DOL Looks to Increase Fiduciary Standards without Following Procedure Standards

Openmarket.org

The Department of Labor (DOL) has proposed a new rule to broaden the definition of fiduciary. Fiduciaries under the Employee Retirement Income Security Act (ERISA) include persons who have discretionary authority over a plans management and provide investment advice. DOL’s original interpretation assigns fiduciary responsibilities only to individuals who provide advice regularly and are the primary provider of investment advice. The proposed rule change expands fiduciary duties by removing the language of primary and regular, leaving anyone who gives investment advice liable for losses to the plan. Besides the increased costs to the financial industry to comply with the rule change and loss of service to small and medium investors, DOL has not performed its duties as a department to justify the rule change.

DOLs proposed rule change intention is to protect American investors. However, DOL has not performed the proper procedures in rulemaking which potentially will cause more harm than good. As well, rulemaking of this sort, similar to Obamacare, of finalizing a rule before the details are worked out (seller exemptions and prohibited transaction exemptions) creates uncertainty, leading to less transparency in government — something the rule change is attempting to promote in the financial industry.

http://www.openmarket.org/2011/06/28/dol-looks-to-increase-fiduciary

-standards-without-following-procedure-standards/