Appeals court denies NAFA motion for emergency injunction of DOL fiduciary rule

D.C. Circuit Court of Appeals says request did not meet the 'stringent requirements' necessary to halt the regulation

Dec 15, 2016 @ 4:21 pm

By Mark Schoeff Jr.

The D.C. Circuit Court of Appeals on Thursday denied a motion for an emergency injunction of a Labor Department investment advice rule, leaving it in place as the Trump administration comes into office.

The National Association for Fixed Annuities sought a preliminary injunction against the regulation in the D.C. district court earlier this year. Judge Randolph Moss upheld the rule in a November decision.

NAFA requested an emergency injunction in late November while it appealed Mr. Moss' decision. The organization argued the April implementation date of the DOL regulation should be delayed to “alleviate what can only be described as chaos in the fixed annuity industry.”

The circuit court judges were not persuaded.

“Appellant has not satisfied the stringent requirements for an injunction pending appeal,” the court order states.

The decision was expected because the appeals court typically denies emergency injunctions, according to Erin Sweeney, counsel at Miller & Chevalier.

If the court grants an expedited appeal of the case, it could hand down a decision by April or May, Ms. Sweeney said.

Implementation of the rule, which would require financial advisers to act in the best interests of their clients in retirement accounts, is set to begin in April.

The failure of the emergency injunction motion was another setback for opponents of the rule.

In November, a Kansas district judge denied a preliminary injunction sought by an insurance agency, Market Synergy Group Inc. An appeal is expected in the case.

Sometime next month, there could be a ruling in a case brought by several major industry groups in a federal court in Texas.

A fourth case is pending in Minnesota.

The Trump administration or the Republican-led Congress may try to repeal or delay the rule, but they face obstacles in doing so. The financial industry opposes the measure, calling it too complex and costly.

The Obama administration says it is need to protect workers and retirees from inappropriate high-fee investments that erode retirement savings.

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