Posts in Fiduciary Rule.

The issue over the Fiduciary Rule, and whether it will be implemented, revised, vacated, forgotten, etc. has been ongoing. In March 2018, the Fifth Circuit Court of Appeals ruled in favor of several business groups who challenged the Fiduciary Rule. See (

Specifically, the business groups challenged the Rule on multiple grounds, including:

(a) the Rule's inconsistency with the governing statutes,

(b) DOL's overreaching to regulate services and providers beyond its authority,

(c) DOL's imposition of ...

It was the Ides of March for the Obama Administration's "fiduciary duty rule" that sought to remake much of nation's financial markets by back-door regulation of anyone dealing with IRA investors. The US Fifth Circuit vacated the regulation entirely in a stinging rebuke by Judges Edith Jones and Joy Clement; Chief Judge Carl Stewart dissented.

The Court held that the "novel assertion of DOL's power," Op. at 7, "fundamentally transforms over fifty years of settled and hitherto legal practices in a large swath of the financial services and insurance industries…." Op. at 3.

"The ...

Posted in: Fiduciary Rule

The Department of Labor has received OMB certification, and sought expedited notice-and-comment, for a rule change that would postpone the full implementation deadline for its Fiduciary Rule from January 1, 2018 until July 1, 2019.

The DOL's Fiduciary Rule became effective June 9, but its transition-period deadline for full implementation of the Best Interest Contract and other requirements was set for January 1, 2018.

This week, the agency published, for quick comment, a proposed rule change extending that full-implementation through July 1, 2019. DOL says it needs the ...

On June 1, new SEC Chair Clayton returned the SEC to the arena in the policy debate surrounding the DOL's Fiduciary Rule. Clayton's public statement responded to a direct invitation for SEC participation by DOL Secretary Acosta in his Wall St. Journal op-ed last week. Acosta used the article to announce there would be no further delay in the DOL Rule, despite continuing study.

In a masterful understatement without apparent irony, the Chair noted: "The SEC has been reviewing this area for some time, including through the RAND study of investor perspectives commissioned in 2006, the ...

Posted in: Fiduciary Rule

Last week Labor Secretary Acosta chose a Wall Street Journal op-ed to announce DOL's decision not to delay the "fiduciary rule" past the once-extended June 9 effective date. See A. Acosta, Deregulators Must Follow the Law, so Regulators Will Too¸ Wall St. J. at A19 (May 23, 2017); our blog, here: blogs/securities-litigation/2017/05/25/dol-wont-delay-fiduciary-rule-past-june-9/

This week, opponents answered, with the lead counsel for the industry's litigation challenge summarizing those arguments on the same op-ed page. See E. Scalia, Godzilla (the Fiduciary Rule) Ate ...

Posted in: Fiduciary Rule

Finally, there's voice of reason entering the policy harangue over the Department of Labor's Fiduciary Rule ... even if it's coming through an unusual outlet. In a May 23 Wall Street Journal opinion piece, new Labor Secretary Acosta announced that DOL won't further delay the implementation of DOL's Fiduciary Rule past June 9.

To recap the bidding:

Tired of foot-dragging by the SEC and Wall Street on adopting an industry-wide fiduciary standard (notwithstanding everyone's agreement in principle), the Obama administration spent over 6 years forging ahead through the Department of ...

Posted in: Fiduciary Rule

The Department of Labor fiduciary rule was supposed to be implemented on April 10, 2017. That date was pushed back to June 9 so that it could be reassessed, and possibly modified or even repealed. The rule as it stands would require financial advisors to act in the best interests of their clients in retirement accounts. If the rule is repealed, what does that mean for the standard and the industry?

FINRA chairman John Brennan recently explained that even if the DOL fiduciary rule is repealed, "it has elevated and put into plain language the idea of providing investment advice that's better ...

Posted in: Fiduciary Rule

The Department of Labor yesterday adopted a rule delaying the April 10 effective date of its "Fiduciary Rule" for 60 days. The delay gives Labor time to complete the re-study mandated by Trump's February executive order.

DOL could only delay the Rule through a formal rule making process. It did so, even though public comments ran 12:1 against delay. It will need further formal rule making for any other changes.

Thomas K. Potter, III ( is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Tom is licensed in Tennessee, Texas and Louisiana. He has ...

Posted in: Fiduciary Rule

The IRS released guidance this week announcing that it will not apply IRC § 4975 excise taxes (15% on prohibited transactions) and related reporting requirements "with respect to any transaction or agreement to which the DOL's temporary enforcement policy, or other subsequent related enforcement guidance, would apply."

On March 13, DOL issued its Field Assistance Bulletin saying it would forbear enforcement of the Fiduciary Duty Rule if Labor hasn't finished its review by the April 10 effective date. The review (and potential delay in implementation) of the Rule was ordered by an ...

Posted in: Fiduciary Rule

The Department of Labor's "fiduciary duty" Rule continues to get more bollixed up. DOL announced a temporary enforcement policy that will give a "free pass" for any violations (a) in the gap between effective date and delay, or (b) tardy good-faith compliance if there's no delay.

The Rule becomes effective on April 10, requiring among others a fiduciary acknowledgement (even though full BIC contract compliance won't be required until January 1, 2018). DOL published a proposed delay for 15-day comment on March 2, with a broader "merits" comment period extending thereafter. If ...

Posted in: Fiduciary Rule

The US Department of Labor today proposed a 60-day extension (through June 9) for the effective date of its Fiduciary Duty Rule and related exemptions.

The extension would give DOL some time to complete the re-analyses directed in the President's February 3 Memo. The Memo directs DOL to examine whether the Rule "may adversely affect access to retirement advice and requires an updated economic and legal impact analysis. We discussed that Memo here: 2017/02/09/dol-fiduciary-rule-still-april-10-implementation/

The Department will collect public comment on the proposed ...

In 2016, the U.S. Department of Labor (DOL) issued its final rule expanding the "investment advice fiduciary" definition under ERISA and modified the complex of prohibited transaction exemptions for investment activities as a result of the expanded definition. The new rule is scheduled to be implemented starting on April 10, 2017.

There are many opponents to the new rule, who argue that it is one of the most costly, burdensome regulations to be implemented. Joe Wilson, a Republican Congressman from South Carolina, has recently introduced the Protecting American Families ...

Last week, industry groups filed two suits seeking to block the Labor Department's new fiduciary rule governing IRA and other retirement-fund investment recommendations.

In the first, the U.S. and several local Texas Chambers of Commerce and the Securities & Financial Markets Association filed suit in Dallas (in the conservative Fifth Circuit). The suit calls the rule-making a usurpation of SEC authority (and Dodd-Frank's specific authorization of the SEC to promulgate uniform fiduciary standard) that deliberately adopts an unworkable rule, then conditions exemptions from ...

Congress voted this week to de-rail the Department of Labor's sweeping fiduciary-duty suite of rule-making, but doesn't have the votes to override the President's threatened veto. The Rule (over a 1,000 pages in all) imposes a sweeping definition of who owes fiduciary duties to retirement investors in retail IRA, HSA, Roth, Coverdell and other "qualified money" situations and prohibits conflicted transactions (including differential compensation), unless they comply with a series of exceptions, carve-outs and exemptions. Industry groups say the compliance and paperwork ...

Posted in: Fiduciary Rule
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