SEC Division of Investment Management staff letter: U.S. Department of Labor

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
DIVISION OF

INVESTMENT MANAGEMENT
PUUC
Februar 22, 1996

AD Il1i/f'51/"f'1 f AJvts.fs AcT
The Honorable Olena Berg sæow i-02-CQ) (11 ) Assistat Secreta RUL Pension and Welfare Benefits Administration United States Deparment of Labor PULI-Q /.. / 200 Constitution Avenue, N. W. "y£u..UlT.1 J- /'J 'i/ r 6 Washington, D.C. 20210 Dea Ms. Berg:
I am writing in response to your request for additional advice with respect to the status under the Investment Advisers Act of 1940 ("Advisers Act") of employer-sponsors of defined contribution plans that provide investment-related information to their employees who are paricipants in those plans. In our letter to you dated December 5, 1995, which was subsequently cited by the Department of Labor in a draft Interpretive Bulletin dated December 8, 1995, we stated that an employer that provides investment-related information to its employees who participate in the employer's plan would not, as a result, be in the business of providing investment advice and therefore would not be an "investment adviser" as defined in the Advisers Act. Such an employer would not be required to register or be subject to regulation under the Advisers Act. We understand that commenters on the draft Interpretive Bulletin raised two issues relating to our position. The first question is whether our position covers only employers that provide the specific types of information decribed in the draft Interpretive Bulletin. Our position is not limited in this respect; it applies regardless of the type of investment-related information provided.

The second question is whether the position stated in the December 5th letter is intended to address the status under the Advisers Act of a person other than an employer who provides investment-related information to plans or plan paricipants. As noted in the

letter, our position is based on the unique nature of the employment relationship. Consequently, our position is not intended to address whether a third-pary service provider meets the definition of investment adviser under the Advisers Act. Whether such a person meets the definition of investment adviser continues to depend on the application of all the factors set out in Section 202(a)(1l), including the type of information provided.! We note, however, that as a general matter, information that simply describes or explains the varous investment options available through a plan, without including any analysis or recommendation with respect to those options, would not constitute "investment advice" as that term is used in the Advisers Act. 1 Investment Advisers Act Release No. 1092 (October 8, 1987) provides the staff's views regarding the scope of Section 202(a)(1 1) and thus should assist in determining whether such a third-party service provider is an investment adviser.

We hope this information has been helpfuL. Any questions relating to the status under the Advisers Act of a paricular person should be addressed to this Office. Sincer~ly, I,' ~'w.lii~

~Jk w. Murphy Î Associate Director
(Chief Counsel)

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