Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Annuities > Fixed Annuities

Court denies NAFA in DOL fiduciary rule case

By Nick Thornton

X
Your article was successfully shared with the contacts you provided.

The National Association for Fixed Annuities has lost its challenge to the Department of Labor’s fiduciary rule.

In a decision issued today in the United States District Court for the District of Columbia, Judge Randolph Moss denied NAFA’s motions for a preliminary injunction and summary judgment.

Among other things, NAFA claimed DOL violated the Administrative Procedure Act when it shifted the regulation of fixed indexed annuities to the rule’s Best Interest Contract Exemption. In the proposed version of the rule, FIAs were scheduled for regulation under the less restrictive Prohibited Transaction Exemption 84-24.

In shifting FIAs to the BIC exemption in the final rule, NAFA argued industry was not given adequate notice to comment on the implications, as the APA requires.

Related: FIAs to take a hit next year, courtesy of DOL fiduciary rule

But Judge Moss cited case law showing that a final rule “need not be the one proposed” in the rulemaking process.

“It is enough that the final rule constitute a logical outgrowth” of the proposed version, wrote Moss.

Moss reasoned that NAFA was given adequate notice that the Department was considering regulating FIAs under the BIC exemption when it explicitly sought comments on whether annuities were adequately regulated in the proposal.

NAFA argued the proposal gave “no inkling whatsoever that the Department was considering moving FIAs from PTE 84-24 to the BIC.”

But Moss ruled that NAFA’s reading of the proposal, and DOL’s request for comment on the viability of how annuities were treated, was “not tenable.”

“The Department expressly requested comment on its decision to ‘continue to allow IRA transactions involving’ fixed indexed annuities ‘to occur under the conditions of PTE 84-24,” wrote Moss.

“That is, it (DOL) asked whether fixed indexed annuities should be grouped under PTE 84-24 or not,” added Moss. “And, if there were any doubt on this, it would be put to rest by the fact that NAFA, along with other industry groups, provided comments on that very issue.”

Full analysis of the ruling will follow.

For full DOL rule coverage, visit the LifeHealthPro Fiduciary Resource Center.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.