Supporters and opponents of a Labor Department investment-advice rule continue to sit on the edge of their chairs waiting for the newly minted Trump administration to address the regulation — a move that could be related to several lawsuits under way in courts across the country.
Last Friday, White House
chief of staff Reince Preibus issued a memo to acting agency heads telling them to delay rules that haven't been finalized or were recently finalized.
That routine action by a new administration did not apply to the DOL regulation because it became effective last June. The initial implementation date of the measure, which would require financial advisers to act in the best interests of their clients in retirement accounts, is April 10.
But the DOL rule is not out of the woods and could be the subject of a separate directive.
“We don't know anything for sure,” said a Washington-based industry representative. “It could come as early as this week.”
Here are the potential scenarios, according to a couple participants in the debate over the rule.
“It could be a proposed delay subject to notice and comment, similar to 2009, when the Obama administration delayed and eventually withdrew” a Bush administration fiduciary rule, the industry representative said.
Another tactic that is the subject of wide speculation is that the Trump administration would take advantage of the legal actions that have been taken against the rule. The administration could delay implementation of the rule for several months while the courts work through the legal process. This approach has the advantage of not requiring a notice and comment period — nor is it dependent upon a judge's decision.
“They have the power to do it independent of the courts,” the industry representative said.
The Trump administration also could drop the defense of the rule that was being carried out by the Obama administration's Department of Justice.
Proponents of the rule are preparing to respond to whichever route the Trump administration takes in the context of the court deliberations.
“We're still researching what the implications of that approach would be,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “How they went about it would be relevant to questions of its legality.”
No matter what the Trump administration decides to do, there will be an industry celebration and an equally strong pushback from supporters of the rule. The fiduciary fight will rage on.
