Welcome back to Human Capital! The Labor Department’s fiduciary rule has been thrown into flux with the resignation Friday of embattled Labor Secretary Alexander Acosta.
Patrick Pizzella, Acosta’s deputy, was appointed to the acting secretary post the same day that Acosta resigned; President Donald Trump could nominate him officially for the post, but that’s still up in the air.
While Acosta signaled that pressure over his handling of the sex trafficking case against hedge fund manager Jeffrey Epstein led to his departure, former tax attorney Andy Friedman with The Washington Update sees other factors at play. “The White House was frustrated with Acosta for the slow pace at which Labor was issuing deregulation guidance. His replacement might move somewhat more quickly.”
Pizzella now appears to be the point man on rubber stamping a new fiduciary rulemaking — but will he?
Pizzella, a former member of the Federal Labor Relations Authority under President Barack Obama, has been praised for having “pro-business views,” and is said to be liked by the administration and the regulated community.
Labor’s spring reg agenda pegged a fiduciary rule release in December. Pizzella’s a veteran and has “been involved certainly” with fiduciary-related efforts in the Employee Benefits Security Administration of Acosta’s Labor Department, which bodes well “for a modest delay” of guidance and/or an exemption or a separate fiduciary rule, opines George Michael Gerstein, a partner at Stradley Ronon in Washington and a member of the firm’s Fiduciary Governance Group.
EBSA head Preston Rutledge has said a Labor fiduciary rule would “align” with the SEC’s Regulation Best Interest. If a rule is already in the works, a “modest” delay, in Gerstein’s mind, pushes release to early 2020.