By a vote of 53-44, the U.S. Senate confirmed Eugene Scalia as the next labor secretary, filling a vacancy left by Alexander Acosta’s resignation in the wake of Acosta’s involvement with Jeffrey Epstein’s sentencing agreement a decade ago.
Scalia, a D.C.-based corporate lawyer and son of the late Supreme Court Justice Antonin Scalia, previously served in the George W. Bush administration.
He was portrayed during confirmation hearings by Democrats and labor groups as a friend of big business at the expense of worker rights.
“Instead of nominating a Secretary of Labor, President Trump has nominated a Secretary of Corporate Interests,” Senator Patty Murray, D-Washington, claimed. “If there’s one consistent pattern in Mr. Scalia’s long career—it’s hostility to the very workers he would be charged with protecting, and the very laws he would be charged with enforcing if he were confirmed.”
Ultimately in charge of the nation’s 401k regulation and 5500 filings, his possible role in a revamped fiduciary rule is in question.
Ethics rules prevent government officials from involvement in issues in which they participated while in the private sector, The Wall Street Journal notes, and Scalia handled a legal challenge to the Obama administration’s version of the fiduciary rule.
“Mr. Scalia’s likely recusal suggests that his ties to the financial-services industry could complicate his tenure on high-profile initiatives should he win Senate confirmation to lead the Labor Department in the coming months,” the paper writes. “At issue is an Obama-era regulation concerning retirement advice that a federal appeals court struck down last year in a legal challenge led by Mr. Scalia …Mr. Scalia handled the challenge and argued on behalf of the financial-services industry before a circuit court that threw out the rule.”
Scalia’s role in killing the fiduciary rule
On March 15, 2018, the Fifth Circuit Court of Appeals, based in New Orleans, vacated the fiduciary rule in a 2-to-1 decision, saying it constituted “unreasonableness,” and that the DOL’s implementation of the rule constitutes “an arbitrary and capricious exercise of administrative power.”
The case had been brought by Scalia’s client, the U.S. Chamber of Commerce, among other parties.
Investopedia noted three lawsuits have been filed against the rule, but the one that drew the most attention was Scalia’s, filed in June 2016 on behalf of the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Financial Services Roundtable in the U.S. District Court for the Northern District of Texas.
The basis of the suit was that the Obama administration did not have the authorization to take the action it did in endorsing and fast-tracking the legislation. Some lawmakers also believed the DOL itself was reaching beyond its jurisdiction by targeting IRAs.
In May 2019 the DOL said it was working with the Securities and Exchange Commission (SEC) to reintroduce a new version of the rule in December of this year.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
