June 27, 2022

Volume XII, Number 178

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June 27, 2022

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Update on DOL Fiduciary Rule Applicability Delay and Litigation

On February 9, 2017 the Office of Management and Budget (OMB) received a proposed rule to delay the applicability date of the fiduciary rule the Department of Labor (DOL) finalized last year. Currently, the fiduciary rule is scheduled to become applicable on April 10, 2017, and as discussed in a previous post and an article, the rule was the subject of a presidential memorandum issued February 3 that directed the DOL to reexamine the rule and consider revising or rescinding it.

While there are many reports and speculation among the press regarding the length of the delay, we won’t know any definitive details until the proposal is submitted for publication in the Federal Register. Here is what we expect will happen next:

  • Once the OMB completes its review and (presumably) approves the proposal, the DOL will publish the proposed rule in the Federal Register.

  • A comment period will begin on the date the proposal is published.

  • Once the comment period closes, the DOL will review the comments and prepare a final rule, which it will submit to OMB.

  • Assuming the OMB approves the final rule following its review, the DOL will publish the final rule in the Federal Register, formally adopting the new applicability date.

We expect that the comment period will be short, and encourage interested parties to consider commenting on aspects of the rule and its proposed delay.

On February 8, just before the proposed delay went to the OMB, a federal district court in the Northern District of Texas rejected challenges to the DOL fiduciary rule. Ruling in favor of the DOL on all counts, the court rejected the plaintiffs’ arguments that (i) the DOL exceeded its statutory authority under ERISA and/or its exemptive authority in issuing the fiduciary rule and related exemptions, (ii) the new exemptions impermissibly created a private right of action, and (iii) the rulemaking process violated the Administrative Procedure Act.

The same day the ruling was issued, the DOL had requested that the court hold off on issuing a ruling until at least March 10, so that the DOL could conduct a further review of the rule.

Copyright © 2022 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume VII, Number 44
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About this Author

Daniel Kleinman, Morgan Lewis, Labor and employment lawyer
Partner

Daniel R. Kleinman advises businesses on the fiduciary responsibilities provisions (Title I) of the Employee Retirement Income Security Act (ERISA). He also counsels these clients on related tax, corporate, and securities laws in connection with the structuring and marketing of investment products (including private equity and hedge funds) and financial services to employee benefits plans. Additionally, Daniel handles issues related to the regulation of broker-dealers and investment advisers under US federal and state securities laws.

202-739-5143
Michael Richman, Employment attorney, Morgan Lewis
Partner

Michael B. Richman counsels clients on the fiduciary responsibility rules under the Employee Retirement Income Security Act (ERISA), including the ERISA prohibited transaction rules. He advises plan sponsors on investment matters for defined benefit and defined contribution plans. He also counsels banks, investment adviser firms, and broker-dealer firms on ERISA compliance for ERISA plan separately-managed accounts, collective investment funds, private funds, and other arrangements. Additionally, he provides guidance to IRA custodians on permissible IRA investments and...

202-739-5036
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