ICI, Financial Industry Associations Comment on Labor Department Proposal

Washington, DC, January 27, 2006 - In a recent letter to the Labor Department, the Institute joined with the American Council of Life Insurers, the Investment Advisers Association, and the Securities Industry Association to comment on filing requirements the Department intends to impose on certain retirement plan service providers under the Labor-Management Reporting and Disclosure Act (LMRDA).

Background
LMRDA requires public disclosure of financial transactions or arrangements made between an employer and a labor organization, union official, employee, or labor relations consultant. The Act requires every employer who has engaged in any such transaction or arrangement during the fiscal year to file a detailed report with the Secretary of Labor using Form LM-10.

However, in an August 2005 policy statement, the Department of Labor stated that a retirement plan service provider-investment manager, investment consultant, or accounting firm-now may be required to file Form LM-10 if the service provider hosts receptions and other entertainment involving more than $25 that include officials of union-related plans, such as Taft-Hartley plans.

The Institute responded to the policy statement, detailing the financial industry's concern about the application of the Form LM-10 filing requirements to service providers. In November 2005, the Labor Department published guidance on the filing requirements on a retroactive basis and without the opportunity for notice and comment despite requests by the Institute and other financial services associations that any filing obligations for service providers to employee benefit plans be imposed only prospectively and after an opportunity to address industry concerns.

ICI Position
In the most recent comment letter, ICI and other associations jointly urge the Department to withdraw the proposal, calling the Form LM-10 requirements "burdensome and unprecedented," and not to proceed until it conducts a separate Form LM-10 notice and comment rulemaking, as legally required.

The associations note that their members have never before been subject to reporting requirements under LMRDA, which was designed to address labor relations matters, not service provider/plan trustee interactions, which are already governed comprehensively by ERISA and securities law. In addition, the expansion of the scope of LMRDA reporting-without appropriate notice and comment rulemaking for Form LM-10-will impose an extraordinary burden on financial services providers to maintain detailed records of ordinary business activities.

Related Links
Sections of this website are devoted to fund disclosure issues and retirement security issues.