Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser (“RIA”) compliance and regulatory issues. This week’s recap focuses on the significant announcement that the implementation of the Department of Labor (“DOL”) fiduciary rule has been potenetially delayed and there is a new nominee for DOL Secretary of Labor. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of February 11, 2017:
- Move to delay implementation threatens DOL fiduciary rule (Author- Mark Schoeff Jr., Investment News)
As reported by Mark Schoeff of Investment News, “the DOL submitted a rule to stall the regulation to the Office of Management and Budget (“OMB”) on February 9, 2016. The proposal will not become public until the DOL releases it after OMB’s review.” According to Barbara Roper, director of investor protection at the Consumer Federation of America, “the only reason to repeal the rule at this point is to give a multi-billion dollar handout to the industry paid for by working Americans and retirees. That is the exact opposite of what President Trump promised to do when he was on the campaign trail.” Many are anticipating that the DOL will pursue a 180-day delay in the April 10 applicability date. Stay tuned.
- Trump Nominates Acosta as Labor Secretary (Author- Melanie Waddell, ThinkAdvisor)
After Andrew Puzder withdrew his nomination for Labor secretary on Wednesday, President Donald Trump wasted no time in naming R. Alexander Acosta on Thursday as his new nominee for Labor secretary. As reported by Melanie Waddell of ThinkAdvisor, “Acosta is the only son of Cuban immigrants, is law dean at the public Florida International University in Miami as well as a veteran Republic administrator, serving as assistant attorney general for civil rights and U.S. attorney in Miami.” Acosta has previously served in three appointed and Senate-confirmed positions. While there are some potential past issues which could stall confirmation, Acosta is considered by many to be a “safe choice” by the administration. Acosta has not publicly commented on the DOL fiduciary rule but it is suspected he will attempt to delay and alter or repeal the rule.
- Wall Street Should Put All Clients First (Author- Barry Ritholtz, BloombergView)
As reported by Barry Ritholtz of BloombergView, President Donald Trump has showed his stance on removing the fiduciary rule by asking the Department of Labor to go through a 180-day review. Ritholtz opines that, “if there is an actual shortcoming to the rule, it is this: The fiduciary rule shouldn’t apply just to retirement accounts; it should apply to all investment accounts, no matter the size and type.” While he is skeptical that the Trump administration will reach the same conclusion, Ritholtz believes a “uniform fiduciary rule” introduced by the Securities and Exchange Commission (“SEC”) would make sense especially considering that many brokerage firms have already spent millions of dollars preparing to implement the DOL fiduciary rule.
- Harold Evensky: How Trump Could Weaken the Fiduciary Standard (Author- Jane Wollman Rusoff, ThinkAdvisor)
Jane Wollman Rusoff’s of ThinkAdvisor recently interviewed Harold Evensky, dubbed the “Dean of Financial Planning.” Evensky believes, “President Donald Trump’s directive to review the Labor Department’s fiduciary standard rule won’t halt the industry’s evolution into a sweeping fiduciary landscape, while firms failing to adapt will suffer from a weakened marketing position.” Rusoff covers the following topics with Evensky: 1) how delaying the DOL fiduciary rule might impact firms 2) In what way might the department weaken the rule and 3) how most consumers don’t know the difference between the various standards.
- Where Puzder’s exit leaves the fiduciary rule, the DOL’s bastardized mission and whether the new appointee prospect is a patsy (Author- Lisa Shidler, RIABiz)
The announcement of Alexander Acosta for the Department of Labor Secretary position may require the fiduciary rule to “continue on life support for the foreseeable future.” Critics are not able to confirm how Acosta can help the process, but they are certain that whoever does take the position will need “political leadership” to get the process moving. Ultimately, the nominee for assistant secretary of the Employee Benefits Security Administration will be the person to enforce, delay, or dismantle the rule. The present assumption is that the administration will nominate another business-oriented person to fill the role.
Don’t forget to check out last week’s top RIA compliance news articles focusing on the potential delay of the DOL fiduciary rule. Be sure to check back next Friday for next week’s top articles!