Unwinding the Department of Labor’s Fiduciary Rule
 

Unwinding the Department of Labor’s Fiduciary Rule

Posted on 09-12-2018

By: George M. Sepsakos and Michael P. Kreps, Groom Law Group, Chartered

This article discusses the implications of the Fifth Circuit Court of Appeals’ vacatur of the Department of Labor’s (DOL) Fiduciary Rule1 and related amendments to other prohibited transaction exemptions (PTEs) in Chamber of Commerce of the United States v. United States Dep’t of Labor, 885 F.3d 360 (5th Cir. 2018).

BY REPLACING A LESS RESTRICTIVE five-part test regulating the scope of persons who fit the definition of an investment advice fiduciary under Section 3(21) of the Employee Retirement Income Security Act of 1974 (ERISA) and Section 4975 of the Internal Revenue Code (I.R.C.),2 the Fiduciary Rule expanded the types of activities that are considered investment advice subject to the ERISA and the prohibited transaction provisions of the I.R.C. The new PTEs and amendments published along with the Fiduciary Rule were designed to avoid conflicts of interest and ensure that retirement industry professionals who provide investment advice (including, for the first time, to owners of IRAs) do so in the best interest of their clients.

In response to the Fiduciary Rule, the retirement industry spent millions of dollars in preparation for compliance. However, after the Fifth’s Circuit’s entering of its mandate on May 7, 2018, ERISA’s definition of investment advice fiduciaries will revert to the original 1975 regulation’s five-part test.

On What Grounds Did the Fifth Circuit Vacate the Fiduciary Rule?

The Fifth Circuit determined that the Fiduciary Rule conflicts with the statutory text of Section 3(21)(A)(ii) of ERISA and with the counterpart provision in Section 4975 of the I.R.C. The Fifth Circuit vacated the Fiduciary Rule on the basis that the common law meaning of the word fiduciary requires a relationship of trust and confidence and that Congress codified that common law meaning in the statutory text. By attempting to broadly expand the universe of persons to whom fiduciary status is assigned to include ordinary salespersons, such as many brokerdealers and insurance agents, the Fifth Circuit ruled that the Fiduciary Rule conflicted with the underlying statutory text.

What Types of Service Providers Can Expect to Retain Fiduciary Status under the Five-part Test?

Many service providers that were fiduciaries under the Fiduciary Rule are likely to retain fiduciary status after the vacatur. ERISA provides a functional test for determining whether a person becomes a fiduciary, meaning that there are several avenues to a service provider becoming a fiduciary. In this respect, ERISA Section 3(21) provides that a person is a fiduciary with respect to a plan to the extent (1) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets; (2) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so; or (3) he has any discretionary authority or discretionary responsibility in the administration of such plan.

The court’s ruling affected the DOL’s definition of a fiduciary providing investment advice under ERISA Section 3(21)(A)(ii). However, the ruling did not affect service providers who are fiduciaries under other prongs of the statute, such as discretionary asset managers who maintain discretionary control respecting the disposition of the plan’s assets or an outsourced plan administrator who maintains discretionary authority respecting the administration of the plan will remain unaffected by the Fifth Circuit’s ruling.

The status of service providers who make investment recommendations to plans or IRAs may change with the return to the five-part test. Under the five-part test, a person would be deemed to provide investment advice under ERISA Section 3(21)(A)(ii) where the person (1) makes recommendations as to the value of securities or other property or makes recommendations as to the advisability of investing in, purchasing, or selling securities or other property; (2) on a regular basis; (3) pursuant to a mutual understanding; (4) that such advice will be a primary basis for investment decisions; and (5) that the advice will be individualized to the plan.3

In most cases, investment advisers will remain fiduciaries as they most likely will satisfy the five-part test because they are generally hired to provide investment recommendations and monitoring services on a regular basis, and it is understood that such advice is individualized to the plan. Whether the adviser acts as a fiduciary under the five-part test for purposes of rollover decisions will depend on the status of the Deseret Opinion4 (discussed further below).

What Types of Products and Services Should Service Providers be Particularly Concerned about When Reevaluating Their Potential Status as Fiduciaries under the Five-part Test?

Service providers should evaluate any product or service that provides ongoing investment recommendations to retirement plans, participants, or IRAs and other accounts subject to Section 4975 where they receive direct or indirect compensation. This includes robo-advisors or investment education providers as it is not uncommon for those vendors to provide advice under the five-part test without being aware of their status as a fiduciary.

To Comply with the Fiduciary Rule, Financial Institutions Have Adopted Policies and Procedures Regarding, for Example, Communications that Would Constitute Fiduciary Investment Advice Recommendations as Well as the Best Interest Standard Imposed by the Related PTEs. To What Extent Should Financial Industries Modify or Abandon These Policies and Procedures?

Service providers should review any and all policies and procedures implemented as a result of the Fiduciary Rule to determine whether their ongoing implementation makes sense. Notwithstanding the vacatur of the Fiduciary Rule, there is a risk that other regulators could enforce a service provider’s policies to the extent that they’re not followed internally. For instance, the Enforcement Section of the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth filed a complaint against a service provider based on alleged violations of their internal policies and procedures adopted in light of the Fiduciary Rule. Importantly, that complaint alleged violations of Massachusetts state law and not the Fiduciary Rule.

Certain service providers may decide to keep in place certain policies implemented in response to the Fiduciary Rule. For instance, firms expecting to take advantage of the DOL’s temporary non-enforcement policy (discussed more fully below) may keep policies and procedures in place for the time being to demonstrate compliance with the DOL’s temporary non-enforcement policy. Moreover, as discussed immediately below, we suspect that the best interest concept is not going away any time soon, meaning that policies and procedures employed by service providers to ensure that brokers and advisers make best interest recommendations may be required by other laws in the future.

What Effects Do You Expect the Recently Proposed Rules and Related Interpretation by the SEC of the Best Interest and Fiduciary Standards Will Have on the Financial Industry (Assuming They Are Finalized)? How Do These Rules Compare with the Standards that the Department of Labor Intended to Implement under the Fiduciary Rule and its Related PTEs?

The Securities and Exchange Commission (SEC) was substantially influenced by the DOL in its promulgation of Regulation Best Interest, as the SEC cited to the Best Interest Contract (BIC) Exemption 340 times within the preamble to its proposed regulation. While Regulation Best Interest largely tracks existing suitability requirements, it also incorporates several concepts raised by the DOL under the BIC Exemption. Having said that, the SEC’s effort provides an arguably reduced standard of care and maintains less extensive disclosure obligations than the BIC Exemption.

Regulation Best Interest would require that broker-dealers and their associated persons “act in the best interest of the retail customer at the time the recommendation is made without placing the financial or other interest of the broker-dealer or natural person who is an associated person making the recommendation ahead of the interest of the retail customer.”

Unlike the Fiduciary Rule and BIC Exemption, the SEC’s best interest standard of care does not require that the recommendation be made “without regard to the financial or other interests” of the broker-dealer.

A broker-dealer is deemed to comply with Regulation Best Interest if it satisfies the regulation’s three core obligations: (1) the Care Obligation, (2) the Conflict of Interest Obligation, and (3) the Disclosure Obligation. These obligations are discussed below.

Care Obligation

The Care Obligation requires that brokerdealers exercise reasonable diligence, care, skill, and prudence to:

  • Understand the potential risks and rewards associated with a recommendation and have a reasonable basis to believe that the recommendation could be in the best interest of at least some retail customers
  • Have a reasonable basis to believe that the recommendation is in the best interest of a particular retail customer based on the retail customer’s investment profile and the potential risk and rewards associated with the recommendation
  • Have a reasonable basis to believe that a series of recommended transactions, even if in the retail customer’s best interest when viewed in isolation, is not excessive and is in the retail customer’s best interest when taken together in light of the retail customer’s investment profile

While the Care Obligation largely tracks existing suitability rules issued by the Financial Industry Regulatory Authority (FINRA) in that it would require that broker-dealers continue to abide by Reasonable Basis Suitability, Customer Specific Suitability, and Quantitative Suitability, the proposed rule does include what can be described as a process element similar to that found under DOL rules and regulations. The inclusion of the term “prudence” for instance, is not found under existing securities rules.

Conflict of Interest Obligation

The SEC’s Conflict of Interest Obligation requires that brokerdealers (1) establish, maintain, and enforce written policies and procedures reasonably designed to identify, and at a minimum disclose or eliminate, all material conflicts of interest that are associated with recommendations covered by Regulation Best Interest; and (2) establish, maintain, and enforce written policies and procedures reasonably designed to identify, and disclose and mitigate, or eliminate, material conflicts of interest arising from financial incentives associated with such recommendations.

The SEC’s interpretation of the term financial incentive is very broad. For example, the SEC described material conflicts that arise from financial incentives to include:

  • Compensation practices established by the broker-dealer including fees and charges for products sold, employee compensation, or employment incentives (quotas, bonuses, sales contests, special awards)
  • Differential or variable compensation and incentives tied to appraisals or performance reviews
  • Compensation practices involving third parties, including compensation for sub-accounting or administrative services to a mutual fund, receipt of commissions or sales charges, or other differential or variable compensation, whether paid by the retail customer or a third party
  • Sales of propriety products or services or products of affiliates and principal transactions

In the case of material conflicts of interests associated with financial incentives, the proposal would require broker-dealers to either eliminate the conflict entirely or mitigate the conflict in addition to providing disclosure. The SEC did state that material conflicts of interests could be mitigated through various conflict mitigation strategies.

Disclosure Obligation

Regulation Best Interest also requires that broker-dealers satisfy the Disclosure Obligation. Importantly, a broker-dealer’s Disclosure Obligation is in addition to and distinct from the Form CRS obligation which must be satisfied by both broker-dealers and registered investment advisers.

The Disclosure Obligation requires that, prior to or at the time of a recommendation, the broker-dealer—or a natural person who is an associated person of a broker or dealer—reasonably disclose to the retail customer, in writing, the material facts relating to the scope and terms of the relationship with the retail customer and all material conflicts of interest associated with the recommendation

At the outset, the SEC notes that brokerdealers should have the flexibility to make disclosures by various means. The SEC noted that disclosures are required to be made prior to the time a recommendation is made.

The material facts relating to the scope of the relationship, which must be disclosed would include:

  • That the broker-dealer is acting in a broker-dealer capacity with respect to the recommendation
  • The fees and charges that apply to the retail customer’s transactions, holdings, and accounts
  • The type and scope of services provided by the broker-dealer, including the monitoring the performance of the retail customer’s account

How Did the Fiduciary Rule Affect the Compensation Structures of Financial Industry Professionals? Will the Demise of the Fiduciary Rule Mean that These Professionals Will Revert to Prior Arrangements?

The Fiduciary Rule and interpretive guidance issued by the DOL affected compensation structures of financial professionals in a dramatic way. In this respect, the BIC Exemption’s warranty requirements required the financial institution to warrant that its policies and procedures did not permit the use of or reliance upon quotas, appraisals, performance or personnel actions, bonuses, contexts, special awards, differential compensation, or other actions or incentives that are intended or would reasonably be expected to cause advisers to make recommendations that are not in the best interest of the retirement investor. The BIC Exemption expressly held that differential compensation could be paid to financial professionals if it was based on neutral factors that resulted from different levels of service required in the delivery of different types of investments.

The DOL issued additional guidance on October 26, 2016, that affected brokerdealer compensation practices. The DOL addressed certain back end recruitment compensation paid to broker-dealers who were changing firms within FAQ 12. Under the DOL’s view, the large all or nothing arrangements that were contingent upon the adviser meeting a production or assets under management target were inconsistent with the warranty requirements under the BIC Exemption.

Similarly, firms relying on the BIC Exemption were required to revisit escalating compensation grids. This is because under the BIC Exemption’s warranty provisions, questions were raised as to whether a firm could provide a greater proportion of revenue to advisers that were more productive. While the DOL answered that compensation grids were permitted, compensation grids were required to be tailored to avoid certain conflicts. For instance, the DOL warned that revenue that was fed into a compensation grid should be the same within product categories and that differentials between product categories must be justified by neutral factors. Grids were required to provide only for gradual increases in compensation and increases in compensation were unable to be retroactive. In the DOL’s view, retroactive grids were likely to create acute conflicts of interest.

What Changes, if any, Should Service Providers Consider Making to Their Customer Agreements and Disclosures, Marketing Materials, and/or Business-to-business Agreements (such as Selling Agreements)?

Service providers should review all client-facing agreements to ensure that they reflect the current state of the law and have not inadvertently established a heightened standard of care through contact. Service providers should also establish a game plan in the event that they accepted fiduciary status via contract in response to the Fiduciary Rule.

Separately, those who revised agreements and issued disclosures to satisfy the Independent Fiduciary Exemption that provided relief from the Fiduciary Rule should review those agreements and disclosures to determine whether some or all of the disclosures remain necessary.

Can Providing Advice Regarding Rollovers Still be Considered Fiduciary Investment Advice under the Five-part Test? If so, What Could This Mean for Fiduciaries?

The answer to this question is largely unclear. Much depends on whether the Deseret Advisory Opinion again constitutes the DOL’s interpretation of the law. In a 2005 advisory opinion to Deseret Mutual Fund administrators, the DOL concluded that an investment adviser who was not otherwise a fiduciary would not be deemed a fiduciary with respect to the ERISA plan solely on the basis of making a recommendation to a plan participant to take a plan distribution and invest it in an IRA, even if the adviser gave specific advice as to how to invest the distributed funds.5 In reaching this conclusion, the DOL interpreted its pre-Fiduciary Rule investment advice regulation at 29 C.F.R. § 2510-3.21(c). The Deseret Advisory Opinion stated further, however, that where a plan officer who is already a fiduciary to the plan responds to questions regarding a plan distribution or the investment of amounts withdrawn from the plan, such fiduciary would be exercising discretionary management over the plan.

What Exemptive Relief Should Service Providers (Who Are Fiduciaries under the Five-part Test) and Who Had Planned on Relying on (1) the Best Interest Contract Exemption and (2) the Principal Transactions Exemption Consider as Alternatives, and under What Circumstances?

The DOL has issued Field Assistance Bulletin 2018-02, which provides for a temporary non-enforcement policy for those service providers who accepted fiduciary status under the Fiduciary Rule but may no longer rely on the BIC Exemption as a result of the vacatur by the Fifth Circuit. FAB 2018-02 effectively extended the initial transition relief under the BIC Exemption on an ongoing basis through a non-enforcement policy. While FAB 2018-02 is not an exemption and could be rescinded at any time by the DOL, it may be relied upon while it remains effective to the extent that there is an oversight in compliance with other available exemptions.

Otherwise, service providers should review how they are compensated and consider other available exemptions that may permit the receipt of compensation. Many exemptions that have been around for years prior to the Fiduciary Rule have been reinstated. Therefore, service providers should look to these exemptions (many of which are described below) in order to map out an effective exemption strategy.

How Will the Vacatur of the Amendments to the Other PTEs (PTE 77-4, PTE 75-1, PTE 80-83, PTE 83-1, PTE 84-24, and PTE 86-128) Result in the Expanded Availability of These Exemptions?

As noted above, the result of the vacatur is that the DOL’s changes to prohibited transaction exemptions under the Fiduciary Rule are also rescinded. While the DOL’s changes to certain of the exemptions, including PTE 77-4, PTE 80-83, PTE, 83-1, were limited to the inclusion of the Impartial Conduct Standards, other exemptions commonly relied on by the industry, including PTEs 84-24 and 86-128, were substantially modified and the broad relief previously available under these exemptions was no longer available. The DOL’s justification for these changes was that service providers would now have exemptive relief available to them for common brokerage and annuity transactions under the BIC Exemption.

We discuss both PTE 84-24 and 86-128 below.

PTE 84-24

The Fifth Circuit’s decision will likely reverse these changes to PTE 84-24. Importantly, with the loss of the BIC Exemption, it is important to focus on the types of transactions covered by PTE 84-24 and the terms and conditions under which relief will be available

PTE 84-24 provides exemptive relief for the sale of shares of a registered investment company (i.e., a mutual fund) if certain conditions are met

Specifically, regarding mutual fund shares, PTE 84-24 exempts:

  • The effecting of a plan’s purchase of mutual fund shares by the mutual fund principal underwriter or its affiliates
  • The receipt of sales commissions by the principal underwriter or its affiliates in connection with sales of shares of the mutual fund

In connection with plan purchases of insurance and annuity contracts, PTE 84- 24 exempts:

  • The plan’s purchase of an insurance or annuity contract from an insurance company
  • The effecting of the plan’s purchase of the insurance or annuity contract by an insurance agent or broker or their affiliates
  • The receipt of sales commissions in connection with the sale of an insurance or annuity contract by an insurance agent or broker or their affiliates

The conditions under PTE 84-24 include, among others, certain general conditions, relationship conditions, and disclosure and approval conditions.

First, the general conditions under Section IV of PTE 84-24 require that:

  • The transaction is effected in the ordinary course of business of the principal underwriter, insurance company or insurance agent or broker.
  • The transaction is on arm’s length terms.
  • The combined total of all fees, commissions and other consideration is reasonable.

Second, the relationship conditions, under Section V(a) of PTE 84-24, prohibit the principal underwriter, insurance company, insurance agent or broker and any of their affiliates from having certain types of relationships with the plan. Specifically, they may not be (1) a trustee of the plan (other than a nondiscretionary trustee who does not render investment advice with respect to any assets of the plan), (2) a plan administrator (within the meaning of Section 3(16)(A) of ERISA and Section 414(g) of the I.R.C.), (3) an employer any of whose employees are covered by the plan, or (4) a fiduciary who is expressly authorized in writing to manage, acquire or dispose of the assets of the plan on a discretionary basis.

Finally, the disclosure and approval conditions under Section V(c) of PTE 84-24 require that, before the transaction is effected, an independent plan fiduciary receive certain information in writing, including information about sales commissions and any other charges, fees, discounts, penalties, or adjustments that may be imposed in connection with the purchase, holding, exchange, or sale of the recommended securities or annuity contract. In the case of sales of shares of mutual funds, the disclosure may be satisfied by distribution of the mutual fund prospectus if it contains the required information.

Based on the disclosure, an independent plan fiduciary must approve the investment before the transaction is executed. The independent plan fiduciary who approves the transaction may not be the principal underwriter of the mutual fund and may not receive, directly or indirectly, any compensation or consideration for his or her own personal account in connection with the plan’s transaction. With respect to participantdirected plans, disclosures can be made to, and approval can be obtained from, plan participants.

PTE 86-128

If required conditions are met, Section II(a) under PTE 86-128 exempts from ERISA Section 406(b) a plan fiduciary’s (e.g., a plan investment manager’s) use of its authority to cause a plan to pay a fee for effecting or executing securities transactions to itself or an affiliated broker-dealer. (The language of PTE 86-128, Section II(a), exempts a plan fiduciary’s causing a plan to pay fees for effecting securities transactions to that person. Under Section I(a), the term person includes the affiliates of a person, including (among others) any person directly or indirectly controlled, controlling, controlled by, or under common control with the person. The exemption applies only to agency transactions and only to the extent that the transactions are not excessive under the circumstances, in either amount or frequency.

Importantly, if securities transactions are effected under PTE 86-128 on behalf of IRAs that are not ERISA-covered plans, no additional conditions apply. However, additional conditions apply where an investment manager effects transactions for ERISA-covered plans through its affiliated broker-dealer, as follows.

Relationship Conditions. The plan investment manager engaging in the securities transactions (or any of its affiliates) may not be the plan administrator or an employer whose employees are covered by the plan.6 Also, the exemption is not available if the investment manager or its affiliate is a discretionary plan trustee (i.e., a trustee other than a directed trustee), unless the plan has assets over $50 million and certain other conditions are met.7

Advance Disclosure and Authorization. An independent fiduciary (which may be the plan sponsor or administrator, or, for a participant-directed plan, the individual participant) must give written authorization in advance of any securities transactions that would be covered by the exemption.8

Within three months before this authorization is given, the investment manager must provide the independent fiduciary with any reasonably available information that the investment manager reasonably believes is necessary for the independent fiduciary to determine whether to make the authorization.9 This includes:

  • A copy of PTE 86-128
  • A form for terminating the authorization
  • A description of the investment manager’s brokerage placement practices
  • Any other reasonably available information regarding the matter that the authorizing independent fiduciary requests

Plan Termination Rights. The independent fiduciary’s authorization must be terminable at will without any penalty to the plan. At least annually, the investment manager must provide the independent fiduciary written notice of the right to terminate, together with a form that can be used to terminate the authorization. PTE 86-128 § III(c).

Periodic Reports. Under PTE 86-128, Section III(e), the investment manager (or its affiliated broker-dealer affiliate) must provide to the independent fiduciary either:

  • A confirmation slip within 10 business days of each covered securities transaction
  • A quarterly report of all securities transactions (whether executed by the affiliated broker-dealer or otherwise) specifically identifying the total compensation paid by the plan for securities transactions and the amount of such compensation retained by the affiliated brokerdealer

Annual Summary. Under PTE 86-128, Section III(f), the independent fiduciary must receive an annual report that summarizes information previously provided in the confirmations or quarterly reports. The report must be provided within 45 days after the end of the period to which it relates, and must specifically include:

  • The total of all securities transactionrelated charges incurred by the plan during the period
  • The amount of the securitiestransaction related charges retained by the investment manager and its affiliated broker-dealer and the amount paid over to other persons for execution and other services
  • A description of the investment manager’s broker placement practices, if the practices materially changed during the year
  • Disclosure of the plan’s portfolio turnover ratio calculated in a manner reasonably designed to provide the independent fiduciary with the information needed to discharge its duty of prudence

Finally, PTE 86-128 only provides exemptive relief from ERISA Section 406(b). Because the provision of brokerage services by an affiliate of a plan fiduciary also involves possible prohibited transactions under ERISA Section 406(a), the brokerage transactions also must satisfy conditions under the statutory exemption under ERISA Section 408(b)(2), including the condition that fees paid by the plan for brokerage services are not more than reasonable.


George M. Sepsakos is a partner at Groom Law Group where he represents clients on a broad range of ERISA, federal tax, and securities law matters. His practice is primarily focused on issues related to Title I of ERISA, including fiduciary responsibility and prohibited transaction issues. Prior to joining the firm, George worked as an ERISA enforcement advisor within the Office of Enforcement of the Department of Labor Employee Benefits Security Administration. Michael P. Kreps is a principal at Groom Law Group, where he counsels employers, plan sponsors, financial institutions, trade associations, and coalitions on retirement, health, tax, and employment matters. Mr. Kreps specializes in issues relating to public policy, fiduciary responsibility, and plan funding and restructuring. Previously, Mr. Kreps served as the Senior Pensions and Employment Counsel for the U.S. Senate Committee on Health, Education, Labor, and Pensions from the 110th through the 114th Congress.


To read the full version of this guidance, see the complete practice note in Lexis Practice Advisor

To find this article in Lexis Practice Advisor, follow this research path:

RESEARCH PATH: Employee Benefits & Executive Compensation > Retirement Plans > ERISA and Fiduciary Compliance > Practice Notes

Related Content

For more information on the duties and obligations of fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA) and on prohibited transaction exemptions, see

> ERISA FIDUCIARY DUTIES

RESEARCH PATH: Employee Benefits & Executive Compensation > Retirement Plans > ERISA and Fiduciary Compliance > Practice Notes

For guidance on fiduciary duties that apply to ERISA discretionary investment managers, see

> ERISA FIDUCIARY COMPLIANCE FOR INVESTMENT MANAGERS

RESEARCH PATH: Employee Benefits & Executive Compensation > Retirement Plans > ERISA and Fiduciary Compliance > Practice Notes

For a description of the principal rules under Title I of ERISA, including fiduciary standards and duties, see

> ERISA TITLE I FUNDAMENTALS

RESEARCH PATH: Employee Benefits & Executive Compensation > Retirement Plans > ERISA and Fiduciary Compliance > Practice Notes

For an update on ERISA prohibited transactions, see

> ERISA LEGISLATIVE DEVELOPMENTS

RESEARCH PATH: Employee Benefits & Executive Compensation > Retirement Plans > ERISA and Fiduciary Compliance > Practice Notes

For a list of steps for a practitioner to follow when applying for a prohibited transaction exemption under ERISA, see

> PROHIBITED TRANSACTION EXEMPTION APPLICATION CHECKLIST

RESEARCH PATH: Employee Benefits & Executive Compensation > Retirement Plans > ERISA and Fiduciary Compliance > Checklists

1. 81 Fed. Reg. 20,946 (Apr. 8, 2016) (the Fiduciary Rule), 81 Fed. Reg. 21,002 (Apr. 8, 2016) (Best Interest Contract and Principal Transactions Exemptions), as corrected at 81 Fed. Reg. 44,773 (July 11, 2016) and 81 Fed. Reg. 21,089 (Apr. 8, 2016). 2. 40 Fed. Reg. 50,842 (Oct. 31, 1975). 3. 29 C.F.R. § 2510-3.21(c)(1)(ii)(B). 4. DOL Adv. Op. 2005-23A, 2005 ERISA LEXIS 24. 5. Id. 6. PTE 86-128, § III(a). 7. Section III(h) to PTE 86-128. 8. PTE 86-128, § III(b). 9. PTE 86-128, § III(d).