DOL Working to Kill Fiduciary Rule Class Action Provision
The Department of Labor further indicated in a recent court filing in the Thrivent Financial case that it may be working to nix a portion of its fiduciary rule that makes it easier for investors to bring class action lawsuits against financial advisors under the best interest contract exemption.
The Justice Department issued a letter to district court judge Susan Nelson stating, “…a stay of the litigation is the most efficient way to address this claim regarding a provision that is not currently applicable to [Thrivent] and which will likely be mooted in the near future.”
The news comes one month after attorneys representing the DOL in the Chamber of Commerce lawsuit disclosed that the government will no longer defend the class action provision.
The fiduciary rule, which is currently under review as directed by President Trump, seeks to eliminate conflicts of interest in the marketplace for retirement investment advice. The controversial regulation began implementation on June 9th, while certain BIC exemption conditions are delayed until January 1, 2018.
The DOL is seeking to further delay implementation of the remaining provisions of the rule for 18 months until July 1, 2019 and submitted proposed amendments to three exemptions to the Office of Management and Budget earlier this month.
The exemptions include the best interest contract exemption (PTE 2016-01); the class exemption for principal transactions (PTE 2016-02); and the prohibited transaction exemption involving insurance agents and brokers (PTE 84-24).
The regulatory action is currently pending review by the OMB.