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DOL to Propose New Fiduciary Rule in December, SEC to Vote on Regulation BI Next Month

The Department of Labor plans to introduce a propose a new fiduciary rule in December 2019 after the previous version was vacated by the Fifth Circuit Court of Appeals last year.

The Department of Labor plans to introduce a propose a new fiduciary rule in December 2019 after the previous version was vacated by the Fifth Circuit Court of Appeals last year. In addition, the Securities and Exchange Commission will vote on its broker advice rule, dubbed Regulation Best Interest, on June 5, 2019.

According to an open meeting agenda on the SEC’s website, the agency “will consider whether to adopt a new rule to establish a standard of conduct for broker-dealers…when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities.”

The Department of Labor’s Spring 2019 regulatory agenda indicates that the agency plans issue a notice of proposed rulemaking in December for “Fiduciary Rule and Prohibited Transaction Exemptions.”

Previously, in its Fall 2018 agenda, the DOL indicated that it would issue a final rule in September 2019.

Earlier this month, Labor Secretary Alexander Acosta told the House Education and Labor Committee that the DOL was planning to revive its fiduciary rule, which broadened the definition of investment advice fiduciary under the Employee Retirement Income Security Act of 1974. The regulation sought to eliminate conflicted retirement investment advice by placing certain restrictions on commission-based product recommendations.

Secretary Acosta told lawmakers that the agency is working with the SEC to issue new rules to protect investors from conflicted advice. No further information was given on the content of the new rule or what it will entail.

The SEC’s Regulation Best Interest maintains its September 2019 deadline, according to the agency’s Spring 2019 regulatory agenda.

After surviving multiple federal lawsuits, the fiduciary rule was vacated in its entirety by the Fifth Circuit Court of Appeals in a 2-1 split decision in March 2018, ruling that the DOL overstepped its authority in the investment advice arena.

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