Five Years
The Labor Department has spent the past four years trying to resurrect a fiduciary rule after its first version collapsed in 2011 under industry opposition and bipartisan criticism. Though the details haven’t been released, President Barack Obama endorsed the plan last month at an event hosted by AARP. The department is set to issue the proposal for public comment in the next few months.
The Labor Department argues that investors are vulnerable because brokers often receive compensation from mutual funds and other companies in return for selling their products. White House economists also raised alarms about the practice, saying investors lose as much as $17 billion a year to inferior products and “backdoor fees.”
Jason Surbey, a spokesman for the Labor Department, said the new plan has been developed with the SEC’s help. Labor Secretary Thomas Perez and White have worked together closely throughout the process, he said. Gina Talamona, a spokeswoman for White, declined to comment.
In an interview last week, White said the SEC and the Labor Department aren’t moving jointly because they have different responsibilities and legal authorities. While the Labor Department answers to the White House, the SEC does not.
Any SEC rules have to “respect those differences,” she said.
Lobbying Campaign
White also said she doesn’t feel any political pressure to speed up progress on new rules. “We’re very focused on our own decision whether to proceed,” she said.
Almost as soon as Perez announced the proposal last month, Wall Street groups seized on the SEC-Labor Department split as part of a ramped-up lobbying campaign.
In one letter sent around by an industry group last week, Senator John Boozman of Arkansas and Representative Ander Crenshaw of Florida, both top members of appropriations panels, told the White House that the SEC is better positioned to write new rules for brokers and the Labor Department should stand down until the commission acts.