In an opinion filed on March 15, 2018 in the matter of Chamber of Commerce of the United States of America et al v. United States Department of Labor et al a majority of a three-member panel of the U.S. Court of Appeals for the Fifth Circuit (Louisiana, Mississippi, and Texas) has vacated the Department of Labor’s Fiduciary Rule . Three business groups had filed suits challenging the Fiduciary Rule finalized by the Department in April 2016.
The Fiduciary Rule is a collection of rules that reinterpret the term “investment advice fiduciary” and redefine exemptions to provisions concerning fiduciaries that appears in the Employee Retirement Income Security Act of 1974 (ERISA). The stated purpose of the new rules is to regulate in an entirely new way hundreds of thousands of financial service providers and insurance companies in the trillion dollar markets for ERISA plans and individual retirement accounts (IRAs). The business groups’ challenge proceeds on multiple grounds, including (a) the Rule’s inconsistency with the governing statutes, (b) DOL’s overreaching to regulate services and providers beyond its authority, (c) DOL’s imposition of legally unauthorized contract terms to enforce the new regulations, (d) First Amendment violations, and (e) the Rule’s arbitrary and capricious treatment of variable and fixed indexed annuities.
Although the district court rejected each of those challenges, the appeals court panel found merit in several of them, and ordered that the Rule be vacated entirely. Whether the Department of Labor will appeal the decision has not be determined.
Read more on the Fiduciary Rule: https://www.jackscomplianceresource.com/dealing-with-the-fiduciary-rule/
A copy of the Fifth Circuit Opinion is available at: https://www.ca5.uscourts.gov/opinions/pub/17/17-10238-CV0.pdf