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DOL Fiduciary News: April 9, 2018

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What becomes of clean shares if Labor walks away from fiduciary rule?

BenefitsPRO | April 05, 2018 at 06:12 PM

Before the Labor Department formally delayed the full implementation of the fiduciary rule in November of 2017, regulators were sending clear signals that clean shares of mutual funds would play a prominent role in revisions to the regulation.

An FAQ issued in May of 2017 by the agency noted the emerging prospect of broker-dealers and fund managers using clean shares as way to comply with the Obama-era regulation, which was written in an attempt to protect investors by reducing conflicts of interest in mutual fund recommendations.

“Such an approach is a potentially powerful means of reducing conflicts of interest with respect to mutual fund recommendations,” Labor wrote in the FAQ.

When the Department ultimately delayed the rule by 18 months, it based its reasoning, in significant part, on product innovations such as clean shares, and the additional time industry would need to address the “logistical obstacles” of implementing a new share class industry-wide.

“The delay provides firms with additional time to address these issues and successfully launch products that benefit investors,” wrote Labor when it issued the delay of the rule.

U.S. fines large financial advisers for breaching fiduciary duties

Reuters; April 6, 2018, 12:02 PM EDT

WASHINGTON (Reuters) -- The U.S. Securities and Exchange Commission said on Friday it had fined PNC Investments LLC, Securities America Advisors LLC and Geneos Wealth Management Inc. around $15 million collectively for allegedly breaching fiduciary duties to clients and generating millions of dollars of improper fees.

The advisers did not admit or deny the findings in the settlements. 

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