Second Court Halt's New Fiduciary Rule, as DOL Hits Back

The nine trade groups, which filed their suit against the new fiduciary rule May 24, include IRI, the American Council of Life Insurers, and the National Association of Insurance and Financial Advisors.

“When investors get advice from a trusted financial professional about their retirement savings, they expect that advice to be in the customer’s best interest, not the financial professional’s,” the Labor spokesperson told ThinkAdvisor Monday morning. “This rule makes that a reality.”

Appeal Ahead?

Labor “may choose to appeal the stay in either or both actions,” Steven Rabitz, partner and co-chair of employee benefits and executive compensation practice at law firm Dechert, told ThinkAdvisor in an email Monday.

“As the cases continue to proceed on the merits, any such challenge would likely cause additional uncertainty for financial institutions,” Rabitz said.

“While we can make no predictions about any outcomes, it is fair to say that each of the judges in the two actions signaled deep skepticism as to the DOL’s approach, with one even … suggesting that it was ‘virtually certain’ that the ruling would be on the merits,” he stated.

SIFMA, FSI Weigh In

On June 29 via a plaintiff-intervenors’ complaint , the Securities Industry and Financial Markets Association and the Financial Services Institute joined the suit filed in May by nine insurance industry trade groups against Labor’s fiduciary rule. FSI and SIFMA asked the U.S. District Court for the Northern District of Texas court to vacate the rule.

Friday’s decision “rightly prevents the Department of Labor’s rule from taking effect as the court continues to weigh the merits of the case,” SIFMA and FSI said Monday in a joint statement.

“The finalized rule unlawfully expands the definition of a ‘fiduciary’ and jeopardizes investors’ access to advice and education,” the two organizations said.