DoL Rule—Partial Implementation on June 9; DoL to Seek Additional Comments

May 23, 2017

In a Wall Street Journal op-ed piece on May 22, 2017, the U.S. Secretary of Labor stated his view that the DoL Rule will continue to roll forward to its two implementation dates, June 9, 2017 and Jan. 1, 2018.  In making the announcement, Secretary Alexander Acosta noted, "The Labor Department has concluded that it is necessary to seek additional public input on the entire Fiduciary Rule, and we will do so. We recognize that the rule goes into partial effect on June 9, with full implementation on Jan. 1, 2018. Some have called for a complete delay of the rule."

He continues, "We have carefully considered the record in this case, and the requirements of the Administrative Procedure Act, and have found no principled legal basis to change the June 9 date while we seek public input. Respect for the rule of law leads us to the conclusion that this date cannot be postponed. Trust in Americans’ ability to decide what is best for them and their families leads us to the conclusion that we should seek public comment on how to revise this rule. Under the Obama administration, the Securities and Exchange Commission declined to move forward in rule-making. Yet the SEC has critical expertise in this area. I hope in this administration the SEC will be a full participant."

He also noted that the DoL will seek further public input on the rule while moving toward full implementation. 

The Dept. of Labor also published a Field Assistance Bulletin announcing its approach.  Importantly the DoL noted that its emphasis at this point is to assist advisers, brokers and others with smooth implementation of the rule:  "The Department has repeatedly said that its general approach to implementation will be marked by an emphasis on assisting (rather than citing violations and imposing penalties on) plans, plan fiduciaries, financial institutions, and others who are working diligently and in good faith to understand and come into compliance with the fiduciary duty rule and exemptions. Consistent with that approach, the Department has determined that temporary enforcement relief is appropriate and in the interest of plans, plan fiduciaries, plan participants and beneficiaries, IRAs, and IRA owners."

Practical Implications:  If an adviser hasn't taken action to comply with the rule in their operations, then it's really almost too late to do so before the June deadline.  Take action immediately, as it appears that further delays or termination of the rule are less likely now.

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Posted:  May 23, 2017   By:  Karl Hartmann