The Fiduciary Rule Update: Lawsuits in Play

As we noted in our previous post on the Department of Labor’s Fiduciary Rule, it looks likely to stand – but not without a fight. As expected, several lawsuits have been filed, clearly with the intent to kill the rule in the courts. Here’s what’s been filed, and by whom.

The National Association for Fixed Annuities v. Thomas E. Perez et al., Case No. 16-cv-1035. Filed in U.S. District Court in D.C, the case is moving quickly, with a briefing and an oral arguments hearing already scheduled and concluded in August. NAFA’s filing references the Administrative Procedures Act, the Regulatory Flexibility Act and the Due Process Clause of the Fifth Amendment.

Chamber of Commerce of the U.S.A., et al. v. Thomas E. Perez et al., Case No. 16-cv-1476. Several financial and business trade groups are throwing in with the Chamber, which filed suit in the U.S. District Court for the Northern District of Texas. They reference the Administrative Procedures Act and the First Amendment.

American Council of Life Insurers, et al. v. U.S. Department of Labor, et al., Case No. 16-cv-1530. This case is filed in the same Texas court as the Chamber of Commerce’s suit – and references the same laws to make its case.

Indexed Annuity Leadership Council v. Thomas E. Perez et al., Case No. 16-cv-1537. Again, filed in the same Texas court, asserting that the DOL has exceeded its statutory authority.

Market Synergy Group Inc. v. U.S. Department of Labor, et al., Case No. 16-cv-40830. This Kansas-based insurance firm filed in Kansas’ District Court. In addition to the Administrative Procedure Act it appeals to the Regulatory Flexibility Act as well. A hearing is scheduled for September 21st.

The three cases in Texas have now been consolidated. Also, a number of organizations are seeking to file amicus curie briefs in support of the DOL. These include the AARP, the Public Investors Arbitration Bar Association, Better Markets, Inc, the Consumer Federation of America and Americans for Financial Reform.

Some arguments have already been heard by the courts, and rebutted by the DOL. Arguments being made against the rule generally claim that it would raise regulatory costs and legal risks for advisors, which in turn would make their services too costly for investors with modest means. They are also attacking the rule based on claims that the administrative process used by the DOL was improper.

In response, the DOL argues that it held an open process over six years, including the consideration of over 3,000 comment letters, multiple public hearings and dozens of meetings.

We’ll update again when we hear how these cases fare, but for now we’d advise you to expect the DOL’s Fiduciary Rule policy to stand, perhaps with some minor adjustments. Of course, if your advisor is already held to the Fiduciary Rule, nothing will really change, regardless. Contact us today​ to schedule an appointment.


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