DoL asks judge for timeout in fiduciary lawsuit, cites Trump order
February 8, 2017 by Andrew Welsch
The Department of Labor has asked a federal judge to hold off on issuing a ruling in a pending lawsuit seeking to overturn the fiduciary rule, a move which could indicate the department is considering overturning its regulation.
The department cited President Trump’s recent memo instructing it to review the regulation and possibly rescind it if it conflicts with his regulatory policies. A withdrawal would negate the need for the plaintiff’s lawsuit against the fiduciary rule.
The Labor Department, which is also assessing whether it can delay the statute’s implementation, said that it is reviewing the president’s memo “with the immediate goal of deciding the best course of action to implement its spirit and intent.”
Should the judge issue a ruling now, it would risk creating “confusion with the affected public,” the department claimed in a court filing.
Chief Judge Barbara Lynn had previously said that she would issue a decision on the case no later than Feb. 10.
The Labor Department proposes holding off on a decision until March 10, when it would report back on its review and presumably say whether it planned on rescinding the regulation altogether.
Trump cast the fiduciary rule’s future into doubt last week when he ordered a review, and laid out a framework for the rule’s possible repeal. That action sparked a backlash from fiduciary advocates and Democratic lawmakers in Congress, who criticized the president’s decision as removing a key investor protection.
Still, a number of top executives say they plan on retaining most of the changes they have been implementing in advance of April 10, when the rule goes into effect.
Trump’s memo and the speculation have also not altered most advisers’ compliance plans. Some 63% of RIA and broker-dealer clients of Fidelity Institutional Asset Management reported that the recent developments had very little impact or none at all, according to an annual survey of more than 1,000 advisers released this week by the custodial giant.
Only 14% of the advisers were proceeding much slower with their compliance plans, and just 1% had halted their efforts completely.
COURT BATTLE
The lawsuit against the rule was filed last June by several industry trade groups, including the U.S. Chamber of Commerce, SIFMA and FSI.
Spokeswomen for SIFMA and FSI declined to comment. The chamber did not respond to immediate requests for comment.
Also unavailable for immediate comment: the Department of Labor, as well as the Financial Planning Coalition.
The Coalition, which consists of the FPA, CFP Board and NAPFA, had been strong supporters of the fiduciary rule. The groups had also filed an amicus brief as part of the lawsuit, explaining why they supported the rule from the perspective of financial planners.
With additional reporting from Tobias Salinger.
