DOL Rollover Guidance Expected After SEC Releases Reg BI
January 16, 2019 by Melanie Waddell
The Labor Department will propose in the summer or fall of this year — after the Securities and Exchange Commission finalizes its Regulation Best Interest for brokers — guidance on when a rollover recommendation constitutes fiduciary advice, as well as an exemption for compliance with Reg BI, attorneys at Stradley Ronon predict.
The attorneys, part of Stradley Ronon’s Fiduciary Governance Group, write in their Jan. 7 blog post, “A Fiduciary’s 2018 Retrospective (and Predictions for 2019),” that given the fact that Labor’s fiduciary rule was vacated, the original five-part test now determines whether an advisor is an investment advice fiduciary under the Employee Retirement Income Security Act.
“We expect that the DOL will issue interpretive guidance, and propose exemptive relief, in the summer or fall of 2019” that will “most likely address the circumstances under which rollover recommendations constitute fiduciary investment advice,” the attorneys, including David Grim, the former director of the SEC’s Division of Investment Management, write in their Risk & Reward blog.
The proposed Labor exemption, meanwhile, “will probably apply to services and products that the DOL views as presenting fewer conflicts of interest, one of the conditions being adherence to the final form of Regulation Best Interest.”
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