Today, the U.S. Department of Labor released its highly-anticipated Final Rule and Exemptions addressing when a person providing investment advice with respect to an employee benefit plan or individual retirement account is considered to be a fiduciary under the Employee Retirement Income Security Act of 1974 and the Internal Revenue
On May 1, 2015, Richard Ketchum, Chairman and CEO of the Financial Industry Regulatory Authority (“FINRA”), reaffirmed his support for a uniform fiduciary standard for broker-dealers. Testifying before the House Financial Services Committee, Chairman Ketchum emphasized that the U.S. Securities and Exchange Commission (the “SEC”) – and not the U.S. Department of Labor (the “DOL”) – is best suited to establish and implement a new industry-wide standard of care.
Chairman Ketchum’s comments come less than three weeks after the DOL issued its highly anticipated, re-proposed regulation addressing when a person providing certain types of retirement investment advice is considered a fiduciary under the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“Code”). At present, broker-dealer recommendations typically must be based on a reasonable determination that the investment is suitable in light of the investor’s financial situation and investment objectives. Under the proposed rule, broker-dealers providing retirement investment advice would be held to a higher (fiduciary) standard – they would be required to act in the best interest of their client.