The Department of Labor will likely unveil another version of its fiduciary rule within the next two months, lawyers tell the press.
The DOL will open up the rule to public comment, attorneys at Groom Law Group say, according to ThinkAdvisor.
That’s likely to attract questions about how the rule would square with the SEC’s Regulation Best Interest implemented earlier this year, the publication writes citing Groom Law lawyers.
In particular, broker-dealers could be impacted by the SEC’s interpretation of the “solely incidental” provision on exclusions related to discretion and monitoring a client’s account, according to ThinkAdvisor.
The DOL had issued the first version of its fiduciary rule, which required retirement account advisors to put clients’ interest first, in 2017, but the rule was defeated in an appeals court last year following pushback from the industry.
The agency said this May that it would put out a new version of the rule at the end of the year.
But the sudden resignation of Labor Secretary Alexander Acosta in July over criticism of his handling of a plea deal with convicted sex offender Jeffery Epstein a decade ago has left the fate of the new rule unclear.
In August, the White House has announced president Donald Trump’s plans to appoint Eugene Scalia to head the agency.
Scalia represented Sifma and the U.S. Chamber of Commerce in a legal challenge to the first version of the DOL’s rule, and lawyers have said he may have to recuse himself from anything to do with the second version due to government ethics rules.
The Senate Committee on Health, Education, Labor and Pensions held a nomination hearing for Scalia yesterday, and the nominee assured lawmakers that he’ll seek advice from ethics officials on whether he can take part in drafting the rule, according to the Associated Press. But Scalia also said that his previous work for corporate clients wouldn’t affect his actions, according to the news service.
“I’m not necessarily my clients,” Scalia said, according to the AP. “I will seek to defend them, to vindicate their rights but that doesn’t mean that I necessarily think what they did is proper.”
Committee chairman Lamar Alexander, R-Tenn., praised Scalia’s work in representing “people who have a right to be heard, to get justice before the bar,” the AP writes.
But the committee’s top ranking Democrat, Sen. Patty Murray of Washington, said Scalia is “an elite corporate lawyer who has spent his career fighting for corporations and against workers,” according to the news service.
Scalia told Murray that he agrees that investment advice professionals need to put clients’ interest ahead of their own, the AP writes.
But Micah Hauptman, financial services counsel at the Consumer Federation of America, said it’s important to look at Scalia’s record, according to the news service.
“We just need to look at the arguments he’s made in court and what he’s advocated for,” Hauptman said, according to the AP. “That counts more than what he said in a job interview.”
Lamar said that a vote on Scalia’s nomination will take place Sept 24, according to ThinkAdvisor. If the vote is affirmative, Scalia’s nomination will head to the full Senate, the publication writes.