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Department of Labor Submits New Fiduciary Rule to OMB, Marking a Significant Step in Financial Regulation

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Department of Labor Sends Proposed Fiduciary Rule to OMB for Review

Department of Labor Sends Proposed Fiduciary Rule to OMB for Review


The Department of Labor has sent a new version of a proposed fiduciary rule to the Office of Management and Budget (OMB) for review. The rule, officially known as “Conflict of Interest in Investment Advice,” aims to redefine fiduciary investment advice under the Employee Retirement Income Security Act (ERISA).

What the Rule Entails

  • The proposed rule would amend the regulatory definition of fiduciary to more accurately determine when individuals providing investment advice for a fee to employee benefit plans and IRAs are considered fiduciaries under ERISA and the Internal Revenue Code.
  • The rule takes into account advisor practices, plan sponsor and participant expectations, and IRA owners who receive investment advice.
  • It also considers developments in the investment marketplace, including compensation structures that could lead to conflicts of interest.
  • The Employee Benefits Security Administration (EBSA) will evaluate available prohibited transaction class exemptions and propose amendments or new exemptions.

Expected Release and Previous Attempts

The American Retirement Association (ARA) CEO Brian Graff stated that the proposed rule is expected to be publicly released in October. This will be the fourth major attempt by the Department of Labor (DOL) since 2010 to revamp the 1975 rule.

Thomas Clark, JD, LLM, Partner and Chief Operating Officer with the Wagner Law Group, commented on the DOL’s authority to regulate in this area. He expects the DOL to have carefully crafted this proposed regulation, considering the last 13 years of attempts, court decisions, and rule-making by the SEC.

Reaction from Lawmakers

Last week, two top Republican lawmakers, Rep. Virginia Foxx (R-NC) and Sen. Bill Cassidy, M.D. (R-LA), called on the DOL to halt any further changes to the definition of fiduciary. They oppose the DOL’s efforts to revise the definition and urged Acting Labor Secretary Julie Su to cease any further action.

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