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By: Ted Peters
In 2016, the U.S. Department of Labor (“DOL”) promulgated a set of rules and regulations now infamously referred to as the “Fiduciary Rule.” After multiple criticism and legal challenges, the Fifth Circuit Court of Appeal struck down the Fiduciary Rule effective May 7, 2018. Surprising many, the DOL elected not to challenge the Fifth Circuit ruling. Even more surprising, however, was the bulletin issued by the DOL on the effective date of the court’s order.
The court’s ruling, which was not opposed by the DOL, left many unanswered questions. Enter the DOL’s field bulletin. Rather than admitting the total defeat of the Fiduciary Rule, however, the DOL seeks to maintain the status quo. Specifically, the DOL announced that pending further guidance, advisors will not be penalized for either complying with the Fiduciary Rule, or ignoring it in favor of pre-existing standards. Unfortunately, this announcement leaves the single most important question unanswered – what is the standard to which advisors will be held? With the U.S. Securities and Exchange Commission working on its own set of rules, and the wait-and-see approach embraced by the DOL notwithstanding, only time will tell.
If you have questions or would like more information, please contact Ted Peters at [email protected].