Quick Action on DOL Fiduciary Rule Unlikely With Acosta Confirmation

While a compliance delay is likely, deciding to modify or kill fiduciary rule ‘will be much slower than people think’

Confirming R. Alexander Acosta is only the first step. Confirming R. Alexander Acosta is only the first step.

Industry officials anticipate a quick confirmation of R. Alexander Acosta to be the next secretary of Labor after his March 15 confirmation hearing before the Senate Health, Education, Labor and Pensions Committee.  

Following next week’s hearing, announced by the HELP committee early Wednesday morning, an executive session will be scheduled for committee members to vote on Acosta’s nomination.

While industry officials see Acosta being confirmed likely within a month, and a delay of Labor’s fiduciary rule from its April 10 compliance date to June 9, they’re skeptical that quick action will be taken by Labor on modifying the rule or doing away with it.

“It appears that there will be a delay to the [fiduciary rule’s] applicability date until June. I don’t see the Acosta hearing derailing this,” said Steve Saxon, chairman of Groom Law Group, which specializes in employee benefits.

Delaying the fiduciary rule’s compliance date is necessary, Saxon said, so that Labor can respond to President Donald Trump’s Feb. 3 order to review the rule, and if it deems appropriate, issue a proposal to revise it.

“What will be most interesting, and somewhat complicated, is what happens when [Acosta] gets there” to Labor, Saxon added. “We have a final [fiduciary] rule; it’s effective, presumably, and it will have a set applicability date. There’s a lot of momentum behind just moving forward with the rule; on the other hand, there’s a lot of momentum on repealing the rule. Someone could drop a bill” on Capitol Hill to further derail the rule or litigators could persuade a court to issue a stay of the rule.

Fred Reish, a partner in Drinker Biddle & Reath’s employee benefits and executive compensation practice group in Los Angeles, notes that while the delay can be done by acting Labor leadership, “it will take political leadership to evaluate whether to modify the rule or to kill it. At the least, that means that the secretary needs to be in place.”

Quicker action on the fiduciary rule’s fate could occur if the assistant secretary of Labor’s Employee Benefits Security Administration, headed by Phyllis Borzi during the Obama administration, was also in place, Reish adds. “I think the process of deciding whether and how to modify the fiduciary rule will be much slower than people think.”

Acosta, the only son of Cuban immigrants, is law dean at the public Florida International University in Miami as well as a veteran Republican administrator, serving as assistant attorney general for civil rights and U.S. attorney in Miami.

Trump noted in a press conference to announce Acosta's nomination his degrees from Harvard College and Harvard Law School as well as his service as a former clerk to Justice Samuel A. Alito of the Supreme Court, adding that he’s had “a tremendous career” and has been through multiple Senate confirmations.

“I think he’ll be a tremendous secretary of Labor,” Trump said.

He is Trump’s first Hispanic cabinet nominee.

--- Check out Why Trump Advisor Scaramucci ‘Hates’ DOL Fiduciary Rule on ThinkAdvisor.

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