Department of Labor Set to Eliminate the Fiduciary Rule

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On March 2, 2017, the DOL proposed to extend the applicability date of the Department of Labor (“DOL”) Conflict of Interest Rule (the “Fiduciary Rule”) from April 10, 2017 for 60 days.[1]  The proposal states that the extension will make it possible for the DOL to take additional steps (e.g., propose rescission of the Fiduciary Rule) without the Fiduciary Rule becoming applicable.[2]  The DOL states that this approach is being taken so that “advisers, investors and other stakeholders would be spared the risk and expense of facing two major changes in regulatory environment.”[3]  This delay follows the Presidential Memorandum, sent by President Trump on February 3, 2017, that directed the DOL to examine whether the Fiduciary Rule would “adversely affect the ability of Americans to gain access to retirement information and financial advice.”[4]  Considering the language contained in the Presidential Memorandum and the text of DOL’s release, we do not believe the Fiduciary Rule is long for this world.

[1] Department of Labor,  Conflict of Interest Rule – Retirement Investment Advice; Proposed Rule; Extension of Applicability Date (March 1, 2017), available at https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/completed-rulemaking/1210-AB32-2.

[2] Id.

[3] Id.

[4] Id.  The DOL was instructed to consider the following three questions in the course of its examination:  (1) whether the anticipated applicability of the final rule has harmed or is likely to harm investors due to a reduction of Americans’ access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice; (2) whether the anticipated applicability of the final rule has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees; and (3) whether the final rule is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.  President Trump directed that if the DOL makes an affirmative determination as to any of the three inquiries or otherwise finds the Fiduciary Rule is incompatible with President Trump’s desire “to empower Americans to make their own financial decisions,” then the DOL is to publish for notice and comment rulemaking a proposal to revise or rescind the Fiduciary Rule.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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