Lookin' Out for You
Apr 25, 2018


The U.S. Securities and Exchange Commission (SEC) proposed overhauling its conflict-of-interest rules for brokers at a public meeting last week. The new "best-interest" standard is designed to eliminate sales practices that investor advocates say encourage firms to steer customers into inappropriate investments that boost broker compensation. The proposal could wind up replacing the Obama-era Department of Labor's (DOL) fiduciary rule for brokers and financial advisors.



The fiduciary rule required advisors and brokers to put their clients' interest before their own when advising on retirement accounts, such as 401(k) plans and individual retirement accounts.

The 5th Circuit Court of Appeals ruled on March 15 that the DOL overstepped its authority and vacated the fiduciary rule. The DOL stated it will not be enforcing the fiduciary rule pending further review.



According to the nearly 1,000 page proposal, brokers will be required to put their clients' needs ahead of their own desire to make the most revenue when recommending investment products or strategies. Under the SEC's proposal, the rule wouldn't ban any single conflict of interest but would generally require brokers to disclose conflicts of interest to clients such as fees they earn for steering investors toward certain mutual funds or insurance products. The SEC also proposed that brokers be banned from referring to themselves as "advisers." Investment advisers have long had a fiduciary duty and the SEC voted to propose guidance clarifying the fiduciary responsibilities that investment advisors face.



With the introduction of the SEC's new proposal, it's less likely that the DOL will appeal the 5th Circuit ruling to the Supreme Court. The DOL must decide by April 30. The public has 90 days to comment on the new proposed rule. Note - the proposed rule applies to both retirement and non-retirement accounts.



Senate Minority Leader Chuck Schumer announced plans to introduce legislation that would decriminalize marijuana on a federal level. Under the new bill, marijuana would be removed from the list of substances classified under the Controlled Substances Act. States would have the power to decide what's best for them. Currently, medicinal use is legal in 29 states and legal for recreational use in eight.



Attorney General Jeff Sessions announced the U.S. Drug Enforcement Administration (DEA) is proposing changes to its regulations over opioid manufacturing quotas. West Virginia sued the DEA in December over drug quota rules, arguing the agency's policy wrongfully sets manufacturing quotas based on the amounts of pills drugmakers expect to sell, not legitimate medical needs. Sessions also announced that the DEA has reached a prescription drug information-sharing agreement with 48 Attorneys General. The DEA collects some 80 million transaction reports every year from manufacturers and distributions of prescription drugs. Sessions hopes this partnership will make it easier to prosecute criminals who are fueling the opioid epidemic. Two steps forward.


Making Our Way Around the Country


Gov. John Kasich and the Ohio Bureau of Workers' Compensation (BWC) proposed a $1.5 billion rebate for Ohio employers this summer. The BWC's Board of Directors will hear the proposal today and will vote on it at the board's May 24 meeting. Most rebates would equal 85% of the employer's premium for the policy year ending June 30, 2017. Both private and public employers are eligible for the rebate. This is the largest rebate in 20 years and expands workers' compensation savings for employers to $8 billion since 2011. BWC would begin sending checks in early July.



The U.S. Mine Safety and Health Administration (MSHA) published its final rule regarding examinations of working places in metal and nonmetal mines that allows for more flexibility for examiners conducting mine inspections to exercise their own judgment. The Workplace Examination Final Rule is less burdensome than previous iterations of the rule. The final rule requires a complete workplace examination at least once each shift for each working place where miners are scheduled to work; it must be conducted before work begins or as miners begin working in that place; operators must promptly initiate corrective actions or must provide timely notification of adverse conditions to miners that are not promptly corrected. The new regulation is effective June 2.



The Senate approved John Ring for a seat on the National Labor Relations Board. Ring was sworn in as Chairman and gives Republicans a 3-2 majority on the body that oversees all private-sector employers, presides over union elections and legal disputes between workers, unions and companies. Unions are bracing for a pro-employer slant. His term will expire in December 2022.



It was great seeing so many folks at the RIMS 2018 Annual Conference & Exhibition. A special shout out to the college students who sought us out! If you're still digging out of your email box, here are some tips to keep it manageable. Or, you can petition for this


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