DOL’s ‘Fiduciary Rule’ Heads to Court, and Here’s What to Expect
August 25, 2016 by C. Ryan Barber and Melanie Waddell
In the face of a fierce lobbying campaign, the U.S. Labor Department backed down in 2010 from a sweeping proposal to change how broker-dealers and investment advisers render advice on retirement accounts.
Six years later, with that rule set to take effect next April, the fight over the so-called “fiduciary rule” is heading to court.
On Thursday, a federal judge in Washington is set to hear the first major challenge to the fiduciary rule, which calls for brokers handling retirement accounts to work in their clients’ “best interests”—a heightened standard designed to curb billions of dollars in fees paid to financial industry.
Investment advisory groups and business advocates have lined up to challenge the rule, which was finalized earlier this year. The court fight has three fronts, with lawsuits pending in Washington, Texas and Kansas federal district courts.
The suit in Washington, brought by the National Association for Fixed Annuities, seeks a preliminary injunction to block the fiduciary rule, and also alleges the DOL rule is invalid on grounds that the agency exceeded its authority to regulate IRAs and that it improperly categorizes insurance agents as fiduciaries.
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