“For example, the term ‘investment loss” probably doesn’t refer to normal market fluctuations for well-selected and reasonably priced investments," he said. "But it likely does include increased fees and costs, e.g., higher expenses in a rollover IRA than in the retirement plan. But, in that case, the higher expenses continue year after year, perhaps for decades. Would the correction include calculating the ongoing effect of the higher expenses? Decisions need to be made in order to correct, but guidance is lacking."
Self-correction must occur no later than 90 days after the firm learned of the violation or reasonably should have learned of the violation, the DOL has said.
“The key to satisfying this condition is close supervision of conflicted recommendations to retirement investors,” Reish said. “The best outcome would be if the failures were discovered, through supervision, almost immediately after they occurred. For one thing, that makes the corrections much easier. For another, it would likely be better received by the DOL than a violation that wasn’t discovered until the retrospective review was performed months or even a year later.”
The DOL requires that firms notify the agency within 30 days of a correction.
“Unfortunately, in most cases it appears that the failures, for instance the failure to provide fiduciary acknowledgements to clients, will be systemic," he said. This could lead to situations where firms "need to notify the DOL about a large number of failures, possibly on a continuing basis."