Kansas judge again upholds DOL fiduciary rule

Judge Daniel D. Crabtree granted summary judgment to DOL, marking the measure's fourth court victory since November.

Feb 17, 2017 @ 6:46 pm

By Mark Schoeff Jr.

A Kansas federal judge upheld the Labor Department fiduciary rule on Friday, giving the measure its fourth court victory since November.

Judge Daniel D. Crabtree granted summary judgment to DOL in a lawsuit filed by Market Synergy Group Inc., a Topeka insurance agency that develops fixed index annuities and other proprietary insurance products.

The decision comes while DOL seeks a delay in the rule's April 10 implementation date. The agency has been directed by President Donald J. Trump to reassess the measure's impact and possibly amend or replace it.

Earlier this week, the DOL sought a stay in the proceedings of a lawsuit against the rule filed in Minnesota.

Friday's court ruling follows Mr. Crabtree's Nov. 28 denial of Market Synergy's motion for a preliminary injunction of the rule. After that decision, Market Synergy asked for summary judgment.

Mr. Crabrtree's reasons for siding with DOL were the same on Friday as they were in November, he wrote in his opinion.

He held that the DOL did not exceed its authority nor did it violate rulemaking parameters in promulgating the regulation, which requires financial advisers to act in the best interest of their clients in retirement accounts.

He also said that DOL was not “arbitrary and capricious” in its treatment of fixed index annuities and that it “properly considered the economic impact that the final rule would impose on independent insurance agent distribution channels.”

Neither Market Synergy nor DOL submitted additional evidence on their cross motions for summary judgment, giving him no reason to change the opinion he handed down regarding the preliminary injunction, Mr. Crabtree wrote.

“Once again, DOL has proven it was on solid ground in promulgating the rule,” Micah Hauptman, financial services counsel at the Consumer Federation of America, wrote in an email.

The decision is another setback for the financial services industry.

Last week, a Dallas federal court upheld the DOL rule in a lawsuit filed by several trade associations, including the Securities Industry and Financial Markets Association, the Financial Services Institute, the National Association of Insurance and Financial Advisors and the American Council of Life Insurers.

The industry groups argue that the DOL rule is too complex and costly and will shut investors with modes assets out of the advice market. Supporters of the rule say that it will protect workers and retirees from inappropriate high-fee investments that erode savings.

The industry hopes that Mr. Trump is its ace in the hole. Last week, the DOL filed a rule with Office of Management and Budget that would delay the rule's implementation. The OMB has not yet approved the delay

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Are investors getting complacent?

Tom Florence, CEO of 361 Capital, discusses growing investor complacency and why he thinks overconfidence might be creeping into adviser and investor decision making.

Latest news & opinion

Nontraded BDC sales in worst year since 2010

The illiquid product's three-year decline is partially due to new regulations and poor performance.

Tax reform debate sparks fresh interest in donor-advised funds

Schwab reports new accounts up 50% from last year, assets up 33%.

Nontraded REITs to post worst sales since 2002

The industry is on track to raise just $4.4 billion, well off the $19.6 billion it raised just four years ago, as new regulations hinder sales.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print