Fiduciary Rule’s Future Even More Uncertain as SEC Steps In

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By Kristen Ricaurte Knebel

The Securities and Exchange Commission’s renewed interest in the Labor Department’s fiduciary rule may give some hope to the rule’s opponents.

SEC Chairman Jay Clayton in his first policy announcement said the SEC would seek comment on a range of issues related to the DOL’s Obama-era rule that aimed to reduce the allegedly conflicted investment advice given to retirement savers.

Opponents of the rule may be pleased, but this isn’t the first time the head of the SEC has expressed interest in tackling the topic, Dana Muir, a professor at the University of Michigan’s Ross School of Business, told Bloomberg BNA. Muir served on the DOL’s ERISA Advisory Council.

“The last three or four SEC commissioners have said they were interested in addressing the extent of the SEC’s fiduciary regulation on advisers and broker-dealers, but it hasn’t happened to date,” Muir said.

It has usually come to pass that SEC commissioners are too divided to decide on a fiduciary rule, Muir said. There are typically five SEC commissioners who are appointed by the president. To ensure that the commission isn’t partisan, no more than three of the five can be of the same political party. There are currently three commissioners.

“SEC movement on the fiduciary front has been long-awaited. Spurred by the DOL’s action and by new personnel at the SEC, the SEC, it now appears, may finally be poised to take this on,” Andrew L. Oringer, a partner with Dechert LLP in New York and co-chair of the firm’s ERISA and executive compensation group, told Bloomberg BNA in an email.

This could be a first step in a rule that is “more principles-based and less Byzantine and complex than the DOL’s rule,” Oringer said.

While the SEC’s past history in this area makes its future actions unclear, the concern supporters of the fiduciary rule have with this announcement is that “opponents of the DOL rule will latch on to this invitation for input and say the SEC is about to go forward and we should pause the DOL rule and see how the SEC proceeds,” Stephen Hall, legal director of the advocacy group Better Markets, told Bloomberg BNA.

The DOL delayed portions of the fiduciary rule until June 9. Other parts are delayed until at least Jan. 1, 2018, while the rule is under a presidentially mandated review by the agency.

DOL Taking Heat

Since Labor Secretary Alexander Acosta announced in a May 23 Wall Street Journal op-ed that he won’t be seeking a further delay of the rule’s upcoming June 9 applicability date, opponents of the rule have expressed their displeasure with the decision.

Two op-eds were published this week in the Wall Street Journal by Eugene Scalia and Sen. Johnny Isakson (R-Ga.). Scalia, an attorney with Gibson Dunn & Crutcher LLP, represented the Chamber of Commerce in its case against the DOL regarding the fiduciary rule.

Isakson asked Acosta to rethink his decision, saying that allowing the rule to move forward will mean “the administration is abandoning its responsibility to protect the availability of retirement options for middle-class Americans.”

Opponents and supporters of the fiduciary rule met with the DOL the last week in May in a listening session. DOL officials attending included acting Solicitor of Labor Nicholas C. Geale. Acosta didn’t attend the meetings.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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