Industry publication Financial Advisor Magazine turned to Drinker Biddle partner Fred Reish for comments on Eugene Scalia, the Secretary of Labor nominee, having to recuse himself from crafting a Labor Department fiduciary rule.
The publication describes Scalia’s role as lead attorney in the case against the Department of Labor’s fiduciary rule before the U.S. Court of Appeals for the 5th Circuit, which vacated the rule. This representation, Financial Advisor Magazine reports, has led to gossip among industry professionals centered on one question: Will Scalia recuse himself from fiduciary matters?
Additionally, the DOL is currently working to reissue a fiduciary rule that would govern the conduct of advisors who work with retirement plan rollovers.
“There are rumors that proposed revisions to the fiduciary regulation will be issued before the end of the year, and possibly before Scalia is confirmed as the Secretary of Labor. So he may not be involved directly in the process of developing the proposal,” said Reish.
He added, “If the confirmation process moves more quickly, and the development of the proposal is delayed, then of course Scalia could, at least in theory, be involved. In that case, there would be ethical issues.”
On the calls for Scalia’s recusal, Reish noted that it “may be a close question. But I think it is clear that it appears to be a conflict of interest, and for appearances purposes at least, he should recuse himself.”