A handful of Senate Democrats sent a letter to Labor Secretary Alexander Acosta urging the Department of Labor to reverse course on its decision not to defend its fiduciary rule following the recent Fifth Circuit Court of Appeals ruling to vacate the regulation that seeks to eliminate conflicted retirement investment advice.
Senators Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Cory Booker (D-NJ), Ron Wyden (D-OR), and Patty Murray (D-WA) are urging the DOL to request the U.S. Supreme Court to weigh in on the issue.
Two months ago, the court vacated the fiduciary rule in a 2-to-1 split decision. In a last-ditch effort to save the rule, the attorneys general for California, New York and Oregon recently submitted two motions with the court asking to intervene as defendants for a rehearing en banc, meaning that the full 17-judge court would rehear the matter if granted. Their first intervention request was denied, and the AGs are asking for a full-court review of the decision if their second request is also denied.
To date, three federal district courts and the Tenth Circuit Court of Appeals have upheld the DOL’s fiduciary rule. The fiduciary rule was set to dissolve on May 7th, however, the court has yet to issue a formal mandate overturning the Obama-era rule. The DOL has until June 13 to appeal to the Supreme Court.
The senators also requested that the DOL respond to a series of questions by June 1st. These include: What has the DOL done to inform savers of their lack of protections from conflicted retirement advice since it is no longer enforcing the rule? Does the DOL plan to defend its authority to protect retirement savers and appeal the Fifth Circuit ruling to the Supreme Court? If not, why not? If the DOL does not appeal, or if the decision is not overturned, what will they do in the future to protect retirement savers from conflicted advice?
Plaintiffs in the Fifth Circuit appeal case include the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association.
The fiduciary rule is currently under review as directed by President Trump, and enforcement was previously delayed until July 1, 2019. The Securities and Exchange Commission is currently seeking public comment for its own proposed best interest advice rules.