Articles Tagged with Department of Labor

Published on:

Stock_broker_01In the wake of the recent presidential election, speculation abounds that President-elect Trump will kill the Department of Labor’s so-called fiduciary rule, set to take effect in April 2017.  Wall Street hates the new rule, as it imposes significant obligations upon them when dealing with IRAs and other retirement accounts.

Prior to the new rule, broker-dealers liked to argue, in securities arbitrations and other lawsuits, that they had no obligation to clients other than the duty to make “suitable” investment recommendations to IRA investors.  Brokers frequently argued they owed no “fiduciary” duty to their clients and had no obligation to act in the client’s best interest.   This meant they could recommend whatever product they liked, usually the one that paid them highest commission, so long as it was otherwise suitable.

In 2015, President Obama’s Department of Labor issued a new rule, now set to take effect in April 2017, which clarifies that brokers who render investment advice to investors in retirement accounts such as IRAs are full-fledged “fiduciaries” with the obligation to act in the best interests of the investor.