House Financial Services Chairman Jeb Hensarling, R-Texas, said Thursday that he will advance Rep. Ann Wagner's Retail Investor Protection Act as it "will stop" the Department of Labor's "misguided" fiduciary rule and require the DOL to defer to the Securities and Exchange Commission's "expertise" on fiduciary-related issues.
A day after stating that she wants her bill to halt the DOL's fiduciary redraft marked up by month's end, Wagner. R-Mo., also said during a joint hearing held Thursday by the House Financial Services Capital Markets and Oversight and Investigations Subcommittees, that Labor Secretary Thomas Perez is violating the Administrative Procedure Act by not reproposing the plan.
Wagner said that statements made to her in an Aug. 7 letter by Perez that DOL would issue a final rule — and not a reproposal — signals DOL is reluctant to revise its redraft to amend the definition of fiduciary under the Employee Retirement Income Security Act. "Based on that, it's hard to imagine the DOL producing a workable rule based off of this proposal. The divide is just too wide between the two," she stated on a Wednesday call with reporters.
She noted that Perez's letter nixing a reproposal was sent to her before DOL held hearings from Aug. 10 to 14 on the redraft. DOL is taking comments on the hearing transcripts until Sept. 24.
Wagner argued during the Thursday hearing that her bill, H.R. 1090, the Retail Investor Protection Act, which requires the DOL to wait to issue a fiduciary rule until the SEC issues its own, is "the proper avenue for further regulation" in the fiduciary area.
But Mercer Bullard, professor of law at the University of Mississippi Law School and founder of Fund Democracy, who testified at the Thursday hearing, told ThinkAdvisor that "there is no APA claim for a failure to repropose" a rulemaking. "The claim would be based on the analysis underlying the final rule, but Rep. Wagner is not interested in the final rule."
The Financial Planning Coalition — consisting of the Financial Planning Association, the Certified Financial Planner Board of Standards and the National Association of Personal Financial Advisors — agreed that DOL "will not violate the APA if it moves straight to a final rule."
