DOL Sends Fiduciary Rule to OMB for Review

DOL has indicated that the final rule will be released in the first half of the year.

The US Department of Labor (DOL) sent its final Conflict of Interest Rule—Investment Advice (with related exemptions and amendments to existing exemptions) to the President’s Office of Management and Budget (OMB) for review. This timing is consistent with the DOL’s indications that it will release the final rule in the first half of 2016.

OMB received the final rule on January 28. The OMB review period is limited by Executive Order to 90 days, subject to extensions, but the actual review time could be significantly shorter. For example, a 60-day review period could result in the final rule being released in early April.

Released in April 2015, the proposed rule

• redefines fiduciary “investment advice” for purposes of the Employee Retirement Income Security Act (ERISA) standards of fiduciary conduct and the prohibited transaction rules under ERISA and section 4975 of the Internal Revenue Code (the Code);  
• includes a new “Best Interest Contract Exemption,” which the DOL indicated was intended to preserve common compensation practices while requiring those who provide fiduciary investment advice to ERISA plans and individual retirement accounts (IRAs) to adhere to a “best interest” standard of care, among other things;  
• includes a new exemption that provides fiduciaries relief for engaging in certain principal transactions; and
• proposes amendments to current exemptions and guidance that would affect transactions with affiliated broker-dealers, investments in affiliated mutual funds, offerings of certain annuity products, and IRA rollovers, among other transactions.

Morgan Lewis is continuing to closely follow this rulemaking process and will provide updates on new developments as they occur. Click on any of the links below to read prior Morgan Lewis thought leadership covering last year’s proposed rule:

• DOL Sends Proposed Conflict of Interest Rule to OMB for Review (LawFlash, March 2015)
• Department of Labor Retirement Initiative Fails to Consider Current Regulatory Regime, which Comprehensively Protects Investors, Including IRA Investors, and Preserves Investor Choice (White Paper, March 2015)
• DOL Fiduciary Rule to Revamp Regulation of Advice to Plans and IRAs (LawFlash, April 2015)
• DOL’s Proposal to Expand Fiduciary Definition Would Bring Many Service Providers Into Scope (White Paper, May 2015)

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Boston
Lisa H. Barton

Chicago
Marla J. Kreindler
Michael M. Philipp
Julie K. Stapel

New York
Craig A. Bitman
Barbara D. Klippert

Philadelphia
David B. Zelikoff

Pittsburgh
John G. Ferreira
R. Randall Tracht

Washington, DC
Lindsay B. Jackson
Daniel R. Kleinman
Michael B. Richman
Steven W. Stone