Labor Department headquarters in Washington. (Photo: Mike Scarcella/ALM)
The Labor Department has sent its fiduciary rule to align with the Securities and Exchange Commission's Regulation Best Interest to the Office of Management and Budget for review.
Preston Rutledge, assistant secretary of Labor for the Employee Benefits Security Administration, who was charged with spearheading a new fiduciary rule to align with Reg BI, left his post at the end of May.
Oral arguments were heard Tuesday by the U.S. Court of Appeals for the 2nd Circuit in the case brought against Reg BI by XY Planning Network, seven states and the District of Columbia.
Reg BI's effective date is June 30.
Fred Reish, partner at Faegre Drinker Biddle & Reath in Los Angeles, told ThinkAdvisor in a Tuesday email that word on the street is that the Labor rule "is primarily a prohibited transaction exemption intended to replace the Best Interest Contract Exemption, which was vacated by the 5th Circuit Court of Appeals, and the temporary non-enforcement policy that provided relief in light of the BICE being vacated."
Reish has also heard that "the fiduciary regulation may be modified to more clearly apply to advisors who are not covered by the SEC's Regulation Best Interest or the RIA fiduciary standard. It's not clear how that will be done or what other changes will be made to the ERISA fiduciary definition."
Brad Campbell, former head of EBSA who's now a partner at Faegre Drinker, told ThinkAdvisor in a previous interview that Rutledge's departure won't result "in any additional delay to current outstanding projects at EBSA, given the strength of his deputy, Jeanne Wilson, and the importance of the agency's mission to current events."
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
