August 9, 2017

[email protected]

U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, DC 20210

Reference : RIN 1210-AB82

Ladies and Gentlemen:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to respond to the Department of Labor’s (“Department”) Request for Information Regarding the Fiduciary Rule and Prohibited Transaction Exemptions (the “RFI”).2 We also appreciate the Department’s seeking public input before it proposes changes to the redefinition
of the term “fiduciary” under section 3(21) of ERISA and section 4975(e) of the Internal Revenue Code (the Code”) and its exemptions (the “Rule”). We reiterate our strong view that
significant changes are necessary to the Rule and its exemptions. We look forward to working with the Department to make the Rule more consistent with ERISA and the Code and to make the necessary exemptions workable. Retirement savers must be able to choose the kind of investment services they want, and the exemptions cannot be so burdensome that they prevent those services from being provided in an affordable manner. It is critical that the Department revise the Rule and its exemptions to eliminate the level of confusion that the current Rule has created among retirement savers.

In an earlier letter dated July 14, 2017, SIFMA urged the Department to delay the January 1, 2018 applicability date of the provisions in the Best Interest Contract Exemption, the Principal Transaction Class Exemption, and Prohibited Transaction Exemption 84-24 that are not now in effect. We also respectfully requested that the Department delay the provisions of the remaining exemptions, amended in 2016, until the President’s requested study is completed.

We believe the voluminous record before the Department dating from April 6, 2016 through the present reflects the harm to retirement savers that the Rule and its exemptions have caused. They will continue to cause significant disruption, loss of services and loss of choice for retirement savers, as described not only in this comment letter and the accompanying market impact study, but also other comments and studies provided to the Department since March 2017. The negative consequences outlined in detail in these submissions, including the cutbacks in products and services to retirement accounts that have occurred since April will be exacerbated if the exemptions, as finalized in April 2016, take effect on January 1, 2018. We urge the Department to carefully review the data that has been collected that supports the conclusion that the Rule has resulted in significant harm to retirement savers. SIFMA’s members have invested a substantial amount of time and resources to come into compliance with this regulation. Unfortunately, there has not been a regulatory project in recent memory that has cost the industry more, while being of questionable benefit to the people it is supposed to protect. Implementing the changes required by the Rule has distracted our members and other financial industry participants from many other projects that could benefit retirement savers and consumers alike, and has been inconsistent with the need to provide Americans with greater access to investment services and affordable choices.

As noted above, most critical in the short run is a delay in the January 2018 applicability date. Although the Department’s review of the Rule and exemptions directed by the President’s February 3, 2017 Memorandum has not been completed, the entire financial services industry continues to devote the massive resources needed to ensure compliance with the Rule and related exemptions by January 1, 2018. There is less than five months until that date and the Department’s review is not complete. The comprehensive reexamination directed by the President’s Memorandum cannot be completed by January 1, 2018. If the review concludes there have been harmful effects or if it otherwise conflicts with the President’s priority that Americans be empowered to make their own financial decisions, revisions, which must be proposed for notice and comment and the opportunity for a hearing, surely cannot be completed by that date.

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1 SIFMA represents the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 Dept. of Labor Request for Information, 82 Fed Reg. 31278 (July 6, 2017).