Why did Department of Labor (DOL) come up with a "Fiduciary Rule" for Investment Advisers and not SEC?

CFA General
#1

In April 2016, under Obama Administration, DOL released a final “Fiduciary rule” for Investment Advisors handling retirement accounts. However, Trump in Feb 2017, passed an Executive Memorandum that required DOL to examine/review the Fiduciary Rule to determine whether it (i) has harmed or is likely to harm investors; (ii) has resulted in dislocations or disruptions within the retirement services industry; and (iii) is likely to cause an increase in litigation and an increase in the prices that investors and retirees must pay to gain access to retirement services.

If the Secretary of Labor makes any of these findings, the memorandum directs the Secretary of Labor to publish a proposed rule rescinding or revising the Fiduciary Rule.

Subsequently, DOL issued a 15 days comment period related to proposal to delay the implementation of the Fiduciary rule. Attaching CFA Institute’s comment letter - https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AB79/01045.pdf

Other comment letters can be found at this link - https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AB79

Finally the applicability of the rule was delayed by 2 months and the partial rule became applicable on 9th June 2017.

My question is, why didn’t SEC have such a rule?

#2

Fiduciary rules are tighter under ERISA, which is governed by DOL, not SEC. Institutional investors operating under ERISA adhere to these tighter regulations. SEC purview is broader and also applicable to those operating under slightly looser fiduciary definitions; thus, DOL is the body which put these into effect.

#3

The SEC could easily have done it also. Financial institutions have five main regulators (and more with indirect regulatory influence), and all can do basically whatever they want. If the Federal Reserve suddenly decided that FAs cannot be affiliated with banks, what can anyone do?

#4

The new DOL regs also give more authority to SEC investigators.

#5

SEC seeks opinion on DOL Fiduciary Rule alternatives.

https://www.forbes.com/sites/ashleaebeling/2017/06/02/the-sec-wants-your-opinion-on-dol-fiduciary-rule-alternatives/#5d8b9c3953f7

#6

…

#7

“I strongly feel it is SEC who should be keeping a watch on Investment Advisors and not DOL.”

Um ok… Good to know…? So is this like a regular dinner time sort of conversation for you?

#8

Employee Retirement Income Security Act ERISA of 1974 is administered by the DOL and pulls service providers who work with retirement plans and accounts into a fiduciary status. This was there before, the recent regs expanded on it.