George Michael Gerstein

George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.

What would a Secretary Scalia mean for fiduciary rulemaking?

Earlier today, I spoke with Fund Intelligence regarding the President’s initial decision to nominate Eugene Scalia as the next Secretary of Labor. His background suggests “an even more deliberative approach” to fiduciary rulemaking, namely, the promulgation of guidance and rules that will safely survive a court challenge. The most likely approach of a DOL under Scalia is the proposal of exemptive relief and other rules that lower compliance costs, meaning that it is unlikely that the DOL would expand the ways in which one becomes an investment advice fiduciary under ERISA.

Trump tweets his intention to nominate Gene Scalia as next Secretary of Labor

“I am pleased to announce that it is my intention to nominate Gene Scalia as the new Secretary of Labor. Gene has led a life of great success in the legal and labor field and is highly respected not only as a lawyer, but as a lawyer with great experience working with labor and everyone else. He will be a great member of an Administration that has done more in the first 2 1/2 years than perhaps any Administration in history!”

@realDonaldTrump, 7/18/19 8:22 pm

New Jersey holds public hearing on its uniform fiduciary duty proposal

Blass and Peirce contrast broker-dealer and investment adviser standards

ESG disclosures update

  1. The Subcommittee on Investor Protection, Entrepreneurship and Capital Markets of the House Financial Services Committee held a hearing on July 10 on ESG disclosures. Five bills were introduced: (A) the ESG Disclosure Simplification Act of 2019, (B) the Shareholder Protection Act of 2019, (C) the Corporate Human Rights Risk Assessment, Prevention, and Mitigation Act of 2019, (D) to require issuers required to file an annual or quarterly report under the Securities Exchange Act of 1934 to disclose the total amount of corporate tax such issuer paid in the period covered by the report, and for other purpose, and (E) the Climate Risk Disclosure Act of 2019. The committee memorandum can be found here.
  2. There is an interesting report by Ignites on the differences of the MSCI and Morningstar ESG ratings. Besides being informative on the methodologies, the article also notes how fiduciaries and investors still seek a standardized ratings and evaluation approach, which has not yet materialized.

Peirce expresses openness to extending Reg BI implementation deadline if firm shows good faith compliance efforts

Her comments, as reported by InvestmentNews, were made at the recent SIFMA seminar.

CFTC to examine how climate change affects markets

Politico Pro is reporting that CFTC Commissioner Rostin Behnam has established a new subcommittee to examine the risks associated with climate change on markets.

Jay Clayton’s speech on Regulation Best Interest and the Investment Adviser Fiduciary Duty

SEC Chairman Jay Clayton

Here is a copy of Chairman Clayton’s recent speech on broker-dealer and investment adviser standards of conduct.

Clayton defends standards of conduct rulemaking

As reported in Bloomberg, Jay Clayton characterized various objections to Regulation Best Interest and other parts of the rulemaking as “false, misleading” and in some cases, “policy preferences disguised as legal critiques.”” He also dismissed claims that the SEC’s interpretive release effectively lowered the standard of conduct for investment advisers. These remarks were made as part of a speech in Boston this week.

Reminder re. NJ’s uniform fiduciary duty proposal

Two things to remember re. the NJ uniform fiduciary duty proposal:

  1. A public hearing on the proposal will be held on July 17 from 9:30 am to 4:30 pm in the Morris Room at the Division of Consumer Affairs, 124 Halsey Street, 6th Floor, Newark, NJ 07101.
  2. The comment period has been extended to July 18.