Home Alts News Fifth Circuit Denies AARP/States’ Fiduciary Rule Intervention Attempt

Fifth Circuit Denies AARP/States’ Fiduciary Rule Intervention Attempt

The Fifth Circuit Court of Appeals has rejected the motions submitted by the AARP and the attorneys general of California, New York and Oregon to intervene in the lawsuit against the Department of Labor's fiduciary rule, which was vacated by the court in a 2-1 split decision on March 15.

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The Fifth Circuit Court of Appeals has rejected the motions submitted by the AARP and the attorneys general of California, New York and Oregon to intervene in the lawsuit against the Department of Labor’s fiduciary rule, which was vacated by the court in a 2-1 split decision on March 15th.

Since the DOL did not appeal the decision, the fiduciary rule is set to dissolve on May 7th. However, the DOL still has until June 13 to appeal to the Supreme Court – which industry experts believe is unlikely.

The AARP and the states filed separate motions with the court within days of the April 30th deadline, requesting permission to intervene as a defendant for a rehearing en banc, meaning that the full 17-judge court would rehear the matter if granted.

Plaintiffs in the case, including the U.S. Chamber of Commerce, Securities Industry and Financial Markets Association, Financial Services Institute and others, urged the court to reject the last-minute motions, which they called “unprecedented.”

The financial industry groups applauded the court’s decision, saying, “The SEC, not the DOL, is the appropriate regulator in this area, and we look forward to working with the SEC on the current proposed rulemaking to establish a best interest standard across all accounts, and not just retirement accounts.”

AARP said that the decision was “disappointing,” but that it will continue “to fight on behalf of consumers who want financial advice in their best interest.”

The fiduciary rule, proposed under the Obama Administration, seeks to eliminate conflicts of interest pertaining to retirement investment advice and broadens the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974. The rule is currently under review as directed by President Trump, and enforcement was delayed for 18-months until July 1, 2019.

The Securities and Exchange Commission is currently seeking public comment for its own proposed best interest advice rules.

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