The Trump aministration has dropped another hint that it’s likely to pursue elimination of the class-action suit provision in the Labor Department’s fiduciary rule.
In a letter filed with U.S. District Judge Susan Richard Nelson, who is presiding over a lawsuit brought by Thrivent Financial for Lutherans opposing that provision, the Justice Department wrote that “a stay of the litigation is the most efficient way to address this claim regarding a provision that is not currently applicable to plaintiff and which will likely be mooted in the near future.”
The Justice Department is defending the government in the case and previously requested a stay of the lawsuit, which the judge denied, while the Labor Department reviews the rule.
In an earlier filing with the same Minnesota court, Labor Secretary Alexander Acosta said the department had submitted proposed amendments to the Office of Management and Budget concerning three exemptions in the rule, including the best-interest contract exemption rule, whose enforcement would include the possibility of class-action suits brought by investors.
Under the rule, financial advisors could receive variable compensation, such as commissions, for retirement investment products if their firm and the client sign a best-interest contraction exemption, but investors could bring class-action suits if the contract was violated.
The Labor Department is in the process of reviewing the rule following a request from the White House and has submitted a proposal to OMB to delay full implementation by 18 months, until July 1, 2019.