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Labor Secretary Says No Further Delay of Fiduciary Rule; DOL Releases FAQs on Transition Period

In an opinion piece for the Wall Street Journal, Department of Labor Secretary Alexander Acosta wrote that the agency sees no legal basis for further delaying the June 9, 2017 effective date of the Fiduciary Rule while it seeks public comments on how to revise the rule. Acosta noted that the SEC has critical expertise in this area of rulemaking and that he hopes the agency will become a “full participant” in the process. The DOL released a bulletin describing the implementation schedule of the Fiduciary Rule, which will be completed in January 2018. On June 9, the Fiduciary Rule will thus be partially in effect, with the Best Interests Contract and Prohibited Transactions exemptions available to financial institutions and advisers, requiring that advisers give advice that is in the “best interest” of the retirement investor; charge no more than reasonable compensation; and make no misleading statements about investment transactions, compensation, and conflicts of interest. The DOL also released FAQs covering many topics on the rule and the transition period. The DOL’s FAQs discuss compliance dates; initiatives already in place to address rule requirements (specifically, Clean Shares, T shares and new compensation structures); the use of robo-advisers; and other requirements during the transition period. The DOL bulletin stated that during the rule’s implementation phase up to January 2018: it “will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.”