Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
The Labor Department’s fiduciary rule was vacated in its entirety March 15 by a federal appeals court in Louisiana. It’s a win for the U.S. Chamber of Commerce and other business groups that have fought to defeat the rule.
The DOL’s action in establishing the fiduciary rule was arbitrary, capricious, not in accordance with the law, and in excess of its statutory authority and limitations, the U.S. Court of the Appeals for the Fifth Circuit held in a 2-1 decision.
The decision comes two days after the Tenth Circuit upheld the Obama-era rule that regulates the financial advice given to retirement savers. In that decision, the Tenth Circuit said the DOL gave sufficient notice of the proposed rule change, and it acted reasonably in treating fixed indexed annuities differently from other fixed annuities.
The fiduciary rule has already “spawned significant market consequences, including the withdrawal of several major companies, including Metlife, AIG, and Merrill Lynch from some segments of the brokerage and retirement investor market,” the Fifth Circuit said.
Parts of the fiduciary rule that the DOL called the “least controversial” are already in effect, while key provisions remain under review until 2019 at the direction of the Trump administration. Multiple industry groups and companies have filed lawsuits challenging the fiduciary rule from various angles.
Most federal district judges who have ruled on these cases upheld the rule in its entirety, handing losses to the U.S. Chamber of Commerce in this case, and to Market Synergy and the National Association for Fixed Annuities in other cases. A judge in Minnesota temporarily blocked the DOL from enforcing the rule’s anti-arbitration provision after the agency changed positions and announced it would no longer defend the provision in court.
The decision to vacate the fiduciary rule is unexpected as last year the Fifth Circuit declined to temporarily block the rule during the appeal.
The two decisions create a circuit split and make it more likely for the U.S. Supreme Court to review the controversial rule in the near future.
Chief Judge Carl E. Stewart issued a separate opinion dissenting.
The case is U.S. Chamber of Commerce v. DOL, 5th Cir., No. 17-10238, order reversing district court decision, vacating fiduciary rule 3/15/18.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)