Proposed Limits on Big Banks’ Retirement Plan Roles Draw Critics

A US regulator is finishing a rule as early as next month that’s meant to clear up misunderstanding about whether foreign convictions can disqualify banks from managing retirement assets, drawing complaints that the new standard could upend how plans rely on financial servicers in the future.

The proposed rule, first introduced in July, would expand disqualifying foreign and domestic misconduct, and allow the US Labor Department’s Employee Benefits Security Administration to closely monitor which companies are relying on legal exemptions and why.

The proposal would set higher net-worth and assets-under-management standards, force out entities unrelated to potential transactions, and ...