(Editor’s note: This article was adapted from Human Capital, Melanie Waddell’s newsletter on the people shaping the financial regulatory landscape.)
The uncertainty surrounding the Labor Department’s fiduciary rule reached full throttle late last week when the U.S. Court of Appeals for the 5th Circuit stunned industry watchers by vacating the rule in its entirety. What now? I chatted with Eugene Scalia, the lead Gibson Dunn attorney who argued against Labor’s rule before the 5th Circuit, on Wednesday afternoon during the East Coast’s fourth nor’easter. Scalia’s take: The Obama-era fiduciary rule will be taken “off the books.”
Eugene Scalia is a son of deceased Supreme Court Justice Antonin Scalia who also served as the Labor Department’s solicitor during the George W. Bush administration, and is now a partner in the Washington office of Gibson, Dunn & Crutcher.
At Gibson Dunn, he co-chairs the firm’s Administrative Law and Regulatory Practice Group and is a member of its Labor and Employment Practice Group.
He represented nine plaintiffs, including the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Financial Services Institute, in the case brought in a Texas court against Labor’s fiduciary rule.
My question-and-answer phone conversation with Scalia (as the snow piled up) follows:
What’s your reaction to the 5th Circuit ruling? “We were very pleased by the court’s decision. This is exactly the relief we thought was warranted and we asked for. The court recognized the very serious problems with the rule” that the Labor Department promulgated.
The court vacated the rule, “taking it off the books; the effect is on the rule itself, and of course if that rule applies nationwide, the effect is nationwide.”
Do you see Labor asking for a rehearing by the 5th Circuit? “I’d be very surprised to see Labor seek rehearing. This was an extraordinarily controversial rule by the prior administration. The [fiduciary] rule is a leading example of the kind of regulatory overreach that the White House counsel and other White House officials have criticized.”