Skip to content

Multiple Lawsuits Filed to Block DOL Fiduciary Rule

Trade groups, business associations and an insurance agency are taking their grievances with The Department of Labor’s controversial fiduciary rule to the courts. This week, three additional lawsuits were filed bringing the total number of suits to five since the final rule was released in April.

The recent lawsuits fall on the heels of a presidential veto against H.J. Res. 88, a joint resolution introduced by Rep. Phil Roe (R-TN) that was seeking to block the rule that redefines what is considered a “fiduciary” as it pertains to giving investment advice.

On Wednesday, the American Council of Life Insurers and National Association of Insurance and Financial Advisors, as well as five NAIFA chapters in Texas, filed a claim in the U.S. District Court for the Northern District of Texas.

“ACLI and NAIFA support responsible and balanced regulations that protect the interests of retirement consumers. But the regulation is neither reasonable nor balanced,” said ACLI president & CEO Dirk Kempthorne and NAIFA CEO Kevin Mayeux in a joint statement. “It has become clear that it will harm the very people it is meant to help. It will harm retirement savers who now, more than ever, need access to the guaranteed lifetime income products – personal pensions—offered by ACLI and NAIFA members.”

They added, “The ACLI-NAIFA litigation details how the rule is arbitrary and capricious, contrary to law, fails to provide notice and comment on changes made to different types of annuities, and violates First Amendment protections for non-fiduciary sales persons to provide accurate, non-misleading commercial speech about retirement products.”

On Thursday, in the same Northern Texas district court, a lawsuit was filed by the Indexed Annuity Leadership Council, Life Insurance Company of the Southwest, American Equity Investment Life Insurance Company, Midland National Life Insurance Company and North American Company for Life and Health Insurance.

The executive director of IALC, Jim Poolman, noted that the lawsuit is not disputing that retirement advisors should act in the best interests of their clients.

“During the rulemaking process, IALC provided constructive recommendations to the Department of Labor with the objective of helping finalize a rule that promotes the best interest of all Americans saving for retirement,” said Poolman. “Unfortunately, the final DOL regulation unfairly targets certain types of fixed annuity products, making it harder for Americans to purchase fixed indexed annuities when it is in their best interest to do so.”

Also on Thursday, the Market Synergy Group filed its lawsuit in the U.S. District Court for the District of Kansas, which seeks an injunction to stop the rule.

Last week, a number of industry trade groups filed the first lawsuit challenging the rule, which is scheduled to become operational in April 2017. Included in the suit are the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Greater Irving-Las Colinas’ Chamber of Commerce, Insured Retirement Institute, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce, Securities Industry and Financial Markets Association, and Texas Association of Business.

The National Association of Fixed Annuities also filed a claim seeking to block the rule from taking effect by requesting a preliminary injunction. The U.S. District Court for the District of Columbia will hear the case on August 25th.

Stay tuned for more on the upcoming lawsuits and other fiduciary rule news.

Click here to visit The DI Wire directory page.