NAFA seeks stay of DOL fiduciary rule during appeals process

An insurance industry group suing the Labor Department over an investment-advice regulation is seeking to put the rule on hold while it appeals its case. Earlier this month, federal district Judge Randolph Moss upheld the rule in a suit brought by the National Association for Fixed Annuities in Washington. On Nov. 23, Mr. Moss also denied a NAFA motion for an injunction during the appeals process. Now NAFA has filed an emergency motion for an injunction with the D.C. Circuit Court of Appeals. It wants the April 10 applicability date of the rule extended while NAFA pushes the case up the court chain. “NAFA members will be forced to accelerate irreversible, costly and industry-altering actions in the weeks ahead to restructure their entire distribution system, which has been in place for decades,” the NAFA motion states. “NAFA seeks a stay of the applicability date pending appeal to alleviate what can only be described as chaos in the fixed annuity industry.” The D.C. Circuit Court is unlikely to grant the emergency injunction, said Erin Sweeney, counsel at Miller & Chevalier. The court has many such requests pending at any given time. But NAFA is pushing to stop the rule during the appeal because it could be months before the court makes a ruling. “NAFA needs to pursue every possible avenue,” Ms. Sweeney said. “They didn't let the grass grow under their feet.” Mr. Moss both denied NAFA's motion for a preliminary injunction and granted summary judgment to the DOL, ruling that the agency had the authority to promulgate the rule and did not treat fixed annuities unfairly. The DOL scored a second court victory earlier this week, when a Kansas federal judge denied a preliminary injunction sought by an insurance agency, Market Synergy Group Inc. An appeal also is expected in that 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. Although the legal details of each suit vary, they all reflect industry concerns that the DOL rule is too complex and costly and would sharply increase the cost of giving and receiving advice. The DOL argues that the rule, which requires financial advisers to act in the best interests of their clients in retirement accounts, is needed to protect workers and retirees from inappropriate high-fee investment products that erode savings.