This interview, published on August 3, 2020, addresses the intersections of SEC's Regulation Best Interest, the upcoming enforcement date for the Massachusetts Fiduciary Rule and the Department of Labor's fiduciary rule 2020 rulemaking. The latter is a two-part set and reinstates the DOL's long-time five-part test as well as proposing a Prohibited Transactions Exemption - with reference to Reg BI — and providing additional gloss on the five-part test. The DOL's PTE proposal also raises an important question as it intersects with the Massachusetts Fiduciary Rule, particularly with regard to what triggers an ongoing obligation under the Massachusetts rule.
The interview also notes that there will be additional Reg BI and Form CRS FAQs — and in fact the next day the SEC staff released additional FAQs (see August 4 additions), with a focus on titling and capacity. As firms refine their Reg BI and Form CRS compliance, it is important that each new FAQ response is evaluated against the firm's existing practices and compliance program.
One of the key questions under the Massachusetts rule is whether the fiduciary standard is episodic, meaning that it only applies at the time of the recommendation or whether there is an ongoing duty that extends beyond the time of the recommendation... [the DOL Proposal] raises the question of whether a firm can be a fiduciary under ERISA and the tax code but still provide episodic advice under the Massachusetts fiduciary rule.