WASHINGTON (Legal Newsline) - President Donald Trump’s pick to head the U.S. Department of Labor told federal lawmakers last week he intends to follow Trump’s February order directing the department to review its controversial new fiduciary rule.
R. Alexander Acosta, Trump’s labor secretary nominee, faced members of the U.S. Senate Health, Education, Labor and Pensions, or HELP, Committee during his confirmation hearing Wednesday.
A native of Miami, Acosta received his undergraduate and law degrees from Harvard.
He currently serves as chairman of the board of U.S. Century Bank, the largest domestically owned Hispanic community bank in Florida. He also is the dean of the Florida International University, or FIU, law school. He has held the position since 2009.
In 2003, Acosta was selected by then-President George W. Bush to serve as assistant attorney general for the U.S. Department of Justice’s civil rights division. He was the first Hispanic man to hold such a rank.
In addition, Acosta has served as a member of the National Labor Relations Board.
U.S. Sen. Elizabeth Warren, D-Mass., asked Acosta if he was confirmed before the DOL’s proposed delay of the rule is finalized whether he would “promise to stop” the holdup.
Warren contends the delay would cost Americans $3.7 billion.
Acosta replied that he supports “following executive actions from the President, who will be my boss.”
“There is an executive action, which addresses with specificity the fiduciary rule,” he testified. “It has asked the Department of Labor to look at the rule and to assess specific questions: Will the rule reduce the investment options available to investors? Will the rule increase litigation? Will the rule financially impact retiree investors? And the executive action directs the secretary of Labor and Department of Labor to repeal or revise the fiduciary rule if any of the criteria laid out in that executive order is found.”
Acosta explained that Trump’s order regulates and determines the DOL’s approach to the rule.
The day before Acosta’s hearing, Warren sent him a 23-page letter, outlining a range of questions concerning his qualifications and views on issues before the department.
“I am very concerned about the possibility that you will simply fall in line with President Trump’s anti-worker statements and policies, which would be disastrous for the millions of American workers who rely on the Department of Labor’s enforcement of labor law,” she wrote.
The implementation of the DOL’s fiduciary, or “conflict of interest,” rule was one of her areas of concern.
In her letter to Acosta, Warren said any efforts to roll back the new protections will be “devastating” to consumers.
“Rollbacks would also disadvantage those honest and hardworking financial advisers and broker dealers who will now be able to compete on a level playing field,” she noted. “Dismantling this rule would mean that advisers who already put their customers’ interests first will once again have to compete against the ones who don’t.”
Among Warren’s questions:
- Did Trump or anyone in the White House, on the transition team, or at the DOL consult with Acosta about the contents of his order? If so, Warren asked Acosta to list the names of all parties he consulted with and send any correspondence.
- Will Acosta commit to only reviewing information that is independent and is not funded “or otherwise compromised” by financial industry players with a “vested interest” in the findings?
- She also asked Acosta to identify all career and political staff at the DOL who will conduct the analysis.
When asked Wednesday if he supported the rule, Acosta said it goes “far beyond” addressing the standard of conduct of an investment adviser but didn’t elaborate.
The DOL released its final rule in April 2016. The rule mandates financial professionals who service individual retirement accounts, including IRAs and 401(k) plans, to serve the “best interest” of the savers and disclose conflicts of interest.
However, the DOL said earlier this month it would move forward -- under Trump’s direction -- with its efforts to delay the April 10 applicability date of the new rule.
The department said under its proposal the applicability date of the rule and related exemptions would be extended to June 9.
“The proposed extension is intended to give the department time to collect and consider information related to the issues raised in the memorandum before the rule and exemptions become applicable,” according to a DOL news release.
The DOL’s proposal was published in the March 2 edition of the Federal Register. The department accepted public comments on the proposed extension for 15 days following its publication. More than 500 were received.
The department’s announcement followed Trump’s memorandum, issued Feb. 3, directing the DOL to review the rule and determine whether it may “adversely affect” the ability of Americans to gain access to retirement information and financial advice.
Comments on issues raised in the presidential memorandum will be accepted for 45 days, according to the DOL.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.