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."

0
Comments

What do you think?

View comments

Recommended for you

Upcoming Event

May 30

Conference

Adviser Compensation & Staffing Workshop

The InvestmentNews Research team will present exclusive data and highlights from its bellwether benchmarking study that will identify best practices for setting and structuring compensation and benefits packages throughout your... Learn more

Featured video

INTV

Behind the scenes of InvestmentNews' Best Places to Work

Benefits and vacation policies are important for hiring top talent, but giving employees a sense of ownership in decision-making is among the most important qualities, editor Fred Gabriel says.

Latest news & opinion

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.

States trying to save DOL fiduciary rule appeal rejection of effort to intervene

California, New York, Oregon ask for rehearing by full 5th Circuit Court of Appeals.

Employees at best places to work focus on the person — and the fun

Employees at best places to work firms focus on the person and fun.

Waddell & Reed sees flurry of senior staff departures

Firm also experiences an almost 30% decline in number of brokers and advisers.

X

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 investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

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

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print