High profile defense attorney Eugene Scalia said the Department of Labor failed on several counts in crafting its fiduciary rule.
“The Labor Department erred by having over-defined fiduciary, exceeding its powers and authority in a number of other ways,” Scalia explained. “For example, the U.S. Labor Department does not have regulatory enforcement authority over IRAs. That lies with the Treasury Department.”
Likewise, the DOL failed to take into account public comments, failed to do proper impact studies and made major changes to its rule after the public record was closed. Scalia identified these points as the basis for a lawsuit that seeks an injunction to stop the DOL fiduciary rule before it goes any further.
A partner in the Washington, D.C. firm Gibson Dunn, Scalia is the lead attorney on the lawsuit, brought by nine groups. The U.S. Chamber of Commerce spearheaded the effort.
“In an era where we need to make it easier for people to save for the future, the Department of Labor has made it much harder, and in some cases, impossible,” said David Hirschmann, president and CEO of the U.S. Chamber. “We hope, by going to court, we can reverse that course.”
Executives from the plaintiff groups spoke on a conference call this morning, explaining the decision to sue was made to reverse an overreaching rule that will irreversibly hurt financial advisors and investors alike.
Kent Bentson, president and CEO of the Securities Industry and Financial Markets Association, echoed the comments of others when he said SIFMA supports a fiduciary standard, but not the rule the DOL crafted.
“Our long held position continues to be that this is something the Securities and Exchange Commission should be working on,” Bentson said.
The SEC is working on a fiduciary standard, but the agency has often missed its own self-imposed deadlines.
In response to a questioning, the plaintiffs declined to say whether they were “venue shopping” by filing the lawsuit in U.S. District Court Northern District of Texas.
While answering another question, Dale Brown, president and CEO of the Financial Services Institute, conceded that advisors should prepare for life under the rule, despite the lawsuit.
“I think every one of us around the table is also very actively helping our members do everything they can to get ready to comply with the rule,” he said.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org.
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