It focuses on recent legal issues impacting these service providers. Now that service providers have disclosed their services, status, and compensation to plan sponsors, as required under 408(b)(2), plan sponsors must review and evaluate these disclosures. However, many sponsors lack the expertise to properly do this. As a result, service providers will need to help their sponsor clients with this process. Additionally, the Department of Labor recently issued guidance on disclosure requirements for investments made through brokerage windows but then retreated from this position due to criticism. While the guidance was revised, the issue is not fully resolved and plans/providers should consider why the DOL pursued
Under ERISA Section 408(b)(2), retirement plan fees must be reasonable in light of the services being rendered. Retirement plan fees are also a hot target in the courts, most notably with last year's Tussey vs. ABB, Inc. decision. In this presentation, we discuss just what the reasonableness standard means for today's retirement plan sponsors, and an action plan for employers.
This memorandum of agreement is between Dr. Yanga's Colleges, Inc. - College of Computer Studies and Fast Services Corporation regarding a practicum program. It outlines the obligations of both parties, including Dr. Yanga's providing student names, assignments, and schedules to Fast Services. Fast Services agrees to provide orientation, supervision, and allow students to use company facilities for educational purposes. Both parties agree to terms of non-discrimination and that students are not employees. The goal is for students to gain real-world experience through exposure to Fast Services' IT workplace.
This memorandum of agreement is between an educational institution and a government office. It establishes an on-the-job training program where the educational institution's students will undergo training at the government office. The agreement outlines the responsibilities of both parties, including screening and supervising students, providing training and certificates of completion. It also clarifies that students are not employees, and establishes rules for the program duration, termination, liability, and interpretation under Philippine law.
The memo recommends three ways for the Computown Public School System to bridge the digital divide:
1. Build an adequate technology infrastructure with hardware, networking, and internet connectivity using free or low-cost resources.
2. Take advantage of free online educational resources like email accounts, web hosting, and course management tools to boost communications and classroom efficiency.
3. Enable administrators, teachers, students, and parents to utilize the new technology and ensure continual learning through hierarchical leadership and support from agencies that provide technology education.
Each month, join us as we highlight and discuss hot topics ranging from the future of higher education to wearable technology, best productivity hacks and secrets to hiring top talent. Upload your SlideShares, and share your expertise with the world!
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SlideShare is a global platform for sharing presentations, infographics, videos and documents. It has over 18 million pieces of professional content uploaded by experts like Eric Schmidt and Guy Kawasaki. The document provides tips for setting up an account on SlideShare, uploading content, optimizing it for searchability, and sharing it on social media to build an audience and reputation as a subject matter expert.
DBR July 2012 Erisa Service Provider Disclosuresfredreish
The document discusses the steps that plan sponsors must take to comply with ERISA Service Provider Disclosure requirements. Plan sponsors must identify all covered service providers, determine what information should have been disclosed, and evaluate any disclosures received to ensure they are complete and the arrangements are reasonable. If disclosures are incomplete, plan sponsors must request missing information and potentially terminate arrangements if information is not provided. The evaluation of arrangements and compensation must consider all sources of compensation and whether conflicts of interest could harm participants.
What Plan Fiduciaries can Expect with 404(a)(5) DisclosuresBroadridge
This document discusses the Department of Labor's 404(a)(5) disclosure regulations for participant-directed retirement plans. The regulations aim to provide plan participants with sufficient information about fees, expenses, and investment options so they can make informed decisions. Key requirements include disclosing:
1) General plan information like investment instructions and restrictions
2) Administrative and individual expenses allocated to participant accounts
3) Investment-related information for each option like name, type, performance history, benchmarks, and fees.
Plan administrators must provide this information initially and annually, as well as upon request or if any details change. The regulations seek to help participants while not overburdening plan administrators by allowing reliance on information from service
408b2 A Look at the New DoL Disclosure and Reporting RulesBroadridge
The document discusses new Department of Labor rules regarding disclosure and reporting of financial information by retirement plans. It covers three key aspects of the new rules: 1) expanded reporting of payments for services on Schedule C of Form 5500, 2) new exemptions for prohibited transactions when parties provide services to plans, and 3) new requirements for fiduciaries to disclose cost and service information to plan participants. The rules aim to increase transparency around retirement plan fees and services. Financial services firms have adapted to the new reporting requirements, though some complex commercial relationships remain challenging to report.
The Department of Labor is adopting a final rule that expands the definition of a fiduciary under ERISA and the Internal Revenue Code as a result of giving investment advice. The final rule treats those who provide investment advice or recommendations for a fee as fiduciaries in a wider array of advice relationships. The rule aims to require advisers and their firms to give advice that is in the best interest of their customers without prohibiting common compensation arrangements by allowing such arrangements under conditions designed to ensure the adviser is acting in accordance with fiduciary norms and basic standards of fair dealing. The rule is effective on April 10, 2017, with the Department providing compliance assistance to help affected parties transition to the new regulatory regime.
The document discusses the key aspects and requirements of the Alternative Investment Fund Managers Directive (AIFMD), an EU directive that introduces a regulatory framework for managers of alternative investment funds. It covers topics such as what an alternative investment fund (AIF) and its manager (AIFM) are, the authorization process for AIFMs, capital requirements, conduct standards, transparency and reporting obligations, and the impact on areas like documentation, service providers, and marketing. Managers have until July 2014 to comply with the new rules by becoming authorized or ensuring any entities managing AIFs meet the regulatory standards.
The document discusses the implications of the Alternative Investment Fund Managers Directive (AIFMD) for private equity fund managers. Some key points:
1) The AIFMD applies to EU-based fund managers and non-EU managers who market funds in the EU. It affects private equity fund managers who manage over €500M in assets.
2) The AIFMD aims to regulate Alternative Investment Fund Managers (AIFMs) and provide investor protection. It establishes rules around calculating assets, capital requirements, operating conditions, and delegation.
3) Private equity fund managers caught by the AIFMD must comply with rules relating to risk management, liquidity, valuation, and more. They will also need a
Alternative Investment Fund Regulation 2011Karthik Deep
The proposed SEBI AIF regulation aims to regulate alternative investment funds in India while allowing qualified investors access to alternative assets. It defines high net worth individuals, sets minimum investment amounts, and categorizes different investment strategies. The regulation imposes reporting requirements on funds related to risks, conflicts of interest, financial statements, and investments. It also clarifies tax treatment and ensures harmonization with other regulations to provide a consistent framework for alternative investments while protecting retail investors.
The SEC amended the definition of "accredited investor" which takes effect on February 27, 2012. This change is likely to affect the eligibility criteria for investors in alternative investments. Funds need to determine if existing investors still qualify and if subscription documents need updating. The amendments exclude an individual's primary residence from their net worth calculation and include certain debt secured by the primary residence. Limited grandfathering provisions apply to some pre-existing rights.
This document summarizes key differences between profit sharing plans and employee stock ownership plans (ESOPs) as alternative employee ownership structures. It notes that both are defined contribution retirement plans governed by ERISA and the tax code. While profit sharing plans can invest in employer securities, ESOPs are designed primarily for this purpose. The document outlines several favorable tax treatments that ESOPs receive over profit sharing plans, such as more flexible contribution deductions and the ability to deduct dividends paid on employer shares. It also discusses differences in prohibited transaction rules and ability to defer capital gains.
The document discusses how the Alternative Investment Fund Managers Directive (AIFMD) affects private equity fund managers in Europe. It affects managers who control over €500 million in assets or offer redemption rights within 5 years. It requires authorization, adherence to operating conditions, limits on delegation, and appointing a depositary. Managers must monitor assets, maintain capital reserves, implement risk management, and comply with new transparency and reporting rules. The directive aims to harmonize regulation of alternative investment fund managers across the EU.
The Reserve Bank of India (RBI) has released final securitization guidelines for banks and non-banking financial companies (NBFCs) that are largely in line with previous draft guidelines, with some changes that are positive. Specifically, the Minimum Holding Period (MHP) has been lowered for loans with monthly repayment schedules, benefiting NBFCs. However, other important aspects such as minimum retention ratios and restrictions on credit enhancements remain unchanged. The finalization of guidelines provides clarity around securitization norms.
This presentation details a new filing requirement to file Form BEN-2 with the Registrar of Companies (“ROC”) and our opinion on the topic, in respect of declaration received from Individuals who fall under the category of “Significant Beneficial Owners” defined under the Companies (Significant Beneficial Owners) Rules, 2018 (“SBO Rules”) introduced by the Ministry of Corporate Affairs (“MCA”).
This document discusses the requirements for a private investment fund to qualify as a Venture Capital Operating Company (VCOC) under ERISA regulations. Key points:
1) To qualify as a VCOC, a fund must invest at least 50% of its assets in operating companies where it has direct contractual management rights. This includes the right to appoint board members or officers.
2) The fund must also exercise active management rights over at least one operating company as part of its regular business activities.
3) It is best practice for funds to obtain a separate "management rights letter" outlining their management rights for each portfolio investment, even though only 50% require this.
4) The
A guide to help advisors understand the proposed Department of Labor changes to the fiduciary definition regulations.
The DOL’s proposed changes to the fiduciary definition regulations are causing financial advisors to re-examine their business models and to determine whether they may be a fiduciary to the plan and participants under the proposed regulations. These proposed changes will not only impact qualified retirement plans, but non-qualified plans too, such as IRAs. There could be major implications for how advisors will work with IRAs if these changes are implemented. This Practice Guide provides a framework to help advisors understand this issue by addressing the following questions:
What are the rules today?
What is being proposed?
How would some of the proposed changes impact an advisor’s practice?
Are there any action steps an advisor can take today in anticipation of the new rules?
Achieve greater certainty through pension deriskingLori Jones
The presentation provided an overview of the changing landscape for defined benefit pension plans including higher PBGC premiums, new mortality tables and improved funding status as a result of favorable investment performance. These changing conditions have encouraged plan sponsors to consider “de-risking” defined benefit pension plans through annuitization and lump sum windows.
Lori provided insight into legal issues within the context of de-risking including a background of applicable ERISA fiduciary rules, recently issued recommendations from the ERISA Advisory Council, IRS private letter rulings and a pending case involving Verizon’s annuitization of its pension plan.
This document discusses 401(k) plan fees, including administrative fees, investment fees, and individual service fees. It explains that fees can significantly impact retirement savings over time. The document provides examples of common investment options in 401(k) plans like mutual funds and variable annuities, describing the types of fees associated with each. It advises participants to obtain fee information from plan administrators and documents and consider fees alongside other factors when making investment decisions.
Comprehensive Guide to Nonqualified Deferred Compensation NQDCFulcrum Partners LLC
This document summarizes the key aspects of non-qualified deferred compensation (NQDC) plans, which many employers create to provide additional retirement benefits to key executives. There are two main types of NQDC plans: defined contribution plans and defined benefit plans. Defined contribution plans tie an executive's benefit to contributions to an individual account, while defined benefit plans pay a specified retirement benefit. NQDC plans allow deferral of income tax but require compliance with IRS rules to avoid penalties. The document provides details on plan types, contributions, investments, taxation and other considerations for employers in selecting an appropriate NQDC plan.
The document discusses two potential areas of 401(k) plan litigation: excessive payments to service providers and high expense ratios of mutual funds. If plan sponsors fail to properly evaluate service provider payments and fund expenses, it could lead to litigation. Additionally, if a case reaches the Supreme Court regarding fiduciary responsibility to monitor fund expenses, it could increase scrutiny of plan sponsors' practices. While revenue sharing to pay for plan costs is allowed, amounts must be reasonable and fund expenses appropriate relative to plan size. Overall the article advises plan sponsors to focus on these issues to manage litigation risks.
August 2012 Just Out Of Reish Plan Sponsorfredreish
1) Past 401(k) litigation has involved company stock cases where large losses occurred and revenue sharing cases where excessive fees were paid from mutual funds.
2) Future litigation risks include unfair allocation of plan expenses among participants and fiduciaries failing to properly evaluate and make prudent decisions about revenue sharing amounts.
3) Litigation risks increase when money is moving between parties without clear disclosure and oversight by fiduciaries.
The document discusses how the definition of a successful 401(k) plan is evolving from measuring features and participation rates to measuring whether the plan will generate adequate lifetime retirement income for participants. It recommends that plans provide gap analysis to help participants determine if they are on track to have sufficient retirement savings. It also suggests plans offer investments and services like annuities that can help participants convert their savings into reliable retirement income to last 30 years or more. The new measure of a plan's success will be whether it produces benefits participants can live on rather than just the size of their account balances.
The document discusses using qualified default investment alternatives (QDIAs) to improve 401(k) participant investment returns. When plans switch providers, moving participants' investments into a QDIA rather than directly mapping them can provide fiduciary protections for sponsors and better outcomes for participants. Data from one large recordkeeper showed that around 80% of assets remained in QDIAs 18 months after conversion, indicating QDIAs can successfully improve long-term investing for most participants in a protected manner.
The aging of the American workforce will have significant implications for employers and employees. People are living longer, with some estimates that over 600,000 Americans will be over 100 years old by 2050. There is now a 31% chance that at least one spouse in a married couple will live past 95 if they retire at 65. This means employees may need to plan for 30 years of retirement. However, retiring at 65 is very expensive to fund for most people. As a result, 70 or 72 is becoming the new standard retirement age. This aging trend presents challenges for employers to support longer working and retirement periods.
ERISA For Retirement Service Providers[1]fredreish
The newsletter provides information for ERISA retirement plan service providers on recent legal issues. Upcoming, Fred Reish and Bradford Campbell will discuss developments in Washington D.C. regarding mandated participant disclosures and lawsuits about indirect payments to service providers. The articles discuss issues like whether service providers need to offset indirect compensation against direct compensation due to new disclosure rules, and specific guidance from the DOL on disclosing asset allocation models and handling "float" income.
Feb 2012 Fiduciary Considerations For Insured Retirement Income[1]fredreish
This document discusses fiduciary considerations for retirement plans offering guaranteed minimum withdrawal benefits (GMWBs). It provides an overview of typical GMWB features, including how they guarantee minimum withdrawals for life from retirement accounts. It also outlines the fiduciary process for evaluating and selecting GMWBs, focusing on three key areas: assessing product features, evaluating portability, and ensuring the financial viability of the insurance company providing the benefits. Fiduciaries must engage in a prudent process to determine whether offering a GMWB is appropriate for their plan and to select the best product and carrier based on factors like costs, benefits, and the long-term ability of the insurer to pay guaranteed amounts.
Feb 2012 Fiduciary Considerations For Insured Retirement Income[1]
DBR May 2012 The Final408(B)(2)Regulation[1]
1. Investment Management Bulletin
May 2012
The Final 408(b)(2) Regulation:
Impact on Investment Managers
By Fred Reish, Joan Neri, Bruce Ashton, Gary Ammon and Brad Campbell
This bulletin discusses the impact of the U.S. Department of Labor’s (DOL) final 408(b)(2)
disclosure regulation on discretionary investment managers – that is, investment advisers
with the authority to manage the assets of ERISA-governed retirement plans. The final
regulation requires various disclosures to be made by an investment adviser to its
ERISA plan clients prior to July 1, 2012. Failure to comply with these new disclosures
could result in substantial penalties, excise taxes and forfeiture of investment
advisory fees. We would be happy to assist you in drafting or reviewing these new
disclosures.
The new disclosure rules apply to any discretionary asset manager for an ERISA-covered
retirement plan who reasonably expects to receive $1,000 or more of direct or indirect
compensation in connection with its services to a plan. Covered plans include both
defined benefit and defined contribution plans, including ERISA-covered 403(b) plans—
covered plans do not include IRAs or retirement plans that allow employers to contribute
to IRAs set up for employees (referred to as SEPs or SIMPLEs). Discretionary managers
include those hired directly by the plan to manage all or some of its assets, and also the
fiduciary managers of “plan asset vehicles”—investments that are themselves subject to
ERISA, and in which a plan invests. Such investments include collective investment funds
or trusts offered by banks, the separate accounts of insurance companies or certain other
investment vehicles (e.g., hedge funds) if more than 25% of the funds being managed
come from ERISA plans and other “benefit plan investors.” The disclosure rule does not
apply to investment advisers for mutual funds because the investments in mutual funds
are not considered ERISA plan assets.
More information is available from earlier Drinker Biddle alerts addressing DOL Reg.
§408(b)(2):
>> The DOL’s 408(b)(2) Regulation: Impact on Investment Managers (June 6, 2011) –
see www.drinkerbiddle.com/files/ftpupload/pdf/DOLs408b2Regulation.pdf
>> Finally the Final … 408(b)(2) Regulation (February 2012) – see
www.drinkerbiddle.com/files/ftpupload/pdf/FinallytheFinal.pdf
Investment Management Group www.drinkerbiddle.com
2. Investment Management Bulletin May 2012
Key Considerations for Investment Managers
>> The disclosures need to be provided in writing to the “responsible plan fiduciary,” defined as the
fiduciary of an ERISA-covered retirement plan with the authority to cause the plan to enter into a
service arrangement with the investment manager.
>> The compliance date is fast approaching – For existing service arrangements, the disclosures
must be provided no later than July 1, 2012.
>> For new, post-June 30 service arrangements, the disclosures need to be provided reasonably in
advance of entering into the arrangements.
>> These disclosures are new requirements for the prohibited transaction exemption that permits
reasonable arrangements with ERISA retirement plans—failure to provide the disclosures
results in a prohibited transaction.
>> Investment managers who are subject to these rules and who fail to comply will be subject to
excise taxes, may need to refund the compensation, plus interest, they receive under the covered
service arrangement, and could be subject to an additional 20 percent penalty imposed by the
Department of Labor.
>> The rules apply to any discretionary investment manager that provides services as an ERISA
fiduciary directly to an ERISA-covered retirement plan or that manages a Plan Asset Vehicle, such
as a common or collective trust fund of a bank, a separate account of an insurance company, or
certain other investment vehicles if more than 25 percent of the funds being managed come from
ERISA plans and other “benefit plan investors.”
>> If an investment manager provides ERISA fiduciary services to a Plan Asset Vehicle that is also a
“designated investment alternative” (DIA) in an ERISA-covered retirement plan, then the investment
manager must also disclose the total operating expenses and certain other information in its
possession relating to the performance and fees or expenses of the Plan Asset Vehicle. A DIA is
any investment alternative designated by the ERISA-covered retirement plan into which participants
can direct the investment of their plan accounts.
>> Arrangements with third-party payers that result in indirect compensation payments (e.g., soft
dollars or other non-monetary compensation) to the investment manager must be described in
sufficient detail that the responsible plan fiduciaries can evaluate their reasonableness.
Overview
The final 408(b)(2) regulation requires detailed disclosures that must be satisfied by
an investment manager that enters into a contract or arrangement to provide “covered
services” to an ERISA-covered retirement plan, such as a 401(k) plan, a defined benefit
pension plan, a non-participant-directed profit sharing plan or an ERISA-covered 403(b)
plan. Covered services include investment management services provided directly to
an ERISA-covered retirement plan as an ERISA fiduciary. Covered services also include
services provided as an ERISA fiduciary to a Plan Asset Vehicle. Finally, covered services
include services provided by a registered investment adviser. For these services, the
disclosure must be provided to the responsible plan fiduciaries of the ERISA-covered
retirement plans.
Investment Management Group www.drinkerbiddle.com 2
3. Investment Management Bulletin May 2012
The disclosures are enforced through the prohibited transaction rules. Because service
providers are “parties in interest” under ERISA, an exemption from the prohibited
transaction rules is necessary in order for a plan to engage a service provider without
committing a prohibited transaction. ERISA section 408(b)(2) is the prohibited
transaction exemption that permits a plan to engage a service provider that is a party
in interest if the contract or arrangement is “reasonable.” The final 408(b)(2) regulation
adds disclosure requirements as new elements of “reasonableness.” As a result, a
failure by a covered service provider to provide the disclosures will result in a prohibited
transaction under ERISA and the Internal Revenue Code. This means that the investment
manager will be subject to excise taxes and must correct the violation, which may mean
refunding the investment manager’s compensation plus interest on that amount. In
addition, if the DOL recovers the compensation for the plan through either a settlement
agreement or a court order, an additional 20 percent penalty may be imposed.
The disclosures must provide detailed information about the investment manager’s
services, direct and indirect compensation, ERISA fiduciary status, and whether the
manager is an investment adviser registered under the Investment Advisers Act of 1940
or state law. Also, they must be written in a manner that facilitates the responsible plan
fiduciary’s evaluation of the information. The disclosures must be made reasonably in
advance of the date the service contract is entered into, but no later than July 1 in the
case of existing arrangements.
This bulletin focuses on those changes made by the final regulation that impact
investment managers.
1. Effective Date. The compliance effective date of the final regulation was extended
from April 1 to July 1, 2012. The delay benefits investment managers who may not
recognize that they are covered service providers and who therefore may not have
taken steps to comply, such as:
a. Investment managers that provide ERISA fiduciary services to Plan Asset
Vehicles; and
b. Investment managers who manage all or part of the assets of an ERISA-covered
retirement plan such as a profit sharing or pension plan, but who are not
otherwise involved in the retirement plan community.
2. Additional Investment Disclosure for Designated Investment Alternatives. As stated
above, a DIA is generally “any investment alternative designated by the covered plan
into which participants and beneficiaries may direct the investment of assets held
in, or contributed to, their individual accounts,” but does not include brokerage
windows, self-directed brokerage accounts, or similar plan arrangements that allow
participants to select investments not otherwise offered under the plan menu. The
final regulation requires additional disclosures from investment managers that
provide ERISA fiduciary services to a Plan Asset Vehicle that is offered as a DIA in
a participant-directed, individual account plan—such as a 401(k) plan allowing
participant direction of contributions into a collective investment fund. (These
additional disclosure requirements of DIA fiduciary managers, therefore, only
apply in the context of participant-directed, individual account plans, and not to
investments made by traditional pension plans or defined contribution plans in which
there is no participant direction.)
Investment Management Group www.drinkerbiddle.com 3
4. Investment Management Bulletin May 2012
Under the final regulation, the investment manager of a DIA is required to disclose
the total annual operating expenses of the Plan Asset Vehicle and, if within the
control of or reasonably available to the investment manager, performance data and
fee and expense information required in order for the responsible plan fiduciary to
satisfy the participant-disclosure rules (DOL Reg. §2550.404a-5(d)(1)). This means
that the investment manager will need to provide (i) information on the DIA’s
average annual total return for the one-, five- and 10-calendar year periods ending
in the most recently completed calendar year, (ii) an appropriate benchmark, (iii) fee
and expense information, (iv) the DIA’s principal strategies and principal risks, and
(v) the DIA’s portfolio turnover rate. If the investment manager does not provide this
information, the responsible plan fiduciary is required to terminate the relationship
so as to avoid engaging in a prohibited transaction.
3. Disclosure of Indirect Compensation Arrangements and Compensation Paid to
Affiliates. The final regulation includes disclosure requirements for indirect
compensation. Indirect compensation means compensation received by the
investment manager from any source other than the plan, the plan sponsor, or an
affiliate of the manager, and includes non-monetary compensation. Under these
definitions, indirect compensation includes soft dollars provided by a broker-dealer
to an investment manager in exchange for the investment manager’s executing
of securities transactions through the broker-dealer. Indirect compensation could
also include non-monetary compensation, such as gifts, awards and trips. The
compensation must be quantified in the disclosure (e.g., a dollar amount, a formula
based upon plan assets, or a per-participant charge) so that the responsible plan
fiduciary can evaluate the total amount of compensation, both direct and indirect,
that the investment manager will receive.
In addition to describing the indirect compensation the investment manager
expects to receive, the investment manager must describe the services for which
the indirect compensation will be received, the payer of the indirect compensation,
and the “arrangement” with the payer. Thus, in the example above, the investment
manager would need to describe the arrangement with the broker-dealer under
which the broker-dealer provides soft dollars to the investment manager in exchange
for executing transactions. An investment manager also must disclose payments
among itself and its subcontractors or affiliates, such as an affiliated broker-dealer
and subcontractors, that are either set on a transaction basis (e.g., soft dollars,
commissions, finder’s fees) or that are charged directly against the covered plan’s
investment and reflected in the net value (e.g., Rule 12b-1 fees).
The DOL has stated in the preamble to the final regulation that it “intends the
concept of compensation to be received by a covered service provider, or its
affiliates or subcontractors, ‘in connection with’ a particular contract or arrangement
for services [to] be construed broadly.” The preamble provides the example of a
conference offered by a covered service provider to its plan clients in which the
clients pay a small fee for attendance and another institution pays a larger “subsidy
fee” to defray a portion of the cost of the conference. The preamble indicates that
in some instances the subsidy fee could be considered compensation received
by the covered service provider in connection with the covered service provider’s
arrangement with the plan client.
Investment Management Group www.drinkerbiddle.com 4
5. Investment Management Bulletin May 2012
4. Responsible Plan Fiduciary’s Obligation to Terminate the Service Contract Upon
Failure to Disclose. Under ERISA’s prohibited transaction rules, the responsible
plan fiduciary is prohibited from permitting a plan to enter into an arrangement
with a service provider unless the arrangement is “reasonable” – which means the
disclosure requirements of the final regulation are satisfied. This means that in
order to avoid engaging in a prohibited transaction, the responsible plan fiduciary
must make sure that each covered service provider furnishes it with the disclosures
and that the disclosures contain the requisite information regarding services,
compensation, fiduciary status and registration status under the Investment Advisers
Act or state law.
Accordingly, the final regulation provides an exemption process for responsible
plan fiduciaries where a service provider fails to provide the required information.
By satisfying the conditions of this exemption, the plan fiduciary will not be liable
for the prohibited transaction. Among the conditions is a requirement that the
responsible plan fiduciary request the information in writing as soon as it learns
of the failure to disclose, and that it identify the service provider to the DOL if
the service provider fails to provide the information within 90 days of the written
request.
The interim final regulation also required that the responsible plan fiduciary evaluate
whether it should terminate or continue the arrangement if the service provider
failed or refused to provide the requested information. In other words, termination
was permissive and in the discretion of the responsible plan fiduciary. The rule
now states that, “If the requested information relates to future services (i.e., services
that will be performed after the end of the 90-day period…) and is not disclosed
promptly after the end of the 90-day period, then the responsible plan fiduciary shall
terminate the contract or arrangement as expeditiously as possible, consistent
with such duty of prudence.” (Emphasis added.)
5. Disclosure of Changes. The final regulation continues to require that the investment
manager disclose changes in information related to its services, status as a fiduciary
and a registered investment adviser, and compensation within 60 days after
the investment manager is informed of the change. Changes to the investment
information, however, may be provided annually.
6. Disclosures for Reporting and Disclosure Purposes. The interim final regulation
required that information needed by the plan administrator of a covered plan to
enable it to comply with its reporting and disclosure obligations under ERISA had
to be provided within 60 days after a written request. The final rule modifies this
to specify that the information must be provided “reasonably in advance” of the
date the plan administrator states in its written request that it must comply with its
reporting and disclosure requirement. For example, the plan administrator must
state when it expects to file its Form 5500, and the investment manager must
provide the information “reasonably in advance” of that date. This presupposes
that the plan administrator has made its written request in time for the investment
manager to do so.
Investment Management Group www.drinkerbiddle.com 5
6. Investment Management Bulletin May 2012
Conclusion
The final regulation should have limited impact on those investment managers that
already recognize they are covered service providers. However, we are concerned
that many investment managers do not realize that they are subject to these new
requirements. Also, investment managers that provide ERISA fiduciary services to a Plan
Asset Vehicle may not have recognized that they are covered service providers and will
need to act swiftly to comply with these disclosure obligations by July 1 for their existing
service contracts. Such investment managers should also take care to understand and
comply with the expanded requirement in the final regulation to disclose investment
information in their possession regarding designated investment alternatives (DIAs)
associated with participant-directed, individual account plans. An investment manager’s
failure to comply with these rules could result in serious consequences, including
imposition of an excise tax, refunding the investment manager’s compensation plus
interest on that amount, and imposition of a 20 percent penalty.
Investment Management Group www.drinkerbiddle.com 6