Alex Acosta isn't going to further delay the DoL rule just yet. But he does want more input from you, help from other regulators, he's leaving the door open to further delay or changes down the line, and he's sort of delaying enforcement, too. Oh, and for fundsters and platform folks pondering what a post-fiduciary reg world will look like in advisor-sold asset management distribution, the DoL staff seems to be throwing their weight behind the "clean shares" idea.

Alexander Acosta DoL Secretary of Labor

Last night Secretary of Labor Acosta penned an op-ed in the Wall Street Journal and his regulatory agency issued new guidance (including an 11-page Q&A and an official field assistance bulletin regarding enforcement of the controversial fiduciary rule. 401kSpecialist, InvestmentNews, and the WSJ all covered the DoL updates.

Acosta explains that his agency has "found no principled legal basis" for further delaying the fiduciary reg beyond the revised June 9, 2017 initial implementation date (for the first parts of the reg, with the rest slated for January 1, 2018).

"Respect for the rule of law leads us to the conclusion that this date cannot be postponed," Acosta writes. "Some who call for immediate action on the Obama administration's regulations are frustrated with the slow process of public notice and comment. But this process is not red tape. It is what ensures that agency heads do not act on whims, but rather only after considering the views of all Americans."

Yet he also confirms that the DoL's extra review of the reg (as ordered earlier this year by U.S. President Donald Trump) is not done. Acosta specifically leaves the door open to further changes or delays down the line, and he wants input: the Q&A reveals that the DoL will soon issue a Request For Information (RFI) on possibly revising (adding more exemptions to) the fiduciary reg and on possibly pushing back the January 1 final implementation date.

Acosta even says he wants help from a traditional DoL rival on the fiduciary subject.

"Under the Obama administration, the Securities and Exchange Commission declined to move forward in rule-making," Acosta writes. "Yet the SEC has critical expertise in this area. I hope in this administration the SEC will be a full participant."

You hear that, Jay Clayton and Co? Acosta wants to team up!

Meanwhile, fundsters and other wealth management and retirement plan industry insiders who are frustrated by a lack of immediate further delay may take heart in another piece of the DoL update yesterday: a temporary enforcement policy that sounds like an enforcement "good faith" grace period:

"During the phased implementation period ending on January 1, 2018, the Department 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," the DoL writes.

As for clean shares, the DoL's new fiduciary reg FAQ mentions the new share class type five times (including spending a whole paragraph describing how clean shares would work). The FAQ even points to clean shares as an example of "promising responses to the Fiduciary Rule" and notes that the industry probably needs more time to bring clean shares and other adaptations online. Hence the RFI specifically asking about pushing back the January 1 final implementation date.

T-shares, meanwhile, which have reportedly fallen a bit out of favor with fundsters of late, are mentioned in the DoL FAQ only once. 

Edited by: Neil Anderson, Managing Editor


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