Wednesday, March 25, 2015

Congressional Republicans Want Answers on DOL and SEC Fiduciary Standards

Tempers Flare as Publication of Sweeping New ERISA Fiduciary Proposal Draws Near

Author: David Schwartz J.D. CPA

In a March 4, 2015 letter, two House Republicans requested answers from Department of Labor (DOL) Secretary Thomas E. Perez about the process for devising new fiduciary rules for investment professionals providing services to retirement plans.  Representative John Kline (R-MN), Chairman of the House Committee on Education and the Workforce, and Rep. Phil Roe (R-TN), Chairman of the Subcommittee on Health, Employment, Labor and Pensions, want to know if and how the DOL and the Securities and Exchange Commission (SEC) are working together to minimize potential conflicts, higher costs, and detrimental effects on information available to those saving for retirement.  

In their letter, Representatives Kline and Roe say they were prompted to write to Secretary Perez by recent remarks by SEC Commissioner Daniel M. Gallagher harshly criticizing the DOL and SEC efforts to expand ERISA fiduciary standards as well as the level of coordination between the two agencies.  According to Gallagher, the SEC and DOL are pursuing a "one-size fits all" approach, and the DOL has not formally engaged the SEC on its rulemaking efforts. Any efforts by DOL, he claimed, were merely intended to “legitimize the runaway train that is their fiduciary rulemaking.”

Representatives Kline and Roe have requested that Secretary Perez hold off on issuing its revised proposal until Congress is satisfied sufficient coordination has occurred.  In addition, the legislators requested that Perez provide all communications after September 19, 2011 between the DOL and the SEC regarding this rulemaking, as well as all documents and materials addressing how the DOL has considered, adopted, or discarded concerns raised by the SEC as it revised its regulatory proposal.