DOL Urges Court: Uphold Fiduciary Rule Despite Review
The Department of Labor, which is currently re-evaluating its fiduciary rule, nonetheless has asked the U.S. Court of Appeals for the Fifth Circuit to uphold the rule against legal challenges from industry groups, the National Law Journal writes. But government lawyers also argue for dropping the rule’s clause banning class-action waivers, according to the publication.
The Labor Department is currently reviewing the fiduciary rule, which purports to require retirement account advisors to put clients’ interests first and went into partial effect June 9. But U.S. Justice Department lawyers, writing in a brief filed Monday on behalf of the DOL, according to the publication, say that three consolidated lawsuits aimed at killing the rule “have failed to identify any reason why the fiduciary rule, including its associated exemptions, should be vacated in full.”
The appeal refers to suits filed by the U.S. Chamber of Commerce, the American Council of Life Insurers and the Indexed Annuity Leadership Council.
But the government’s brief nonetheless also argues for vacating the rule’s current prohibition on class-action waivers, which it calls “a discriminatory obstacle to arbitration,” according to the National Law Journal.
Removing the provision, according to the government lawyers, would not invalidate the rule in its entirety nor the rule’s best interest contract exemption, which allows the sale of some commission-based investment products after signing an agreement with the clients.
The brief acknowledges that the current review of the rule as mandated by a February memorandum from president Donald Trump may result in a new assessment of its pros and cons, the publication writes.
Last week, the DOL issued a request for information on the rule, part of which addresses the possible extension of the rule’s full implementation scheduled for January 1. The U.S. Chamber of Commerce immediately took issue with the 30-day public comment period and asked the DOL to extend it to 60 days, according to the National Law Journal.