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Mar 2017
15
March 15, 2017

DOL Adopts Temporary Fiduciary Rule Enforcement Policy

The U.S. Department of Labor (DOL) has issued a Temporary Enforcement Policy dated March 10, 2017, providing public assurances that no DOL enforcement action will be taken under the Fiduciary Rule and related class prohibited transaction exemptions (PTEs) if the DOL: (1) issues a final rule after April 10, 2017, the initial applicability date, and the adviser or financial institution did not satisfy the requirements of the Fiduciary Rule during the “gap” period; or (2) decides not to issue a delay of the Fiduciary Rule and the adviser’s or financial institution’s initial round of prescribed compliance steps are not completed by April 10, 2017.

In adopting this policy, the DOL concluded, “temporary enforcement relief is appropriate to protect against investor confusion and related marketplace disruptions attributable to uncertainty regarding the timing of the Department’s decision on whether to delay the applicability date of the fiduciary duty rule and related PTEs.” While a 60-day delay of the Fiduciary Rule is widely anticipated, financial institutions have faced the growing dilemma between issuing required customer communications ahead of the April 10th applicability date and the likelihood that the communications’ content will be rendered inaccurate or moot by the DOL’s rulemaking.

This is welcome relief given widespread concerns and uncertainties surrounding the Rule’s proposed delay, review and possible revision or repeal in light of President Trump’s February 3rd Executive Memorandum directing the DOL to reexamine the Fiduciary Rule, as previously announced. The DOL’s action upon the proposed delay is anticipated before April 10, but the related public comment period does not close until this Friday, March 17. If the DOL’s delay is adopted as anticipated, then June 9, 2017, would become the new applicability date.

On a parallel 45-day track, the DOL is still taking public comments until Monday, April 17, 2017, with respect to the considerations enumerated in the President’s Memorandum. Public comments may be submitted and viewed online. The DOL’s Employee Benefit Security Administration’s webpage provides additional information and resources.

When the proposed extension date has been formally adopted (hopefully later this month), we will send another alert. Further developments affecting the Fiduciary Rule are anticipated to follow in late April or May. In the meantime, if you have any questions, please contact Lisa Zimmer at lzimmer@wnj.com or 248.784.5191 or Shane Hansen at shansen@wnj.com or 616.752.2145.

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