Tuesday, September 13, 2011

Groom Lobbying for Financial Advisers Over Proposed ERISA Changes

Groom Lobbying for Financial Advisers Over Proposed ERISA Changes

Groom Law Group this month has notified Congress it is lobbying for eight firms that provide services concerning employee stock ownership plans, submitting more lobbying registration forms than any other firm so far this month.

According to congressional records, Groom is representing Stout Risius Ross, Prairie Capital Advisors, Houlihan Lokey, Duff Phelps, ComStock Advisors, Columbia Financial Advisors, Chartwell Capital Solutions and Willamette Management Associates. Groom wrote in the forms that it is advocating for the firms on a "[p]roposed regulation issued by the Department of Labor to change the definition of fiduciary" under the Employee Retirement Income Security Act.

In October, the Labor Department proposed a rule that would expand the definition of "fiduciary" to an individual who gives investment advice to an employee benefit plan for compensation. Under the proposed rule, an individual would no longer need to provide advice on a regular basis or give recommendations that are the main basis for investment judgments regarding plan assets to be considered a fiduciary. These key changes and other alterations to the definition would increase the number of plan service providers that must abide by fiduciary regulations.

Groom principals Lars Golumbic, Edward Scallet and Brigen Winters, who are lobbying for the firms, didn't immediately respond to requests for comment. But Golumbic and Scallet in February filed a letter with the Labor Department urging the agency to withdraw the proposed rule or make changes to it.

The lawyers wrote in the letter that they represented all but one of the firms. Golumbic and Scallet did not mention Willamette Management Associates.

"[T]he firms have serious concerns about the impact of the Proposed Regulation on their own businesses, and on the over ten million active and retired employees who rely upon [employee stock ownership plans] for their retirement security," the lawyers wrote.

A less competitive valuation market and higher costs are among the firms' worries, Golumbic and Scallet wrote. The lawyers expressed concern that the new definition would put the firms at a greater risk for lawsuits or investigations, driving up insurance costs and potentially forcing them out of the employee stock ownership plan market.

If the Labor Department does not withdraw its proposed rule, the firms would back "a well-reasoned approach toward further strengthening the standards governing the provision of [employee stock ownership plan]-related valuation services," the lawyers wrote.

In written remarks prepared for a House hearing in July, Phyllis Borzi, assistant secretary of labor for the Employee Benefits Security Administration, said her agency is working to address concerns about the proposed rule while ensuring advisers work in the best interest of their clients.

"The Department is committed to developing and issuing a clear and effective rule that takes full and proper account of all stakeholder views, and that ensures that investment advisers can never profit from hidden or inappropriate conflicts of interest," Borzi said.


Rodrigo González Fernández
Diplomado en "Responsabilidad Social Empresarial" de la ONU
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