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Kline, Roe Press for Details on DOL, SEC Coordination

This article originally ran on March 9, 2015.

Editor’s Note: The Obama Administration has been attempting in fits and starts, for the better part of the last five years, to put a new definition of fiduciary in place. The formal rollout of the latest iteration appears to be imminent, but it has generated no less attention despite the passage of almost half a decade. Two members of the U.S. House of Representatives are asking for details. 

By Nevin Adams

The Labor Department has repeatedly claimed to be consulting with the Securities and Exchange Commission on its fiduciary reproposal — but a couple of key House Republicans would like to see some proof.

House Education and the Workforce Committee Chairman John Kline (R-Minn.) and Rep. Phil Roe (R-Tenn.), who chairs that committee’s Health, Employment, Labor, and Pensions Subcommittee, have requested information regarding the DOL’s pending regulatory proposal to expand the definition of a fiduciary under ERISA, and they’d like to see it by March 18, 2015.
In a March 4 letter to Labor Secretary Thomas Perez, Kline and Roe asked to see “documents and communications related to the department’s consultation with the Securities and Exchange Commission as it worked to introduce a new proposal to redefine the fiduciary standard.” The letter asks for “all communications after September 19, 2011, between DOL and SEC regarding this rulemaking,” as well as all documents and materials addressing how DOL has considered, adopted, or discarded any concerns raised by SEC as it revised its regulatory proposal.”

Lest there be any doubt about their intent, Kline and Roe noted that “…a revised notice of proposed rulemaking should not be issued until after Congress is satisfied sufficient coordination has occurred.” 

“The public has been assured repeatedly that close consultation between these two agencies was underway to avoid any regulatory confusion and inconsistencies,” Kline said in a press release. “However, recent statements by a member of the SEC raise serious doubts about whether meaningful consultation has taken place. This rulemaking will affect the retirement security of millions of Americans, and I hope the department has done more than simply pay lip service to good government on this very important issue.”

Kline was referring to statements made by SEC Commissioner Daniel M. Gallagher Feb 20 in which Gallagher described the public reports of close coordination between the two agencies as “nothing more than a ‘check the box’ exercise by DOL designed to legitimize the runaway train that is their fiduciary rulemaking.”

“It is clear coordination between SEC and DOL is vital to ensure a functioning regulatory framework; it is unfortunately far less clear that such coordination is occurring,” Kline said, noting that “…concern over this coordination — or lack thereof — was so grave as to warrant congressional action,” specifically the 2013 passage by the House of H.R. 2374, the Retail Investor Protection Act (RIPA), which required DOL to delay its rulemaking until after the SEC acts. RIPA author Rep. Ann Wagner (R-Mo.) introduced an updated version of that bill on Feb. 25.