Church Alliance Submits Comment Letter to SEC on Section 956 Proposed Rule (July 22, 2016)
On July 22, the Church Alliance submitted a comment letter to the SEC on a Dodd-Frank-related proposal. By way of background, Section 956 of the Dodd-Frank Act requires that the banking regulators, SEC, and CFTC, prohibit certain incentive-based compensation arrangements that they determine encourage too much risk-taking by a covered financial institution, including investment advisers as defined in Sec. 202(a)(11) of the Investment Advisers Act of 1940 (“Advisers Act”). The Church Alliance is concerned that entities that are typically exempt from most provisions of the Advisers Act – such as church plans – could end up being subject to Section 956 of the Dodd-Frank Act, and thereby subject to new compensation disclosure/reporting requirements.
The proposed rule would apply to advisers who average total consolidated assets of at least $1 billion not including any non-proprietary assets. While there appears to be only a relatively small risk of church plans being subject to the rule, the Church Alliance feels it is prudent to submit the comment letter urging an express exemption for church plans.