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DOL Fiduciary Rule

Find the latest guidance on everything to do with the US Department of Labor's fiduciary rule

The undertaking by the US Department of Labor (DOL) to expand the “investment advice fiduciary” definition under the Employee Retirement Income Security Act of 1974 (ERISA), and to modify the complex of prohibited transaction exemptions for investment activities in light of that expanded definition, became the most substantial, controversial and politicized retirement rulemaking since the enactment of ERISA. Nearly everything about this rulemaking was unprecedented, including the following.

  • The initial October 2010 proposal – Proposal 1.0 – was offered on DOL’s own initiative without advance public groundwork, then was abandoned in September 2011 in the face of broad substantive and political opposition, after public comments and a hearing.
  • The April 2015 reproposal – Proposal 2.0 – was announced by President Obama in a speech dedicated to that purpose.
  • The rulemaking process entailed thousands of pages of commentary and petitions and 3½ days of hearings. 
  • It produced the April 2016 final rule, which had an applicability date of June 9, 2017, and full compliance with the conditions of all exemptions required on July 1, 2019 (after both dates were postponed in separate proceedings subsequent to the April 2016 publication).
  • Post-publication, yet another exemption process—to resolve the treatment of a particular class of insurance products under the final rule—was initiated but never completed.
  • Controversy surrounding the final rule was ongoing, including dueling editorials in the New York Times and the Wall Street Journal, legislative proposals to revoke or rewrite the new definition and exemptions (which were never enacted), and a February 2017 order from the White House, shortly after President Trump’s inauguration, that DOL review the rule.
  • Four requests were made by DOL in 2017 for additional public comment on elements of a rule it had already adopted: on the DOL study, the original transition date, the substance of the final rule, and the proposal to postpone the transition date.
  • In 2017-2018, four separate enforcement policies were announced by DOL—one vacating a requirement of exemptive relief and three temporary policies generally limiting the conditions of compliance.
  • Actual enforcement of the final rule was undertaken not by DOL but, avowedly, by a state securities regulator.
  • Six litigations challenged the validity of the rule. The rule survived merits decisions by three District Courts and one Court of Appeals, only to be vacated by the Fifth Circuit in March 2018 (two days after the Tenth Circuit affirmed the rule). 
  • Because the vacatur also revoked exemptive relief on which providers may have been relying on since June 2017, DOL announced a temporary enforcement policy pending further guidance.
  • In June 2020, DOL released Proposal 3.0, which formally reinstated the investment advice fiduciary definition in effect since 1975 accompanied by new interpretations that extended its reach in the rollover setting, and proposed a new exemption for conflicted investment advice and principal transactions. 
  • DOL adopted Rule 3.0 in December 2020, and the incoming administration allowed it to take effect on February 16, 2021.
  • DOL proposed Rule 4.0 on October 31, 2023.

 


 

Eversheds Sutherland has been actively involved in the DOL fiduciary rulemaking process since the original proposal was released in October 2010. We brought together a team to provide comprehensive compliance advice to clients in the retirement plan, banking, insurance, mutual fund, broker-dealer and investment adviser sectors. We provide practical advice on the impact of the final rule on every aspect of our clients’ businesses, including retirement product and service development, distribution, and platform management, regulatory compliance, and investigations and litigation challenges that were anticipated under the new rule. 

  • DOL Fiduciary Rule proposal, November 22, 2023, National Society of Compliance Professionals (NSCP)
  • DOL Fiduciary Rule proposal, November 22, 2023, Coalition of Collective Investment Trusts (CCIT)
  • DOL Fiduciary Rule proposal, November 16, 2023, Financial Services Institute (FSI)
  • DOL's fiduciary proposal - what financial institutions should be considering now, September 1, 2020