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Comments on Delay of Department of Labor’s Fiduciary Rule

The Department of Labor’s Fiduciary Rule requires investment advisors to serve the best interests of their retiree clients. In August 2017, Labor proposed to stay the rule’s enforcement provisions. In our comments on the proposed delay, we argue that the delay violates basic administrative law principles. First, Labor does not have statutory authority to delay the enforcement provisions. And, second, the proposed delay improperly underestimates the benefits of the delayed provisions. Instead of calculating the forgone benefits of delaying the rule, Labor assumes that investors will still receive a “significant portion of the estimated gains” from the original rule because firms are already in compliance. But Labor offers no proof that firms are actually in compliance. And in issuing the Fiduciary Rule, Labor had originally found that the enforcement provisions it plans to delay were crucial to ensuring that firms comply. In this proposed suspension, Labor has not adequately explained why it no longer believes that those enforcement provisions are crucial to ensuring compliance.