United States: The US Department Of Labor's Final "Fiduciary" Rule Incorporates Concessions To Financial Service Industry But Still Poses Key Challenges

The Rule Will Require Restructuring of Pay and Compliance Policies at Financial Institutions Serving Retail Retirement Clients

The Rule Also Increases the Litigation Risks to Financial Institutions Associated with Providing Investment Advice to IRAs and IRA Beneficiaries

On April 6th, the US Department of Labor issued its final "fiduciary" rule. Over 800 pages in length and more than 15 years and three iterations in the offing, the rule and its related prohibited transaction exemptions ("PTEs") will, for the first time since the passage of ERISA,1 subject many of the investment and asset management recommendations from broker dealers, banks and other financial organizations to individual retirement accounts ("IRAs") and other retail retirement clients2 to ERISA's fiduciary standards and remedies. 3

The most immediate impact of the rule will be on the compensation practices at broker-dealers and other financial institutions and on the fee and revenue sharing arrangements among funds, fund sponsors and the financial institutions that offer investment advice to retail retirement clients. The rule and related exemptions require new client contracts, new internal "best interest" or "impartial conduct" policies and procedures, new websites and additional disclosures to both investors and the DOL. For fund and other product sponsors, there may be new demands for investment vehicles with low, no or level broker compensation – and potentially a "stuck in the middle" quandary for some as they try to accommodate competing or even conflicting approaches to the rule from different financial institution partners. The rule also increases the litigation risks to financial institutions in providing investment and other services to retail retirement clients, because the rule subjects advice to IRA and other non-ERISA plan clients to ERISA's remedial provisions, and does so in a context that emphasizes subjective fair treatment in a complex environment.

The rule will be applicable to financial institutions and the financial advisers employed by them4 on April 10, 2017, which is one year after its effective date. However, in response to implementation and feasibility concerns raised by the financial services industry, the DOL has delayed full compliance with certain provisions of the "best interest contract" and "principal transaction" exemptions until January 2018.

This publication describes the main provisions of the rule, as well as the key terms of the new and amended PTEs promulgated by the DOL.

Re-defining Who is an "Investment Advice Fiduciary"

In General

Under both ERISA and the Internal Revenue Code, 5 a so-called "investment advice fiduciary" is a person who renders investment advice for a fee or other compensation with respect to moneys or other property of an employee benefit plan or a tax-favored retirement savings account such as an IRA. 6 Since 1975, regulations promulgated by the DOL have provided that a person will be an investment advice fiduciary only if (1) the advice is rendered as to the value of securities or property or as to the advisability of investing in securities or property, (2) on a regular basis, (3) pursuant to a mutual agreement or understanding between the adviser and the client, (4) that the advice will serve as the primary basis for investment decisions and (5) that it will be particularized to the individual needs of the retirement investor. The narrow focus of this five-part test allowed advisers comfortably to conclude that they were not acting as ERISA fiduciaries when making most investment recommendations to retail retirement clients.

The rule abandons the five-part test and replaces it with a principles-based approach that focuses on whether or not a "recommendation" has been made that constitutes "investment advice." At the heart of the rule is an examination of (1) the relationship between the adviser and the client and (2) the type of advice being given, and the rule provides a detailed explanation of the types of communications that will and will not rise to the level of being a "recommendation."

Significantly, the rule no longer requires the investment advice be provided to the client on a regular basis or with the understanding that it will be used as the primary basis for the client's decision. As a result, the rule broadly captures "recommendations" made pursuant to any written or oral understanding that the advice is being tailored to the specific needs of the retail retirement client.

Advisers who are fiduciaries for purposes of ERISA or the Code are subject to a broad prohibition against conflicts of interest transactions. That, in turn, requires an adviser to cast about for available exemptions to continue compensation and other commercial practices that would have been permissible absent fiduciary status–a process that under the rule will, in many cases, lead to the so-called "best interest contract" or "BIC" exemption described later in this publication.

Types of Relationships

For a "recommendation" to be subject to the rule, it must be made by one of the following persons (or their affiliates):

  • Persons who represent or acknowledge that they are acting as fiduciaries with respect to the advice;
  • Persons who render the advice pursuant to a written or verbal agreement, arrangement or understanding that the advice is based on the particular needs of the recipient; or
  • Persons who direct the advice to a specific advice recipient(s) regarding the advisability of a particular investment or management decision. 7

Types of Recommendations

Recommendations as to either the investment or management of the securities or investment property8 constitute "investment advice" under the rule. 9 These include recommendations as to the advisability of acquiring, holding, disposing of or exchanging securities or other investment property or recommendations as to how such securities or investment property should be invested after being rolled over, transferred or distributed from the plan or IRA. The rule clarifies that the management of the securities or investment property include recommendations as to: (1) investment policies or strategies, (2) proxy voting, (3) portfolio composition, (4) other persons to provide investment advice or management services, 10 (5) types of investment account arrangements (e.g., brokerage vs. advisory), (6) transitions to fee-based arrangements11 or (7) rollovers, transfers or distributions (including whether, in what amount, in what form and to what destination a transfer or rollover is directed). 12

Communications That Are "Recommendations"

Under the rule, a "recommendation" is a communication (whether initiated by a person or computer software program), that, based on its content, context and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action. 13 Under this standard, the determination as to whether a "recommendation" has been made is not dependent on the intentions of advisers when they make the communication, or the interpretation of the communication by advice recipients.

In its 2015 proposal, the DOL solicited comments on whether it should adopt some or all of the standards developed by FINRA in defining communications that rise to the level of a "recommendation" for purposes of distinguishing between investment education and investment advice under ERISA. The NASD Notice to Members 01 – 2314 provides guidelines to assist brokers in evaluating whether a particular communication could be viewed as a "recommendation," triggering application of FINRA's Rule 2111, which requires that a firm or associated person have a reasonable basis to believe that a recommended transaction or investment strategy involving securities is suitable for the customer. The rule mirrors the FINRA guidance in stating that the more individually tailored the communication is to a particular customer or customers about a specific security or investment strategy, the more likely the communication will be viewed as a "recommendation." However, the rule does not adopt the FINRA standard for "recommendation." In the view of the DOL, FINRA guidance does not specifically define the term "recommendation" in a way that could be directly incorporated into the rule. Moreover, according to the DOL, strictly adopting FINRA guidance would mean that the rule could be subject to changes in FINRA interpretations announced in the future and not reviewed or separately adopted by the DOL.

As noted above, the rule states that the more individually tailored a communication is to a specific advice recipient or recipients, the more likely the communication will be viewed as a "recommendation." Further, the rule clarifies that offering a selective list of securities to a retail retirement client would be a "recommendation" as to the advisability of acquiring securities, even if no "recommendation" is made with respect to any one security.

The rule provides that the following provisions of services or information do not constitute "recommendations":

  • Platform Providers and Related Activities. Marketing or making available to a plan fiduciary, without regard to the individualized needs of the plan15 or its participants, a platform or similar mechanism to select or monitor investments is not a "recommendation," so long as the plan fiduciary at whom the marketing is directed is independent of the person marketing the platform, and the adviser discloses in writing to the plan fiduciary that the adviser is not undertaking to provide impartial investment advice or give advice in a fiduciary capacity. For purposes of this exception, plan fiduciaries do not include plan participants, IRA owners or IRA beneficiaries.

In addition, certain activities carried out by platform advisers to assist plan fiduciaries in selecting and monitoring investment alternatives are not "recommendations" under the rule. These activities are: (1) identifying investment alternatives that meet objective criteria specified by the plan fiduciary, 16 (2) responding to a request for information or proposal with information of a limited or sample set of investment alternatives based only on size of the plan and/or the current investment alternatives designated under the plan and (3) providing the plan fiduciary with objective financial data and comparisons with independent benchmarks. 17

  • Investment Education. The provision of general investment information and educational materials is not a "recommendation" on how to invest plan assets and therefore is not "investment advice." The new rule incorporates most of the DOL's Interpretive Bulletin from 1996 on investment education, a notable exception for references to specific investment options. 18 The rule provides and discusses four categories of education information: (1) plan investment information, (2) general financial, investment and retirement information, (3) asset allocation models and (4) interactive investment materials.

Seller's Carve-Out and Other "Recommendations" That Do Not Constitute Investment Advice

The rule provides that the following "recommendations" do not constitute "investment advice" subject to the 19

  • Transactions with Independent Fiduciaries with Financial Expertise (the "Seller's Carve-Out"). This exception provides that an adviser will not be considered an investment advice fiduciary by providing advice to an independent fiduciary of a plan with respect to an arm's length sale, purchase, loan, exchange or other transaction involving the investment of securities or other property. In order to fall within this exception, the adviser must: (1) not receive a fee or other compensation from the plan for the investment advice in connection with the transaction, (2) inform the independent fiduciary of the existence and nature of the adviser's financial interest in the transaction and (3) know or reasonably believe that the independent fiduciary is a bank, registered investment adviser, insurance carrier qualified in more than one state, or manager with at least $50 million in assets under management20 which is acting independently for the plan and is capable of evaluating the risks of the transaction.
  • Swap Transactions. Providing advice to an employee benefit plan covered by ERISA in connection with a swap or security-based swap21 will not be investment advice if the financial institution giving the advice is a swap dealer, security-based swap dealer, major swap participant, major security-based swap participant or a swap clearing firm and:
    • The fiduciary of the ERISA plan is independent of the financial institution;
    • The swap dealer or security-bases swap dealer is not an adviser to the plan under § 4s(h) of the Commodity Exchange Act or § 15F(h) of the 1934 Act;
    • The financial institution does not receive a fee or other compensation directly from the plan or plan fiduciary for the advice in connection with the transaction; and
    • Before providing any "recommendation" with respect to a swap or security-based swap transaction, the financial institution obtains a written representation from the fiduciary that the fiduciary understands that the advice-provider is not undertaking to provide impartial investment advice, and the fiduciary is exercising independent judgment.
  • Employees of Plan Sponsors. Employees of plan sponsors generally will not become fiduciaries by providing advice to plan fiduciaries or another employee of the plan sponsor. In addition, employees will not become fiduciaries by providing advice to plan participants if the employee's job responsibilities do not involve providing investment advice or recommendations, the employee is not registered or licensed under federal or state securities laws, and the advice does not require the employee to be so registered or licensed. Under no circumstances may the employee receive any fees or other compensation in connection with the advice beyond the employee's normal compensation.

These exemptions apply only in limited circumstances and will not typically apply to most of the dealings with retail retirement clients that are the focus of the rule.

Consequences of Being a Fiduciary

There are many implications of ERISA fiduciary status, including being subject to ERISA's prudence and exclusive benefit rules, being restricted by ERISA's prohibited transaction rules, being subject to a remedial framework that allows claims for violations of fiduciary duty to be brought by the DOL, other fiduciaries and participants, and, in certain circumstances, being potentially liable as a co-fiduciary. ERISA also prohibits a fiduciary from exercising its discretion in a manner that will directly or indirectly benefit the fiduciary or its affiliates. One direct consequence of this limitation is that a fiduciary may not exercise its discretion in any manner that results in the compensation paid to the fiduciary and its affiliates to vary based upon the advice given or the securities recommended. As a result, absent the BIC Exemption discussed below, financial institutions and advisers would be precluded under the rule from receiving third party payments, commissions and other forms of variable remuneration and payments related to products recommended or purchased by their retail retirement clients.

The Best Interest Contract Exemption

In General

At the heart of this regulatory initiative by the DOL is the Best Interest Contract Exemption, or "BIC Exemption." The BIC Exemption allows financial institutions and advisers22 to retail retirement clients23 to receive forms of compensation that would otherwise be prohibited by ERISA and the Code, subject to compliance with a number of conditions.

As noted above, ERISA and the Internal Revenue Code broadly prohibit fiduciaries from receiving any compensation that could create a conflict of interest, in particular, any compensation paid by a third party, or fees that vary based on the particular investment product recommended. Without the BIC Exemption, many existing types of compensation–including commissions, 12b-1 fees and revenue sharing payments–would be prohibited when received in connection with a recommendation to a retail retirement client.

Changes from 2015 Proposal

The BIC Exemption included in the 2015 proposal was heavily criticized by the financial services industry as being unworkable and overly rigid. In response to these criticisms, the DOL made a number of changes to the BIC Exemption that lessen the compliance burdens imposed by the exemption. These include:

  • The requirement to enter into a contract with the retail retirement client has been eliminated for plans covered by Title I of ERISA.
  • The procedure for entering into a contract has been streamlined. A contract must be entered into prior to execution of the recommended transaction, rather than prior to making a recommendation, and can be incorporated into account opening documents or agreements.
  • A negative consent process is permitted for existing retail retirement clients that eliminates the need for a signed contract but that does not otherwise eliminate the obligations on the financial institution and the adviser to comply with the requirements of the BIC Exemption.
  • The BIC Exemption applies to recommendations to invest in any investment product, rather than a specified list of approved assets. 24
  • Certain required disclosures to the retail retirement client have been eliminated.
  • Mechanisms for correcting good faith violations of disclosure conditions were introduced.
  • The scope of grandfathering relief has been expanded with respect to advice regarding some investments entered into prior to April 10, 2017.

Despite these concessions by the DOL, as noted below, the BIC Exemption will place substantial recordkeeping and disclosure burdens on financial institutions and change fundamental aspects of the relationship between financial institutions and advisers and retail retirement clients.

Conditions of the BIC Exemption

Broadly, the BIC Exemption allows financial institutions and advisers to receive otherwise prohibited forms of compensation resulting from recommendations made to a retail retirement client as long as:

The financial institution and its advisers adhere to Impartial Conduct Standards, as described below;

  • The financial institution adopts and complies with policies and procedures designed to ensure that advisers adhere to the Impartial Conduct Standards; and
  • The financial institution complies with certain disclosure and recordkeeping requirements.

With respect to retail retirement clients that are not covered by Title I of ERISA, there is also a requirement that the financial institution enter into an enforceable contract with the retail retirement client in which the financial institution agrees to adhere to Impartial Conduct Standards. An electronic copy of the retail retirement client's contract must be maintained on the financial institution's website and be accessible by the retail retirement client.

The BIC Exemption applies differently to IRAs than it does to plans subject to ERISA, and different procedural requirements apply to new clients and clients of a financial institution that already have an "existing contract" (i.e., an investment advisory agreement, investment program agreement, account opening agreement, insurance contract, annuity contract, or similar agreement or contract that was executed before January 1, 2018, and remains in effect). The differences are highlighted below.

  • IRA clients without an existing contract:
  • The financial institution and retail retirement client must enter into an enforceable contract.
    • The contract must include the financial institution's (1) acknowledgement of fiduciary status for both the financial institution and its advisers, (2) agreement that it and its advisers will adhere to Impartial Conduct Standards, (3) warranty of adoption of and compliance with anti-conflict policies and procedures designed to ensure advisers adhere to Impartial Conduct Standards and (4) required disclosures related to services, fees and compensation, and conflicts of interest (which may be provided in the contract or in a separate document).
    • The contract must NOT include any provisions (1) that disclaim or limit the liability of the adviser or financial institution, (2) under which the retail retirement client waives or qualifies the right to bring a class action or other representative action or agrees to liquidated damages (except that a waiver of the retail retirement client's right to punitive damages or recession of recommended transaction is permissible) or (3) under which the retail retirement client agrees to arbitrate or mediate individual claims in a venue that is distant or that limits the rights of the retail retirement client to assert claims.
    • The contract must be signed (in writing or electronically) prior to or at the same time as execution of the first recommended transaction and may be included with standard account opening documents.
  • The financial Institution must comply with recordkeeping requirements and must notify the DOL of its intention to rely on the BIC Exemption before receiving any compensation in reliance on the BIC Exemption.
  • IRA clients with an existing contract:
  • The same requirements set forth above apply, except that the required BIC Exemption contract need not be physically signed by the retail retirement client. A "negative consent procedure" is permitted, allowing the financial institution to deliver a proposed contract amendment, adding the required provisions and removing
  • any impermissible provisions to the retail retirement client prior to January 1, 2018. Under this procedure, the amended contract may be considered effective if the retail retirement client does not terminate the amended contract within 30 days. Negative consent eliminates the need for a signature from an existing client but does not eliminate the need to comply with the requirements of the BIC Exemption with respect to advice given to existing clients.
  • Plan clients subject to Title I of ERISA:
  • A BIC Exemption contract between the financial institution and the ERISA client is NOT required.
  • The financial institution and the adviser must comply with the Impartial Conduct Standards. In addition, the financial institution must (1) provide to the ERISA client a written statement of its and its advisers' fiduciary status, (2) adopt and comply with anti-conflict policies and procedures designed to ensure advisers adhere to Impartial Conduct Standards and (3) provide required disclosures related to services, fees and compensation and conflicts of interest.
  • The financial institution and adviser must not, in any contract, instrument or communication, (1) disclaim or limit the liability of the adviser or financial institution if the disclaimer would be prohibited under ERISA, (2) waive or qualify the right of the ERISA client to bring a class action or other representative action or (3) require arbitration or mediation of individual claims in a venue that is distant or that limits the rights of the ERISA client to assert claims. To the extent that an existing agreement with the ERISA client contains such provisions, it would likely have to be amended to comply with the BIC Exemption.
  • The financial institution must comply with recordkeeping requirements and must notify the DOL of its intention to rely on the BIC Exemption before receiving any compensation in reliance on the BIC Exemption.
  • Level Fee:
  • Generally, an adviser or financial institution will not be required to rely on the BIC Exemption when fees are level, because neither the financial institution nor the adviser would be exercising discretion in a manner that varies fee income or compensation. In the DOL's view, however, the potential for a conflict of interest exists when an adviser recommends that a participant roll money out of a plan into a fee-based account that will generate ongoing fees (including level fees). When a fiduciary that earns only level fees must rely on the BIC Exemption (generally, in connection with a rollover recommendation), the BIC Exemption provides for streamlined conditions. Under this streamlined approach, the financial institution must give the retail retirement client a written statement of its and its advisers' fiduciary status, and the financial institution and the adviser must comply with the Impartial Conduct Standards. In addition:
    • If the level fee fiduciary recommends a rollover from an ERISA plan to an IRA, the financial institution must document the specific reasons why the recommendation was considered to be in the Best Interest of the retail retirement client. This documentation must include consideration of alternatives to the rollover, the fees and expenses associated with both the plan and the IRA, whether the employer pays for some or all of the plan's administrative expenses and the different levels of services and investments available under each option.
    • If the level fee fiduciary recommends a rollover from another IRA or a switch from a commission-based account to a level fee arrangement, the level fee fiduciary must document the reasons why that arrangement is considered to be in the Best Interest of the retail retirement client.

Footnotes

1 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2  While the rulemaking and this publication focuses on retail retirement clients, the rule will, in certain instances, apply to large plans, and the fiduciaries of those plans, as well. The rule, and the related PTEs, define "plan" as "any employee benefit plan described in § 3(3) of ERISA and any plan described in § 4975(e)(1)A) of the Code." The rule, and the related PTEs, defines "IRA" as any account or annuity described in Code § 4975(e)(1)(B) through (F)..."

3 The rule and the prohibited transaction exemptions promulgated along with the rule can be found at: http://www.dol.gov/ebsa/regs/conflictsofinterest.html.

4 The "best interest contract exemption" and the "principal transaction exemption" (both of which are described, below) contain specific definitions of "financial institutions" and "advisers" for purposes of determining who can take advantage of each exemption.

5 Internal Revenue Code means the US Internal Revenue Code of 1986, as amended.

6 ERISA § 3(21)(A)(ii) and Internal Revenue Code § 4975(e)(3). In 1978 the Department of Labor was provided with the authority to promulgate rules under § 4975 of the Code and, therefore, the rule applies to the identical definitions of "fiduciary" found in ERISA and the Code.

7 The rule was initially proposed in 2015 (along with the proposed exemptions, the "2015 proposal"). The 2015 proposal provided that unless the adviser represented that he or she is a fiduciary with respect to advice, the advice had to be provided pursuant to a written or verbal agreement, arrangement, or understanding that the advice is individualized to, or that such advice is specifically directed to, the recipient for consideration in making investment or management decisions with respect to investment of the plan or IRA. In the preamble to the rule, the DOL explains that this provision was revised for two reasons. First, the phrase "for consideration" was removed because that clause was largely redundant with the description of investment advice set forth in Section 2510.3-21(a)(1) of the rule, which addresses the subject matter areas to which a recommendation must relate to constitute investment advice. Accordingly, the rule revises the condition to require that advice be "directed to" a specific advice recipient or recipients regarding the advisability of a particular investment or management decision. Second, the DOL determined that requiring that there be an agreement, arrangement or understanding that advice was specifically directed to the recipient for both the "individualized advice" prong and the "specifically directed to" prong served no useful purpose for defining fiduciary investment advice because the point of the language concerning advice "specifically directed to" an individual was to distinguish specific investment recommendations to an individual from recommendations made to the general public, or to no one in particular. The DOL believes that a showing that an adviser directed a specific investment recommendation to a specific person carries with it a reasonable basis for both parties to understand what the adviser was doing. 

8 The definition of "investment property" excludes health insurance policies, disability insurance policies, term life insurance policies and other property to the extent the policies or property do not contain an investment component. In discussing the type of recommendations that constitute investment advice, the DOL uses the term "investment component" several times, but does not define the term. It appears that the term is short-hand for "investment advice component." (See § A(1) of the preamble to the rule, stating "The Department believes it would depart from a plain and natural reading of the term "investment advice" to conclude that recommendations to purchase group health and disability insurance constitute investment advice.")

9 Although the 2015 proposal included appraisals and valuation reports, the DOL stated that it is reserving that coverage for a future rulemaking.

10 In the preamble to the rule, the DOL states that communications with respect to marketing oneself or an affiliate would not give rise to "investment advice."

11 Communications of this type to sophisticated or large money managers will generally be excluded under the "seller's carve-out," discussed below.

12 The rule therefore supersedes Advisory Opinion 2005-23A (Dec. 7, 2005), which provided that it is not fiduciary advice to make a "recommendation" as to distribution options even if accompanied by a recommendation as to where the distribution would be invested.

13 A series of actions (including actions taken by an affiliate) that may not constitute a "recommendation" when viewed individually may amount to a "recommendation" when considered in the aggregate.

14 The NASD Notice to Members 01 – 23 is available at: http://www.finra.org/sites/default/files/NoticeDocument/p003887.pdf

15 The rule permits "segmentation," or the marketing of platforms based on objective criteria (e.g., size of plan).

16 Examples of objective criteria include: stated parameters concerning expense ratios, size of fund, type of asset or credit quality.

17 In order to take advantage of the activities in (1) and (2), the adviser (or other person identifying the investment alternatives) must identify whether he has a financial interest in any of the identified investments alternatives, and the precise nature of that interest.

18 See 29 CFR 2509.96-1 ("IB 96-1") which is superseded by the rule. The one substantive change from IB 96-1 is that asset allocation models and interactive investment materials may not identify specific investment alternatives and distribution options unless: (1) the alternative is a designated investment alternative under the plan covered by ERISA, (2) the alternative is subject to fiduciary oversight by a plan fiduciary independent of the person who developed or marketed the alternative or distribution option, (3) the asset allocation model and interactive materials identify all the other designated investment alternatives that have similar risk and return characteristics and (4) the models and materials are accompanied by a statement that identifies where information on those investment alternatives may be obtained.

19 The 2015 proposal referred to these exceptions as "carve-outs" but the rule drops this term.

20 A fiduciary that does not meet these qualifications is a "retail fiduciary" for purposes of the BIC Exemption. (See fn. 23, below.)

21 As defined in § 1a of the Commodity Exchange Act and § 3(a) of the Securities Exchange Act of 1934 (the "1934 Act"). 

22 The BIC Exemption is only available to advisers that became fiduciaries by providing "investment advice for a fee," work for a financial institution and satisfied the federal and state regulatory and licensing requirements of insurance, banking and securities laws with respect to the covered transaction. A financial institution is defined in the BIC Exemption as any entity that is (1) registered as an investment adviser under the Investment Advisers Act, (2) a bank, similar financial institution or savings association, (3) an insurance company that meets certain qualifications, (4) a broker or dealer registered under the 1934 Act or (5) any entity that the DOL determines is a financial institution in a future exemption.

23 For purposes of the BIC Exemption, a retail retirement client is referred to as a "retirement investor." A "retirement investor" is (1) a participant or beneficiary of a plan subject to Title I of ERISA or described in § 4975(e)(1)(A) of the Code with authority to direct the investment of assets in his or her plan or take a distribution, (2) the beneficial owner of an IRA acting on behalf of the IRA or (3) a fiduciary of a plan that is a "retail fiduciary" (as defined in fn. 20, above). 

24 Under the 2015 proposal, only the following assets were covered by the BIC Exemption: bank deposits, certificates of deposit, shares or interests in registered investment companies, bank collective funds, insurance company separate accounts, exchange-traded REITs, exchange-traded funds, corporate bonds offered pursuant to a registration statement under the Securities Act of 1933, agency debt securities, US Treasury securities, insurance and annuity contracts, guaranteed investment contracts and exchange-traded equity securities.   

To view the full document please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.