By: Jennifer S. Kiesewetter, Esq. & Christopher R. Michel, Esq.
On Thursday, February 9, 2017, the Department of Labor (DOL) filed a notice with the Office of Management and Budget (OMB) to delay the effective date of the final Conflict of Interest Rule that re-defines who is a fiduciary (the Fiduciary Rule). While the exact language of the notice will not be known until the OMB’s review is complete and the proposed rule is sent to the Federal Register, many sources are reporting that the notice delays the effective date of the Fiduciary Rule for one hundred eighty (180) days. The OMB usually takes around ten (10) to fifteen (15) days to review a regulation, and the comment period will reportedly be as short as fifteen (15) days, meaning that the notice delaying the effective date of the Fiduciary Rule by one hundred eighty (180) days could be official as soon as early March.
The DOL is also working on a second notice to be filed with the OMB, which if approved, will start a new notice and comment period for the Fiduciary Rule. By pushing out the effective date of the Fiduciary Rule one hundred and eighty (180) days, the DOL now has time to hold another notice and comment period before the rule takes effect. During this notice and comment period, the DOL will hear concerns on the Fiduciary Rule. This is likely a result of the executive order issued by President Trump.
On February 3, 2017, President Trump signed an executive order, ordering the DOL to review the Fiduciary Rule. The executive order more specifically required the DOL to examine (a) whether the Fiduciary Rule is likely to harm investors by reducing access to retirement products, (b) cause dislocation or disruption within the retirement service industry, and/or (c) is likely to cause an increase in litigation.
The executive order does not delay, amend, or withdraw the enforcement of the Fiduciary Rule which goes into effect in April, 2017, instead it orders the DOL to examine the Fiduciary Rule for the above issues. As stated above, it is likely that as a result of the President’s executive order, and the DOL’s instructed review of the Fiduciary Rule, that the DOL determined that the rule should be delayed and subject to future comment.