The groups asked the U.S. Court of Appeals for the 5th Circuit for a rehearing en banc — before all the judges of the court. On March 15, a three-judge panel ruled 2-1 to vacate the rule.
DOL has until April 30 to appeal the 5th Circuit’s ruling. AARP states in its filing that it “has concerns that DOL itself might not request a rehearing.”
Nancy LeaMond, AARP’s chief advocacy and engagement officer, said in a statement that “AARP is not giving up on our fight to make sure that hard-earned retirement savings have strong protections from conflicts and hidden fees. Many financial advisors already give advice with the public’s best interests in mind. But the recent court decision allows some financial advisors to provide guidance based on what’s best for their pocketbooks, not the consumers.’”
“Retirement investors need and deserve advice in their best interest,” said David Certner, AARP’s legislative policy director, on a Thursday morning call with reporters.
“The DOL rule was long overdue,” he said, adding that protecting the rule “is a big issue for AARP” as the rule is “critical to retirement income savings.”
As to the Securities and Exchange Commission’s new standard of conduct proposal for brokers and advisors, Certner said that the SEC and Labor have different jurisdictions. “Regardless of where the SEC is going, the DOL rule is a strong rule and necessary in its own right.”
Certner added that the SEC, in its proposal, “is talking also about a best-interest standard, but we need to delve into further into how they are defining a best-interest standard.”
Mary Ellen Signorille, senior attorney for litigation at AARP Foundation, noted on the call that AARP filed its motions because “we have not heard anything from the DOL that they would file for a petition of rehearing.”
She explained that the court does not have to render a decision on AARP and the state AGs’ requests before April 30, which is the deadline for Labor to file an appeal.
California Attorney General Xavier Becerra said on a separate Thursday morning call with reporters that “as we continue to see the Trump presidency unravel, here’s one thing that’s become pretty clear: It appears that the Trump administration continues to try to tip the scales in favor of Wall Street over Main Street.”
California, Becerra said, is leading a coalition with New York and Oregon and seeking from the 5th Circuit Court of Appeals “an opportunity to intervene in this case to make sure that the fiduciary rule has the defense it needs to move forward,” as it’s a “common-sense measure that protects people who are saving towards their retirement.”
The Trump administration, Becerra continued, “has proven that it does not plan to fully defend the fiduciary rule, so we’d like to intervene in this case to be able to do so” by seeking to have “this matter heard before a full panel.”
The fiduciary rule “is lawful in its role,” he added, “and we believe if given the opportunity to litigate this, we can succeed.”
New York Attorney General Eric T. Schneiderman said in a statement that “it’s common sense: financial advisors should act in their client’s best interest, not their own.” The fiduciary rule “is vital to protecting families in New York and across the country who are saving for their retirement. Our coalition will continue to fight to ensure that the interests of hardworking Americans are put first.”
On Wednesday night, before the motions were filed, Financial Services Institute CEO Dale Brown said the independent advisor trade group had heard rumors that such an action was in the offing.
It is “unlikely the 5th Circuit will grant [the groups] the hearing they’re hoping for” given the April 30 deadline for Labor to appeal the ruling, he said at the fi360 Conference in San Diego. “One of the points we’ve made is that the 5th Circuit’s opinion, in terms of a regulatory policy standpoint, is in line with the Trump administration’s views.”
The U.S. Chamber of Commerce, FSI, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association said in a statement after AARP and the states filed their motions that the 5th Circuit “got it right in its March 15, 2018 opinion striking the DOL fiduciary rule in toto. We will oppose any motion to intervene in this case at this late stage.”
— Check out DOL Fiduciary Rule Vacated. Now What? on ThinkAdvisor.