There will be multiple lawsuits along with new Finra arbitration cases when the Department of Labor’s fiduciary rule takes effect April 10 and a much larger surge when it is fully effective January 1, 2018, Public Investors Arbitration Bar Association Executive Vice President and President-Elect Andrew Stoltmann said Tuesday.
On the first day, brokers will have a legal obligation to re-examine retirement investment recommendations he or she made three years ago to find if they are suitable, appropriate and not a breach of a fiduciary duty, the private Chicago attorney said.
Most of the new legal actions will happen in Finra arbitration because they will involve brokers, Stoltmann pointed out.
But filings against Securities and Exchange Commission registered investment advisors and other financial professionals will be made in federal district courts, he added.
According to the DOL’s website, starting April 10 firms and advisors must adhere to the impartial conduct standards, and provide a notice to retirement investors that acknowledges their fiduciary status and describes material conflicts-of-interest standards.
Stoltmann said it is very clear private attorneys will be enforcing the fiduciary rule under the Trump Administration because DOL will have to take its marching orders from an anti-fiduciary White House.
Fiduciary Rule Day 1: Lawsuits, Arbitration Filings Predicted
December 6, 2016
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It is not clear whether Mr. Winks is for or against the DOL Fiduciary Rules. No one has truly defined what "fiduciary duty" is in the Rules. And truly no one has really defined what "best interest" is being served. Millions of small account retirement savers who will be left to buy myRA-type U.S. Government Bond investments because no true financial professional will work with them certainly won't be having their best interests served. Competition and reputation are the best ways to gain market share. Let investors choose whomever they want to work with and pay for those services whichever way they prefer--most small account owners prefer that financial institutions pay transactions-based commissions rather than they themselves have to pay recurring annual fees for many years. Full and open choice of financial institutions and financial professionals is definitely in the best interests of all retirement savers. DOL cannot improve on that.
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If one purports to render advice with that responsibility comes fiduciary duty. The consumer will determine the importance of their best interest being served as required by statute. The incentive to serve in the client's best interest will be market share to be gained. The consumer is not deprived of anything as their best interest is advanced and with it the ongoing accountability for recommendations of their broker will be clarified. SCW
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If the DOL Rules under a Trump Administration are not repealed before the April 10, 2017 effective date, it will be seen as a travesty and a betrayal for all retirement savers, especially those with small qualified accounts who will have to be abandoned due to litigation and profit margin concerns. Financial Professionals will be deprived of their First Amendment rights to provide unrestricted financial advice, as well as be faced by anti-competitive sanctions favoring 401(k)s over IRAs and favoring fees over commissions, all for unspecified but political reasons. If the rules are repealed the only people negatively affected will be DOL bureaucrats on their way out and salivating lawyers. Frank P, CLU, ChFC