DOL Rule Struck Down

[Tahoe Ray]

Fifth Circuit Court of Appeals vacates DOL fiduciary rule

 

[DHK]

I won't say "struck down", because this one just happened two days ago:

Appeals Court Upholds DOL Rule in Market Synergy Group Ruling

 

[Tahoe Ray]

Maybe a poor choice in wording but still an important decision...especially considering they specifically referenced BICE and the law violating ERISA.

 

[walthamny]

It will get appealed. Even if DOL does not appeal the ruling, industry groups who benefit from the rule will appeal.

 

[VolAgent]

You moving to Texas or Louisiana? Because that is the 5th Circuit. And particularly since it has been upheld by the 10th, assuming I read the link from David correctly.

With differing opinions from the Circuit Court of Appeals, you can be pretty confident this will end up at the Supreme Court in time.

 

[walthamny]

My guess is supreme Court will kick it back on a technical issue and won't make any final decision anytime soon

 

[DHK]

Tom Perez’s Fiduciary Flop

By
The Editorial Board
March 18, 2018 6:30 p.m. ET
98 COMMENTS

The Obama Administration sold its fiduciary rule to the public as protecting retirees. This was never true, but now we learn it also was illegal, as the Fifth Circuit Court of Appeals explained last week in a tart decision striking down the rule.

The Dodd-Frank Act directs the Securities and Exchange Commission to promulgate standards of conduct for broker-dealers and investment advisers who render “personalized investment advice about securities to a retail customer.” The law also prohibits the SEC from banning commissions.

The Labor Department under Tom Perez usurped the SEC and wrote a rule that ignored that prohibition. Mr. Perez essentially rewrote the 1974 Employee Retirement Income Security Act (Erisa), which regulates employer- and union-sponsored plans differently from individual retirement accounts. For instance, individuals are allowed to sue fiduciaries of employer and union plans for charging a commission. Labor applied the more rigorous protections for employer and union plans to IRAs.

Mr. Perez also extended Erisa’s definition of “investment advice fiduciaries,” who provide advice “on a regular basis,” to broker-dealers and financial-insurance agents who merely sell a product. “Transforming sales pitches into the recommendations of a trusted adviser mixes apples and oranges,” Judge Edith Jones wrote for the 2-1 majority.

This created a Catch-22. “Thousands of brokers and insurance agents who deal with IRA investors must either forgo commission based transactions and move to fees for account management or accept the burdensome regulations and heightened lawsuit exposure required by the [best interest contract exemption] contract provisions,” Judge Jones explained.

The effect is to raise costs for small savers, many of whom will have to turn to robo-advice. Several firms including MetLife , AIG and Merrill Lynch have already withdrawn from segments of the brokerage and retirement market.

The Trump Labor Department has said it won’t enforce the rule and is working with the SEC on a new one that applies to all brokerage firms and investment advisers. The Fifth Circuit ruling will make this task easier. This is good news for retirement investors and the rule of law.

Sounds like a win for those who sell fixed indexed annuities!

 

[DHK]

SEC forging ahead on fiduciary rule despite DOL rule decision in 5th Circuit

At the Securities Industry and Financial Markets compliance and legal seminar in Orlando, Fla. on Monday, Mr. Clayton said that the SEC is forging ahead despite the doubt now surrounding the DOL rule's fate. The SEC rule is expected as early as this summer.

In a recent analysis, the law firm Gibson Dunn, which was the legal counsel for the plaintiffs in the DOL lawsuit, said that it kills the rule nationally. But in its own report, The Wagner Law Group said that the court ruling takes the DOL regulation off the books only in the southern U.S. states covered by the 5th Circuit.

SEC's proposal

The other unknown is what the SEC will come up with for its own proposal. Mr. Clayton reiterated that his goals include articulating a standard of care for broker-dealers, who currently must adhere to suitability requirements; clarifying the current investment-adviser fiduciary standard, which requires them to act in the best interests of their clients, and delineating the differences between the two kinds of financial professionals.

No delineation for fixed indexed annuity sales.

 

[DHK]

Court of Appeals Vacates DOL Fiduciary Rule

The U.S. Court of Appeals for the Fifth Circuit has struck down the Department of Labor’s fiduciary rule, agreeing with the plaintiffs that the department overstepped its statutory boundaries, according to documents filed Thursday.

 

[Mike Siegal]

Newby Here.

What exactly does this mean to those who only hold an Insurance License?

Anyone??

Thanks