Displaying items by tag: fiduciary rule

(Washington)

Advisors have recently been feeling relieved about the fifth circuit court ruling that struck down the DOL’s version of the fiduciary rule. However, it may not be time to jump for joy yet. The fifth circuit is supposed to issue a mandate which vacates the rule, which takes it out of force. It is unclear why the fifth circuit court has not done so yet, but it is starting to make the industry nervous.

FINSUM: Most say the court simply has not gotten around to issuing the mandate yet, but that seems odd given it has been two months since the verdict. The next date to watch is May 16th, as that is the deadline for states and other entities to apply for appeals to the ruling.

(Washington)

The saga of the fiduciary rule seems to be never ending. Odysseas had an easier time. Now, just when things were starting to look clear—the DOL rule is effectively gone and the SEC has proposed a new one—everything is murky again. A senior figure, Michael Piwowar, at the SEC has just resigned. According to InvestmentNews, “Mr. Piwowar’s departure could significantly delay a rulemaking that already was projected to last for months — or make it impossible to complete”. Piwowar was a major ally of SEC chief Clayton, and now there are an equal number of Democrats to Republicans on the SEC commission. Trump could try to replace Piwowar and Democrat Kara Stein (whose term has lapsed) all at once, but the Senate would need to fast track approval.

FINSUM: Even if everything gets fast-tracked by Trump, the Senate needs to get the approval done, and that very well may not happen soon, especially because the Democrats might take the Senate back.

(Washington)

One of the senior-most figures at the SEC, Michael Piwowar, who has been a commissioner for five years, has just announced he will step down from his post after July 7th. The resignation has massive implications for advisors because Piwowar has been a strong opponent of the DOL version of the fiduciary rule and has generally been very pro de-regulation. His stepping down will leave just four commissioners active, two of whom are Democrats. This means the new SEC version of the fiduciary rule, universally seen as more accommodating to the industry, might have some severe difficulties in getting approved, as the Democrats are likely to vote against its implementation.

FINSUM: So in order to alleviate this risk, the White House and Senate would need to move quickly to nominate and approve a new commissioner/s. Nonetheless, this remains a major risk.

(Washington)

The DOL made an announcement yesterday, telling the industry that it would temporarily suspend enforcement action of various parts of its fiduciary rule. The department said it “will not pursue prohibited transactions claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have been exempted in the BIC Exemption and Principal Transactions Exemption, or treat such fiduciaries as violating the applicable prohibited transaction rules”.

FINSUM: This was largely expected given the DOL’s loss in the fifth circuit court, but evidently the wording of it came as a surprise.

(Washington)

On Friday we reported that the DOL had let its deadline for asking for an appeal to its fifth circuit court loss pass. That meant the DOL could no longer challenge the ruling and was effectively letting the rule die. However, the AARP, as well as the states of California, Oregon, and New York, had all requested the court to let them stand in as defendants in an appeal. After about a week of time in limbo, the court has now denied all the requests, meaning case-closed, the DOL’s fiduciary rule is no more.

FINSUM: The DOL rule is so dead, that even the Consumer Federation of America, which was a major champion of it, has said it is now just focused on getting the best version of an SEC fiduciary rule.