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DOL Fiduciary Rule Survives A Court Challenge


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A federal appeals court on Thursday declined to slap down the Department of Labor’s new fiduciary rule, which is intended to minimize conflicts of interest by brokers and financial advisors dealing with clients’ retirement accounts.

The court action was a setback for opponents of the DOL and Obama administration rule, which requires brokers and advisors to recommend investments that are in the best interests of clients, not merely suitable for them. As a result, the new rule will require brokers and advisors to put their clients’ best interest before their own profit.

Discount brokers like Charles Schwab ( SCHW ), TD Ameritrade ( AMTD ) and E-Trade Financial ( ETFC ) are expected to benefit from the rule. A Goldman Sachs report said the rule will likely heighten investors’ concern about fees, accelerating the shift to ETFs and passive mutual funds. That should benefit iShares and PowerShares parent asset managers BlackRock ( BLK ) and Invesco ( IVZ ) as likely beneficiaries. State Street (STT) and WisdomTree Investments (WETF) should also benefit.

IBD’s TAKE: This IBD report analyzes the financial impact of the fiduciary rule on workers and on the financial services industry.

In its Thursday ruling, the U.S. Court of Appeals for the District of Columbia Circuit denied a request by the National Association for Fixed Annuities for an emergency injunction against the DOL and Secretary of Labor Thomas Perez.

In their order , D.C. Circuit judges Karen LeCraft Henderson, David Tatel and Sri Srinivasan said NAFA “has not satisfied the stringent requirements for an injunction pending appeal.”

The Justice Department had asked the court to not enjoin regulations that had been issued after six years of public comment, which the government called essential to the nation’s retirement security.

The department had described NAFA’s accusation that the new regulations will cause irreparable harm to members of the annuities group as speculative.

Critics of the new rule say it will make some retirement investment advice unaffordable by middle-income families.

More lawsuits against the fiduciary rule are still pending in Texas, Kansas and Minnesota federal district courts.

How President-elect Donald Trump will deal with the fiduciary rule is a wild card. Trump and his intended Labor secretary, Andrew Puzder, are seen as advocates for reduced regulatory burdens.

RELATED:

New, Tighter Retirement-Advice Rule Raises Industry Concerns

New DOL Rule Forces Investors To Weight Their Options

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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DOL Fiduciary Rule Survives A Court Challenge Reviewed by on . Shutterstock photo A federal appeals court on Thursday declined to slap down the Department of Labor's new fiduciary rule, which is intended to minimize conflic Shutterstock photo A federal appeals court on Thursday declined to slap down the Department of Labor's new fiduciary rule, which is intended to minimize conflic Rating:
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