A federal judge in Texas vacated the Labor Department's fiduciary rule Thursday.
Judge Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas issued the ruling to vacate, which was unopposed by the Labor Department or by the Federation of Americans for Consumer Choice, which challenged the fiduciary rule in court.
In a statement shared with ThinkAdvisor Friday, FACC said that while vacating the 2024 fiduciary rule "is a welcome development," FACC "has another lawsuit pending against the DOL which challenges the 2020 fiduciary guidance" on rollover advice.
Labor's Employee Benefits Security Administration decided last November not to pursue its defense of the Biden-era fiduciary rule.
On Monday, plaintiffs in another case, including the American Council of Life Insurers and the Insured Retirement Institute, filed their motion to vacate the 2024 fiduciary rule. The groups are awaiting a decision.
The 2024 DOL fiduciary rule was previously stayed by two federal district courts in challenges brought by insurance industry groups, including ACLI, which stopped the rule from taking effect.
The two cases applied only to the halt, not to the rule itself, and were consolidated in the U.S. Court of Appeals for the 5th Circuit.
New Fiduciary Rule in May or 'Regulatory Fatigue'?
Labor plans to issue a fiduciary rule in May 2026, according to its regulatory flexibility agenda.
Retirement planning officials predict Daniel Aronowitz, who was confirmed by the Senate last September to head Labor's EBSA, may help write a new rule to address fiduciary advice regarding rollovers.
"As someone who worked closely on this issue, I'm disappointed we may never see whether the revised rule addressed the court's concerns in the Chamber of Commerce decision on the prior rule," Lisa Gomez, former head of EBSA, told ThinkAdvisor Friday in an email.
"We genuinely tried to respond to the Fifth Circuit's reasoning in the revised rule, and I hoped to see that tested," Gomez continued. "Regardless, while the litigation may be ending, the policy challenge remains — ensuring retirement advice is aligned with workers' interests, and doing so in a way that reflects the current structure of retirement plans. I hope that we can finally get there and put this to bed once and for all."
The 2024 fiduciary rule package "was fundamentally flawed and exceeded DOL's legal authority," said Brad Campbell, a former head of EBSA who's now a partner at Faegre Drinker in Washington, in another email Friday. "The courts wisely stayed its implementation, and I think the Trump administration made the correct decision in agreeing to vacate the rule and its associated exemptions."
The question now: "Is [it] the end of the fiduciary rule's story, or the beginning of a new chapter?" Campbell said.
"Will the Trump administration move forward with some related activity as their last regulatory agenda suggested, or will they focus their attention on their many other regulatory priorities? I don't see any urgency to taking new action — because the 2024 rule never went into effect, its vacatur preserves the current status quo, and I think everyone involved has regulatory fatigue on this issue."
Credit: Chris Nicholls/Touchpoint Markets
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