The Office of Management and Budget has completed its review of the Labor Department’s fiduciary prohibited transaction exemption to align with the Securities and Exchange Commission’s Regulation Best Interest.
OMB’s notice states that the PTE was reviewed with changes, so Labor will incorporate those changes and finalize the rule quickly, industry officials explained.
Because the rule is “economically significant,” the effective date should come 60 days after publication in the Federal Register, explained Barbara Roper, director of investor protection for the Consumer Federation of America, in a Tuesday morning email to ThinkAdvisor.
“I wouldn’t put it past them [Labor] to include a 30-day effective date, as they did on the proxy rule, to try to get it effective before Inauguration Day,” Roper said. However, such a timeline “would require them [Labor] to be very nimble. Basically, they’d need to get it published this week.”
Steve Saxon, partner at Groom Law Group in Washington, stated in a separate Tuesday morning email to ThinkAdvisor that Labor “should cut it [the effective date] back to 30 days by taking the view that the exemption is not ‘economically significant.’”
A 60-day effective date, Saxon continued, “takes the exemption past Inauguration so the Biden administration can put a hold on it immediately. With a 30-day effective date, the exemption would become final before [Jan. 20], making it a little stickier.”