On May 24, a group of nine industry organizations, including NAIFA and the American Council of Life Insurers (ACLI), filed a lawsuit seeking to overturn the Department of Labor’s (DOL’s) newly finalized fiduciary rule. Joining NAIFA and ACLI in the lawsuit are NAIFA-Texas, NAIFA-Fort Worth, NAIFA-Dallas, NAIFA-Piney Woods of East Texas, the National Association of Fixed Annuities (NAFA), the Insured Retirement Institute (IRI), and Finseca.
The lawsuit, filed in federal court in the Northern District of Texas, alleges that the now-final new fiduciary rule (which goes into effect in September unless the court stays its effective date and/or overturns the rule) is not materially different from the 2016 rule that the courts overturned. The lawsuit also argues that DOL overstepped its statutory authority and that the new rule ignores the reforms and impact of state and Securities and Exchange Commission (SEC) rulings.
The lawsuit says, “Put simply, the Department’s current Rule suffers from the same key legal defects as the 2016 rule. It exceeds the agency’s statutory authority. It is the product of a rushed, outcome-oriented process. It is arbitrary and capricious in multiple respects: It fails to establish its necessity (particularly in light of existing regulations), arbitrarily targets annuities while ignoring their benefits, includes cost-benefit analysis that does not reflect reasoned decision-making, and fails to adequately address significant concerns. And it violates the U.S. Constitution by heaping significant fiduciary burdens on garden-variety sales conversations, violating the First Amendment rights of Plaintiffs’ members to communicate truthful information to consumers about annuities and other retirement products and the rights of those consumers to receive such truthful information beneficial to their retirement futures.”
Prospects: NAIFA and its coalition of industry plaintiffs have moved for a preliminary injunction to stay the DOL fiduciary rule while the case is considered. That motion is pending. We will keep you posted.
NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.
