On April 8, 2016, the Department of Labor (DOL) published its Final Rule and related Exemptions to address conflicts of interest in retirement advice. The Rule generally is effective April 2017, with phased in requirements for certain areas effective January 2018.
From June 1 to June 8, 2016, five different lawsuits were filed challenging the DOL Final Rule and certain of the Exemptions.
• National Association for Fixed Annuities v. Perez and U.S. DOL, Filed in United States District Court for the District of Columbia
• Market Synergy Group Inc. v. U.S. DOL, Perez & Borzi, Filed in United States District Court for the District of Kansas (Topeka)
• Chamber of Commerce, Financial Services Institute (FSI), Financial Services Roundtable, (FSR),Greater Irving-Las Colinas Chamber of Commerce, Humble Area Chamber of Commerce, Insured Retirement Institute (IRI),Lubbock Chamber of Commerce, Securities Industry and Financial Markets Association (SIFMA), Texas Association of Business v. Perez and U.S. DOL, Filed in United States District Court for the Northern District of Texas
• Indexed Annuity Leadership Council, Life Insurance Co. of the Southwest, American Equity Investment Life Insurance Co., Midland National Life Insurance Co., North American Co. for Life and Health Insurance v. Perez and U.S. DOL, Filed in United States District Court for the Northern District of Texas
• American Council of Life Insurers, National Association of Insurance and Financial Advisors, NAIFA-Texas, NAIFA-Amarillo, NAIFA-Dallas, NAIFA-Fort Worth, NAIFA-Great Southwest v. U.S. DOL & Perez, Filed in United States District Court for the Northern District of Texas
The court consolidated the three cases filed in Texas.
Together, the lawsuits make 28 legal claims against the DOL, the Rule and the rule-making process. In addition to challenging the Department's regulation of fixed income annuities, the lawsuits allege that the DOL:
• exceeded its authority under the Administrative Procedure Act by adopting an expanded definition of the word fiduciary that contradicts existing law;
• unlawfully created a private right of action that would allow individual lawsuits to proliferate without proper authorization from Congress;
• provided insufficient notice of certain of its decisions and inadequately considered the comments it received from industry players;
• impermissibly extended fiduciary obligations under the Employee Retirement Income Security Act to individual retirement accounts;
• violated the First Amendment's free speech protections by unduly restricting the speech of investment advisers;
• violated the Due Process Clause by adopting an unduly vague regulation;
• failed to consider the rule's effects, particularly on small businesses; and
• unfairly disfavored certain retirement products without reasonable justification.
The courts have set the two cases (Kansas and the District of Columbia) for oral argument on the plaintiffs’ request for a preliminary injunction for August 24 and 25. The consolidated Texas cases are set for oral argument on November 17, 2016.
AARP and AARP Foundation have filed with the courts motions requesting leave to file friend-of-the-court briefs supporting the position of the government in the issuance of the Rule.