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March 17, 2015 at 10:22 AM
House Appropriations Committee Chairman Hal Rogers, R-Ky., questioned the Department of Labor’s authority to change the definition of fiduciary for retirement advisors during the DOL’s budget hearing with the Labor, Health and Human Services, Education, and Related Agencies subcommittee on Tuesday morning.
Rogers, addressing DOL Secretary Thomas Perez, began by saying that the Department of Labor’s jurisdiction lies over the federal pension laws and regulations through the Employee Retirement Income Security Act (ERISA).
“Mr. Secretary,” Rogers said, “ERISA was designed to govern pension plans and 401(k) investment plans provided by an employer. The SEC’s mission is to protect investors and regulate the financial industry including broker-dealers … Please explain to us how ERISA gives DOL jurisdiction over an individual’s relationship with a personal investment advisor.”
Perez responded by saying that both the DOL and the Securities and Exchange Commission have a shared interest in a fiduciary rulemaking.
In fact, while Perez was at his budget hearing, Securities and Exchange Commission Chairwoman Mary Jo White was making her own statements on a fiduciary standard at an event in Phoenix. White said that the SEC should “act” on a uniform fiduciary standard for brokers and investment advisors, one that should be a “codified principles-based standard rooted in the current fiduciary standard for investment advisors.”
“We have overlapping jurisdiction with the SEC,” Perez said at the budget hearing. “We handle ERISA; the SEC handles another set of statutes.”
Rogers also questioned Perez on how much the SEC has been involved in the DOL proposal – a question that has been getting a lot of attention lately.
“Your website says that SEC staff provided significant technical assistance in developing this new proposal,” Rogers said. “However in a recent article, SEC Commissioner Daniel Gallagher is quoted as saying DOL has not formally engaged the SEC commissioners in the process.”
