Ed. Note: This article first appeared in Bloomberg
The Labor Department’s efforts to delay enforcement of the fiduciary rule aren’t enough, the Chamber of Commerce argued in a brief asking a federal judge to step in and block the rule ( Chamber of Commerce v. Hugler , N.D. Tex., No. 3:16-cv-01476-M, motion for injunction filed 3/10/17 ).
The Obama administration rule—which purports to cut down on the allegedly conflicted investment advice given to retirement savers—was scheduled to become applicable on April 10, until President Donald Trump’s Labor Department proposed extending the deadline to June 9 in response to a presidential memorandum ordering a re-evaluation of the rule.
The Chamber of Commerce, which has been unsuccessfully challenging the rule in court, on March 10 asked a federal judge for an emergency injunction blocking the rule’s enforcement while a federal appeals court considers the matter.
An injunction is needed, the Chamber argued, because the DOL may be unable to finish its process for delaying the April 10 deadline before that deadline passes.
The DOL’s March 10 field assistance bulletin promising not to enforce the fiduciary rule during any “gap” period isn’t sufficient, the Chamber argued, because it does nothing to prevent enforcement actions by the Treasury Department, which has authority over individual retirement arrangements.
Without an injunction, the financial services industry will be forced to make irrevocable and costly changes to its business models that ultimately may be “for naught” if the fiduciary rule is revoked or significantly modified by the DOL, the Chamber argued.
Despite its efforts to delay the rule’s enforcement, the DOL opposes the idea of an injunction, the Chamber said in its brief. The Chamber conferred with the department in seeking “temporary relief,” but the DOL indicated that it “intends to oppose” the injunction request, according to the Chamber’s brief.
Even so, the Chamber said an injunction pending appeal would benefit the department by giving it enough time to conduct “the thorough and careful reassessment of the Rule that the President has directed.”
The American Council of Life Insurers, another industry group challenging the fiduciary rule in court, on March 11 filed a similar motion for an injunction blocking the rule. ACLI used its motion to emphasize how the fiduciary rule allegedly violates the free speech protections found in the First Amendment of the U.S. Constitution.
Both the Chamber and ACLI have asked Chief Judge Barbara M.G. Lynn of the U.S. District Court for the Northern District of Texas to rule on their motions by March 20.
Multiple industry groups and companies have filed lawsuits challenging the fiduciary rule from a variety of angles.
Every federal judge to have ruled on these cases has upheld the rule in its entirety, handing losses to the Chamber and ACLI, Market Synergy Group and the National Association for Fixed Annuities. Another case is pending before a federal judge in Minnesota.
Gibson Dunn & Crutcher LLP represents the Chamber. Wilmer Cutler Pickering Hale & Dorr LLP and Thompson Coe Cousins & Irons LLP represent ACLI.