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Press Release

  • Attorney General Shapiro Joins 7 Attorneys General in Urging Department of Labor to Lift Delay of Fiduciary Rule

    4/19/2017

    Rule would protect consumers by requiring financial advisors to put clients’ best interests ahead of their own profits Vanguard’s John Bogle issues statement supporting AG Shapiro, other AGs on issue to better protect consumers and investors  

    HARRISBURG — Attorney General Josh Shapiro today announced the Pennsylvania Office of Attorney General has joined a group of seven attorneys general in urging the U.S. Department of Labor to lift its delay in implementing a rule that would require financial advisors to put clients’ best interests ahead of their own.

    The investment advice fiduciary rule was set to take effect April 10, but the Department of Labor delayed it by 60 days to June 9. On February 3, President Trump ordered the agency to review the fiduciary rule “to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.”  

    “To the contrary, postponement of its application is costing investors tens of millions of dollars each day as advisors continue to give conflicted advice and the rule should be implemented without further delay,” the attorneys general wrote in a letter to Acting Secretary of Labor Edward Hugley. “This rule is long overdue and would provide substantial protections to consumers seeking retirement investment advice and create only necessary changes to the retirement investment market.”  

    “This fiduciary rule protects consumers and makes perfect sense,” Attorney General Shapiro said, explaining his rationale for signing onto the letter. “Investors – including our retirees – should be able to know their investment adviser is putting their interests first whenever they provide advice on what to invest in.”     

    In signing onto the letter, Shapiro also noted that John C. Bogle, founder and former CEO of the Vanguard Group, strongly supports the fiduciary rule. Bogle issued a comment today supporting the rule’s implementation and the attorneys general’s letter, stating:  

    “The annulment of the government’s fiduciary rule would clearly be a setback for investors trying to prepare for retirement,” Bogle said. “I commend Attorney General Shapiro and other state attorneys general for the action they are taking in defense of the fiduciary duty rule.”

    The rule would expand the definition of fiduciary and hold all retirement investment advisors to the standard of a fiduciary. In addition to putting client interests before advisors’ profits, the rule would require advisors to disclose conflicts of interest, and would remove advisors’ limited liability for harms resulting from their advice.  

    “The rule addresses conflicts that lead to widespread abuse of vulnerable investors and in turn dramatically improves the quality of financial investment advice provided,” the attorneys general wrote. “Rather than self-regulating in anticipation of change, the industry has taken full advantage of their non-fiduciary status to the detriment of consumer investors.”  

    In addition to Pennsylvania, the joint letter is signed by attorneys general in the states of Hawaii, Illinois, Iowa, North Carolina, Oregon, Washington and the District of Columbia.

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