The Securities and Exchange Commission and the Labor Department will likely release simultaneously in the fall their fiduciary rule proposals, prominent ERISA attorneys say.
Fall “is a reasonable estimate,” said Brad Campbell, former head of Labor’s Employee Benefits Security Administration, who’s now counsel with Drinker Biddle & Reath, during the firm’s recent Inside the Beltway webcast.
“If you assume that they [Labor] needs to complete their changes by July 2019, which is when the deferred provisions of the current exemptions – the most onerous parts” of Labor’s fiduciary rule take effect, fall “really is the deadline for action by DOL.”
In fact, both Labor and the SEC “need to have their new plans in place and moving by that timeframe to avoid further conflict and problems in how their rules work,” Campbell argued.
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DOL would need to put out a proposal by the fall detailing “changes it wants to make in order to provide enough time for the comment period, which would be at least 60 days, [and] to then work through the comments and come up with a final rule and publish them by roughly July.”
Fred Reish, partner at Drinker Biddle & Reath in Los Angeles, agreed that he sees Labor acting in “coordination” with the SEC. “As a result, the timing of the releases of new proposals may be the same for each.”
Labor announced last November the official 18-month extension for the start of key provisions of the fiduciary rule, stating that the transition period for the rule’s Best Interest Contract Exemption and the Principal Transactions Exemption, and of the applicability of certain amendments to Prohibited Transaction Exemption 84-24 (PTEs), would move from the previous Jan. 1, 2018, compliance date to July 1, 2019.
With the new head of Labor’s EBSA, Preston Rutledge, now confirmed, revising Labor’s fiduciary rule “can begin in earnest,” Reish said.
The importance of Rutledge “as political appointee and providing political leadership to EBSA cannot be overstated,” Reish said. “Without political leadership, really nothing could proceed in terms of revising the fiduciary regulation and the prohibited transaction exemptions.”