Justice Department seeks stay in Thrivent lawsuit against DOL fiduciary rule

Attorneys are seeking a stay pending the results of a rule review requested by the president.

Feb 17, 2017 @ 1:30 pm

By Greg Iacurci

The Department of Justice has requested a stay in the lawsuit against the Labor Department's fiduciary rule brought by Thrivent Financial, just one week after another court denied the department's request for a stay against the rule in a separate case.

A letter from Galen N. Thorp, one of the DOJ attorneys defending the rule against industry lawsuits, to Minnesota district court judge Susan Richard Nelson on Feb. 15 asks for a stay in legal proceedings "pending the results of the review directed by the President."

President Donald J. Trump in early February directed the Department of Labor to review the rule, which requires brokers and advisers to give retirement investment advice that's in clients' best interests.

Mr. Thorp proposed reporting back to the court on May 15 to "update the Court on the Department's actions and address whether a continued stay is warranted."

RULE CHANGE?

The letter infers the new administration may change the fiduciary rule, and it may not make sense to fight over a regulation that could be changed in the future, Merril Hirsh, a partner at law firm Troutman Sanders, said.

"It's not unusual to request a stay if the agency is considering doing something different," said Mr. Hirsh, a former trial attorney at the Justice Department.

An oral argument in the Thrivent suit — Thrivent Financial for Lutherans v. Edward C. Hugler et al — is currently scheduled for Mar. 3.

The request comes exactly one week after Judge Barbara M.G. Lynn in Texas denied plaintiffs' motion for a stay in what has been considered the most significant of several lawsuits filed against the rule, and ruled in favor of the DOL.

While the Minnesota judge in the Thrivent case "isn't bound by what a judge in Texas does," it could persuade the judge's decision to grant or not grant the stay, Mr. Hirsh said.

The DOL has won three legal battles against its fiduciary rule to date.

The challenge brought by Thrivent, an organization that provides financial services to Christians, is "probably the most narrowly tailored lawsuit" of the bunch, said Duane Thompson, senior policy analyst at fi360 Inc., a fiduciary consulting firm.

Whereas the Texas suit, for example, wanted to effectively "throw out everything" about the fiduciary rule, Thrivent is challenging the rule's best-interest contract exemption by seeking an injunction against its class-action provision.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

Geoffrey Brown: What's top of mind at NAPFA?

NAPFA is looking ahead at the rest of 2018 and has a broad agenda that includes improving diversity in the advice industry. What's next? Geoffrey Brown offers his insights.

Latest news & opinion

10 fastest-growing IBDs

These independent broker-dealers saw the biggest percentage gains in their revenue in 2017.

The unique nature of working with celebrity clients

Athletes and entertainers are just like everyone else — aside from complex tax issues, a lack of financial savvy and a need for prenups

Top 10 IBDs ranked by revenue

These independent broker dealers generated the most revenues in 2017.

8 podcasts advisers listen to when they aren't working

Listening to podcasts for the fun of it.

UBS continues to cut loans to recruits, while increasing compensation to brokers

The wirehouse reduced recruitment loans 20% and increased bonus loans 68% in the first quarter.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print