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www.sifma.org | www.investedinamerica.org 

February 9, 2011 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Attn: Fiduciary Definition Hearing 

Room N-5655 

U.S. Department of Labor 

200 Constitution Avenue, NW 

Washington, DC 20210 

To Whom It May Concern: 

We respectfully request an opportunity for Ken Bentsen, Executive Vice President, Public 

Policy and Advocacy, to testify on SIFMA’s behalf at the Department’s March 1-2, 2011 

hearing. 

Mr. Bentsen’s testimony will cover the following points: 

• The ability of millions of Americans to save for retirement will be adversely 

impacted. Financial institutions will not be able to deliver critical 

investment tools, information and services, or will only be willing to do so 

at an added cost to IRA account holders and retirement plan participants. 

• Costs exceed benefits. We believe that the reasons given by the 

Department for proposing the regulatory change pale when compared to 

the costs of the proposal. 

• More limited choices. . Limited availability and decreased competition 

will result in higher costs and spreads and adversely impact market 

efficiency. Service providers and counterparties that choose to continue 

to provide services to, and trade with, plans and IRAs will incur a 

multitude of new costs, much of which will be passed on to clients. 

• Investment options will be curtailed. Plans will be prohibited from 

engaging in swaps, restricted in their use of custody, lending, cash 

management, and futures strategies, and limited in their access to 

alternatives. 

• Higher costs for participant investment education. Under the proposed 

regulation, the risk of failing to meet the participant education bulletin 

has enormous consequences, because a small discrepancy will almost 

certainly cause the service provider to be treated as a fiduciary under the 

“may consider” test. 

• Creates significant uncertainty. The proposed regulation replaces the 

clarity of the current regulation with vague and ambiguous definitions 

which do not permit service providers to know whether, in hindsight, they 

will be considered fiduciaries and who will be claiming to have 

“considered” their advice. 
• Inconsistent with Congressional intent. Section 913 of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) 

required the SEC to conduct a study on the appropriate standard of care 

for retail accounts and, if necessary, issue regulations implementing a 

uniform standard of care for investment advisers and broker-dealers, 

without requiring changes in the fees and commissions charged these 

accounts. 

• Disrupts capital markets. Trading counterparties will be severely limited 

because dealers will not know whether their affiliates will be deemed 

fiduciaries. All of the exemptions for principal transactions prohibit 

transactions with anyone who is a fiduciary with respect to the assets 

involved in the transaction. The proposed regulation will make it 

impossible to determine whether market-makers are fiduciaries with 

respect to those assets because it requires no relationship with the plan 

and no mutual understanding between the parties. In addition, a futures 

commission merchant may not be able to provide services to plans and 

IRAs if it is a fiduciary with respect to the assets involved in the 

transaction. 

• Turns ministerial custodial valuations or pricing services into fiduciary acts. 

Custodians will prohibit plans and IRAs from holding assets which cannot 

be valued through a third party pricing service and such pricing services 

may be deemed fiduciaries even with respect to plans and IRAs with 

respect to which they have no relationship. Custodians may be prohibited 

from hiring third party appraisers to take on the fiduciary duty because of 

the substantial expense of doing so, or because the securities laws do not 

permit delegation to a third party. 

• Adversely affects the economy. At a time when the economy is making at 

best a fragile and halting recovery, the adverse effects on the capital 

markets will be significant and capital currently invested by plans and 

IRAs in real estate and private equity will be reduced. 

Sincerely, 

Lisa J. Bleier 

Managing Director, Government Affairs 

Securities Industry and Financial Markets Association