Plaintiffs have reached agreement with the Department of Labor on a schedule that will have attorneys making oral arguments on the fiduciary rule before a judge by the end of October.
That is just a little more than five months before the first clauses of the regulation are scheduled to take effect. Still, the proposed agenda will serve the interests of “judiciary economy and efficiency,” the parties said in a joint legal filing.
The filing concerns a consolidated lawsuit filed against the DOL in U.S. District Court Northern District of Texas. Plaintiffs include a range of groups, including the U.S. Chamber of Commerce. Two additional lawsuits were filed in Kansas and Washington, D.C. district courts.
The timing of any court decision is important because of the implementation period financial services companies and distributors need to update their systems and compliance procedures to meet the DOL’s requirements.
"Plaintiffs submit that there is good cause for the expeditious resolution of this litigation," the filing reads. "Among other things, plaintiffs and/or many of their members will incur significant costs and challenges in endeavoring to comply with the Department’s rulemaking by April 2017."
Initial fiduciary rule requirements go into effect April 10, 2017, with the remainder of the regulation going into effect Jan. 1, 2018.
The lawsuits seek a preliminary injunction, among other remedies, which would delay the rule until the next administration. Central to the plaintiffs’ arguments was the DOL had overstepped its regulatory authority, acted in an "arbitrary and capricious" manner, and the rule violates the First Amendment.
At more than 1,000 pages, the rule will impose the most far-reaching changes to the management of money flowing into qualified retirement account.
Regulators say the rule is necessary because it protects investors in an era when more Americans are managing their own retirements.
Opponents, including insurers and distributors, say many financial advisors will leave the business or abandon marginally profitable retirement accounts and leave middle-class retirement investors without the retirement guidance they need.
Proposed Schedule Dates
In legal documents submitted Friday, plaintiffs asked U.S. District Judge Barbara M.G. Lynn to approve of the following:
- The plaintiffs shall file up to three summary judgment briefs totaling no more than 110 pages in the aggregate, each due on July 18, 2016;
- The parties shall file an initial joint appendix consisting of the core rulemaking documents, due on July 18, 2016;
- Defendants shall file an index of the administrative record on Aug. 1, 2016;
- Plaintiffs shall file conforming versions of their opening briefs, if necessary, on
Aug. 8, 2016;
- Defendants shall file a combined opposition and cross-motion brief of up to 110
pages, due on Aug. 19, 2016;
- Plaintiffs shall file up to three combined reply and cross-opposition briefs totaling
no more than 110 pages in the aggregate, each due on Sept. 16, 2016;
- Defendants shall file a combined cross-reply of up to 50 pages, due on Oct. 7,
- The parties shall file a supplemental joint appendix on Oct. 14, 2016.
Additional plaintiffs joining the U.S. Chamber include the Indexed Annuity Leadership Council, the American Council of Life Insurers and the National Association of Insurance and Financial Advisors.
Delay in Market Synergy Lawsuit
Two additional lawsuits challenging the DOL rule have been filed in District of Columbia District Court (by the National Association for Fixed Annuities) and in U.S. District Court for the District of Kansas (by Market Synergy Group).
In a separate legal development Friday, attorneys for Market Synergy and the DOL asked the court for a three-week extension. If the court agrees, the DOL will have until July 22 to respond to plaintiff's request for an injunction to vacate the rule.
Meanwhile, a Washington, D.C. judge has scheduled an Aug. 25 hearing date for the NAFA lawsuit.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
© Entire contents copyright 2016 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.