The Labor Department on Tuesday won a case in federal court brought against its fiduciary rule by Market Synergy Group, an insurance distributor.
The U.S. Court of Appeals for the 10th Circuit ruled that Labor did not “arbitrarily treat fixed indexed annuities differently from fixed annuities” under its final fiduciary rule.
Kansas-based Market Synergy Group (MSG) had argued that Labor threw FIAs under the fiduciary rule’s best-interest contract exemption, or BICE, at the last minute.
“According to MSG, the DOL simply did not give notice that it might exclude FIAs from PTE 84-24 and therefore did not give adequate notice of the final rule,” the ruling states. “We are unpersuaded. The [notice of public comment and review] clearly asks for comment on whether removing variable annuities from PTE 84- 24 but leaving FIAs and fixed rate annuities struck the appropriate balance.”
The court’s ruling found that Labor’s decision to include FIAs under PTE 84/24 was “not arbitrary or capricious.”