A Texas judge again denied plaintiffs’ motion for a preliminary injunction halting the Department of Labor fiduciary rule.
DOL rule opponents lost federal court challenges in three states, a factor Judge Barbara M.G. Lynn cited in her opinion this week.
“Plaintiffs have not presented any arguments that would cause the Court to question its decision or persuade it that the Fifth Circuit is likely to reach a contrary conclusion,” she wrote.
Plaintiffs, led by the U.S. Chamber of Commerce, asked for the emergency injunction March 10 to delay the April 10 "applicability date" of the DOL fiduciary rule. That same day, the DOL released a bulletin alerting the financial services industry that it will not pursue enforcement of the rule in the short term.
The fiduciary rule establishes a best interest standard of care for anyone working with retirement funds. It requires advisors and firms to make substantial disclosures or face class-action liability.
President Donald J. Trump ordered the DOL to delay the rule in a Feb. 3 memorandum. That 60-day delay could be published in the Federal Register later this month. In the meantime, the DOL reassured the industry with its bulletin.
Courts in Kansas and Washington, D.C. previously ruled against the plaintiffs. Lynn ruled in favor of the DOL in February.
Opponents say the Best Interest Contract Exemption is arbitrary and capricious and will limit retirees' access due to hefty disclosures and recordkeeping requirements.
Lynn disagreed, writing that the "BICE's affect on compensation models is not arbitrary or capricious. To the contrary, it is reasonable for the DOL to incentivize certain compensation models over others to protect plan participants and beneficiaries.”
Other plaintiffs in the Northern District of Texas’ lawsuit include the Indexed Annuity Leadership Council, the American Council of Life Insurers, the Insured Retirement Institute, the Financial Services Institute, and the National Association of Insurance and Financial Advisors.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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