Tag Archive for: Best interest

It's official: DOL fiduciary rule is dead

It’s official: DOL fiduciary rule is dead

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It's official: DOL fiduciary rule is dead

 

 

 

 

The 5th Circuit Court of Appeals issued a mandate Thursday making its March 15 decision to strike down the regulation effective

By Mark Schoeff – InvestmentNews – June 21, 2018

After a long delay, the U.S. Fifth Circuit Court of Appeals confirmed Thursday a March decision to strike down the Labor Department’s fiduciary rule.

The court issued a mandate making effective the March 15 split decision that vacated the DOL regulation. The court majority held that the agency exceeded its authority in promulgating the rule, which would have required brokers to act in the best interests of their clients in retirement accounts.

In the mandate, the court also said the Labor Department has to pay the financial industry plaintiffs the costs related to the appeal.

“It is ordered and adjudged that the judgment of the District Court is reversed, and vacate the fiduciary rule in toto,” the mandate states. “It is further ordered that appellees pay to appellants the costs on appeal to be taxed by the clerk of this court.”

The 5th Circuit overturned a decision by a Dallas federal court that had upheld the DOL rule, representing the first win by industry opponents in several lawsuits that were filed against the measure.

The mandate was supposed to have been filed May 7. It was delayed for several weeks, as AARP and three states tried to intervene in the case to defend the rule after the Department of Justice, acting on behalf of the DOL, declined to appeal the March 15 decision.

The Securities and Exchange Commission is now firmly in the lead on the effort to reform investment advice standards. The agency’s proposal, which would subject brokers to a best interest standard, is open for public comment until Aug. 7.

http://www.investmentnews.com/article/20180621/FREE/180629985/its-official-dol-fiduciary-rule-is-dead

SEC fiduciary rule ... is not a fiduciary rule

What’s Next for the DOL Fiduciary Rule?

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What’s Next for the DOL Fiduciary Rule?

March 16, 2018 by John Hilton

The Department of Labor fiduciary rule does not exist anymore after a late-Thursday court ruling. That court decision opens the door for the Securities and Exchange Commission and state insurance departments to take over rulemaking.

The Fifth Circuit Court of Appeals’ 2-1 decision stunned the industry and has many asking the same question this morning: What now?

Click HERE to read the full story via INN; subscription required.

Originally Posted at InsuranceNewsNet on March 16, 2018 by John Hilton.

SEC fiduciary rule ... is not a fiduciary rule

Gibson Dunn: No ‘Circuit Split’ on DOL Rule; Decision Applies Nationwide

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Gibson Dunn: No ‘Circuit Split’ on DOL Rule; Decision Applies Nationwide

Gibson Dunn: No ‘Circuit Split’ on DOL Rule; Decision Applies Nationwide

Gibson Dunn: No ‘Circuit Split’ on DOL Rule; Decision Applies Nationwide

March 20, 2018 by Nick Thornton

Gibson Dunn, the law firm that successfully argued to vacate the Labor Department’s fiduciary rule before the U.S. Court of Appeals for the 5th Circuit, says the 2-to-1 decision in favor of industry opponents of the rule applies “nationwide.”

Citing the Administrative Procedure Act, the law that governs federal agency rule making, and Black’s Law Dictionary, attorneys for the firm said the ruling has the effect of the removing the fiduciary rule from the books.

Click HERE to read the original story via ThinkAdvisor.

“Under the APA, ‘vacatur’ is a remedy by which courts ‘set aside agency action’ that is arbitrary and capricious or otherwise outside of the agency’s statutory authority,” wrote attorneys for Gibson Dunn, including Eugene Scalia, in a client update.

The consequence of the 5th Circuit’s decision is to delete the fiduciary rule. “Because the effect of vacatur is, in essence, to remove a regulation from the books, its effect is nationwide,” wrote Mr. Scalia and a team of Gibson Dunn attorneys.

Since the decision was released last week, some attorneys in press reports have speculated that the fiduciary rule is still in effect. Other reports have suggested the decision may only impact investment and insurance providers and distributions within states under the 5thCircuit’s jurisdiction.

But the impact of the decision is not as ambiguous as some reports claim, according to Gibson Dunn.

By May 7, when the 5th Circuit is scheduled to issue a final order under the Federal Rules of Appellate Procedure, the fiduciary rule will effectively be erased from the Federal Register, “without geographical limitation,” the attorneys say.

No circuit split

Gibson Dunn’s client update also sets out to clarify the existence of a so-called circuit split over the fiduciary rule.

Days before the 5th Circuit released its ruling, the 10th Circuit Court of Appeals issued a more narrow ruling upholding the fiduciary rule’s treatment of fixed indexed annuities.

But the 10th Circuit decision did not address the larger question of the Labor Department’s authority to write the fiduciary rule as it did.

“Because the 5th Circuit vacated the rule on grounds the 10th Circuit did not address, no ‘circuit conflict’ is presented by the two decisions,” say the Gibson Dunn team.

The question of whether a circuit conflict, or split, exists has ramifications on a potential Supreme Court review of the fiduciary rule case.

“We commented on the scope of the 10th Circuit decision to correct apparent misperceptions about it,” said Jason Mendro, a partner at Gibson Dunn, in an email. “We had seen commentary incorrectly suggesting that it conflicts with the 5th Circuit’s decision, so we wanted to clarify that it does not.”

The odds of a Supreme Court review of any case are “always very low,” said Mr. Mendro, who was part of the litigation team that appealed to the 5th Circuit. According to the Supreme Court’s website, up to 8,000 petitions for review are requested each term. The High Court typically grants full review in about 1 percent of cases.

“The absence of a circuit split further reduces the likelihood of such review,” added Mr. Mendro.

NAFA expected to drop its appeal in D.C. Circuit

Last November, oral arguments before the D.C. Circuit Court of Appeals were delayed in a case brought by the National Association for Fixed Annuities.

NAFA was granted a delay of its hearing until after the 5th Circuit issued its decision. The original hearing in the D.C. Circuit had been scheduled for December 8, 2017.

Now that the 5th Circuit has vacated the fiduciary rule in its entirety, NAFA can be expected to drop its appeal, removing the potential for a split with the D.C. Circuit.

“When the (5th Circuit) court issues the mandate, vacatur will become effective, and the appellants (NAFA) in the D.C. Circuit case will have obtained the full measure of relief they sought in their appeal,” explained Mr. Mendro. “They should, therefore, dismiss their appeal.”

Originally Posted at ThinkAdvisor on March 19, 2018 by Nick Thornton.

SEC fiduciary rule ... is not a fiduciary rule

DOL Fiduciary Rule Struck Down by Appeals Court

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DOL Fiduciary Rule Struck Down by Appeals Court

DOL Seeks 18-Month Delay of Fiduciary Rule

March 16, 2018 by Melanie Waddell

The U.S. Court of Appeals for the 5th Circuit voted 2-1 Thursday to vacate the Labor Department’s fiduciary rule.

The nine plaintiffs in the 5th Circuit case included the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Financial Services Institute.

The ruling comes one day after Labor won a case in federal court brought against its fiduciary rule by Market Synergy Group, an insurance distributor.
The appeals court struck down the entirety of the fiduciary rule.

Click HERE to read the original story via ThinkAdvisor.

Labor’s next move is to decide whether to ask the full appeals court to rehear the dispute, or take the case to the U.S. Supreme Court.

The U.S. Court of Appeals for the D.C. Circuit still has an active case. That court will not be bound by how the 5th Circuit ruled.

In a joint statement, FSI, SIFMA and Chamber said that “the court has ruled on the side of America’s retirement savers, preserving access to affordable financial advice. Our organizations have long supported the development of a best interest standard of care and the Securities and Exchange Commission should now take the lead on a clear, consistent, and workable standard that does not limit choice for investors.”

According to the 5th Circuit ruling, Labor’s “new definition dispenses with the ‘regular basis’ and ‘primary basis’ criteria used in the regulation for the past 40 years. Consequently, it encompasses virtually all financial and insurance professionals who do business with ERISA plans and IRA holders. Stockbrokers and insurance salespeople, for instance, are exposed to regulations including the prohibited transaction rules. The newcomers are thus barred, without an exemption, from being paid whatever transaction-based commissions and brokerage fees have been standard in their industry segments because those types of compensation are now deemed a conflict of interest.”

Judge Says Rule Has ‘Woke’ Financial Services
Judge Edith Jones, who wrote the decision for the majority, stated that “DOL has made no secret of its intent to transform the trillion-dollar market for IRA investments, annuities and insurance products, and to regulate in a new way the thousands of people and organizations working in that market.”

Large portions of the financial services and insurance industries, Jones wrote, “have been ‘woke’ by the Fiduciary Rule and BIC Exemption. DOL utilized two transformative devices: it reinterpreted the 40-year-old term ‘investment advice fiduciary’ and exploited an exemption provision into a comprehensive regulatory framework.”

The court wrote in the ruling that President Donald Trump has directed Labor “to re-examine the Fiduciary Rule and prepare an updated economic and legal analysis” of its provisions, noting that the effective date of some provisions has been extended to July 1, 2019.

“The case, however, is not moot,” the ruling states. The fiduciary rule, the court said, “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. Companies like Edward Jones and State Farm have limited the investment products that can be sold to retirement investors.”

The ruling continued: “Confusion abounds — how, for instance, does a company wishing to comply with the BICE exemption document and prove that its salesman fostered the ‘best interests’ of the individual retirement investor client? The technological costs and difficulty of compliance compound the inherent complexity of the new regulations.”

Labor’s rule also “contradicts the text of the ‘investment advice fiduciary’ provision and contemporary understandings of its language,” the ruling states.

Dissenting Judge Says DOL Acting ‘Within Its Authority’
The judge voting in favor of Labor’s fiduciary rule, Chief Judge Carl Stewart, wrote in his dissent, that: “I conclude that the DOL acted well within the confines set by Congress in implementing the challenged regulatory package, and said package should be maintained so long as the agency’s interpretation is reasonable.”

“DOL has acted within its delegated authority to regulate financial service providers in the retirement investment industry — which it has done since ERISA was enacted — and has utilized its broad exemption authority to create conditional exemptions on new investment-advice fiduciaries,” Stewart wrote. “That the DOL has extended its regulatory reach to cover more investment-advice fiduciaries and to impose additional conditions on conflicted transactions neither requires nor lends to the panel majority’s conclusion that it has acted contrary to Congress’ directive.”

Micah Hauptman, financial services counsel for the Consumer Federation of America, told ThinkAdvisor that the “case was wrongly decided. The industry opponents went forum shopping and finally found a court that was willing to buy in to their bogus arguments. This is a sad day for retirement savers.”

The opinion, Hauptman added, “is extreme by any measure. It strikes at the essence of the DOL’s authority to protect retirement savers under ERISA. It’s not only an attack on the rule, it’s an attack on the agency.”

— Mike Scarcella contributed reporting.

Originally Posted at ThinkAdvisor on March 15, 2018 by Melanie Waddell.

It's official: DOL fiduciary rule is dead

Best interest is in the eye of the beholder…

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Best interest is in the eye of the beholder in debate over DOL fiduciary rule

Best interest is in the eye of the beholder in debate over DOL fiduciary rule

July 18, 2017 by Mark Schoeff Jr.

The term “best interest” is subjective it seems in the debate over the Labor Department’s fiduciary rule. The phrase is used by both critics and supporters of the measure to describe what they’re trying to do for the average investor.

The latest example of the fluidity of the term was seen in a July 13 hearing of the House Financial Services Subcommittee on Capital Markets, Securities and Investments. Lawmakers on the panel debated draft legislation offered by Rep. Ann Wagner, R-Mo., that would kill the DOL rule and replace it with a regulation written by the Securities and Exchange Commission that would “establish standards of conduct for brokers and dealers that are in the best interest of their retail customers,” according to the preamble of the measure.

Click HERE to read the full story via InvestmentNews; registration required.

Originally Posted at InvestmentNews on July 14, 2017 by Mark Schoeff Jr..