The Department of Labor Has Proposed Delaying the New Fiduciary Rule for Sixty Days from April 10, 2017, to June 9, 2017
Client Alerts | March 9, 2017
In April 2016, the Department of Labor (“DOL”) released regulations that, among other things, modify the definition of an “advice fiduciary” for plans covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The new definition also applies to IRAs and other non-ERISA plans which are subject to Section 4975 of the Internal Revenue Code of 1986, as amended.
The regulations (also referred to as the “fiduciary rule”) are currently scheduled to take effect on April 10, 2017. On February 3, 2017, President Trump issued a presidential memorandum which required the DOL to review the regulations and, if necessary, to revise or revoke them. On March 2, 2017, the DOL proposed delaying the effective date of the new regulations for sixty days, until June 9, 2017. The proposed delay is subject to a comment period, which ends on March 17, 2017. The regulations, however, have not actually been delayed. Hopefully, the regulations are delayed soon because of the imminent April 10th effective date.
The DOL has proposed the delay because it believes that it will not be able to finish its review and analysis of the advice fiduciary rule ordered by the presidential memorandum before April 10, 2017. The DOL has also requested comments relating to the presidential memorandum. Based on the comments received during this comment period and the DOL’s analysis, it is possible that the DOL could further delay the effective date for the fiduciary rule past June 9, 2017, revise the fiduciary rule or revoke the fiduciary rule.
We continue to consider how these regulations will effect hedge fund managers and whether any changes to fund documents will be necessary. As additional guidance is issued, the impact of these rules on hedge funds may become more clear.