House passes bill to defer DOL fiduciary regs until SEC acts

The House on October 29, 2013 passed H.R. 2374 (The Retail Investor Protection Bill), legislation that would prohibit the Labor Department from issuing any regulation under ERISA defining the circumstances under which an individual is considered a fiduciary “until 60 days after the Securities and Exchange Commission (SEC) issues a final rule governing standards of conduct for brokers and dealers under specified law.” The purpose of the bill, according to the Committee Report, is to “promote coordination between the DOL and the SEC, and to reduce the potential for conflict among any related regulations.” The bill was sponsored by Rep. Ann Wagner (R-MO) and co-sponsored by Rep. Patrick Murphy (D-FL).

EBSA issued proposed regulations in October 2010 that would more broadly define the circumstances under which a person is considered a fiduciary under ERISA by reason of giving investment advice to an employee benefit plan. The rules came under intense criticism and EBSA subsequently announced that it would be re-proposing the rules.

The Obama Administration has announced its opposition to the measure. In a Statement of Policy issued by the Office of Management and Budget (OMB) on October 28, 2013, the Administration said it “strongly opposes” passage of H.R. 2374 and that senior advisors would recommend a veto if the President were presented with the legislation. According to the OMB, the bill “would hinder efforts to protect consumers from conflicts of interest among brokers, dealers, financial advisors, and others whose incentives may be misaligned with investors, potentially leading to deceptive and abusive practices.”

Source: H.R. 2374 (The Retail Investor Protection Bill).

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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