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DOL Fiduciary Standard Rule Survies Challenge

DOL Fiduciary Standard Rule Survies Challenge

The government recently negotiated spending bill that will keep the government operating until fall 2016 did not contain a provision to halt a Labor Department rule that would raise investment-advice standards for retirement accounts. In a victory for proponents of the DOL rule, legislators’ policy riders that would have either prevented or delayed promulgation of the regulation did not make it into the must-pass measure. The fiduciary rule praised lawmakers for “standing up for American investors” in a statement last Wednesday.


Despite surviving the spending bill, the rule still faces resistance in Congress.  A bipartisan group of lawmakers introduced two bills last Friday that would require Congress to approve the DOL rule before it goes into effect. If Congress did not approve the rule, it would be replaced by a fiduciary standard drawn up in the legislation, which is being spearheaded by Rep. Peter Roskam, R-Ill., and Rep. Phil Roe, R-Tenn. But President Barack Obama, who calls the DOL rule an important part of his “middle-class economics” initiative, stands ready to veto legislation, even if it achieves enough support in the Senate to overcome a filibuster.  But many advisers expect the rule won’t look exactly the same as it does now, especially since the Department of Labor promised to make tweaks based on input during the extended comment period.


The Obama administration has argued that the measure, which would require brokers to put their clients’ interests ahead of their own in 401(k) and individual retirement accounts, is needed to protect workers and retirees from high-fee products that erode their savings.

The financial industry says the rule would significantly increase liability risk and regulatory costs for brokers and would make giving and receiving advice much more expensive – forcing savers with modest assets out of the advice market.


The Financial Services Institute, which represents independent broker-dealers and financial advisers, is not giving up on congressional action to stop the DOL rule stating if would adversely affect investors saving for retirement. Proponents of the fiduciary rule see it another way. Financial firms have mounted one of the most aggressive lobbying campaigns in recent memory to defeat a rule that would require them to put their customers’ interests first when providing retirement investment advice,” Barbara Roper, director of investor protection at the Consumer Federation of America, said in a statement. “We are enormously grateful that Congress chose to stand up to the special interests and stand with workers and retirees on this issue.


It’s safe to say this debate and the fate of the DOL Fiduciary Rule is far from settled.


The experienced securities fraud attorneys at Colling Gilbert Wright & Carter represent investors in all types of investment negligence, breaches of fiduciary duties and fraud.  If you have lost money as a result of an investment professional not putting your interest ahead of his or her own, please contact us for a free case evaluation