States Launch Hail Mary Attempt to Save DOL Fiduciary Rule
In a last-ditch effort to save the Department of Labor’s fiduciary rule, the Attorneys General for California, New York and Oregon asked the Fifth Circuit Court of Appeals late Wednesday to reconsider allowing the trio to intervene as defendants in the case that vacated the regulation in a 2-1 split decision in mid-March.
In a last-ditch effort to save the Department of Labor’s fiduciary rule, the Attorneys General for California, New York and Oregon asked the Fifth Circuit Court of Appeals late Wednesday to reconsider allowing the trio to intervene as defendants in the case that vacated the regulation in a 2-1 split decision in mid-March. The AGs are also asking for a full court review of the decision if their intervention request is denied.
The states, along with AARP, filed separate motions with the court within days of the April 30th appeal deadline, requesting permission to intervene as defendants for a rehearing en banc, meaning that the full 17-judge court would rehear the matter if granted. The Fifth Circuit rejected the motions on May 2.
Since the DOL did not appeal the decision, 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 that seeks to eliminate conflicts of interest pertaining to retirement investment advice. The DOL still has until June 13 to appeal to the Supreme Court – which industry experts believe is unlikely.
“The federal government is no longer pursuing this appeal,” the AGs wrote in their motion. “Given that posture, the exceptional importance of the issues, and the grave harm the states will suffer as a result of the panel opinion—billions of dollars in lost retirement income to their residents and tens of millions of dollars in lost tax revenue—the states respectfully request that the court reconsider its decision.”
“If the panel declines to reconsider its order denying intervention, the states ask that the court direct the clerk to permit the filing of a petition seeking review of that order by the full court,” they added.
Yesterday, plaintiffs in the Fifth Circuit appeal case, which include the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association, issued a statement saying, “The 5th Circuit has already denied the states’ motion for leave to intervene, and any request for rehearing is without merit.”
The fiduciary rule, which broadens the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974, 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.
