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
