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Friday, March 24, 2017

"Peeps" Goes the (Multiemployer) Weasel

You'd like to think being cute is good enough, right?  I just got done talking about how Louis C.K.'s company has to make contributions to a multi, and now the even-cuter (cuter than Louis C.K.?) manufacturer of those ubiquitous peeps may need to do so.  In Bakery & Confectionery Union & Indus. Int'l Pension Fund v. Just Born II, Inc., No. 8:16-cv-00793 (D. Md. Feb. 8, 2017), the court held that Just Born (could the name BE any cuter?!?) was required to continue to pay certain contributions to the plan even though the applicable agreement had purportedly expired.‎  Ouch.  The case is now being appealed.*


* Interestingly, earlier, the district court had rejected the parties' prior agreement to settle the case.

Wednesday, March 22, 2017

ERISA Goes "Oink" - Louis C.K.'s Pig Newton Owes Contributions to a Multiemployer Plan

There have previously been posts here relating to ERISA-related judicial difficulties surrounding Denny McLain, The J. Geils Band and Michael Vick.  Now let's add ‎MPPAA issues surrounding Louis C.K.'s Pig Newton to the mix.

In Pig Newton, Inc. v. Boards of Directors of Motion Picture Industry Pension Plan, No. 15-01029 (2d Cir. March 31, 2017), Pig Newton, Inc. did editing work on the TV show, "Louie," through its sole owner, Louis Szekely.  A multiemployer plan sued for allegedly required contributions.  Louis Szekely is known by many as the one and only Louis C.K.  See also here (relating to the derivation of the "C.K." he uses as his surname).

The Second Circuit affirmed the district court in concluding that ‎Pig Newton was required to make contributions for a flat number of hours for work, regardless of how many hours of work were actually performed.  In this case, there was a plan rule applicable to those controlling employees who could determine their own hours (and thereby potentially avoid applicable hours thresholds) under which Pig Newton had to contribute for Louis C.K. at set weekly and annual rates, regardless of the actual hours of editing work.

Hopefully, the proprietor's unsurpassed sense of humor will . . . ahem . . . somehow get him through this dark time.  More fun with ERISA!

Saturday, March 18, 2017

"Going in Style" with Pension-Centric Movies (Part III)

I have posted here and here about movies that are, unbeknownst to many, quite ERISA-centric.  Maybe the best (or at least most interesting) example is Wall Street, which is essentially a pension-reversion  movie.

Now, with the Arkin/Caine/Freeman remake (or "reboot," or whatever) of the Burns/Carney/Strasberg movie Going in Style we clearly have another example of ERISA-centric cinema.  The movie isn't yet out, but already we have a commercial starting with, "the pension fund is being dissolved," and trailers that contain the statements that, "Zentex [sp?] Steel has frozen all pension payments," and that, "Williamsburg Savings will manage the liquidation of the fund."  From there, the plot (and I don't think is a spoiler, given the marketing campaign) seems to center around some combination of vengeance and necessity revolving at least in part around the failed pension plan.

It's no Wall Street, I strongly suspect, but it's a pretty high-powered release with what seems to be much ERISAspeak.  I guess that, at some point, I really do need to see it.*

* For the record, back in the day, I DID see the original.

Sunday, March 12, 2017

Treatment of 401(k) Plans When . . . Men Join Sororities (?)

[SPOILER ALERT, for those of you who may see the movie Neighbors 2: Sorority Rising, the below reveals an important scene]

The critical question of what happens to 401(k) accounts when men join sororities is addressed by Seth Rogen's movie Neighbors 2: Sorority Rising‎.  In a key scene from the movie, when Zac Efron's ‎Terry is told by Chloë Grace Moretz‎'s Shelby that he's getting thrown out of the sorority (lonnnng story), we get the following exchange -

Shelby: We just voted.  And we decided it's best for you if you go.

Terry: When‎?

Shelby: Just now.  With our phones.

Terry: What - no?  No-  you can't do this to me.  I thought we were sisters. ‎We were supposed to be a team‎.  Why is this happening?  You can't do this to me.

Shelby: I, uh . . .

Terry: I quit my job!

Shelby: Well, we didn't tell you to do that.

Terry: I liquidated ["liquidated" - wow!!] my 401(k) for this.

Shelby: What's a 401(k)?

Terry: I don't know - now‎.[*]


* And then, by the way, they went on to address the arguably related aging-workforce issue, as follows -

Shelby: Look, I'm so happy that you helped us get this place that we're in.  You let really let us spread our wings and fly ‎as women.

Terry: This is all I have. I thought we were in this together.

Shelby: You're not like us, dude. You're an old person‎.

(By the way, Efron's about 29-years old.  Argh.  Shades of Dee Wallace's "old" 31ish Mary Lewis from the Bo Derek/Dudley Moore movie 10.)

Wednesday, February 22, 2017

Apple AirPods, Lil Buck, Marian Hill and . . . Pensions

So I'm noticing that the initial scene in a particular segment of Apple's major AirPod ad campaign - the one with the dancing of Lil Buck (Charles Riley) to Marian Hill's "Down" - features the word "PENSION" clearly emblazoned on a street-facing building wall in Mexico City.  I then get all kinds of excited (sorry!) that pensions had inserted themselves itself into yet another iconic setting in the World of Pop Culture.  But, no - it turns out that a "pension" is a term typically used in continental Europe and elsewhere for a type of guest house or boarding house‎, as in, for example, "Pension Las Brisas Marbella".  Ya learn somethin' new every day . . .  

Saturday, February 4, 2017

Johnny Depp and . . . the DOL's Fiduciary Rule?!?

It has been reported (thank you, Mike S.) that Johnny Depp is pursuing claims against his former business managers for fraud and other breaches of fiduciary duty.  Now, at least two writers, here and here, have drawn a connection between Depp's situation and the noise surrounding the DOL's fiduciary "investment advice" rule.  The point is that Depp's sad state of affairs may have been less likely to have occurred if only - ah, if only - the now-vanishing fiduciary rule had been applicable law.  Maybe Tim Burton can do "Edward Scissorhands II - the ERISA Connection"?!?*

Well, I'm not sure that the connection between Depp and ERISA is as strong as the writers think.  Obviously, the fiduciary rule, even if  applicable, would only have application in respect of retirement accounts, and I didn't see any indication that Johnny's assertions related to 401(k) or IRA money.  Even the DOL's expansive view of its charge wouldn't seem to lead to a justification of regulation outside of the retirement context.**  Details, details, details.

And, speaking of the fiduciary rule, how about yesterday's Trump memorandum directing a review of the rule, coupled with the DOL press release contemplating a delay in the applicability of the rule?  Yuuuuuge news.***

Onwards . . .

* I would note that Depp's representative makes a disparaging reference to the use of a series of press releases to "gaslight" the public into an adverse view of Mr. Depp.  I just want to go on record as saying that I'm not sure that the use of the gaslighting concept in this context is exactly right.  As I previously outlined, Gaslighting is more about punking people through subtle obfuscation than about bludgeoning people with on onslaught of assertions.  I think that the right reference would have involved some kind of accusation that Depp's enemies had blanketed (as opposed to gaslighted) the market with falsehoods.  Details, details, details.

**  Or would it?  The DOL's recent consumer-protection FAQs do contain the following arguably bold suggestion: "[T]he best interest standard and other significant consumer protections offered under the Department of Labor’s Rule and exemptions only apply to retirement accounts in ERISA plans (like 401(k) plans) and IRA accounts where you are building up savings for your future retirement[, and to certain other accounts]. . . .  An investor can always ask an adviser whether the adviser will live by the fiduciary “best interest” standard in the Department of Labor Rule and exemptions for all investments – and if they will not, can consider finding one who does."

*** Give me some credit - it looks like I may have it right, both here and here, that, as a result of the 2016 election, the rule's survival is in real jeopardy, to say the least.

Friday, February 3, 2017

Another Linguistic Machination - From Ira to IRAs

As a follow up to my post on various linguistic items, which included a discussion of the naming of things after people and other things, I want to revisit Sen. Roth's "Roth IRA." It turns out (with thanks to Carl L. and Steve G.) that this one little phrase actually has two embedded names - not only Sen. Roth's but also Ira Cohen's! Rumor has it that Bill Lieber of the Joint Committee on Taxation may have massaged "individual retirement plan" (uninterestingly, "IRP") into "individual retirement account" (forever, "IRA") to immortalize the . . . great . . . Ira Cohen. If that's true, that's pretty cool, at least in my strange world.

In a similar - although non-ERISA - vein, I want to throw another item out there, as an example of where things intersect to embed new words in language. "Gaslighting," which has come to mean acting in a way that causes one to wonder about one's own sanity, coolly derives from the 1944 movie "Gaslight" in which a husband over time adjusts the gaslights in the house downwards and upwards, essentially prodding his wife to question her sanity when he dismisses her observation that things are successively dimming and brightening. Pretty nifty.

And, please, let's also not forget the concept of "punking" people bestowed on us by Ashton Kutcher, or of "catfishing" by way of Nev Schulman and Max Joseph.

Pretty nifty.

Monday, January 30, 2017

Advising in Favor of Sebastian Maniscalco

I've been posting about my view that, with a Republican victory, both Obamacare and the fiduciary  "investment advice" rules would see their imminent demise.  While it still looks like there's very little doubt in the case of Obamacare, I am starting to wonder just a little bit about whether current events on the national stage will distract the administration away from waylaying the fiduciary rule.  Clearly, to me, if the rule makes it to April 10 applicability, it's prospects for ultimate survival increase geometrically.  We shall see . . .

Moving along to lighter fare, I want to get another prediction out there, this time about a comedian we've seen several times, even if only on his Showtime specials.  Before he's done, Sebastian Maniscalco may wind up being included in lists of the all-time greats.  I know that's a high bar, but this guy may be just about as good as any of 'em ever.  Maniscalco's combination of material, delivery and physicality is unusual in the Xtreme, and he's hilarious.  Like really hilarious.  I have no dog in this fight; I just think I've got a tiger by the tail here.  We're about to see him live this coming week, and I think we may be about to witness a true star right before his arrival on the mainstream stage.  Fun stuff.

Hey, every now and then, I really am right about something.  For example, I was right when I suggested early on that Argo was heading for an Oscar, and there are those who actually remember that I said that Guns N' Roses would take the world by storm, about a month or so before the band exploded onto the scene. Also, going back to my very first post, I don't think you can say that I was late to the dance when it comes to Heath Ledger and The Dark Knight.

On the other hand, like my fiduciary prediction, my Oscar "sweep" prediction for La La Land may be in a bit of jeopardy, given that last night's SAG award did not go in the direction of that other Sebastian, the one played by Ryan Gosling.  Look, if I really knew what I was doing, I would have placed a trifecta bet last year on the Cubs, the Cavs and Trump, and then I wouldn't have had to go back to work again.  Oh, well, back to work.

Saturday, January 28, 2017

All Dressed Up and a 401(k) to Go

So I'm listening to the pretty darn funny Whitney Cummings in her "I Love You" comedy special and I hear her talking about how, as a woman, she's ashamed  when other girls see her all dressed up just to impress a guy:

[I'm] humiliated at all the dumb slutty sh** I'm doing.  I'm like, "Hi ,I know this is bad. It's just that he's really shallow.  And I'm I'm ‎in my 30s now. So I gotta make a move. You know what I mean. He's got a 401(k). You get it."

 Yes, Whitney, I get it. I'm an ERISA lawyer. Thanks for the shout-out.

Monday, January 23, 2017

Is Elizabeth Warren Breaking Bad?

Here's something I noticed, somehow without making the connection that it cries out for a mention here.  Thanks to my friend Jeff S. for dutifully tweaking me to post on it.  Recently, Sen. Elizabeth Warren sent 33 letters to various recipients regarding the future of the DOL's new fiduciary rule.  The top letter in the pile is addressed to non other than [cue grand orchestral music] Walter White.  Now I'm guessing that some would contend that this is other than the Walter White we all got to know and love in Breaking Bad, but, then again, who knows?  (For those killjoys among you, I get it that the remaining part of the address block runs against my surmise.)  I wonder if she's retaining Saul (or Jimmy, or whatever his name presently is) as counsel to assist her in her efforts . . .

Sunday, January 22, 2017

Can Everybody Learn from ERISA, by Going "Old School"?

So I'm flipping from channel to channel and I flip to "Old School".  ‎I hadn't seen it in a while and didn't remember any of the details.  Imagine my surprise when, just as I turn to the movie, I hear Andy Dick's Barry saying, "Everybody can learn from ERISA."  I even replayed it for others, and we all heard it the same way.   Not possible - what was he really saying?

Well, it took me a while to decipher it, but it turns out he was referring to Perrey Reeve's Marissa, and in fact was saying, "Everybody can learn from Marissa."  ‎Ahhhhhhhhhhh.  The two sentences are phonetically  identical, with maybe the ever-so-slightest variation between an "a" sound and an "e" sound after the word "from"!

Given the subject matter of the quote, I guess I should be happy that the sentence was indeed the latter and not the former.  Or, maybe, if this really were an ERISA reference, ERISA's fame and breadth would be even greater?

Anyway, some pretty funny confusion, if you ask me . . .

Saturday, January 21, 2017

The Fiduciary Rule - Dead Yet?

With apologies to Monty Python, is the fiduciary rule dead yet?  I've suggested here that the rule's demise may be next to inevitable, and we may now be lurching towards a conclusion that, to quote The Doors, this is the end. I think there has been a lack of focus on the Trump administration's hostility to the rule, surfacing in all its glory in the comparison of the rule to the Dred Scott decision, as I've previously noted

I'm reminded of Jake Tapper's prescient point right after Wisconsin fell to Trump that not only was it then possible to see a Trump path, he was having trouble identifying a Hillary path. Here, there are so many paths to the rule's being scuttled, that I'm having trouble identifying the path to survival.  There could be (some have even suggested that under the Priebus memo there already is) administrative delay. There could be legislative delay. There could be legislative repeal.  There could be administrative repeal. There could be mischief connected with the pending judicial actions.  And it gets even worse when it's realized that delay essentially kills the rule, as a practical matter.

Do I hear a "ding dong"? Hmm. The rule may be dead.

Now that leaves the question of, what now? I think it's pretty clear that the efforts by the DOL have appropriately and productively focused multiple aspects of the market on the benefits of a "best interest" overlay on the manner in which financial institutions interact with their customers. But there are fundamental problems with the way in which the DOL proceeded -

- Congress decided that IRAs are not subject to ERISA. It's nice that the DOL has identified that the world has changed since ERISA's enactment, but then it's for Congress to adjust its statutory scheme to a changing world, not the regulators. The DOL used a 1978 administrative reorganization to expand the scope of who's a fiduciary for purposes of the tax code, and then, as the toll charge for being able to do business given that expansion, required that institutions contractually become subject to ERISA. That may well be legally defensible, but to me it raises real and basic policy concerns.

- By having the DOL take this on, non-retirement accounts are not covered. The DOL was keenly aware of this, and in Q&A 19 of the recent Consumer Protection FAQs arguably seems to be encouraging customers to pitch for institutions to adhere to the new rule even for accounts that are not subject to it. I get it that the DOL felt zealously about what it did in the new rule and would like to see the rule become the gold standard for all institutional behavior of this type, but the lack of application to non-retirement accounts highlights that the right place for this rulemaking was the SEC. Had the SEC undertaken this effort, it presumably would have come at the issue with a deep understanding of just how the world of financial institutions works. Unfortunately, the SEC sat on its hands too long, in essence pushing the DOL to step in. But the SEC's inaction, it seems to me, does not mean that the "wrong" regulator should have taken the reins.

- The new rule, including the related exemptions, is incredibly complex. It does not seem likely that an SEC would have taken such a Byzantine turn. The rule is also harsh, and there is clear evidence that there a negative impact on providers being willing to serve and an upward effect on pricing. That doesn't mean that there should be no "best interest" element in the mix; but it may mean that this particular method of proceeding may have been . . . imperfect.

I, for one, would like to see a securities-centric effort to address the situation. Assuming the DOL's rule is done, I'd like to see the SEC actually do something here, or have a carefully designed provision added to the securities laws that moves us into this "best interest" world. I guess, as with many things right now, we shall see.

Before exiting here, I want to note that my Monty Python, Doors and Wizard of Oz references above do not seem to have exhausted the possible pop-culture references surrounding this issue.  Here's the following, from a post by Alice Joe on the US Chamber of Commerce's website:

[title] Trump Could Be a Hero to Retirement Savers

Before Russell Crowe rose to Oscar fame, he starred in the 1996 movie “Proof of Life” alongside Meg Ryan, whose character hired Crowe to help free her kidnapped husband. Against great odds, Crowe’s character heroically freed Meg Ryan’s movie husband from guerilla rebels in South America. The same heroism is needed today in Washington after eight years of overregulation that stifled the economy and growth. With the incoming Trump administration, there is hope that salvation is in the wings for overburdened workers and retirement savers.

Such heroism is called for now in Washington, D.C., as Americans saving for retirement need the Trump administration to start the process to repeal the Department of Labor’s . . . fiduciary rule. . . .

Geez, an ERISAfied reference to Russell Crowe and Meg Ryan. I may have to step up my game.

Thursday, January 5, 2017

ERISA Meets The Godfather (with apologies to The Who) - and Some La La Thrown in for Good Measure

I'm really in awe of The Godfather.  The portrayals are so natural that it's hard for me even to imagine that the actors are reading someone else's lines. They just seem like people living their lives (or, as the case may be, dying).

However, when it comes to The Godfather Part 2 - and I know I'm a total heretic on this one - I am, as I've previously indicated, just not the biggest fan.  I guess I get lost in the De Niro stuff, which, for some reason, notwithstanding the Oscar, just doesn't grab me.  I guess that's what makes the world go 'round.

But, putting aside whatever I may happen to think, the other day I was reminded again of the central role that ERISA plays in this undeniably classic film.  In one of the climactic scenes at the end (spoiler alert), the iconic Lee Strasberg's Hyman Roth, when asked by reporters why he had decided to try to move to Israel, says, "I am a retired investor on a pension, and I wished to live there as a Jew in the twilight of my life."  And then, uttering his last words several moments later, he says, "I'm a retired investor living on a pension.  I came home to vote in the presidential election* because they wouldn't give me an absentee ballot."  (Laughter then gunshots follow.)

And, while we're on the topic of classic movies, I just saw what might be an 2016 Oscar sweep with La La Land.  Rarely will you see a move this ambitious and creative.  Damien Chazelle follows Whiplash with this?!?  It doesn't seem totally fair that so much talent resides in one person.  Looks to me like we've got another classic here - a veritable privilege to have witnessed.  I'm exhausted.

Fun stuff.

* As a bonus, in keeping with current events, there's even an "election" reference!

Tuesday, January 3, 2017

Ah-nold in the Land of Employment Terminations

Ah-nold makes a return visit here, this time in the field of employment law, specifically as it relates to terminations of employment.

A while back, I posted on the Second Circuit's Schwarzenneger UBIT case.  I've also previously posted herehere and here on a sampling of some interesting terminations of employment in the world of entertainment.

Now, the Governator needs to be added to the list of those who have provided notable employment-termination moments in pop culture, as we now have the "you're Terminated" line from the rejiggered Celebrity Apprentice (which, it simply must (!) be noted, is executive-produced by the (to-be) President of the United States of America*).  As to whether it's thumbs-up or thumbs-down on the show itself, I just report - you decide.

Happy New Year to all!

* . . . and which, of course, added its own catchphrase to the termination lexicon, with the now-ubiquitous, "you're fired."

Saturday, December 31, 2016

An Election Review, and Some Holiday Wishes from the Past

Well, I'm embarrassed to say that I haven't composed any Holiday wishes for this year.  Maybe the Election just exhausted me - I haven't been this interested in current events in . . . ever?  That did give me the opportunity to post about some Election fun and other current events here (about Brexit), here (about the 400-lb. hacker (!!)), here (about the real Voice Immodulation Man), here (about the Dred Scott decision and the DOL's new fiduciary rule), here (about the future of Obamacare and the DOL's new fiduciary rule) and here (about Hardee's, Carl's Jr. and Arby's, and the DOL's proposed new leadership).  For some old Holiday messages, please don't hesitate to peek at my silly little post about Snohanumas and my little research piece on Christmas music.  Merry Christmas, Happy Holidays and - very shortly - Happy New Year!!!  Hope to see you in 2017 . . .

Friday, December 9, 2016

Hardee's, Carl's Jr. (and the WWE?) and . . . ERISA

So Andy Puzder has been tapped as Trump's new Labor Secretary.  Hardee's, Carl's Jr. and ERISA!  Just last month, I was at Arby's, which is also in the group, and had the Smokehouse Pork Belly Sandwich with Loaded Curly Fries (and, of course, a Diet Coke).  Mmmmm.  Didn't realize I was doing ERISA research.  Does it get any better than this?  Oh, wait, maybe it does - Linda McMahon of the WWE for Small Business?!?  Maybe he'll hit her with a chair as he did her husband?  With apologies to the Rock, can you smell what the Trump is cookin'?  Wheeee . . .

Wednesday, November 9, 2016

The Election . . . and Obamacare . . . and the "Investment Advice" Fiduciary Regulation

Well, the Election was something, huh?  Or is it THE Election? 

Anyway, quite a while ago, I posted very early on that a Republican presidency would mean the end of Obamacare.  I was more than aware of those who said that it would be too hard to unwind, it would be too entrenched, it would be too beloved, it would be blah blah blah.  My suggestion was rejected roundly and dismissively. 

Frankly, that amazed me.  You have a statute that is intensely despised by a significant wing of the political party that controls Congress, with an enmity that is hard to describe.  And then there was the argument that it might take 60 Senate votes to undo it, and that the Senate would never climb that mountain.  Was no one following the bouncing ball?  People were running for President on a kill-Obamacare platform, and yet were to think that, if the Republicans win, Democrats in Congress would continue to fight that battle?  C'mon.

So now Trump wins, and he as much as anyone has savaged Obamacare.  Indeed, in the weeks leading up to the Election, he focused his ire on Obamacare and I think arguably his going on-message on this policy point, especially given the rumblings surrounding apparent upcoming premium increases, may have been a material factor in his win. 

So do we still think that Obamacare will survive this?  With both houses of Congress being Republican?  Pity the fool (thanks, Mr. T) who as a Democrat in Congress tries to slow down this particular train at this particular time.  On this (the Obamacare) point, can you say, "mandate"?

I suspect that there are going to be a lot of professionals doing a lot of retooling.  Start learning the new program, 'cuz the old one's gone.  It reminds me of when Section 89 was passed and then repealed, and of the friend of mine who authored a hard-bound treatise on the darn thing.  I'm not even sure that he still has a copy of that wonderful treatise (and it was wonderful).  Oh, well.* 

So, yes, I'm doubling down on my Obamacare prediction.  I give it half a year, and even that only because this thing has to be unwound carefully, and replaced by some new regime.

And, while we're at it, let's go to another prediction.  I'm going to suggest there that you'll never see the implementation of the DOL's incredibly controversial "investment advice" fiduciary regulation.  This is another one of Obama's personal-legacy things, and you just have to imagine Trump going after it.  Plus, this one's an easy target.  There's no careful unwinding, no replacement regime to craft, no nuancing about which to worry.  You simply announce you're getting rid of it, freeze enforcement while that's proceeding, and then eventually discard the carcass. 

When it comes to Obamacare and the fiduciary reg. - Trump's bat, Trump's ball, game over.**  Those're my predictions, and I'm sticking to 'em.


* I remember getting an AARP New Year's card for 1989 showing Father Time pushing 1989 over the cliff.  But on a close peek it wasn't '89 he was pushing over the cliff, it was 89 - Section 89!  SO clever!  Can't believe I didn't save that thing.

** Alice Cooper's "Elected" reverberates in my head. 

Wednesday, November 2, 2016

Seinfeld in the Land of 162(m) Joins Schwarzenegger in the Land of ERISA Preemption

Previously, I wrote about how cool it is to be able to refer to a key ERISA preemption case in the state-law UBIT area as the Schwarzenegger case.*  Well, I've now come upon the Seinfeld v. O'Connor/Seinfeld v. Slager cases, which arise in one of those 162(m)-informed situations where there were allegations of misleading proxy disclosure and excessive compensation.

So now I can cite to Seinfeld, in addition to citing to Schwarzenegger.  Now, I get it - the Schwarzenegger case really is Ah-nold (as the Governator), while the Seinfeld cases really aren't Jerry (not at all).  But, who cares?

And I'm quite aware that, following in the footsteps of Elaine (who just wanted to get rid of Ed) and Jerry (who so wanted to get Jean-Paul to the race), I'm getting to this particular party like about four or five years late.  Not that there's anything wrong with that . . .

* In what is a nice coincidence, my prior Schwarzenegger post was around the time of Obama/McCain, and was titled "Elections".  I guess my timing regarding the back-reference to that particular post is pretty good.

Monday, October 31, 2016

Looking Gift Horses in the Mouth, Stern-Style with Sal the Turtle and ERISA-Style with QDIAs, 406(b)(2) and 457A.

First, Happy Halloween!!  (I still miss Heath Ledger.)  Now, onto the subject matter of the above title . . .

To all those Howard Stern fans, did you see that Sal the Turtle won a race at Belmont Park the other day?  Pretty funny.  It looks like the horse went off at some pretty steep odds, and, seeking not to look a gift horse in the mouth, to coin a phrase, Sal himself apparently bet some decent money on his namesake.

And, as long as we're talking about gift horses, let's talk about . . . gift horses, ERISA-style.  (You're authorized to let out an audible GROAN now.)  What do I mean by that?  Over the years, I've noticed situations in which the regulators give stuff away, and somehow the private legal community winds up believing that somehow something is too good to be true.  One starts to see people constructing arguments - the government's arguments - against whatever the government is trying to give us.  Dare I say, "Looking a gift horse in the mouth."  Let's look at some examples:

1.  Do You Really Have to Comply with the QDIA Rules?

We all know that you need to comply with the QDIA rules when you want some fiduciary protection in the context of setting up default investment alternatives.  These are investment alternatives where the participant has not made an affirmative investment election.

But what if the plan sponsor simply says in its enrollment form something like, "In the absence of a contrary affirmative election below, ‎I hereby expressly elect that 100% of my account balance be invested in the X Fund"?  And let's say that the plan sponsor, along with that, gives a sufficient amount of disclosure in connection with the making of an affirmative election (here, in the X Fund).  And now maybe I'll go ahead and take the position that the X Fund doesn't need to be a QDIA, because there's no lack of affirmative election.  That is to say, the participant has indeed affirmatively elected to invest in the X Fund.

"Pish-posh" (as my friend Karen K. might intone), you say?‎  "Too good to be true", you say?  Well, in response to such naysaying, I direct you to the little nugget, nay the gem, at the end of Section IV of the preamble to 1992's final 404(c) regs., 57 Fed. Reg. 46,906 (Oct. 13, 1992), which states:

Two commentators suggested that a participant or beneficiary should be considered to have made an affirmative [investment] instruction where the [SPD] discloses the investment alternative which [sic] is used when no affirmative instruction is received and where the participant or beneficiary signs an instruction form which [sic] notifies him of what will be done with money contributed to the plan if no instruction is received.  The Department notes that a participant or beneficiary will not be considered to have given an affirmative instruction merely as a result of being apprised that certain investments will be made on his behalf in the absence of instructions to the contrary.  On the other hand, a participant or beneficiary will be considered to have given affirmative instruction where the participant or beneficiary signs an instruction form specifying how assets in his account will be invested if he has exercised ["independent control" for these purposes] with respect to such signature.

There really aren't two ways to read that.  If things are done correctly, an express investment selection contained in a form signed by the participant is respected as an affirmative investment selection.  So - (i) draft your forms right, (ii) satisfy the disclosure and other rules that validate the participant's/beneficiary's exercise of "independent control" over the investment of the account (that's important!)* and then (iii) kiss your (ahem) QDIA goodbye.  Since you now have an express investment election (or, stated in reverse, you don't have a failure to make a selection that calls out for the need for a default), there's no "default" regime (i.e., no QDIA requirements) to activate.  And, by the way, that is the right, and utterly unabusive, answer.  There shouldn't be a distinction between a signed form specifying in pretyped language that a particular investment has been selected, on the one hand, and a signed form on which the participant has manually penciled (or even penned) in that very same selection, on the other.

Ne'ertheless, my experience, when you show the above-quoted passage to practitioners, is that they often say, "Oh, c'mon, can't be", or "They can't have meant that", or something like that.  But they did say it and, given that they said it, they presumably did mean it.  Why the anxiousness to do the DOL's job for the DOL and be more conservative than even the DOL would have us be?

2.  ‎Cross-Trading Between Affiliates - an Oxymoron?

Company A owns Company B.  Or maybe Company X owns Company A and Company B.  Company A manages Plan M and Company B manages Plan N.  Company A directs Plan M to buy or sell securities or other property from or to Plan N, and Company B directly Plan N to accept and consummate the transaction.  Do you have a cross-trade?

As a general matter, I don't think so.   At the beginning of Section B(6) of the preamble to the final 408(b)(19) regs., 73 Fed. Reg. 58,450 (Oct. 7, 2008), the DOL stated:

[T]he Department notes that an investment manager‘s exercise of discretionary authority, on behalf of an account it manages, to effect a purchase or sale of a security with another account over which an affiliate of the manager exercises discretionary authority would not, in itself, constitute a violation of 406(b)(2) . . . .

Under that reasoning, the notion of cross-trading by affiliates‎ is essentially an oxymoronic contradiction in terms.  That is, where affiliates are on the opposite sides, there's just simpy is no crossing.

My experience, when you show the above-quoted passage to someone, is that they often say, "Oh, but I'm not really sure you can rely on what they said there" or something like that.  I get that it's a preamble statement rather than an operative regulatory provision, but do we really think that a court, on something so technical would substitute its judgment for the DOL's?  Again, there seems to be an inclination to be more conservative than the regulators themselves.

The DOL did go on to caution that a PT violation "could arise in operation if, in fact, there was an agreement or understanding between the affiliated entities to favor one managed account at the expense of the other account in connection with the transaction."  Thus, for example, 406(b)(1) considerations should be carefilly reviewed, although I would note that it will by no means always be so that there is always a 406(b)(1) violation in such a case.  Clearly, though, the possibility of 406(b)(1) and other issues on any given facts and circumstances should not detract from the significance of being able to be outside of "the prohibitions embodied in section 406(b)(2) . . . [, which] are per se in nature," 63 Fed. Reg. 13,696 (Mar. 20, 1998).

3.  457A and Substantial Risks of Forfeiture; 457A and Stock (and Similar) Rights

A.  Vesting

Under 457A, generally speaking, you can't defer compensation if 457A applies.  It's not like it is under 409A, where if you comply with the rules you can defer.  Under 457A, where it applies, once you have deferred comp., you have a problem.  So it becomes critical to determine whether you have "deferred compensation".

And, in turn, as under 409A, critical to the question of whether there's "deferred compensation" is the question of whether the compensation has vested before it's paid.  If the compensation is paid sufficiently near in time to the vesting event and under the 457A rules you've thereby got a "short-term deferral", then you don't have deferred comp. for these purposes.

The 457A vesting rules naturally draw heavily on those under Section 83, and a number of possible planning opportunities arise around the possibility of attempting to make compensation not be considered nonforfeitable (be considered forfeitable) under traditional 83 concepts, particularly where the service provider is a bona fide entity rather than an individual.

I remember sitting on a panel with other private practitioners and a Treasury official back around the time that 457A was enacted, and the question of whether 83 principles informed the basic 457A nonforfeitability analysis.  Without necessarily commenting on the possible planning opportunities referred to above, the Treasury official indicated that, surely, the basic 83 nonforfeitability rules applied for purposes of 457A, other than to the extent expressly altered by 457A or the authority thereunder.  Some of the panelists starting challenging her and making the contrary arguments, both policy and technical, but she held firm.  What we had here was practitioners fighting Treasury on a view that was pro-taxpayer.  Hmm . . .

B.  Stock Rights

Another 457A issue on which practitioners seem unwilling to take what they're given also arises under Section 457A.  In Q&A  2(b) of Notice 2009-8, ‎2009-1 C.B. 347, the IRS told us that equity appreciation rights payable that must be settled in stock do no constitute deferred compensation for these purposes.  And yet the market pretty much en masse refused to entertain the possibility of the issuance by a fund of appreciation rights as OK under 457A.

It took the issuance of Revenue Ruling 2014-18, 2014-26 I.R.B. 1104 to get the market even to consider this compensation technique.  Ruling 2014-18, which clearly was issued against the backdrop of fund compensation in terms of the way the issue got onto the IRS's radar, is among the more "and we mean it"-type of rulings you'll see.  It breaks no real new ground, but was issued in light of a perception that, for whatever reason, the market wasn't willing to proceed based on the pretty clear authority of Notice 2009-8.***  Thus, it has become a pretty important ruling, at least in terms of getting managers and investors alike to take a look at fund-based appreciation rights as a technique that would avoid 457A.  


Now I take the point that relying on nonbinding authority in one's own favor is not steel-trap.  T‎wo sobering examples come to mind.

First, there was the IRS's successful pursuit in litigation, in the case of Bobrow v. Comm'r, T.C. Memo 2014-21, of a position that was flatly inconsistent with clear statements in its own publications.  I'm not sure how the IRS made piece with pursuing a taxpayer who had done nothing other than proceed in accordance with what the IRS said was OK, but the litigation was pursued and, further, was pursued successfully.  Ultimately, Announcement 2014-15, 2014-16 I.R.B. 973, was issued, confirming the general reversal of the prior IRS position, thankfully with prospective effect.**

My other sobering example is the dust-up over the ability to accelerate the payment of performance-based compensation intended to qualify for the 162(m) exception therefor in the case of termination without cause.  PLRs 199949014 and 200613012 permitted that approach, see also PLR 200724011, and so, naturally, many (most?  all?) in the market felt comfortable with it, notwithstanding the non-binding nature of the rulings.  Then, in PLR 200804004, the IRS reversed field, and, since the companies at issue were public companies, and particularly since difficult public accounting issues quickly arose, the IRS change in position, as manifested by the later ruling, was really quite the gotcha.  Eventually, a published ruling, Revenue Ruling 2008-13, 2008-1 C.B. 518, disposed of the issue, and included transition relief; but the whole situation was admittedly nerve-racking for those who had no binding authority on which to rely. ‎

But should these examples ‎make us gun-shy at every turn?  The flip side of that "we should learn from our experiences" is that "we shouldn't be victimized by our experiences."  When the regulators give us something that seems at first blush to be too good to be true, maybe it isn't.  Maybe it's really just simply, as Alanis Morrisette might say, fine fine fine. ****

* The DOL went on to note expressly that "the form and manner in which investment alternatives are presented to participants and beneficiaries of a plan would be facts taken into consideration in determining whether a participant or beneficiary, in fact, exercised independent control in giving investment instructions."

** Presumably, absent there having been a settlement in the Bobrow case, Announcement 2014-15 is of no help to the taxpayer there.

*** Indeed, I have it on pretty good authority that the reason there was initial resistance to issuing 2014-18 is that the result therein was so obvious that the IRS didn't need to issue new authority to confirm it.

**** I've described above what to me are some pretty straightforward gift horses that tend to be looked in the mouth.  I've previously written about arguably unnecessary conservative approaches to the question of whether managed money needs to be excluded under the 25% "plan assets" exception and about whether a five-year limitation is always needed under the shadow-equity exception in the regulations under 409A.  But I take the point that those issues may be more analytically complex and nuanced, and, even to me, are not as straightforward as those addressed hereinabove.  And‎, while we're on the topic of arguable over-conservatism, don't get me started on the question of whether a six-month delay is necessary under 409A in the case of severance payments where the separation from service also constitutes the applicable vesting event (my answer - NO).  ‎

Conversely, there are situations in which the regulators concede a point because they think they just have no choice but to do so, even though some may think there are ample arguments that they could've easily come out the other way.   Take, for example, Notice 2007-49, 2007-1 C.B. 1429, under which 162(m) now grabs only three rather than the statutory four non-CEO NEOs and the CFO is somewhat perversely always excluded.  But see CCA 2001643003 (under which certain CFOs may NEOs to whom 162(m) does apply).  ‎Some feel the approach in Notice 2007-49 really is militated by the way the various relevant rules fit together, but I'm still surprised they gave this one away.  And I also remain surprised that, when they overhauled the 401(a)(4) rules some years ago, they ultimately allowed cross-testing of DBs and DCs, at least in a way that allows some pretty arguably counterintuitive results.  Again, I know they felt that the controlling statutory language left them no choice, but I'm not so sure I agree.  I guess that's what makes the world go 'round: s‎omeone's "that's so obvious!" is someone else's "no way!"

Sunday, October 23, 2016

Retirement Planning vs. Playing ‎Monopoly, the SNL Way

On Saturday Night Live's Black Jeopardy!, from last night:

Shasheer Zamata's Keeley - OK let's stay with, "You Better", for $400.

Kenan Thompson's Darnell Hayes - OK.  And the answer: "Your job wants to take ‎$40 a month out of your check for a 401k."

Leslie Jones' Shanice - What is, "You better give me that money so I can buy me some scratch-offs"?

Darnell - Yeah, you d*mn . . . you d*mn right.  I mean, why do I need a retirement plan when I got Monopoly Millionaires' Club?

Tom Hanks' Doug - [Hey] [inaudible] . . . Hey, I play that every week.

Darnell - Well, that's good for you.

I know that many of you are only watching the debate footage, but SOMEone's got to watch out for the ERISA stuff!

Wednesday, October 19, 2016

The "Dred Scott" Angle on ERISA

Presented without comment (after being passed along to me by my friend John R.), reported to be said by Skybridge's Anthony Scaramucci, an adviser to Donald J. Trump's campaign, in reference to the DOL's "investment advice" regs.:

We're going to repeal it.  It could be the dumbest decision to come out of the U.S. government in the last 50 to 60 years.

It's about like the Dred Scott decision.

The left-leaning Department of Labor has made a decision to discriminate against a class of people who [sic] they deem to be adding no value.  They are judging what should happen in a free market and attempting to put financial advisers out of work.  When market forces cyclically adjust again, they will be having congressional hearings about how big the mistake was to do this.

Friday, September 30, 2016

The REAL Voice Immodulation Man

Some may argue that ERISA is tone deaf.  Or that the IRS or the DOL is tone deaf.  Or that Congress is tone deaf.  Or that ERISA practitioners are tone deaf.  Why do I raise this point?

I desperately raise this point in the rankest of rank attempts to build a bridge to - a connection between - any nexus involving - ERISA and . . . Voice Immodulation Man.  I need to do that in order to pretend I have found an ERISA-to-pop-culture connection and justify posting on this blog about (ahem) Voice Immodulation Man.*

And why do I do that?  Because I want to know if I am the only one who's noticed that there is a real-life version of Will Ferrell's Voice Immodulation Man in the person of Republican commentator Steve Schmidt.  Click on the foregoing links and see if you agree (I'm going for audible laughter, so don't hold back).  Jacob Silj lives!

As an aside here, I really think that you owe it to yourselves to get a hold of the DVD, "Saturday Night Live: The Best of Will Ferrell" (the first one, not (!) Volume 2).  It may well be the funniest video compilation that I have ever seen.  And it has, among its various treasures, a hilarious Jacob Silj outtake.

Forgive me; I now have to go back to watching The Election.**

* Get it? - tone deaf / voice immodulation

** Not the Matthew Broderick movie, which is just Election without the "The", but, rather, the real thing, which is better than anything.

Thursday, September 29, 2016

Wellness Programs, and the Best Moment in American Political History

With all of the recent ACA and other regulation of and controversy surrounding wellness programs, a recent development should focus us all on possible special issues surrounding weight gain in this era of Internet access and cybersecurity threats. And that development is the moment in the 2016 Hofstra presidential debate‎ from Donald J. Trump that went as follows:

"I don't think anybody knows it was Russia that broke into the DNC. She's saying Russia Russia Russia.* But I don't . . . maybe it was.  I mean it could be Russia.  But it could also be China. Could also be lots of other people.  It also could be somebody sitting on their bed that weighs 400 pounds, OK?"

Having intent neither to be admiring nor to be pejorative in respect of the speaker of this precious quote, I would argue that - it just doesn't get any better than that. Hail to thee, 400-Pound Hacker.** 
*Marcia Marcia Marcia

** With apologies to Allan Sherman

Saturday, June 25, 2016

Brexit - Sticking It to the Man, Through the ERISA Prism

Hey - has anyone noticed that a significant number of stories in the news are reporting on Brexit (which, by the way, spurred me to add School of Rock's "stick it to the man" to my Lite Thoughts sidebar) by reference to the impact of the resulting stock-market downturn on 401(k) accounts?  Geez, let's add the Brexit/ERISA connection to the recent ERISA-centric references by John Oliver and on AGT.  Quite a cycle for ERISAns in which we currently find ourselves!

Thursday, June 23, 2016

Transformative! - Now ERISA Finds Its Way to America's Got Talent

Earlier in the month, John Oliver went on (and on and on and on) about ERISA.  Now we get Julia Scotti, in her absolutely hilarious bit on AGT, telling us about here retirement plan: "So, in addition to be old, I'm fat, single and broke.  My 401(k) - I got enough in there for about a month and a half of Netflix."  ERISAfolk are on a bit of a fun run, here, no?

Monday, June 13, 2016

ERISA and . . . John Oliver?!? - Leaving Obama in the Dust

As I noted in a prior post, none other than the venerable Jon Stewart on The Daily Show highlighted ERISA when he discussed the funding rules applicable to pension plans.  Now, his acolyte, John Oliver (who is, remarkably, dangerously close to surpassing his mentor), has done a closing segment on retirement plans on Last Week Tonight with John Oliver, covering a wide array of arcane ("404a-5" was actually prominently displayed on the screen!) and key seminal concepts, and even reaching to the new fiduciary "investment advice" regulation.  I've previously noted the mainstream impact of the new fiduciary rule, with amazement that an ERISA defined term had become the centerpiece of a policy speech by the President himself.  Now, we get John Oliver!!  Heck, who needs Obama?!?  ERISA be cooooooooooooooooool.  That's all (for now), Folks . . .

Saturday, May 21, 2016

"Too Cute"

In some states, there is an extremely low level of protection for employees from being termination for little or no reason.  The idea is that I simply don't have to hire you, or keep you hired, absent a constitutional, statutory or contractual reason to the contrary.  New York has long been a clear example of a state where there is no general right to work, be employed, etc.

For some, the result is counterintuitive.  But it's actually a cogent result that flows from the underlying dearth of legal hiring-related requirements on employers and the concomitant lack of legal protection running in favor of employees.  I mean, it's nice for a court to want to try to help out, but the basis for doing so can be murky at best.

The example I like to give is that I can fire you for having brown eyes.  If you have no right to work for me at all, then the extent to which I inappropriately or even irrationally choose to terminate you is of no moment.  Arguably, I can even fire you for your refusal to give up a valuable right (e.g., contractually required compensation), leaving you with only any contractual rights you may otherwise have.  The basis for the termination can't be a veiled rationale actually grounded in some kind of prohibited discrimination - but, absent such a pretense, the employer may well have free rein.

A recent case drives that home.  According to reports, Dilek Edwards was fired by Charles Nicolai as a yoga instructor and massage therapist.  Why?  The allegation was that Nicolai's wife, an ex-Playmate (and, apparently, a descendant of Presidents John Adams and John Quincy Adams (?!?)), was sufficiently jealous that she incited her husband to terminate Ms. Edwards.  It was alleged that Ms. Edwards was informed by Mr. Nicolai that she was just "too cute."  The judge ruled against Ms. Edwards, pointing out that the complaint did not allege that the termination was "because of her status as a woman."

Now I'm not sure this case is right.  I think there's a credible claim in a case like this that being terminated for being too cute flows sufficiently from the cute person's status as a woman.  Regardless, though, the case illustrates, in a pretty amusing way (although presumably not amusing to Ms. Edwards), how truly hard (no pun intended) it is to bring a successful claim in New York for wrongful termination.  

Friday, May 20, 2016

Fear the Walking ERISA

Headline from yesterday's BBNA - "'Zombie' Pension Plans Need Autopsies, Financial Watchdog Says".  Would someone please call AMC and pitch a series around that concept?  Thank you.

Friday, May 6, 2016

Make ERISA Great Again

Sorry - just couldn't resist.  (Baseball caps to follow?)

Monday, April 25, 2016

Brady and "Cause"

So, thanks to the Second Circuit's opinion earlier in the day, Brady will sit after all (assuming no rehearing en banc and no grant of certiorari by the Supreme Court).  The situation is interesting as an object lesson in the employment context, as it shows how grey the situation can be when there is an accusation of wrongdoing against an employee, particularly one covered by an employment (or similar) contract.  Does the conduct rise to the level of "cause"?  What level of proof is necessary for action against the employee?  How much is an arbitrator's decision final and binding?  I would suggest viewing the Brady suspension/reversal/re-suspension* through the employment prism, as I think that in some sense it shows that, at the very least, certainty is often not the right by-word for disputes of this nature.

And, as a bit of a personal post-script, I just went to find where I posted my prediction right after the district court reversed Brady's Deflategate suspension, which prediction I had boldly stated to any number of people, that the Second Circuit would ultimately reverse the district court here.  It just always seemed obvious to me that, putting aside for a moment whether the NFL made the right substantive call in suspending him, the NFL did act within its contractual power in doing so.  However, to my great dismay, I never did the post.  So you'll just have to trust me that, in this case, I got one right (I'm entitled to get one right every 16 or so years).

* Sounds like a description of the path for the DOL's fiduciary regulation.

Saturday, April 23, 2016

SOX in Saul (with sincere apologies to Dr. Suess)

SOX's impact on executives has been referenced in USA's Suits, as discussed in a prior post relating to executive-compensation references in a certain Suits episode. And, as discussed in a prior post regarding Better Call Saul and then a subsequent Saul post, BCS, after having hit various employment and executive-compensation issues in consecutive episodes, now also adds a SOX reference of its own. In trying to woo a key client, Charles (Chuck) McGill (played by the appropriately revered Michael McKeon) pontificates as follows:

"Any bank such as Mesa Verde looking to open a de novo branch is definitely going to need to show a healthy portfolio of [Community Reinvestment Act] compliance. Duh. Obviously. You guys have all that covered, I'm sure. . . . And then there's the SEC's interpretation of Section 302 of SarbOx. Blah blah blah."

OK, I know that that's three Saul references by me in a very short period of time - but after having watched the finale of Season 2 I just cannot believe how great this show is. So I was emboldened. So there.

Thursday, April 7, 2016

From Presidential Speeches to an Impact on the Stock Market - ERISA's "Fiduciary" Rule in the Limelight

Back in the day (it seems like so long ago), I posted on the fact that an ERISA defined term ("investment advice") had become the centerpiece of a major presidential policy speech.  Who'da thunk THAT?!?  Well, it became increasingly clear the "investment advice" regulations under the ERISA "fiduciary" rules were becoming quite a "thing", potentially having real impact on financial institutions and their customers.  The ability of institutions to continue making available a range of products and offering traditional compensation structures, and of investors and other customers to have access to those products and structures, was in some amount of serious jeopardy.

In the end, we wound up with a final regulation the release of which seems to have boosted certain financial-sector stocks, while possibly having a dampening effect within the insurance-company sub-sector.  Not only has the President pontificated on a defined term in ERISA, but now the stock market has moved in response to the final interpretation thereof.  Wow - the Little ERISA Engine That Could.

So - how did we get to where we are?  Basically, over the years, the DOL came to be extremely frustrated with the narrowness of its '75 "investment advice" reg., on the basis that it may have been too easy to escape fiduciary status merely by causing any one part of the reg.'s ubiquitous five-part test not to be satisfied.

Why was the test as narrow as it was?  I think there were legitimate concerns that an overinclusion of providers as "fiduciaries" could cause potentially desirable providers not to want to serve or could, at the least, affect pricing.  And there's always the question of the fairness of the definition and its scope.  So the '75 reg. struck a balance.  Was it the right balance?  Is it still the right balance?  These are debatable points.

Regardless, the DOL grew increasingly frustrated over the years with its regulation, both from a compliance perspective in terms of being able to reach providers giving what on some level may have seemed like advice, and in terms of a litigation strategy to try to address perceived fiduciary violations.  In addition, the retirement market had moved dramatically, with a seismic shift from traditional defined benefit pensions to those newfangled individual account 401(k) plans, and with a real change in the nature of investments and investment platforms.  For better or for worse, the DOL came to the conclusion that the '75 balance was not optimal.

The DOL's distrust of financial professionals became palpable.  And, on the flip side, the DOL had the sense that, particularly on the retail side, investors and other customers were not seeing or reading disclaimers and other disclosure and, when they were, were not understanding them. This latter dynamic has been somewhat less focused upon by commentators, but it is a key part of the calculus that led the DOL to the approach it would eventually pursue.

So back in 2010 the DOL uncorked a proposal to expand exponentially the scope of who might be considered a nondiscretionary fiduciary by virtue of providing investment advice.  Leaning heavily on that power plant of electricity known as Reorganization Plan No. 4 of 1978 (see also (with my thanks to Mark G.) P.L. 98-532), the DOL not only reached toward expansively interpreting "investment advice" for ERISA purposes, but also made a play to grab the issue as applied to IRAs.  Pretty gutsy, since Congress itself eschewed IRAs when it came to ERISA coverage - but, nevertheless, there it was.  The DOL saw IRAs as being at or close to the center of the retirement market, and was not about to let some silly little thing like a lack of ERISA applicability stop it from seeking substantively to step in and regulate.  Some have asked whether the DOL had the authority effectively to port ERISA over to IRAs where Congress had pretty clearly decided not to do so.  Maybe even a better question seemed to be: should the DOL be wielding this purported authority in this way?

The ensuing maelstrom was thunderous, eventually resulting in the 2011 announcement that the proposed regulation would be withdrawn.  The financial-services community had credibly made the case that the reg. as proposed would have a palpable adverse effect on that community, assertedly to the detriment not only of financial-services organization but also of the very plan clients and customers that were supposedly the object of the purported protections.  But, supposedly, the regulation would someday be reproposed.

And there it sat for years in a state of atrophy, at least from the outside looking in.  Until, that is, there started to be rumblings towards the end of 2014 that the reg. was not dead.  And then, in early 2015, the other shoe - a really big shoe (apologies to Ed Sullivan), dropped.  The President himself, as noted above, stepped in and in February of 2015 made the as-yet un-reproposed regulatory initiative into the centerpiece of a major policy speech, and it was game on.  Sure enough, in April 2015, we indeed get the reproposed reg.

It was clear that reg.-redux was more carefully thought through than the initial proposal.  And this time the reg. was accompanied by a new exemption, klunkily to become known as the "best interest contract" exemption (or the "BIC" exemption, or just "BICE").  However, on further reflection, the financial-services community at some point gravitated back to a highly adverse approach, and literally thousands of comment letters were submitted.  The DOL was in a bit of a bunker, but, particularly in light now of an express presidential imprimatur, there seemed to be no real path to administrative reversal.  Legislative solutions? - maybe, but not overly likely.  Litigation solutions? - who knows?  (More on that later.)

So barreling down the road to finalization we went.  To the great consternation of some, administrative consideration periods were truncated, and effective-date strategies were conceived, all with an eye towards getting the reg. done before the election and, maybe moreover, before the impending changeover in administrations.  As we saw when Obama took over from Bush (see, e.g., the eventually re-jiggered 408(b)(14) and (g) regulation), pending regulatory initiatives not fully implemented at the time of a turnover in administrations are at risk for being waylaid.  And this particular li'l ERISA reg. had become the object of some real zealotry within the DOL and maybe, to some extent, even within the broader administration.

We move now to yesterday, April 6, and, after all that, we get the final rule.  Many had resigned themselves to the notion that, given the background, the DOL would maybe pay lip-service to some contouring here and there, but would never make any material changes in favor of financial-services organizations.  I didn't share that view.  I agreed that the basic tack of the regulatory effort would indeed not change - that the ocean liner would not turn with enough force to avoid an iceberg - but that there would be substantial and significant major changes to any number of specifics - "the devil is in the details", as they say.  I really had the sense that the people at the DOL, for all their zealotry, very much wanted to try to get it "right".  I guess a question became, could they get out of their own way and put out something that advanced the DOL's agenda without causing further mass hysteria in the financial market?

While we ERISAns will be parsing the details of the rules for who-knows-how-long, several generalities seem to be emerging quickly. Taking a step back, I don't see how one can read these rules and come away legitimately believing that the DOL has not responsive - to one extent or another - to legitimate market concerns.  The changes from the 2015 reproposal are deep and meaningful.

In this regard, the DOL had from the beginning said that the intent was to allow existing products to continue and to allow market-based compensation structures to continue to be used, albeit with new conditions.  Those statements seemed to ring hollow - sure you can still do all this stuff, just by complying with rules and principles that you will in no way ever be able to satisfy.  (You can cross the street, so long as you don't cross the street.)  One might have wondered who the heck was the DOL to be requiring investors to suffer asset-based fees even if they prefer commissions.  One might of wondered who the heck the DOL was to decide that a willing investor has no practical way to be offered the opportunity to invest in a private fund.  And the list went on . . .

Well, the ship has now veered here, too.  It seems clear, for example, that the use of commissions and the offering of proprietary investment products will be doable, with some bells and whistles that may give rise to some discomfort but that would not appear at first blush to render proceeding utterly undoable.  Some other demonstrative examples are:

- Generally speaking, there needs to be a "recommendation" of some type before fiduciary status attaches.

- Efforts to get hired are less likely to be fiduciary in nature.

- Exceptions for "selling" investments are expanded.

- The rules for call centers and the like have been made more flexible.

- Applicable disclosure requirements have been pared back.

- Investment "education" in certain circumstances will be able to identify specific potential investments.

- The BICE will be available with respect to broader types of plans.

- No separate contract will be required under the BIC exemption (which is pretty funny, when you think about the fact that the conditions of the "best interest contract" exemption often won't involve requiring a contract).

- Where contracts are required in order to satisfy a condition in the BICE, the associated mechanical requirements have been streamlined and simplified.

- The BICE is not restricted in its application to specified asset classes.

- The beginning of implementation is generally pushed out a year, and implementation is staged thereafter.

Undoubtedly, there's much to work through, but hopefully the rules are largely workable.  The devil remains in the details, so upon further review things could still turn south.  But that doesn't seem to be where we're fundamentally heading.

But maybe that's just not what happened.  Arguably, the less ambitious final rules would seem in some ways to complement and overlay the rules that have been developed over the years that have increased fee transparency (see the development of the rules under 408(b)(2) and in connection with the filing of 5500s; see also the 404(a)/(c) rules relating to participant-level disclosure), and, frankly, already pushed any number of arrangements towards alternative fee approaches.  Rather than setting up a whole new primary regime where everything else sits underneath, maybe these final rules live in and serve to bolster a world of fee-transparency and increased disclosure.

One way to look at the evolution of the regulation here is that we started with proposals that looked like they would require the reshaping and maybe elimination of a variety of investment products and opportunities, strategies and approaches to compensation.  "What can't I do?" if you will.  And we wound up with conditions and other rules of the game.  "How do I do it?" if you will.  If that's a fair characterization, then this regulatory ocean liner really did experience quite the sea change.  After maybe a bit of a "Rush" to judgment about the regs., it's possible that the DOL may get its chance to bask a bit in the "Limelight", after all.  (Sorry.)

Honestly, though, good for them.  After all, their hearts have always been in the right place.  Maybe they got something done here that gets to the nub of what they were going after, while at the same time scaling back some of the earlier ambitiousness walking away from some of the overbreadth, stridency and unworkability of the earlier proposal and reproposal.

It had appeared that what we might have been faced with here was a comprehensive new regime that essentially would color and fundamentally impact an incredibly broad array of financial products and relationships.  Indeed, given the desire or even need of many financial organizations to standardize disclosures and other practices, one could legitimately have wondered whether the rules were about to bleed over into the realm of personal accounts with no retirement component whatsoever.  What, if anything, was to be left to do by the SEC?  I'm not sure the debate and discourse will continue to be framed in this way in light of the final regs.

And there was talk of lawsuits.  Does the DOL have the authority?  Was the APA fully satisfied?  It remains to be seen whether chatter of that ilk continues to the same extent.  There's always a kid-who-cried wolf concern, where the sky is asserted to have fallen yet again, while maybe it hasn't quite done so. But, as noted, things still need to be worked through.  And certainly there could be be market segments that wind up being more adversely affected than others.

So how big is all this really?  Pretty big.  The President cares.  Financial-services organizations were in a palpable tizzy.  And a number of financial stocks got a bump up, and some went a tick down, on the news that the final regulation might not be as bad as had been feared.

All in all, in the brave new world of the now-final regs., has the DOL found a balance that is more ideal than the ones struck by the old '75 balance and the 2010/2015 proposals?  Certainly, it still remains to be seen.  But at least we've maybe gotten to . . . maybe.

In the end, a regulation governing a defined term in ERISA has been embraced by the President of the United States, and now has apparently had an impact on the stock market.  I like my area of practice, to be sure, but I'm not even sure that I would've seen this coming.  Cool.  And now, as the Foo Fighters might say - done, done and I'm onto the next one . . .

Tuesday, March 29, 2016

Employment Law in the Land of Saul, Redux


Well, just last week, I noted that Better Call Saul had found its way to issues implicating employment law.  Now, a mere one week later, we return to world of employment terminations.*  As I said last time, someone in the Saul universe sure knows this employment stuff.

This time, the show explores quite sophisticated issues surrounding an attempt to get oneself fired without cause, in an effort to avoid voluntarily resigning.  Rarely if ever has such a gambit been pulled off with Jimmy McGill's aplomb.  Modeling one's workplace performance on Wacky Waving Inflatable Arm Flailing Tube Man probably isn't ordinarily the trajectory to success with this strategy, but it sure did work for Jimmy.

This maneuver is one of the oldest and most venerable tricks in the book.  This is a highly nuanced context, where there can be a collision between such things as (i) the employee's not wanting to forfeit (or, in this case, return) compensation, (ii) the terminating employee's trying to retain entitlement to severance (not an issue in the Saul episode in question), (iii) reluctance on the part of the employer to assert cause, even where there may be a strong case for it (we saw this in the Saul episode), and (iv) a range of other nonlegal (and maybe even distinctly personality-driven) considerations (we certainly saw this in the episode).

And a key contextual point needs to be kept in mind: the natural inclination against wanting to be involved in litigation, on either side, is maybe as strong as ever in the employer/employer relationship.  The kind of personal barbs that tend to go back and forth, and the desire to cut the cord and simply move on rather than wallowing around in the muck of a messy divorce, contribute to an understandable desire to avoid protracted and public conflict.  The Saul episode hits these touchpoints will skill and precision.

Watch the way the foregoing plays out in the following exchange:

Ed Begley, Jr.'s Clifford Main - You win.

Bob Odenkirk's Jimmy McGill (eventually aka Saul Goodman) - What do I win?

Cliff - You're fired.

Jimmy - What?  Cliff, if this is about the bagpipes . . .

Cliff - It's not about the bagpipes. . . .  Well, of course it's the bagpipes.**  It's the bagpipes, and it's the not flushing, and this . . . this optical migraine you call a business suit. . . .  It's about . . . it's about you keeping your bonus, that's what this is about.  Been brushing up on your contract law, haven't you?  You want out of here, clearly, but you can't just up and quit and expect to keep your bonus.  And if I fire you for cause like I should have done for the TV commercial, again no bonus.  However, if I fire you not for cause but for being an all-around jacka**, . . . yeah, hooray for you.

Jimmy - If you think there's been some malfeasance here . . .

Cliff - Oh, save it.  I can fight you on this but you're not worth my time.  I'd rather just have you gone.

Jimmy - I'm sorry you feel that way.  I'll just pack up.

That's a pretty impressive capturing of the applicable dynamics, if you ask me.  It's all good, man . . .

* See also my earlier post on terminations of employment.

* A new bagpipe question emerges.  Which set of out-of-place bagpipes is more fun, Saul's when he finally succeeds in getting fired, or Bon Scott's in AC/DC's "It's a Long Way to the Top (If You Wanna Rock 'n' Roll)"?

Tuesday, March 22, 2016

Employment Lawsuit Makes Its Way to Saul

Thanks to Amanda G. for not allowing me to miss this one.  It's not purely ERISA - really more a matter of pure employment - but I've posted on such things before.

The point here is to note a particular exchange between Jimmy and Kim in the fifth episode of the second season of the absurdly good Better Call Saul.  Kim's been treated not-so-well by her law firm.  Jimmy's unhappy with (and feeling more than just a little guilty regarding) how she's being treated.  He goes over to her with a set of typed-up papers, leading to:

Bob Odenkirk's Jimmy McGill (aka Saul Goodman (eventually!)) - . . . Here's how we're going to handle this travesty of justice.

Rhea Seehorn's Kim Wexler - Wexler v. Hamlin Hamlin [&] McGill.  You want me to sue my own firm?

Jimmy - Filing's all typed up.  It's ready to go.  This is not my area of expertise.  Alright so, first order of business we get a great employment-law attorney.  Show them we mean business. . . .

Turns out that Jimmy isn't thinking discrimination but rather homes in on extortion.  Well, he DID say that the area is not one of his expertise.

Note also that, in the ensuing week, during last night's episode, Rick (sometimes Rich) Schweikert (the venerable Dennis Boutsikaris) reported to Kim that his first big case was a yoooge employment-discrimination case.  Someone on Vince Gilligan's Saul team has done some employment stuff at one time or another, don't ya think?

Better Call Saul really is some ride.  Odenkirk is ridiculously good, and Jonathan Banks, as Mike Ehrmantraut, may be even better.  (Remember him from Beverly Hills Cop, among other things?)  WARNING: SPOILER ALERTS!  The episode where Mike goes after the two rogue cops might be one of the best in television history (right there with the Breaking Bad episode in which Jesse's girlfriend dies), and the later devastating soliloquy during which he bemoans having caused the loss of his son is utterly unsurpassed.

One day, we'll catch up in Better Call Saul to where Breaking Bad began.  As Vonnage (who I (jokingly) contend stole it from me) might say - woo hoo.

Monday, February 29, 2016

Clearing Things Up with EMNAs

A while back, I listed a number of acronyms relevant in the ERISA/compensation world that I thought were sorta funny.  Examples included SLOBs and STDs.   I've come upon another one.

Bank regulators and the CFTC recently finalized their rules on uncleared swap margin.  One of the provisions provide for the concept of an “eligible master netting agreement”, or EMNA.  Say it quickly.

Here's some background. If a determination regarding the ability to effect certain close-outs is not (or cannot be) made, then the dealer may be required to post and collect certain additional margin.  Going forward, among other changes to what has been dealer practice, margin may need to be collected on a gross basis.

It remains to be seen how the EMNA changes may impact banking/dealer practices where ERISA plans are on the other side.  Or maybe another way to frame the issue is: let's see how everyone's . . . ahem . . . clearing systems are affected by . . . ahem . . . EMNAs.*

* I know - that's just . . . "gross".

Sunday, February 28, 2016

Ennio Morricone - the Good

I apologize in advance for this one - no ERISA connection here, and, admittedly, a crass self-reference.  But I just HAD to point out, in light of tonight's Oscar festivities, a comment in a prior post that "[t]he best soundtrack for any movie ever might well be Morricone's for The Good, the Bad and the Ugly. There are long stretches of the movie, including the climactic scene, in which the music IS the dialogue."  (And to think that he finally gets his Academy Award for a movie made by the guy who made my favorite movie of all time (Pulp Fiction).)  A fun moment for a benefits lawyer who, for what it's worth, cares about such things.  Congrats, Ennio, and thanks, Quentin.

Sunday, January 24, 2016

Settl-ing? - Well, at Least He Has a 401(k) . . .

From Vanessa Bayer's turn on Saturday Night Live's mock (?) advertisement for Settl, a new on-line dating service for women who need to get married as the clock goes "tick tock"*:

"That's how I met my Henry.  He may drive a smart car.  But he's a manager at Petco.  And even has a 401(k)."


*  "Because, remember, it's not giving up - it's Settl-ing up."  My wife can undoubtedly relate.

Sunday, January 17, 2016

Archer, Part III: SEPs in a Cartoon - What's Next, the President Talking About ERISA?!?

Well, we have another season of FX's Archer coming up soon, and so it becomes incumbent upon me to pay (or re-pay) ERISA-centric homage to the show.  After my initial Archer post regarding cafeteria plans (!), I followed up with an Archer stock-drop/401(k) (!!!) post.  Going back to the well one more time (for now), and again with a nod to Mike S.'s unparalleled research skills, here's a little ditty from Season Two:

Archer to hooker (claiming to have had his baby):   I guess I skipped the Emily Post chapter about how to introduce your mother to a hooker!

Hooker:  Escort! . . .  And I'm retired.

Archer:  Yeah? Your 401(k) doing that well?

Hooker:  I have a SEP, smarta**!

SEPs have made it into the world of animated television?!?  Geez, that seems just about as likely as the President of the United States making an ERISA defined term into the centerpiece of a major presidential policy speech.  Oh, yeah, that's right - that happened, too.  See Pres. Obama's 2/15 speech to the AARP (relating to the oh-so-sexy "investment advice" definition under the ever-so-exciting "fiduciary" rules); cf. my post on Justice Souter's retirement (relating to another example of ERISA's impact on high-level governmental institutions).

Saturday, December 26, 2015

The Christmas Zone

I thought there was no way I hadn't seen every original gem contained within Rod Serling's The Twilight Zone, at least those of the half-hour variety. I'm consistently convinced of this supposed reality, and yet, every several years, I find another pearl.  This year's discovery, which turns out to have a Christmas theme, is The Changing of the Guard, with the great Donald Pleasence.

It shows how incredibly times have changed in the world of employment and employment law, and therefore finds its way into this post.  The set-up is that the venerable Prof. Fowler is being terminated.  Here's what he's told:

You've been on the faculty for more than 50 years.  You reached the normal retirement age several years ago.  We decided at our winter meeting that, perhaps a younger man. . . .  If you could have been at that meaning, sir, you would have been very proud of the things said about you and your work.  A teacher of incalculable value to all of us.  But, but, youth must be served - changing of the guard, that sort of thing.

. . . .

Discharged?  Oh, no, Professor, please don't call it that.  It's retirement.  And at half salary for the rest of your life.

Wow - times sure have changed!

The show, as is the case with virtually all of them, is great.  It's by no means at the level of Art Carney's devastatingly incredible Christmastime Zone entry, The Night of the Meek, but it's certainly a worthy entry in Mr. Serling's formidable archives.

Happy Holidays, all!

Thursday, September 3, 2015

401(k) Plans and Mr. Robot (not to be confused with robo-advice)

Robo-advice is all the range with participant-directed retirement plans, so I suppose it's no surprise that 401(k) plans have made their way into none other than USA's Mr. Robot (thanks to Jon B. for pushing me to watch).

Now, I've been noticing ever since the sub-prime crash that market downturns have consistently been reported by the press through the prism of retirement planning.   To wit, any given downturn seems likely to be reported in the context of how much it diminishes the value of "your 401(k) plan". I'm not talking about financial papers; I'm talking about tabloid reporting.   401(k) plans have become a part of the very fabric of our basic financial lives.

And now they're in Mr. Robot, in the run-up to the climactic scene in the Season One season finale.  To wit:

Allsafe Cybersecurity's temporary CFO - Best thing you can do for them is to let them know soon, so they can find other jobs.   And . . .

Michael Gill's Gideon Goddard - What?

CFO - All their 401(k)s were tied up in the market, which is expected to plummet once the bell rings.

Later in the same episode, Richard Bekins' James Plouffe laments how his pension, etc., had been wrapped up in his troubled company and is now lost (I'm guessing he was referring to his unfunded top hat benefits?).   Looks like retirement benefits are as omnipresent in the Mr. Robot world as they are in the real world.  I won't go into more detail, as I like to avoid spoilers. 

On a slightly unrelated note, before we leave the season finale, I do want to make note of the fact that the episode features what to me is one of the great songs of all time, Jim Carroll's "People Who Died".  Listen for it, and then, if you haven't previously, listen to the whole thing.  (Yes, "that" Jim Carroll - "The Basketball Diaries" guy.)  


Sunday, June 21, 2015

"Inside Out" in the World of 401(a)(4), 410(b) and Disney/Pixar

For years, I've had a way of looking at 410(b) and 401(a)(4).  I've characterized 410(b) as looking at a plan from the "outside in", and 401(a)(4) as looking at the plan from the "inside out".  And then, with the two of them working together, you wind up with a set of rules that comprehensively restricts the ability to discriminate regarding the availability and level of benefits provided under a plan.  I've always thought it was a good way to look at the complementary nature of the two provisions, especially since the 401(a)(4) regulations eventually became in many ways a sort of an intra-plan surrogate for rules of 410(b).

Why do I blather on about this now?  If but for no other reason to have an excuse to tie into "Inside Out", and to wonder aloud whether, for an animated movie, we could have real-world Oscars for things like Best Screenplay and . . . (shudder) . . . Best Picture. 

And how about a new category for Best New Theory of Psychology in a Movie as to the Manner in Which the Human Mind Operates?  Regarding the already-existing animation-specific category, I'm not sure there's a reason even to open the nominations - let's just give them the 2015 award now and move onto any number of issues that, unlike this one, are open. 

(Wow - whatta movie.  Thanks to the folks at Disney/Pixar for such a special Fathers Day gift that I could enjoy with my whole family - one that one of my sons characterized as a movie that would change his life (!).)

Monday, May 18, 2015

The Trouble with Tibble (Part II)

In a prior post, I made the mandatory connection between Harcourt Fenton Mudd and Tibble v. Edison.  The case has now been decided, and I really am not surprised that the Supreme Court has effectively preserved a six-year period for bringing claims for a failure to monitor adequately.  To me, the only real open question was whether the Court would impose a requirement that there be some kind of factual change within the six-year period.  Even that would have surprised me, and the Court, having no trouble with Tibble, did not go down that road.  The Court did clearly confirm a duty to monitor regarding fund selections, although, interestingly, the possibility was left open that, in this particular case, the plaintiffs forfeited their opportunity to argue that a failure to monitor is actionable absent a change in circumstances.  In any event, while there will still be some postscripts here, things are now at least a little more clear than . . . Mudd.

Monday, February 23, 2015

Train Keep A Rollin', Part II - Now It's Fiduciary Rulemaking That's Referred to as a "Runaway Train" (with Goonies and Godfather references included at no extra charge)

In a prior post, I tried to make a pun that took me from a series of songs about trains to the five-year limitation under the 409A regs. on "track"-ing underlying equity payouts.  Well, now none other then Commissioner Gallagher has brought a train-based metaphor into the ERISA world, referring to the DOL's fiduciary rulemaking as a "runaway train."  (And, just for the record, Soul Asylum's "Runaway Train" was indeed included in my prior list of train-themed songs.)  Commissioner Gallagher's remarks were made at The SEC Speaks in 2015.  His language is colorful, to say the least, and I offer the following sampling (emphasis in original) (footnotes omitted), which even includes references to the Goonies and Godfather sequels (!!):

[W]e've spent much of the past several years chipping away at the one hundred or so mandates imposed upon the Commission by the Dodd-Frank Act.  At last year's Speaks conference, I delivered an "open letter" to the SEC staff.  Reiterating a theme to which I’ve referred throughout my tenure as a Commissioner, I stated that the Dodd-Frank Act is "a 2,319 page monstrosity that is in substantial part untethered to the causes of the crisis."  Some have objected to this and the many related pronouncements I've made regarding the Dodd-Frank Act over the years.  To them I say:  You should have seen the first drafts!   

. . . .

Speaking of distractions and rulemaking untethered to identifiable problems, I’d like to turn now to a long-anticipated re-proposal, a sequel of sorts – but, probably more like Goonies 2 than Godfather 2.  This rulemaking is based on the premise that an entire SEC-regulated industry is plagued by conflicts of interest. . . .

. . . .

. . . And despite public reports of close coordination between the DOL and SEC staff, I believe this coordination has been nothing more than a “check the box” exercise by DOL designed to legitimize the runaway train that is their fiduciary rulemaking.  Unfortunately, this is par for the course in Washington these days - take, for example, the Financial Stability Oversight Council SIFI designation process for non-banks, where everyone's an expert except for the actual experts.  Although, as I noted, I haven't seen the DOL’s re-proposal, thanks to a White House “memo” shockingly "leaked" to the press earlier this year, I can make an educated guess at what might be included. . . .

Let’s start with some of the claims the White House memo makes.  First, the memo states that “consumer protections for investment advice in the retail and small plan markets are inadequate.”  This overarching statement is not accompanied by any analysis or study of the current protections investors receive from the regulatory oversight of brokers and investment advisers by the SEC and the SROs - in fact, it blatantly ignores this comprehensive regulatory oversight.  Indeed, the memo manages to avoid any mention of either the SEC or FINRA!

Second, the memo states that “the current regulatory environment creates perverse incentives that ultimately cost savers billions of dollars a year.”  I am not going to be drawn into a debate about the studies the memo selectively cites to support this conclusion.  But I will point out that there are SEC and SRO rules directly addressing the so-called perverse incentives referenced to in the memo. . . .

Third, the memo states that “the current regulatory environment allows fund sponsors and advisory service firms to create incentives for their advisors to recommend excessive churning . . . of retirement assets and to steer savers into higher cost products with financial payoffs for the advisor.”  Far be it from me, as a mere SEC Commissioner, to second guess the White House securities law experts, but I do feel obligated to point out that our rules expressly prohibit brokers from churning client accounts, and the SEC and SROs have sophisticated tools designed to monitor for such activity.

Finally, the memo states “academic research has clearly established that conflicts of interest affect financial advisors’ behavior and that advisors often act opportunistically to the detriment of their clients because of payments they receive from product providers.”  This statement, like the others, ignores the existence of the comprehensive oversight and disclosure regime specifically designed to address these underlying conflicts of interest.  

. . . .

To be blunt, the White House memo is thinly-veiled propaganda designed to generate support for a widely unpopular rulemaking.  Seven years after the height of the financial crisis, it is obvious that some remain intent on not letting it go to waste.  Perhaps it’s time to acknowledge a little nuance.  It’s easy to shout about conflicts of interest and vilify any potential practices that involve them, even if it means taking entire swathes of investment products off the table.  It’s a lot harder to establish a regulatory system that balances mitigating conflicts and effective disclosures with expanding investment opportunities for the good of individual investors and the economy as a whole, as the Commission has done for decades.  In a matter of this import, we should not shirk from our path simply because it is difficult.

It's somewhat hard to embellish that, so I'll just leave it there.

(Although I will say one more thing, on a totally unrelated matter - congratulations to Birdman.)