DOL Rule Withstands Court Challenge
The Department of Labor has scored a small victory, with a federal judge rejecting one of several legal challenges to the agency’s fiduciary rule, the Wall Street Journal reports.
The National Association for Fixed Annuities had argued that the DOL overstepped its authority by releasing the rule, which forces retirement brokers to put clients’ interests ahead of its own and goes into effect in April. But U.S. District Judge Randolph Moss denied the group’s request to delay the rule’s implementation, the Journal writes.
The NAFA suit is the first legal challenge to the rule to receive a hearing, but several other lawsuits are still outstanding. The most significant suit, according to the Journal, is the one filed in Texas by a group of industry groups headed by the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association, which is scheduled for a hearing November 17. The suit, taken up by Eugene Scalia of the law firm Gibson, Dunn & Crutcher, claims that the DOL overstepped its mandate by creating the rule in the first place. In addition, Scalia claims that by making the rule, the DOL had rendered the term “fiduciary” unrecognizable.
Moss’s rejection of NAFA’s request, meanwhile, was expected. But Judge Daniel Crabtree in the District of Kansas, whose court has been traditionally opposed to the DOL, may grant the injunction brought in his court September 21, Erin Sweeney, counsel at Miller & Chevalier and a former senior benefit law specialist at the DOL, told the National Law Journal this summer. In that case, the rule’s fate could end up getting decided in the Supreme Court, he said.