It looks as though the Department of Labor’s (DOL) investment advice regulation is in for some changes. The new Administration has asked the DOL to delay implementing the rule, which was scheduled to take effect on March 23, until May 22, because a number of Democratic Senators, including Ted Kennedy (D-Massachusetts) and George Miller (D-California), chairman of the House Committee on Education and Labor, “have strong objections to the regulation as drafted,” says Fred Reish of the law firm Reish Luftman Reicher & Cohen in Los Angeles. The notice of postponement reopened the comment period on the investment advice reg until March 6, 2009.
These lawmakers say the current investment advice regulation “goes far beyond what the law intended and that it will result in many participants being hurt by conflicted advice,” Reish says, for example, “by mediocre and overly expensive investments.”
Reish believes that the class exemption portion of the regulation “will be withdrawn or rewritten (or, if not, that there will be legislation that overrides it).” The regulation will be rewritten, he says, once the Obama Administration appoints a new Assistant Secretary for the DOL’s Employee Benefits Security Administration (EBSA).