A trade association and insurance industry plaintiffs have directed a legal attack towards the Department of Labor’s (DOL) latest version of its fiduciary rule. They have filed a lawsuit challenging the rule, which mirrors the similar action taken by litigants six years ago leading to the overturning of a prior version of the rule.
The fiduciary rule, finalized by the DOL in late April, was rapidly contested by insurance industry stakeholders. Subsequently, on May 2, they filed a suit in the US District Court for the Eastern District of Texas, seeking to block and eliminate the rule along with an associated amended prohibited transaction exemption.
In the case surrounding the rule set to commence in September, the plaintiffs aim to convince the court to rule similarly to previous litigations that resulted in the vacating of an earlier iteration of the rule half a dozen years ago. Explanation of the current contention and an exploration of the past case regarding the fiduciary rule can be found here.
This present legal challenge could potentially undermine ongoing DOL efforts in the realm of fiduciary guidelines. The DOL has previously heeded court precedent and a 2018 decision that upended the standard. The current situation indicates another circular pattern where its revised fiduciary rule may face the same fate as its 2016 predecessor.
The fiduciary rule’s potential to significantly affect the players within the financial and legal arena places importance on tracking its developments. Analysis pertinent to these professionals will be provided as events unfold.