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DOL Likely Won’t Fight for Fiduciary Rule, Former Exec Says

April 24, 2018

The Department of Labor isn’t likely to appeal the Fifth Circuit Court of Appeals decision last month to vacate the agency’s fiduciary rule — and that could leave the SEC more room to maneuver when it comes to its own ruling on a best-interest standard, lawyers tell ThinkAdvisor.

Appealing the court’s ruling would have been an “easy decision,” so the DOL would have done so by now, Fred Reish, partner in Drinker Biddle & Reath’s employee benefits and executive compensation practice group, said in a webcast cited by the publication. He says the agency is “perhaps leaning” toward letting the court’s decision stand, according to ThinkAdvisor.

Brad Campbell, another partner with the firm and former head of the DOL’s Employee Benefits Security Administration, agrees the agency isn’t likely to appeal, the publication writes. And with the DOL no longer pressing for its fiduciary rule, “the SEC now no longer has to adjust itself to fit what DOL has already done,” Campbell said, according to ThinkAdvisor. “The SEC can now lead the way [with its standards of conduct proposal] and have DOL adjust itself to the SEC’s rule.”

The DOL’s fiduciary rule only applies to retirement account advisors, purporting to force them to put clients’ interests first, and went into only partial effect last summer. After the Fifth Circuit Court's decision on March 15, the DOL said it’s no longer enforcing the rule, pending review.

Last week, meanwhile, the SEC put out its 1,000-page best-interest proposal and opened it to a 90-day comment period, as reported.


Reish called the release “rushed” and Campbell said it had “very clear ambiguity,” according to ThinkAdvisor. When federal agencies roll out proposals for new regulations, “their minds are 80% or 90% made up about what they want to do,” he said, according to the publication. But this time it’s not the case, according to Campbell, ThinkAdvisor writes.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.