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DOL working with SEC on fiduciary rule, labor secretary says

Labor Secretary Alexander Acosta

Though its fiduciary rule was struck down in court last year, the Department of Labor hasn't abandoned the issue, Labor Secretary Alexander Acosta told lawmakers Wednesday.

The DOL is working with the Securities and Exchange Commission as the latter agency completes its standard-of-conduct package, Mr. Acosta said during a House Education and Labor Committee hearing.

In an exchange with Rep. Marcia Fudge, D-Ohio, Mr. Acosta said, "We are communicating with them, and based on our collaborative work we will be issuing new rules in this area."

The 5th U.S. Circuit Court of Appeals in New Orleans vacated the DOL's fiduciary rule in March 2018, saying it represented regulatory overreach. But in its fall regulatory agenda, the DOL said it is "considering regulatory options in light of the (5th) circuit opinion," with a final rule expected by September.

Mr. Acosta did not give a timeline for issuing a new rule when asked by Ms. Fudge on Wednesday.

The SEC package, which has become commonly known as Reg BI for one of its three components, is expected by September. Among its provisions, Reg BI compels broker-dealers to put clients' financial interests ahead of their own and requires them to mitigate financial conflicts, but critics say the proposal does not adequately define the term best interest and wouldn't establish a legally enforceable standard.

While the financial industry was widely opposed to the DOL fiduciary rule, it is more supportive of the SEC package, though questions remain before a final rule is issued.