DOL fiduciary delay final rule expected to be released Wednesday
Agency pushes back implementation date just before April 10 deadline
By Mark Schoeff – InvestmentNews – April 4, 2017
It looks as if the implementation delay for the Department of Labor’s fiduciary rule will be approved just under the wire.
In a letter filed with the Fifth Circuit Court of Appeals on Monday for a lawsuit against the rule, the Department of Justice indicated that the DOL is pushing for release of the final delay rule on Wednesday. The measure is under review at the Office of Management and Budget.
“The Department [of Labor] has requested that the rule be made publicly available the morning of Wednesday, April 5, and that the rule be published in the Federal Registered no later than April 7,” Michael Shih, a DOJ lawyer, wrote in an April 3 letter to the appeals court clerk, Lyle Cayce
The delay, which would push back the fiduciary-rule implementation date from April 10 to June 9, is expected to go into effect immediately upon publication in the Federal Register.
The DOL is seeking the delay in order to reassess the rule as called for in a Feb. 3 directive from President Donald Trump, who told the agency to modify or repeal the regulation if it was projected to deny investors access to investment advice or cause an increase in litigation for firms.
Those are two of the arguments that the financial-industry plaintiffs have cited in seeking a preliminary injunction against the rule, which opponents say is too complex and costly. Their motion was denied at the district level in Dallas, and they have appealed to the Fifth Circuit. The industry plaintiffs also lost on summary judgment at the district level in Dallas and have appealed that decision.
The DOL opposes a preliminary injunction, saying it is superfluous given the pending review of the fiduciary rule.
“[T]he balance of equities weighs decisively against interrupting the agency’s administrative process to vindicate the preferences of these disappointed litigants,” the DOJ, on behalf of the DOL, wrote in response to the motion for a preliminary injunction. The plaintiffs asked the court to rule on the injunction appeal by Tuesday, April 4.
Proponents of the rule, which would require financial advisers to act in the best interests of their clients in retirement accounts, say the measure is needed to protect investors from conflicted advice that leads to the sales of inappropriate, high-fee investments that erode savings.