The Proposal to Delay the Applicability Date of the Fiduciary Rule
The public comment period for the proposed 60-day delay of the applicability date of the Fiduciary Rule concluded last Friday on March 17th. The Department of Labor (DOL) is now reviewing the comments it received through that process and preparing a final rule to delay. Once the final rule to delay is ready, it will be re-submitted to the Office of Management & Budget (OMB) for its review and approval.
If one assumes that the DOL will need one week to review and address the comments received and prepare a final rule, the final rule to delay will be sent back to the OMB by the end of this week (Mar 24) or the beginning of next week (Mar 27).
Despite taking nearly two and a half weeks to review the original proposal from the DOL to delay the Rule, it is widely believed that the OMB will not need that much time to perform its review of the final rule that will soon be submitted. Many expect that the OMB may be able to complete its review within a week and a half after receiving it. As such, that would lead to a formal publication of the rule to delay in the Federal Register in the last couple of days of March at the earliest, or more likely during the week of April 3rd.
Normally, the rule-making process for this type of rule requires a waiting period of 60 days after a final rule is published in the Federal Register before it becomes effective. However, given the urgency of declaring the delay prior to the current rules becoming applicable, it is expected that the DOL will make the delay effective immediately on publication in the Federal Register.
New Labor Secretary Nominee
Despite heated exchanges with Sen. Elizabeth Warren (D- MA) and Sen. Tim Kaine (D-VA), Alexander Acosta had strong support from Republicans during his hearings this week with the Senate Health, Education, Labor and Pensions (HELP) Committee, and appears to be on track for confirmation.
The HELP Committee has scheduled a vote on Acosta’s nomination on Thursday, March 30th. Assuming approval by the HELP Committee, a full senate confirmation vote will follow. With only 51 Senate votes needed to confirm him, it is widely expected that he will be confirmed and be the first Latino in President Trump’s cabinet.
During the hearing this week, Acosta was asked about his stance on the future of the new Fiduciary Rule and its related exemptions. Acosta replied, “There is an executive action that directs how the Department of Labor will approach this rule… If I am confirmed as Secretary of Labor, I believe and support my following executive orders of the president, who would be my boss.”
SEC Chair Nominee
Jay Clayton, President Donald Trump’s nominee for chair of the Securities and Exchange Commission (SEC), began his confirmation hearings before the Senate Banking Committee on Thursday, March 23rd. Surprisingly, Clayton was not asked any questions at the hearing on Thursday about his view on the DOL Fiduciary Rule or the prospect of the SEC proposing their own rule regarding a unified standard of care.
Clayton’s hearing will be watched closely by industry observers, as his responses to questions should provide insight on his likely agenda for the SEC.
If confirmed, Clayton will join an SEC that is flush with vacancies. The five-member commission (including the Chair) currently has only two commissioners, Democrat Kara Stein and Republican Michael Piwowar. Until the two seats remaining are filled, votes for regulations that are not supported by Stein could be stymied if she chooses to skip the meetings where commissioners vote on rules, leaving the Clayton and Piwowar short of a quorum. Of course, President Trump can resolve the situation by nominating candidates to fill the SEC's two remaining vacancies.
Another anticipated issue for Clayton is that he has many ties to Wall Street and Goldman Sachs (who employs his spouse), which could create scenarios where conflicts of interest would force him to miss many SEC votes. Despite these issues, both current and former SEC staff have told Reuters they are confident that Clayton will make a strong SEC chairman.
Clayton is likely to be approved by the Senate for the role.
Contact Steve Saltzman with questions or comments at firstname.lastname@example.org.