A group of 10 Democratic senators are urging the Office of Management and Budget to carefully review the Department of Labor’s fiduciary reproposal to ensure that it doesn’t “directly conflict” with or “upend” the Securities and Exchange Commission’s work on its fiduciary rule.
In an Aug. 2 letter to Sylvia Matthews Burwell, OMB’s director, the senators–members of the Senate Banking and Health, Education, Labor and Pensions Committees–say that while they believe the SEC is moving forward in crafting a fiduciary rule that adheres to the congressional mandate set out in Section 913 of the Dodd-Frank Act, the DOL’s efforts to redefine fiduciary under the Employee Retirement Income Security Act could work “at cross purposes” to the SEC’s rule.
“We believe that Congress clearly intended that a single [fiduciary] standard should apply to retail accounts, including retirement accounts, based on specific guidelines enumerated in Section 913,” the senators write.
While acknowledging that they don’t know what the DOL’s fiduciary reproposal will say, the senators cite DOL’s 2010 proposal that they say could have caused “all broker-dealers that service individual retirement accounts to be ERISA fiduciaries, which would have as a practical matter eliminated meaningful investment services for millions of IRA holders.”
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Given OMB’s role in “coordinating and streamlining” agencies’ regulations, “we write to make you aware of the potential conflicts between these two regulations,” the senators write.
While DOL is required to send its rule proposals to OMB, the SEC is only required to send final rules to OMB.