U.S. Labor Department in Washington, D.C. (Photo: Michael A. Scarcella/ALM Media)
The U.S. Chamber of Commerce and industry groups are urging a Texas federal judge to block an Obama-era retirement advice rule pending an appeal and as federal regulators consider halting implementation of the rule for 60 days.
U.S. District Judge Barbara M.G. Lynn on Feb. 8 upheld the Labor Department’s so-called “fiduciary rule,” saying Congress gave regulators “broad discretion” to confront conflicts of interest and to protect retirement investors. The U.S. Chamber and other plaintiffs, including the Securities Industry and Financial Markets Association and the Financial Services Institute, took their challenge to the U.S. Court of Appeals for the Fifth Circuit.
“Absent immediate relief, the fiduciary rule will bring about the most sweeping changes to the retirement savings system since the adoption of the Employee Retirement Income Security Act (“ERISA”)—even as the Fifth Circuit Court of Appeals examines whether the rule is lawful and the Department of Labor considers whether to revise or rescind it,” Gibson, Dunn & Crutcher partner Eugene Scalia wrote in court papers. “The rule would require a wholesale reordering of the financial-services and insurance industries.”
The fiduciary rule, which was six years in the making, is set to take effect in April. The Trump administration is weighing a 60-day delay, giving regulators and Congress to determine next steps. Business groups sued in courts across the country last year to stop the rule—but judges ruled for the Labor Department.
Lynn on Monday told the Labor Department to respond to the Chamber and other plaintiffs by Friday. The groups asked that Lynn issue a decision by March 20.
In a separate case in Washington, the National Association for Fixed Annuities is also appealing a federal trial court’s denial of the group’s push to block the fiduciary rule. The U.S. Court of Appeals for the D.C. Circuit in December refused to stop the rule from taking effect in April.
Pam Heinrich, NAFA’s general counsel, told ThinkAdvisor on Tuesday that “we are keeping all of our options open at this time, including seeking extraordinary relief.”
The Chamber’s request for an injunction, filed on March 10, came the same day that Labor Department’s Employee Benefits Security Administration issued a temporary enforcement policy regarding the retirement-savings rule.
In its Field Assistance Bulletin 2017-01, the Employee Benefits Security Administration said it expects the regulation delaying the start date of the fiduciary rule will be in place before April 10. The employee benefits agency, a component of the Labor Department, said it would plan to help fiduciary advisors avoid problems because of the delay.
Comments continue to flood in to the Labor Department regarding its proposal to extend for 60 days the applicability date of the fiduciary rule under the Employee Retirement Income Security Act.
The confirmation hearing for President Donald Trump’s nominee to head the Labor Department, R. Alexander Acosta, has been delayed from March 15 to March 22. Sen. Lamar Alexander, chairman of the Senate Health, Education, Labor and Pensions Committee, was set to join President Trump at a health care rally Wednesday in Nashville.