Blog

Insights from the experts in investment fiduciary responsibility.

Santomenno court case a window into debate over DOL fiduciary rulemaking

Posted by Duane Thompson on February 13, 2015

Permalink |     

As the industry waits for the DOL to re-propose its fiduciary rule, a case at the appellate level last year provides an interesting preview of the upcoming debate. Last September, the U.S. Court of Appeals for the Third Circuit decided that a retirement plan provider was not a functional fiduciary by virtue of its role selecting and monitoring a “Big Menu” of funds for its clients to select from. This was not a surprising result, as it merely reinforced settled law from previous court decisions.

What makes this case so interesting is how the plaintiffs, defendants, and the DOL itself, via its amicus brief in support of the plaintiffs, addressed the past, present, and future of the DOL’s fiduciary rule.  On the one hand, the plaintiffs asked the courts to ignore DOL’s current definition of fiduciary on the basis that it wasn’t aligned with Congress’s intent when it first passed ERISA. On the other, while the DOL attempted to dissuade the court from dismissing the plaintiffs’ case, it wasn’t willing to go so far as to stand behind their updated rule as it was first proposed in 2010. All of this leads to fi360 Senior Policy Analyst Duane Thompson to speculate on what it means for the anticipated 2015 version of an updated DOL fiduciary rule.

  • Just how far will the existing, five-part test of fiduciary status be streamlined to cover more service providers?
  • What will the DOL do to prevent providers from disclosing away fiduciary responsibility?
  • How will a seller’s exemption be incorporated?  
  • Will DOL be able to provide a sufficient argument on the economic benefits of the rule, a point of emphasis in recent challenges to new regulation?  

Duane’s thoughts on these questions and more are available in a new briefing paper presented by fi360:

DOWNLOAD A COPY NOW

*  *  *  *  *

Register for INSIGHTS 2015

Previous Post Next Post Return to Blog
Let’s get to work. Connect