March 29, 2021

Fred Reish Addresses Possible DOL Approach to Fiduciary, Proxy Voting Rules With Bloomberg Law

In the article “Lost Track of Fiduciary, ESG Rules? Here’s Where They Stand,” Bloomberg Law turned to benefits and executive compensation partner Fred Reish for insight on upcoming rulemaking by the U.S. Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA), particularly the fiduciary rule and the proxy voting rule.

According to the publication, President Joe Biden froze and reviewed all but two of those rules required under the Setting Every Community Up for Retirement Enhancement Act, which Congress passed in 2019. Reish said that since then, a lot has been riding on incoming leadership at the DOL.

“Now that we have a confirmed secretary of labor, part of that puzzle is in place,” Reish said, noting that EBSA still lacks an assistant secretary. “That is the person who will likely have the primary responsibility for setting the tenor of these guidance projects.”

Regarding the fiduciary rule, Reish said, “The next step will likely be a new regulation further expanding the definition of fiduciary advice and possibly an update to prohibited transaction exemption.” He added, “The DOL will need to walk a fine line between the desire to cover more advisers under the fiduciary definition and the limits imposed on the DOL by the Fifth Circuit’s vacatur of the Obama-era fiduciary rule.”

Reish also said that the EBSA’s proxy voting rule is “connected at the hip” to the investment duties rule, as it follows the Securities and Exchange Commission’s best-interest standard and regulates based on pecuniary factors.

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