New Court Filing Seeks to Halt DOL Fiduciary Rule
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“Propelled by its conviction that existing law does not adequately protect retirement investors, the DOL has defied Congress and the Fifth Circuit by adopting new rules virtually indistinguishable from a predecessor 2016 regulation that was emphatically struck down by the Fifth Circuit,” the filing states.
“Whereas the core holding of the Fifth Circuit decision was that not all financial salespeople are fiduciaries under ERISA, the DOL’s new regulation now decrees that any insurance agent who merely complies with state insurance laws when dealing with an ERISA plan member or owner of an Individual Retirement Account … is a fiduciary,” the lawsuit continues.
“By doing so, the DOL exceeds its authority and devises rules that are contrary to law, arbitrary, and capricious,” the filing states.
The new fiduciary rule and amended PTE 84-24 first take effect on Sept. 23, 2024, the lawsuit continues.
“Revised PTE 84-24 contains a phase-in period of one year during which certain supervisory requirements imposed on insurers do not apply,” the lawsuit explains.
“However, during the phase-in period, the Agents must still comply with onerous requirements that include acknowledging to clients that they are fiduciaries. They must also satisfy the exemption’s ‘Impartial Conduct Standards,’ which includes compliance with a ‘Care Obligation’ and ‘Loyalty Obligation’ applicable to ERISA fiduciaries, and receive no more than ‘reasonable compensation,’” the lawsuit states.
“The Agents must immediately begin incurring the time and expense of preparing for the phase-in period requirements that take effect in just four months,” the lawsuit states.
“Accordingly, preliminary injunctive relief is needed to avoid irreparable harm during the pendency of this lawsuit.”