U.S. District Court Denies Motion Challenging DOL Fiduciary Rule

Chief Judge Barbara M.G. Lynn of the U.S. District Court for the Northern District of Texas Dallas Division (the "Court") denied a motion for summary judgment by the Chamber of Commerce, the Indexed Annuity Leadership Council and the American Council of Life Insurer's (collectively, the "Plaintiffs"). The motion challenged the new rules and rulemaking procedure relating to the fiduciary rule and the heightened fiduciary standards mandated by the DOL ("Defendant") fiduciary rule.

The Plaintiffs argued that "financial professionals are improperly being treated as fiduciaries and should not be required to comply with heightened fiduciary standards for one-time transactions." The Plaintiffs asserted that the conditions to qualify for an exemption under the Best Interest Contract Exemption ("BICE") "are so burdensome that financial professionals will be unable to advise the IRA market and sell most annuities to ERISA plans and IRAs."

The Court found that:

the fiduciary rule does not exceed the DOL's authority; the DOL did not exceed its statutory authority to grant conditional exemptions; contrary to the Plaintiffs' argument that BICE and Prohibited Transaction Exemption 84-24 ("PTE 84-24) impermissibly create a private right of action, the aforementioned exemptions do not create a private right of action; the new rules and the rulemaking do not violate the Administrative Procedure Act because: (i) the notice and comment period was adequate; (ii) the DOL moved Fixed Income Annuities from PTE 84-24 to...