In March, the 5th Circuit Court of Appeals issued a decision vacating the DOL Fiduciary Rule in its entirety. The ruling went into effect on June 21, 2018, meaning that the DOL Fiduciary Rule is no longer the law of the land.
In addition to vacating the Fiduciary Rule, the 5th Circuit decision revoked a number of prohibited transaction exemptions (including the Best Interest Contract exemption) that fiduciary advisors have been relying on for common transactions, such as receipt of a commission, involving potential conflicts of interest. On May 7, the DOL issued interim guidance indicating that it will not pursue enforcement actions against advisors who work in good faith to satisfy the impartial conduct standards. These standards generally require that the adviser put the client’s interests first, receive no more than reasonable compensation and make no misleading statements.
The Department of Labor can still choose to request that the case be heard by the U.S. Supreme Court, although that is broadly considered to be unlikely.
The SEC proposed its own investment-advice rule in April. Comments on the proposals are due August 7, 2018.
We will continue to provide policy updates as the news evolves.