Editor’s note: This article first appeared in Human Capital, a newsletter by Washington Bureau Chief Melanie Waddell about the people who shape the financial regulatory space.
Welcome back to Human Capital! We’re starting off the week with a warning from ERISA attorney Steve Saxon: The Labor Department’s moves in the fiduciary realm “aren’t dead at all,” and forthcoming Labor guidance on fiduciary-related matters is “a sleeping giant” that will be awakened by the SEC’s Regulation Best Interest for brokers.
While Saxon, who specializes in Title 1 of the Employee Retirement Income Security Act at Groom Law Group, is anxiously awaiting Labor’s fiduciary guidance, other regulatory bugaboos like cybersecurity and confidentiality of plan data along with rising DOL investigations occupy his time.
What’s on the horizon? When the SEC rolls out Reg BI (Saxon and others are pinning their hopes on delivery in the next six months), “Labor will come to life again, and we will have to deal with the possibility that people would have to be fiduciaries when they sell products and want to receive variable compensation.”
As it stands now, the retirement planning world is still relying on Labor’s temporary enforcement policy under Field Assistance Bulletin (FAB) 2018-2, “where the DOL said temporarily it would not enforce ERISA prohibited transaction rules” for those acting as a fiduciary.
Saxon’s hope is that Reg BI will be “a launching pad — that the SEC and DOL would work together to enable us to build a framework to comply with Reg BI. Right now, we’re relying on the temporary FAB — it has to change.”