Washington, D.C. – Late yesterday, Labor Secretary Alexander Acosta announced by way of an op-ed in the Wall Street Journal that he had found “no principled legal basis” for further delaying implementation of the core provisions of the Department’s conflict of interest (or “fiduciary”) rule. As a result, the provisions of the rule that close loopholes in the definition of fiduciary investment advice will become applicable as scheduled June 9, as will the impartial conduct standards requiring those operating with what would otherwise be an impermissible conflict of interest to act in their customers’ best interests, charge reasonable fees, and avoid misleading statements. CFA’s Director of Investor Protection Barbara Roper and Financial Services Counsel Micah Hauptman issued the following statement in response.
“Since taking office, Secretary Acosta has been under relentless pressure from industry lobbyists to freeze implementation of the rule while the Department conducts the ongoing reconsideration required by the Presidential Memorandum. That would have been a clear violation of the Administrative Procedure Act and would have subjected the Department to legal challenge,” said CFA Financial Counsel Micah Hauptman. “We applaud Secretary Acosta for recognizing that respect for the rule of law demands that implementation of the rule be allowed to go forward without further delay. Unfortunately, his comments on the substance of the rule – developed without any meaningful consultation with rule supporters – suggest that Secretary Acosta has pre-judged the outcome of the reconsideration and may plan to gut core provisions of the rule that are essential to its effectiveness.”
“Secretary Acosta states in his op-ed that, ‘This administration presumes that Americans can be trusted to decide for themselves what is best for them.’ If that’s what he believes, Secretary Acosta should give the fiduciary rule his unstinting support,” said CFA Director of Investor Protection Barbara Roper. “Americans have already clearly indicated that they believe all financial professionals should have to act in their customers’ best interests. Across party lines, they have voiced strong support for the Department’s fiduciary rule. Unfortunately,” Roper added, “Secretary Acosta’s comments on the rule to date simply parrot propaganda from the financial interests with most to gain from a return to a system that allows them to profit unfairly at their customers’ expense. If Secretary Acosta truly respects the will of the people, he will stand up to the industry lobbyists who want a fiduciary standard in name only, and he will proceed with implementation of a rule that puts real teeth into the best interest standard by making it legally enforceable and by reining in practices that encourage and reward advice that is not in customers’ best interests. That is what Americans saving for retirement expect and deserve.”
Contact: Barbara Roper, 719-543-9468; Micah Hauptman, 202-939-1004
The Consumer Federation of America is a nonprofit association of more than 250 consumer groups that was founded in 1968 to advance the consumer interest through research, advocacy, and education.