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If You Didn’t Already Get It Done: Don’t Forget About the Initial Department of Labor Retrospective Review

By Robert R. Boeche, Partner; Robert D. Conca, Partner; and Andrew Steiger, Associate of Shustak Reynolds & Partners, P.C. posted on Wednesday, July 12, 2023.

As described in our prior article on the Requirements of New Prohibited Transaction Exemption PTE 2020-02, on December 18, 2020, the U.S. Department of Labor’s Prohibited Transaction Exemption 2020-02 (the “Exemption”) became effective. Among other things, this rule requires advisers relying upon this exemption to perform an annual Retrospective Review (the “Review”). The Exemption requires that the Review be reasonably designed to: (1) detect and prevent violations of the Impartial Conduct Standards, and (2) achieve internal compliance with the Policies & Procedures enacting those Impartial Conduct Standards. The Review consists broadly of two components, the methodology and the results, which are to be memorialized as part of a written report.

The Retrospective Review, report, and certification must be completed at least annually and no later than six months following the end of the period covered by the Review. A Review covering calendar year 2022 should have been completed on or before July 1, 2023.

Questions that should be asked and analyzed as part of the Review include, but are not limited to:

  • Was any compensation collected under the Exemption for discretionary fiduciary investment arrangements?
  • Has the firm, to date, provided sufficient training to enable each of its investment professionals to comply with the requirements of the Exemption, including: (i) Impartial Conduct Standards, (ii) disclosures, (iii) policy and procedures, and (iv) retrospective review?
  • Have any rollovers been recommended or transacted without first completing a rollover recommendation form to document and disclose the reasons for the recommendation?
  • Did retirement investors acknowledge receipt of the standard material conflicts disclosure form?
  • What fees and costs does the firm charge investors for rollover transactions, on an ongoing basis, etc.?

If you need help conducting and/or documenting your Retrospective Review, determining how your firm can become eligible to use PTE 2020-02, or analyzing and responding to a possible violation, please contact us.

Shustak Reynolds & Partners, P.C.’s experienced California FINRA, securities and financial services lawyers are well versed in the financial services industry.
We routinely represent brokerage firms, registered representatives and registered investment advisory firms (RIAs).  
Attorneys Robert R. Boeche & Robert D. Conca can be reached at (619) 696-9500.



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