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Finance industry lobby groups failed in their attempt to have the Obama administration’s “fiduciary rule” struck down by the courts, putting the focus back on whether the Trump administration will halt the rule’s implementation.
The rule requires retirement advisers to put their clients’ interests above their own, making it much harder to sell products on commission, and it has already led to a big shake-up in the $16tn US retirement savings industry.
In an 81-page judgement handed down in federal court in Dallas, Judge Barbara Lynn dismissed all the arguments put forward by plaintiffs, nine trade bodies including Sifma and the US Chamber of Commerce.
The rule does not violate the First Amendment right to free speech, it is not unworkable despite complaints about its complexity, and the Department of Labor properly considered opposition points of view, the judge said.
The judgement may be moot, since President Donald Trump last week signed an order telling the DoL to reconsider the rule and to revise or rescind it if it is found to cause disruption to the market or to raise the risks of brokers being sued. Mr Trump’s economic adviser, Gary Cohn, said it was a bad rule that ought to be changed.
The president did not, however, delay enforcement of the rule, which is due to go live on April 10. The industry is still expecting a delay, but the DoL has so far only said that it is considering its legal options. Mr Trump’s nominee for Labor Secretary, Andy Puzder, is not yet in place, but a Senate confirmation hearing has now been scheduled for February 16.
After the Dallas ruling, the plaintiffs issued a statement saying: “We continue to believe that the Department of Labor exceeded its authority, and we will pursue all of our available options to see that this rule is rescinded.”