As anticipated, financial services trade groups are said to be filing a lawsuit soon challenging the Department of Labor’s new fiduciary rule.
The suit is to be filed by the Securities Industry and Financial Markets Association, the Financial Services Institute, the Insured Retirement Institute, the Financial Services Roundtable as well as the U.S. Chamber of Commerce, The Wall Street Journal reported Tuesday.
A suit could be filed today, Thursday or next week, according to an industry official who asked to remain anonymous to discuss the groups’ plans.
A Chamber spokesperson said the group wouldn’t comment on “speculation.” The other trade groups didn’t respond by press time to requests for comment.
FSI, SIFMA as well as the Chamber have stated previously that they wouldn’t rule out taking legal action against DOL’s fiduciary rule. But Labor Secretary Thomas Perez has argued that any legal challenges to torpedo the rule would fail.
“Every rule we take, people threaten us with litigation,” Perez told reporters on the sidelines of the April 6 event to announce release of the final fiduciary rule at the Center for American Progress in Washington. “We had a very lengthy and deliberate process, and what people see when they review the rule is that we listened and made changes. I’m confident in what we’ve done on the policy front, and I’m confident that we will survive any legal challenge.”
Eugene Scalia, a partner in Gibson, Dunn & Crutcher’s Washington office, who co-chairs the firm’s Administrative Law and Regulatory Practice Group and is a member of its Labor and Employment Practice Group, is said to be filing the lawsuit on the trade groups’ behalf.
An email request for comment as well as a request to his office were not returned by press time.
The legal challenges come on the heels of both the House and Senate passing resolutions to kill DOL’s rule. But the Obama administration has already vowed to veto any such resolution that reaches the president’s desk.
Rep. Peter Roskam, R-Ill., a member of the House Ways and Means Committee, vowed at a late April briefing on Capitol Hill sponsored by the Chamber of Commerce to fight DOL’s rule, arguing that the rule will have long-term consequences that will devastate retirement savers.
Roskam argued at the briefing that the “long-term impact of the rule is, unfortunately, that people at the lower end of the food chain are going to get less advice.”
If the final rule “is not dealt with” either by statute or other means, “then what we’ll see over a period of time is a self-fulfilling prophecy: What happens with less advice is more diminished returns and over a period of time what happens is a wider and wider [savings] gap,” Roskam said.
— Check out Lessons for Advisors From Indecipherable DOL Fiduciary Rule on ThinkAdvisor.