By Pamela Wolf, J.D. President Obama on June 8 vetoed a joint resolution disapproving the Department of Labor’s controversial final regulation defining the term “fiduciary” and addressing conflicts of interest in retirement advice for ERISA purposes. The veto was expected. The joint resolution of disapproval, finalized on May 24 with a 56-41 vote in the Senate, was filed under the Congressional Review Act (CRA) to prevent the final rule from being implemented. Substantial controversy arose over, among other things, the best interest contract exemption in the final rule, which would let fiduciary advisers and their firms collect fees not typically permitted to them under existing laws—but only if they acknowledged their fiduciary status. Under the CRA, the House and Senate may vote on a joint resolution of disapproval to stop, with the full force of law, a federal agency from implementing a rule or regulation or issuing a substantially similar regulation without congressional authorization. However, the resolution of disapproval now has garnered Obama’s veto and must achieve a two-thirds override vote in both the Senate and the House to become law.
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