A major court decision could be released on a lawsuit over the Labor Department's fiduciary rule after the partying is over next month on the Bayou.
Opponents and advocates of the regulation have been waiting for months for the Fifth Circuit Court of Appeals in New Orleans to issue its opinion. The court held a hearing last summer. The lead plaintiff in the case, the U.S. Chamber of Commerce, asked for a decision by last month.
"I've been told that New Orleans takes Mardi Gras pretty seriously, so we should expect a decision to follow that," David Hirschmann, Chamber senior vice president and head of its Center for Capital Markets Competitiveness, said on the sidelines of the organization's State of Business event Wednesday in Washington. Mardi Gras falls on Feb. 13 this year.
The case is the highest-profile suit of several against the DOL rule because it involves the leading industry opponents to the regulation. In addition to the Chamber, plaintiffs include the Securities Industry and Financial Markets Association, the Financial Services Institute, the American Council of Life Insurers and the Financial Services Roundtable.
Industry groups lost decisively at the district level in Dallas last year.
But Mr. Hirschmann and others have anticipated decisions before only to be left hanging.
"So, who knows?" he said. "Reading court tea leaves is a dangerous proposition."
Advocates of the rule also are watching the appeal closely.
"Obviously, there's a lot riding on this decision," said Barbara Roper, director of investor protection at the Consumer Federation of America. "It's an extremely important case because it raises every issue. The other cases were more narrowly focused."
The DOL rule, which requires brokers to act in the best interests of their clients in retirement accounts, was partially implemented last June. But in November, the agency delayed from Jan. 1, 2018, until July 2019 the enforcement provisions of the rule, including the best-interest-contract exemption that allows brokers to receive variable revenue for investment recommendations but legally binds them to be a fiduciary.
"I always felt our strongest argument was the argument against the compelled contract," Mr. Hirschmann said.
The industry plaintiffs assert that the DOL lacks the authority to promulgate the rule and that it overstepped its bounds with a provision that allows investors to file class-action suits against brokers.
That means that enforcement would be carried on in various state courts, Mr. Hirschmann said.
"That's the opposite of uniformity," he said.
Ms. Roper countered that the best-interest contract is "permissive, not restrictive."
She also said industry plaintiffs have argued in the case that brokers are sales professionals who shouldn't be subject to a fiduciary standard for advice.
"That would mean everything they do — from the titles they use to how they market their services — is deceptive and misleading," Ms. Roper said. "They should be careful what they wish for."
The DOL is reviewing the rule under a directive from President Donald J. Trump that could lead to significant revisions.