Labor Department headquarters in Washington. (Photo: Mike Scarcella/ALM) Labor Department headquarters in Washington. (Photo: Mike Scarcella/ALM)

The Labor Department is expected to propose new fiduciary rules aligning with the Securities and Exchange Commission’s Regulation Best Interest “in the next two months,” according to attorneys at Groom Law Group.

Labor’s plan will include a comment period before being finalized. “Many in the industry would like clarity on how Regulation Best Interest and the new interpretation of solely incidental will impact ERISA fiduciary status,” Groom principals Kevin Walsh and George Sepsakos write in a recent legal brief.

As the attorneys explain, “a major impact that could go overlooked” in the SEC’s Reg BI is the SEC’s new interpretation of “solely incidental,” in which the agency “narrowed the level of discretion and monitoring that a broker-dealer may maintain regarding a retail investor’s account while still being able to rely on the broker-dealer exception to the Investment Advisers Act’s requirements.”

As a result, the attorneys advise broker-dealers “to review the services they offer to evaluate whether they can still rely on the exclusion.”

Indeed, the Senate Committee on Health, Education, Labor & Pensions has scheduled a nomination hearing for Eugene Scalia, President Donald Trump’s nominee to be the new Labor secretary, for Thursday.

HELP Committee Chairman Lamar Alexander, R-Tenn., announced that a quick vote on Scalia’s nomination will be held a week later, on Sept. 24.

Scalia’s nomination will then move to the full Senate.

If confirmed by the Senate, Scalia would replace Alexander Acosta, who resigned on July 12 due to pressure over his handling of the sex trafficking case against hedge fund manager Jeffrey Epstein, who was found dead in jail on Aug. 10.

The White House announced Scalia’s nomination on Aug. 27, and noted that in 2001, Scalia joined the Labor Department as solicitor.

Former Labor officials sent a Sept. 9 letter to Alexander and members of the HELP committee in support of Scalia’s nomination.

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