The National Association for Fixed Annuities has dropped its lawsuit challenging the Department of Labor’s fiduciary rule. In a filing with the U.S. Court of Appeals for the D.C. Circuit, NAFA and the United States Department of Justice agreed to a voluntary dismiss the appeal.
NAFA’s decision comes on the heels of a March 15th ruling by the Fifth Circuit Court of Appeals, which vacated the fiduciary rule in its entirety. The plaintiffs in the case include the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, and the Financial Services Institute, and others. The NAFA lawsuit was one of two lawsuits challenging the DOL’s authority to issue the rule.
“We are very pleased the Fifth Circuit understood the harms the fiduciary rule created for middle American retirement savers. This ruling vindicates both NAFA’s and the Fifth Circuit plaintiffs’ chief concerns, and, as a result, we see no reason to continue to pursue our litigation in another federal circuit court,” said NAFA executive director Chip Anderson.
NAFA brought its challenge to the fiduciary rule nearly two years ago in the D.C. District Court, while the Chamber of Commerce and the other trade organizations brought a similar challenge in the Northern District of Texas. The lower courts in both cases ruled in favor of DOL to uphold the rule, but, on appeal, the Chamber prevailed in the Fifth. NAFA believes the Fifth Circuit decision renders its case moot.
“We still have a lot of work to do,” said Anderson, “but now we will focus our energies on promoting insurance regulations that properly recognize differences among financial products and the way those products are delivered.”
The fiduciary rule, which is currently under review as directed by the President, attempts to reduce conflicts of interest in retirement investment advice and redefines who is considered an investment advice fiduciary under the Employee Retirement Income Security Act of 1974.
In light of the Fifth Circuit ruling, federal regulators said that they will not enforce the rule.
The DOL has until May 1 to file an appeal of the Fifth Circuit’s ruling. Given the Trump administration’s open hostility to the Obama-era rule, however, an appeal is not expected.