DOL Pledges to Push Back on ‘Regulation by Litigation’

During a Securities Industry and Financial Markets Association virtual roundtable on Wednesday, Deputy Secretary of Labor Keith Sonderling told a panel of industry experts that the Department of Labor plans to issue more guidance and to reduce “regulation by litigation.”

Sonderling said the DOL would deliver a new rule on the inclusion of private investments in DC plans, a rule that would provide plan sponsors with a safe harbor from potential litigation that often curtails their hesitancy to adopt private assets.

President Donald Trump’s executive order issued in August 2025, which encouraged the inclusion of private equity, cryptocurrency and other alternative investments in 401(k) plans, “gives the Department of Labor the license not to create anything new, [but] to go back to the basics of [the Employee Retirement Income Security Act] and look broadly at all various types of possible investments allowed in 401(k)s,” Sonderling said. “None of this is novel.”

Trump’s order gave regulators 180 days to examine past and current guidance on ERISA fiduciary duty regarding the inclusion of alternative assets in 401(k) plans and to propose “rules, regulations, or guidance, as the Secretary deems appropriate, that clarify the duties that a fiduciary owes to plan participants under ERISA when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets.”

The order was issued on August 7, so the period of 180 days ends in early February.

Sonderling’s remarks to the SIFMA panel also reiterated previous commitments from the DOL. For example, during testimony at his confirmation hearing before the U.S. Senate Committee on Health, Education, Labor and Pensions on June 5, 2025, Daniel Aronowitz, now head of the Employee Benefits Security Administration, promised to “end the practice of open-ended investigations that go on for years.”

Since Aronowitz took over at EBSA in September 2025, the DOL has taken steps to fulfill that agenda. For example, the DOL issued an advisory opinion that month affirming that AllianceBernstein L.P.’s Lifetime Income Strategy meets the criteria to be classified as a qualified default investment alternative under ERISA.

In Sonderling’s comments on Wednesday, he reiterated that the department intends to continue offering more legal briefs and other forms of sub-regulatory guidance.

“The most important thing [the DOL] can do is lead with compliance assistance,” Sonderling said during the roundtable. This means the DOL “giving the information that you all need to ensure that your workers are protected and have it done through enforcement … not through litigation.”

Sonderling commented on what he interprets as the DOL’s usual stance on ERISA litigation.

“Very rarely has the [DOL] filed on behalf of employers,” Sonderling said. “Look, we’re the federal government. We need to be neutral. … There’s been a slant on that.”

However, the DOL filed a plan forfeiture amicus brief in July that may have given plan sponsors a glimmer of hope. Legal experts embraced the DOL’s support for HP Inc., saying the brief would boost the odds of court rulings in plan sponsors’ favor.

“The amicus brief is significant in that it’s a shift from the way that the department has historically approached amicus briefing and a shift [to] the more employer-friendly position, at least in this case, of the department,” Katie Kohn, a partner in Thompson Hine who represents employers, told PLANSPONSOR in July. “It’s also an indication that the department may be willing to go outside of the traditional regulatory and sub-regulatory guidance area to use other tools available to it to help support the employee benefit system.”

Sonderling told the panelists at the roundtable that he considered the industry to exist in a state of hesitancy—but not one that needs to be permanent.

“[We] have an industry that is … living in fear based on every decision they have to make … because a lawyer or a judge is going to potentially second-guess that,” Sonderling said. “We have to eliminate that.”