Bloomberg seeks to restore DOL fiduciary rule as part of his retirement agenda

Democratic presidential candidate Michael Bloomberg doesn’t believe the Securities and Exchange Commission’s investment advice reform efforts provide enough investor protection and is seeking to revive a previous Department of Labor standard.

In a four-page retirement security policy agenda released Tuesday by his campaign, Mr. Bloomberg indicated that he would restore the Labor Department’s fiduciary rule for retirement accounts, which was vacated in 2018 by a federal appeals court.

“Financial advisers who work on commission sometimes prey on elderly customers, steering them into expensive funds and annuities and away from better alternatives,” the document states. “The Trump administration has reversed the [DOL fiduciary] rule. Mike will protect elderly investors from conflicted financial advice and improve the financial position of retirees.”

The agenda doesn’t mention the SEC’s Regulation Best Interest, the centerpiece of its advice-reform regulatory package that is designed to raise the broker standard above suitability. Reg BI, as it’s known, will go into force on June 30.

A Bloomberg campaign aide said the former New York City mayor doesn't think Reg BI will do enough to protect investors.

“It doesn’t set an adequate fiduciary standard,” Bloomberg spokeswoman Rachel Nagler wrote in an email to InvestmentNews. In a Bloomberg administration, the SEC “ideally would revise the rule to better reflect the original intent of the Labor Department’s fiduciary rule.”

Ms. Nagler added that Mr. Bloomberg sees the effort by several states, including Massachusetts and New Jersey, to promulgate their own fiduciary rules as a “predictable response to an inadequate rule. We need a better federal standard.”

Mr. Bloomberg’s position on the DOL fiduciary rule was a pleasant surprise to Barbara Roper, director of investor protection at the Consumer Federation of America.

“I think both the DOL fiduciary rule and the fixing of Reg BI are a natural part of the Democratic platform, and I’m delighted to see this included on Bloomberg’s agenda,” Ms. Roper said. “But he hasn’t always been a big fan of financial regulation, so I didn’t take for granted that he would embrace such a mainstream Democratic policy.”

She noted that during his tenure as New York mayor, Mr. Bloomberg criticized financial regulations for impeding capital formation and criticized elements of the Dodd-Frank financial reform law.

“That makes me very nervous,” Mr. Roper said. “It’s a cause for concern. Everything is relative.”

Ms. Nagler said that as mayor, Mr. Bloomberg protected financial consumers.

“Mike has always recognized that financial policy should evolve to keep pace with the constantly changing market, and this plan calls for policies that make sense in today’s economy,” Ms. Nagler wrote in an email. “For example, strengthening the fiduciary rule in fact reflects his record of vigorously defending consumers. As mayor, Mike took many strong steps to protect New Yorkers from unscrupulous lenders."

Mr. Bloomberg, who has made billions of dollars as the head of a financial information company and has had a long Wall Street career, said ordinary investors aren’t making enough from the soaring stock market.

“The financial system isn’t working the way it should for most Americans,” Mr. Bloomberg said in a statement.“The stock market is at an all-time high, but almost all of the gains are going to a small number of people, and our economy is still vulnerable to another shock like the 2008 financial crisis that devastated families and communities all over the country.”

Before Mr. Bloomberg gets a chance to restore the DOL rule, the Trump administration is poised to promulgate a revised DOL rule that many experts believe will dovetail with Reg BI in setting an advice standard for retirement investments.

The revised rule was supposed to be released in December, according to Labor's regulatory agenda. The closer the DOL gets to the end of this year, the greater opportunity the next Congress would have to overturn the DOL rule through the Congressional Review Act.

“We’re all still waiting,” said George Michael Gerstein, counsel at Stradley Ronon Stevens & Young. “Most anticipate it will be out by the spring. They don’t have a lot more time for CRA purposes.”