The Department of Justice did not petition the Supreme Court on Thursday to challenge the U.S. Court of Appeals for the 5th Circuit’s decision to vacate the Department of Labor’s fiduciary rule. Industry officials say that the DOJ’s decison, while not surprising, further signals the rule’s demise.
Labor’s fiduciary rule will officially die on the vine once the 5th Circuit issues its mandate vacating the rule.
DOJ had 90-days from when the 5th Circuit issued its mandate to vacate the fiduciary rule on March 15, to petition the Supreme Court to review the 5th Circuit ruling.
A legal observer told ThinkAdvisor on Friday that the “DOJ did not file a petition for certiorari [by Thursday], but the mandate itself has not yet been issued.” This could mean that DOJ still has time to petition the Supreme Court.
Industry officials are opining Labor’s next fiduciary-related move.
“DOL will closely monitor developments at the Securities and Exchange Commission” and the securities regulator’s advice standards proposal, Steve Saxon, an attorney specializing in the Employee Retirement Income Security Act with the Groom Law Group in Washington, told ThinkAdvisor on Friday.
“Any expectation that SEC guidance [in this fiduciary realm] will be forthcoming by the end of the year is overly optimistic,” Saxon said. “I don’t think DOL will come out with guidance or exemptive relief on its own motion, at least in the near future.”
Rob Foregger, co-founder of NextCapital, added in comments to ThinkAdvisor that while Labor’s fiduciary rule “has now died several deaths,” the rule “has irreversibly accelerated the entire investment industry toward client-advisor alignment — and a fiduciary future.”
Foregger hopes the SEC’s Regulation Best Interest, or Reg BI, for brokers, which is part of the regulator’s advice conduct standards package, once in final form, ”will assist in moving the industry toward a unified fiduciary standard over the coming decade. Time will tell.”