Obama Vetoes Anti-DOL Rule Resolution
President Barack Obama followed through with his promise on Wednesday and vetoed resolutions designed to halt the implementation of the Department of Labor’s fiduciary rule, InvestmentNews writes.
In a letter accompanying the veto, the President said the rule, which forces retirement brokers to put clients’ interest first, is “critical to protecting Americans’ hard-earned savings and preserving their retirement security,” the publication writes.
The DOL rule was approved in April but was challenged by resolutions in both the House and the Senate, as reported previously.
President Obama had promised to veto any such resolution even before either of the chambers could vote on it, as reported previously. Meanwhile, the House and Senate resolutions did not garner enough votes to override a presidential veto, InvestmentNews writes.
Nonetheless, the rule now faces several lawsuits. The U.S. District Court for the District of Columbia has set Aug. 25 as the hearing date for a preliminary injunction request from the National Association for Fixed Annuities, according to a court order cited by InvestmentNews.
NAFA’s lawsuit, which claims that the DOL is overstepping its authority and wrongly categorizing insurance brokers as fiduciaries, is the second suit filed against the rule. A group of nine trade groups, led by the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce, filed another lawsuit earlier, challenging the DOL’s authority to regulate individual retirement accounts, as reported previously.
Now, the American Council of Life Insurers and the National Association of Insurance and Financial Advisors have filed yet another lawsuit, according to Forbes. This complaint — which ACLI president and CEO Dirk Kempthorne and NAIFA CEO Kevin Mayeux say they filed “reluctantly” — alleges the rule wrongly classifies as fiduciary advice all interactions between insurance salesmen and retirement savers, the publication writes. The two groups’ reluctance arises from the possible repercussions of the suit, namely, the loss of support for the group among lawmakers, according to a letter from the ACLI to its members cited by Forbes.
One reason for the multiple lawsuits is a bet that the rule’s challengers could get a split opinion in the lower courts, which would push the suits up to the Supreme Court, Erin Sweeney, an ERISA lawyer with Miller & Chevalier, tells Forbes.
Responding to the first two lawsuits, Labor Secretary Thomas Perez said last week that they were a product of entities seeking “to put their own interests ahead of their clients’ best interests,” as reported previously. He added that the DOL will defend its rule “vigorously,” according to the Wall Street Journal. And while a spokesman for the agency declined comment on the new lawsuit from the ACLI, he pointed to Perez’s statement from last week, according to the publication.
Back on Capitol Hill, Rep. Phil Roe, R-Tenn., chairman of the Health, Employment, Labor, and Pensions Subcommittee, and John Kline, R-Minn., chairman of the House Education and the Workforce Committee, denounced the President’s veto, ThinkAdvisor writes.
In April, Kline approved the resolution to block the rule introduced by Roe, according to the committee.