DOL Fiduciary Rule Still On for April 10 Implementation

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The Department of Labor’s Fiduciary Duty Rule remains on track for April 10 implementation, notwithstanding a maelstrom of hype about it.

Nearly everyone expected the new administration would delay the Rule – and many reported that done.  The opposition claimed delay was Wall Street’s license to steal from your grandparents’ retirement savings.

But when actually signed, the Presidential Memorandum did not direct DOL to delay implementation of the Rule.  Instead, it instructed DOL to study it to see if it posed unintended adverse consequences for investors by reduced access or increased costs.  And its savings provisions said the Memo had to be implemented “consistent with applicable law” – including the Administrative Procedures Act that imposes roadblocks to quick action in the next two months.  The Presidential Memorandum on Fiduciary Duty Rule is here.

Yesterday, Judge Barbara Lynn of the Northern District of Texas became the third federal judge to uphold the Rule in the face of industry challenges.  Chamber of Commerce of the U.S., et al., v. Perez, et al., Case No. 16-cv-1476-M (U.S.D.C. N.D. Tex.)(opinion here:  http://www.txnd.uscourts.gov/sites/default/files/documents/3-16cv1476Doc137.pdf ).  Moreover, the Opinion (of those of the other two courts to have upheld the Rule) addresses most of the points the Presidential Memorandum directs DOL to study – setting up new questions for the next round of litigation.

In response, the co-plaintiffs in the suit reaffirmed commitments to both (a) a best-interest standard and (b) continue their challenge to the DOL Rule as the wrong way to implement it.  The statement is here.

Sen. Elizabeth Warren (D., Mass.) sent a letter to the Acting Secretary of Labor urging timely implementation and claiming broad industry support for the Rule.  Her claims overstate industry responses to her pointed inquiry.  They generally say the responding firms (a) support the best interest standard, and (b) are continuing their work to prepare for the Rule’s implementation. Sen. Warren’s press release with links to the letters is here.

Everyone agrees there should be a best-interest standard; they disagree whether the DOL Rule is the way to implement it.  For now, though, that Rule is final and it takes effect April 10 – no matter what overheated claims rise up from either side of the aisle.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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