Department of Labor
Congress and the Trump Administration may be embarking on making far-reaching changes that will recalibrate the manner in which financial services are regulated in the United States, including amending the Dodd-Frank Act and its implementing rules. We expect to see vigorous debate regarding the appropriate approach to financial services regulation, leading to rewrites of the structures and goals of federal banking and securities agencies and other government agencies.
This page is dedicated to tracking legislative and regulatory developments as well as executive actions related to the DOL.
For more information, please contact Andrew L. Oringer.
Date | ActionH.R. 2823 (Affordable Retirement Advice for Savers Act) Sponsor: Rep. Roe (R-TN) (29 Co-Sponsors – 29 R) H.R. 2823 introduced in the House of Representatives on June 8, 2017. Key ProvisionsThe Bill would add a definition of "investment advice" to ERISA and the Internal Revenue Code. Under the Bill, a fiduciary relationship would generally arise when an advisor provides one of the defined recommendations relating to retirement accounts, where there is an acknowledgement of fiduciary status or a mutual agreement that the advice is personalized and that the advice recipient intends to rely on the recommendation when making decisions about plan assets. The Bill would also provide "prohibited transaction" exemptions for advice where reasonable compensation is paid and certain disclosure requirements are met, and where an advisor places the interest of the client above the advisor’s own interest. Potential ImpactThe Bill seeks effectively to repeal the DOL's Fiduciary Rule and replace it with a new statutory definition. The controversial Fiduciary Rule generally became applicable on June 9, 2017. | Important Links |
Date | ActionS. 1321 (Affordable Retirement Advice Protection Act) Sponsor: Sen. Isakson (R-GA) (6 Co-Sponsors – 6 R) S. 1321 introduced in the Senate on June 8, 2017. Key ProvisionsThe Bill would add a definition of "investment advice" to ERISA. Under the Bill, a recommendation would generally constitute covered advice if it relates to (i) the advisability of acquiring, holding, disposing or exchanging any moneys or other property of a retirement plan or account, including any recommendation relating to a rollover or distribution; (ii) the management of moneys or other property of the plan or account, including recommendations relating to the management of plan assets to be rolled over or otherwise distributed; or (iii) the advisability of retaining or ceasing to retain a person who would receive a fee or other compensation for providing investment advice. The Bill would add "prohibited transactions" exemptions for (i) advice for which no more than reasonable compensation is paid and for (ii) advice that is based on a limited range of investment options or may result in variable income to the investment advisor, if a notice is provided that similar investments may be available at other costs. Potential ImpactThe Bill seeks effectively to repeal the DOL's Fiduciary Rule and replace it with a new statutory definition. The controversial Fiduciary Rule generally became applicable on June 9, 2017. | Important Links |
Date | ActionH.J. Res. 66 and H.J. Res. 67 Sponsors: Reps. Walberg (R-MI), Rooney (R-FL) and Foxx (R-NC) H.J. Res. 67
HJ. Res. 66
Key ProvisionsThe resolutions disapprove two DOL rules adopted during the Obama administration. The rules exempt from ERISA coverage automatic-IRA-style retirement plans for private-sector workers sponsored by states and subdivisions thereof. Potential ImpactStates had begun exploring the prospect of instituting IRA-style retirement plans for private-sector workers. As a result of H.J. Res. 67 being signed into law, it is unlikely that IRA-style retirement plans will be instituted by political subdivisions of states for private-sector workers, because such plans must comply with ERISA. Under the Congressional Review Act, the DOL is prohibited from adopting substantially similar rules to H.J. Res. 67 unless they are specifically authorized by subsequently-enacted legislation. | Important LinksResolutions Rules Savings Arrangements Established by States for Non-Governmental Employees Savings Arrangements Established by Qualified State Political Subdivisions for Non-Governmental Employees |
Date | ActionThe U.S. Department of Labor issuance of Field Assistance Bulletin regarding partial non-enforcement of the new Fiduciary Rule Key ProvisionsThe DOL, on August 30, 2017, issued Field Assistance Bulletin 2017-3 providing new compliance guidance under which the DOL will not pursue claims against fiduciaries based on failure to satisfy the Best Interest Contract Exemption or the Principal Transactions Exemption if the sole failure of the fiduciary to comply with these exemptions is a failure to comply with the provisions of the exemptions that relate to barring class-action waivers in the "best interest contract" (at least as applied in the context of arbitration agreements). Potential ImpactThe DOL will not enforce the provisions in the BIC Exemption and the Principal Transactions Exemption that make the exemptions unavailable if a financial institution’s “best interest contract” with a retirement investor includes a waiver or qualification of the retirement investor’s right to bring or participate in a class action or other representative action in court. The BIC Exemption and the Principal Transaction Exemption are currently scheduled to become applicable on January 1, 2018; however, there is currently a proposal to delay these exemptions until July 1, 2019. Thus, the DOL’s decision not to enforce the anti-arbitration provisions of these exemptions may not ultimately be relevant. | Important LinksBrief in the Chamber of Commerce litigation (filing indicating that the DOL will not pursue enforcement of the BIC Exemption provision relating to class-action waivers, as applied in the context of arbitration agreements) Letter in the Thrivent v. Acosta litigation (letter from the DOL indicating that the issues under the BIC Exemption surrounding class-action waivers in the context of arbitration agreements will likely become "mooted") |
Date | ActionThe U.S. Department of Labor submission of Notice of Administrative Action and publication of proposed delay Key ProvisionsThe DOL on August 9, 2017, submitted a Notice of Administrative Action in the Thrivent v. Acosta litigation (D. Minn.) stating that the DOL had submitted a proposal to amend the "best interest contract" exemption and two other exemptions that form a part of the Fiduciary Rule so as to delay until July 1, 2019, the applicability of material portions of those exemptions, and also to extend until that time certain existing transition relief applicable to the exemptions. On August 31, 2017, the DOL published the proposed delay in the Federal Register. Comments on the proposal are due on September 15, 2017. Potential Impact
| Important LinksNotice of Administrative Action See Dechert Newsflash, Drip Drip Drip – Is the DOL's Fiduciary Rule Slowly Going Down the Drain? |
Date | ActionRFI Regarding the Fiduciary Rule and Related Prohibited Transaction Exemptions Key ProvisionsThe DOL seeks, among other things, comments regarding a delay in the January 1, 2018, applicability date of certain provisions of the Best Interest Contract ("BIC") Exemption and input regarding possible additional exemption approaches or changes to the Fiduciary Rule. Comments regarding a potential delay of the January 1, 2018, applicability date are due on or before July 21, 2017, and responses to the other RFI questions are due on or before August 7, 2017. Potential ImpactThe DOL is considering a delay of and changes to certain parts of the Fiduciary Rule. It seems unlikely that the BIC Exemption will become effective in its current form on January 1, 2018, as currently scheduled, and it is possible that the Fiduciary Rule will ultimately be scaled back substantially. | Important Links |
Date | ActionWall Street Journal op-ed by Secretary Acosta Key ProvisionsThe DOL will seek additional public comment on the Fiduciary Rule, but compliance will nevertheless be required beginning on June 9, 2017, with full implementation on January 1, 2018, pending any change in policy based on the DOL’s review of the public comment. Potential ImpactConfirmation that the Fiduciary Rule will generally become applicable on June 9, 2017.
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Date | ActionDepartment of Labor Conflict of Interest FAQs (Transition Period) (“FAQs”) Key ProvisionsThe DOL intends to issue a Request for Information (RFI) in “the near future” that will specifically ask for public comment on whether an additional delay in the January 1, 2018, applicability date would allow for more effective retirement investor assistance and help avoid needless or excessive expense as firms build systems and compliance structures that may ultimately be unnecessary or mismatched with the DOL’s final decisions on the issues raised in the Presidential Memorandum. The FAQs also provide specific guidance about conflicts of interest of advisers during the transition period, the reasonable belief requirement of the independent fiduciary exception, model developers and investment advice recommendations, robo-advice, grandfathering of certain compensation structures, PTE 84-24 and whether certain general communications to plan participants about increasing contributions will be considered investment advice. Potential Impact
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Date | ActionDepartment of Labor Field Assistance Bulletin 2017-02 Key ProvisionsThe DOL announced a temporary enforcement policy that “during the phased implementation period ending on January 1, 2018, the [DOL] will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.” Potential ImpactThe DOL will not pursue certain parties making diligent and good-faith compliance efforts | Important Links |
Date | ActionFinal Rule (See Proposed Rule March 2.) Key ProvisionsThe DOL finalizes rules (i) generally extending for 60 days, until June 9, 2017, the applicability date of the prescribed compliance requirements defining who is a fiduciary under ERISA and the Code and of the related Best Interest Contract ("BIC") Exemption, and (ii) providing that compliance with conditions of the BIC Exemption (and with the amendments to Prohibited Transaction Exemption 84-24 (relating to certain annuities and proprietary products)), other than adherence to the Impartial Conduct Standards, is not required until January 1, 2018. The applicability dates of amendments to other previously granted exemptions are also extended for 60 days. Potential ImpactCompliance efforts that may have been suspended in light of uncertainty surrounding the fiduciary rule may need to be recommenced, although much of the prescribed compliance requirements (i.e., written statements and disclosures) can be postponed until 2018 as the DOL continues its reconsideration of the Fiduciary Rule as contemplated by the February 3 Presidential Memorandum relating to the rule.
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Date | ActionDepartment of Labor Field Assistance Bulletin 2017-01 (“FAB”) IRS Announcement 2017-4 Key ProvisionsThe FAB announces a temporary enforcement policy pursuant to which (i) if the DOL extends the April 10 applicability date of the new Fiduciary Rule (and related exemptions) but does so after April 10, the DOL will not initiate any enforcement action because of noncompliance during the "gap" period, and (ii) if the DOL ultimately does not extend the April 10 applicability date, the DOL will not initiate any enforcement action because of noncompliance, provided that all of the applicable conditions of the rule (and the exemptions) are satisfied within a “reasonable period” after announcement that the applicability date will not be extended. Subsequently, on March 27, 2017, the IRS in Announcement 2017-4 issued corresponding non-enforcement temporary relief with respect to the application of excise taxes under Section 4975 of the Internal Revenue Code. Potential ImpactThe Trump Administration continues to takes steps consistent with the potential scaling back or complete rescission of the Fiduciary Rule. The FAB and the IRS Announcement are intended to assure regulated parties that they will not be subject to enforcement action to the extent they are not in compliance with requirements imposed by the Fiduciary Rule while the DOL is in the process of determining whether to repeal or modify the Rule or during a reasonable period after the conclusion of its review. | Important LinksSee Dechert Newsflash, ERISA’s Fiduciary Rule at the Crossroads – DOL Puts the Brakes on Enforcement. |
Date | ActionProposed Rule (See Final Rule April 7.) Key ProvisionsThe DOL proposes a 60-day delay, until June 9, 2017, of the applicability date of the new Fiduciary Rule and seeks comment on questions of law and policy raised by the rule, including questions raised by the February 3, 2017 Presidential Memorandum. The notice and comment period for the 60-day delay ends March 17, 2017. Comments on the DOL’s questions related to the legal and economic impact of the Fiduciary Rule are due by April 17, 2017. Potential ImpactThe DOL is continuing with its reconsideration of the Fiduciary Rule, in accordance with the February 3 Presidential Memorandum on Fiduciary Rule. | Important Links |
Date | ActionNews Release: US Department of Labor to Evaluate Fiduciary Rule Key ProvisionsThe News Release, which was issued in conjunction with the February 3 Presidential Memorandum on Fiduciary Rule, states that the DOL will consider its legal options to delay the Rule’s applicability date of April 10, 2017, as it complies with the Presidential Memorandum. Potential ImpactDechert has previously remarked that the election has drawn into question the survival of the Fiduciary Rule. See Dechert Newsflash, Has the Fiduciary Worm Turned? Freedom Caucus Targets the New ERISA “Investment Advice” Regulation. As compared to situations where Congress is able to disapprove a regulation under the Congressional Review Act there are number of administrative law and timing issues associated with taking actions to suspend, modify or repeal a rule under these circumstances. | Important Links |
Date | ActionPresidential Memorandum on Fiduciary Rule Key ProvisionsThe Memorandum directs the Secretary of Labor to examine the Fiduciary Rule, and directs the DOL to determine whether it may adversely affect the ability of individuals to gain access to retirement information and financial advice. The Secretary is to consider whether: (i) the Rule is likely to harm individuals due to a reduction in access to retirement products and services; (ii) the Rule will cause disruptions in the retirement services industry that harm investors; and (iii) the Rule is likely to cause an increase in prices individuals must pay to obtain access to retirement services. The Memorandum directs that if the Secretary determines that any of the foregoing concerns result from the Rule or it is inconsistent with other priorities set forth in the Memorandum, the Secretary is to publish for notice and comment a proposed rule rescinding or revising the Rule. Potential ImpactThis action establishes a path by which the Rule, which had been scheduled to become applicable on April 10, 2017, would not go into effect or be significantly modified. The DOL has indicated that it will be complying with the Memorandum. See Dechert Newsflash, Ding Dong – Is ERISA’s New Fiduciary Rule Dead? (revised) for a discussion of the Memorandum. | Important Links |
Date | ActionRecent decisions of the U.S. Court of Appeals for the Fifth Circuit (i) denying motions by the States of California, New York and Oregon, and by the AARP, to intervene in the action vacating the Fiduciary Rule, and (ii) denying the States’ motions to reconsider the Court’s denial. Key Provisions
Potential ImpactIt now appears that, if the United States does not seek review of the underlying decision by the U.S. Supreme Court, the Fiduciary Rule will be null and void and of no effect. | Important LinksDecisions of the U.S. Court of Appeals for the Fifth Circuit in Chamber of Commerce v. Alexander Acosta, Secretary of Labor: May 2 denial of motions to intervene May 22 denial of motions for reconsideration See Dechert Newsflash, Ding Dong – The Amended Fiduciary Rule Is (Almost) Dead See Dechert Newsflash, ERISA's Amended Fiduciary Rule – Done, Done, on to the Next One |
Date | ActionDecision of the U.S. Court of Appeals for the Fifth Circuit vacating the Department of Labor Fiduciary Rule Key ProvisionsThe U.S. Court of Appeals for the Fifth Circuit, in Chamber of Commerce v. Alexander Acosta, Secretary of Labor reversed the ruling of the U.S. District Court for the Northern District of Texas and vacated the DOL Fiduciary Rule, finding that the DOL had exceeded its regulatory authority in promulgating the rule and that the rule’s definition of “fiduciary” was unreasonable. Potential ImpactIt is unclear how the DOL will proceed in light of this decision. It is also not immediately clear what the fate of the rule will be if the DOL concedes the case. There is also the possibility that the DOL might look to the decision as a basis on which further to cut back or maybe even to repeal or rescind the rule. | Important LinksDecision of the U.S. District Court for the Northern District of Texas See Dechert Newsflash, ERISA's Fiduciary Rule Vacated - "When Congress Has Acted with a Scalpel, It Is Not for the Agency to Wield a Cudgel" See Dechert OnPoint, ERISA's Fiduciary Rule – Dead Yet? Game Over? Maybe, Maybe Not... See Dechert Newsflash, Ding Dong – The Amended Fiduciary Rule Is (Almost) Dead See Dechert Newsflash, ERISA's Amended Fiduciary Rule – Done, Done, on to the Next One |
Date | ActionOrder in Thrivent Financial v. Edward Hugler, Acting Secretary of Labor denying the DOL’s request for a stay in the proceedings Key ProvisionsThe U.S. District Court for the District of Minnesota denied the DOL’s request to stay the proceedings while the DOL reviews the issues raised in the President’s Memorandum of February 3. Potential ImpactThe DOL appears to be continuing with its reconsideration of the Fiduciary Rule; in its request for a stay, the DOL stated that as part of its review process the plaintiff may have another chance to seek an administrative change to the Rule. | Important Links |
Date | ActionOpinion and Order in Market Synergy Group v. U.S. Dep’t of Labor Key ProvisionsThe U.S. District Court for the District of Kansas granted the DOL’s motion for summary judgment upholding Prohibited Transaction Exemption 84-24, which covers certain indexed annuities. Potential ImpactIt is expected that the DOL will continue to proceed with its reconsideration of the Fiduciary Rule called for by the recent Presidential Memorandum, regardless of the court’s decision in this case (which is the second Federal case in February 2017 upholding the DOL’s actions relating to the Fiduciary Rule). | Important Links |
Date | ActionOpinion and Order in Chamber of Commerce v. Edward Hugler, Acting Secretary of Labor Key ProvisionsChief Judge Barbara M.G. Lynn of the U.S. District Court for the Northern District of Texas granted the DOL’s motion for summary judgment upholding the Fiduciary Rule. The court denied the DOL’s motion submitted on February 8, to stay the proceedings while it reviews the issues raised in the Presidential Memorandum of February 3 that could result in a delay of the applicability date of the rule or its revision or rescission. The plaintiffs filed a notice of appeal on February 24, and then, on March 11, moved for an injunction to block the rule pending the appeal. On March 14, the district court denied the motion for an injunction. On March 21, the plaintiffs filed an emergency motion with the Fifth Circuit seeking an injunction to block the rule pending appeal, or alternatively expediting the appeal. On March 29, defendants filed its opposition. On April 5, the Fifth Circuit denied both motions. Potential ImpactIt is expected that the DOL will continue to proceed with its reconsideration of the Fiduciary Rule called for by the recent Presidential Memorandum, regardless of the court’s decision in this case. | Important Links |