During a workshop at the American Society of Pension Professionals & Actuaries (ASPPA) Annual Conference, Jeffrey A. Monhart, chief, Division of Field Operations, Office of Enforcement at the Employee Benefits Security Administration (EBSA), said entities subject to investigation include registered investment advisers (RIAs), investment advisers, investment managers, consultants and broker/dealers. “Service providers are always a party-in-interest, but they are not always fiduciaries,” Monhart explained, adding that the agency will determine fiduciary status of service providers based on facts and circumstances established through interview and records review.
Information used to determine fiduciary status of a service provider includes the organizational chart, the products and services sold, affiliate relationships and compensation received through affiliates, as well as interviews with employees, affiliate employees and clients. The DOL determines the entities it will investigate through many sources, including retirement plan participant complaints, Form 5500 filings, media reports, other regulators’ actions and Securities and Exchange Commission (SEC) investigations. Monhart said the DOL is attuned to situations where the provider is both managing and valuing investments; there could be a conflict-of-interest if compensation is tied to assets under management. The agency also looks for misrepresentations about portfolio holdings, for example, stable value funds that include holdings in risky investments.