DOL 408(b)2 Fee Disclosure ‘Guide’ Lands at OMB

Reish says that he and his colleagues at Drinker Biddle have heard that, "based on the DOL's review of 408(b)(2) disclosures, the Department has concluded that plan fiduciaries may, in some cases, have difficulty understanding the required disclosures because of the lengthy, technical and/or multiple disclosure documents that are being distributed."

As a result, he says, "we believe that the proposed regulation may require a guide (or table of contents) for the 408(b)(2) disclosures."

The Sample Guide provided for the disclosure of information at a detailed level. For example, Reish explains, "the Guide had references to page and section numbers in specific documents, and under indirect compensation, the Guide provided a number of categories, including one entitled 'Compensation ABC will receive from other parties that are not related to ABC' ('indirect compensation')."

If the DOL's proposed regulation is similar to the Guide, Reish continiues, and "if, for example, a broker-dealer makes disclosures by delivery of prospectuses, that would require references to each of the mutual fund prospectuses, together with the section and page numbers where the description of 12b-1 fees and other compensation appear."

Most covered service providers, Reish says, "are not providing disclosures that are that detailed or specific," which means that "this could be a big change, which could result in additional administrative work and expense."