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.
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.