Financial industry opponents of the Department of Labor's fiduciary rule lost again in federal court on Wednesday.
The
Fifth Circuit Court of Appeals in New Orleans denied a request for a preliminary injunction against the regulation that was filed by several industry interest groups. The three-judge panel also denied the plaintiffs' motion for an expedited appeal of the case.
The plaintiffs lost twice recently at the district level in a Dallas federal court, when Chief Judge Barbara M.G. Lynn granted summary judgment in favor of the DOL and then denied the plaintiffs' emergency injunction, which was filed after she decided the case on its merits.
The plaintiffs include the Securities Industry and Financial Markets Association, the Financial Services Institute, the Financial Services Roundtable and the U.S. Chamber of Commerce. Representatives of the organization were not immediately available for comment.
The plaintiffs argued in their suit that the DOL lacked the authority to promulgate the rule, which would require financial advisers to act in the best interests of their clients in retirement accounts. They also have asserted that the DOL illegally established a private right of action for clients to sue advisers who they believe don't act in their best interests.
The industry groups were trying to stop the rule just as the DOL launches a review of the measure as directed by President Donald J. Trump in a Feb. 3 memo. Mr. Trump told the agency to modify or repeal the regulation if it is found to deny access to investment advice, cause an increased litigation risk for firms or othewise disrupt the industry.
The DOL on Tuesday published a
final rule that delays implementation of the fiduciary regulation from April 10 to June 9.
The DOL opposed the injunction, arguing that it was not needed because the agency is not going to enforce the rule during the review.
"[T]he balance of equities weighs decisively against interrupting the agency's administrative process to vindicate the preferences of these disappointed litigants," the Department of Justice, on behalf of the DOL, wrote in response to the motion for a preliminary injunction.
Industry opponents have been on the losing end of every decision so far in other lawsuits against the DOL rule in Washington and Kansas over the last several months.
