SIFMA wants a 'time out,' seeking longer delay of DOL fiduciary rule

Meanwhile, the Consumer Federation of America complains that the Trump administration has prematurely made up its mind to repeal or replace the fiduciary measure

Apr 17, 2017 @ 5:05 pm

By Mark Schoeff Jr.

The biggest brokerage industry trade association is calling for a longer delay of the Labor Department's fiduciary rule, while a consumer group concludes that that the Trump administration has already decided to revise or repeal the rule.

In a Feb. 3 memo, President Donald J. Trump told the DOL to update the economic and legal analysis of the rule — which would require financial advisers to act in the best interests of their clients in retirement accounts — and revise or repeal the regulation if it is found to reduce investors' access to retirement advice, increase their costs, disrupt the financial industry or cause an increase in litigation for financial firms.

Monday marked the deadline for comment letters regarding the topics raised in Mr. Trump's memo.

In its comment letter, the Securities Industry and Financial Markets Association urges an additional delay beyond the 60 days the regulation was already pushed back — from April 10 to June 9 — by the agency on April 7.

"In order to comprehensively and effectively address the key questions in the president's memo, there needs to be additional time," Ira Hammerman, SIFMA executive vice president and general counsel, said in an interview.

He did not say how long a delay SIFMA is seeking. But the letter does outline a way for Mr. Trump's nominee as labor secretary, Alexander Acosta, to extend the delay under rulemaking parameters.

"We need to call a timeout. There is no magic number," Mr. Hammerman said. "It's going to take time."

The Consumer Federation of America said that the review is politically motivated and signaled it might challenge the Trump administration in court.

"[A]lthough we still hope to be proven wrong, the weight of the evidence leads us to conclude that the department has already predetermined the outcome of this reconsideration and expects to revise or replace the rule, regardless of what the reconsideration indicates about the effectiveness and workability of the rule," wrote Barbara Roper, CFA director of investor protection, and Micah Hauptman, CFA financial services counsel, wrote in their April 17 comment letter. "If true, that would be a gross abuse of process and would subject the department to claims that it acted in an arbitrary and capricious manner."

The CFA said that the integrity of the rule, which the Obama administration said is needed to protect investors from conflicted advice that reduces savings, has been upheld in numerous court challenges.

"[T]here is strong reason to believe that the real motivation [of the review] is to grant concessions to powerful special interest groups — either an outright repeal of the rule or a fatal weakening of provisions that the department previously determined were essential to effectiveness — concessions that they failed to win in court, in Congress or from the previous administration," Ms. Roper and Mr. Hauptman wrote.

The one saving grace of the delay is that after it concludes on June 9, two major provisions of the rule — expanding the definition of who is a fiduciary to retirement accounts and implementing impartial conduct standards — will go into effect, they wrote.

Mr. Hammerman attributed that twist in the delay rule to DOL "career staff" operating without direction from political appointees, such as Mr. Acosta.

"They are prejudging the conclusion [of the review], and they've said that very key elements of the rule would [become applicable] as of June 9 without further consideration or analysis," Mr. Hammerman said. "That's flouting the clear directive in the Feb. 3 presidential memo."


What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Apr 30


Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video


Top questions surrounding future of DOL fiduciary rule

Reporter Greg Iacurci and managing editor Christina Nelson discuss the biggest uncertainties springing from the Fifth Circuit Court of Appeals' decision to vacate the regulation.

Latest news & opinion

What the next market downturn means for small RIAs

Firms that have enjoyed AUM growth because of the runup in stocks may find it hard to adjust to declining revenues if the market suffers a major correction.

DOL fiduciary rule likely to live on despite appeals court loss

Future developments will hinge on whether the Labor Department continues the fight to remake the regulation its own way.

DOL fiduciary rule: Industry reacts to Fifth Circuit ruling

Groups on both sides of the fiduciary debate had plenty to say.

Fifth Circuit Court of Appeals vacates DOL fiduciary rule

In split decision, judges say agency exceeded authority.

UBS, after dumping the broker protocol, continues to see brokers come and go

The wirehouse has seen 14 individuals or teams leave and five join for a net loss of $2.4 billion in AUM


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print