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December 01, 2016 at 07:44 AM
The National Association for Fixed Annuities filed an emergency motion for an injunction pending appeal with the U.S. Court of Appeals for the District of Columbia Circuit.
The motion asks for a delay of 10 months at a minimum but says a two-year delay is warranted.
The association is appealing an order and memorandum opinion of the federal district court issued Nov. 4 denying NAFA’s application for a preliminary injunction and motion for summary judgement in its lawsuit against the U.S. Department of Labor’s fiduciary rule, and a subsequent district court order issued Nov. 23 denying NAFA’s motion for an injunction pending appeal.
“We are aggressively moving forward with our appeal of the lower court’s decision, but our immediate concern is to stay the rule’s implementation date set for April 10, 2017,” said Chip Anderson, NAFA’s executive director, in a press release. “With every passing day, NAFA members are incurring excessive and unrecoverable expenses as they attempt to navigate the rule’s byzantine compliance regime. Moreover, we are extremely concerned about how quickly consumers may face an environment in which they no longer have access to the products and professional advice needed to retire with confidence.”
NAFA filed its lawsuit in June seeking a preliminary injunction to stay implementation of the rule. Judge Randall Moss, who presided over the case, denied the preliminary injunction and ruled in favor of the Labor Department on its merits in upholding the rule.
Among other things, NAFA claimed the Labor Department 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, fixed indexed annuities were scheduled for regulation under the less restrictive Prohibited Transaction Exemption 84-24.
In shifting fixed indexed annuities to the Best Interest Contract exemption in the final rule, NAFA argued the industry was not given adequate notice to comment on the implications, as the Administrative Procedure Act requires.
But 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.
