Opponents of the Department of Labor's fiduciary rule were dealt another blow Monday, when a federal judge in Dallas denied their latest effort to halt its implementation.
Chief Judge Barbara M.G. Lynn of the U.S. District Court for Northern Texas denied the financial trade association plaintiffs' motion for an injunction to stop the regulation, which requires financial advisers to act in the best interests of clients in retirement accounts and will become applicable April 10. The trade groups, which include the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, and the Financial Services Institute Inc.,
filed their preliminary injunction earlier this month.
The Labor Department has proposed delaying the rule's implementation while the agency conducts an assessment of the regulation,
called for by President Donald J. Trump in a Feb. 3 memo. The DOL received
hundreds of letters on the proposed delay through last Friday, when the comment period ended.
(More: DOL issues bulletin to ease confusion over near-term fiduciary rule compliance)
Ms. Lynn cited four factors in her analysis of whether to grant the injunction. The plaintiffs' fell short in each instance, according to the order.
"First, this court has already found the plaintiffs' position on the merits unpersuasive," and two other district courts have reached the same conclusion in similar cases, she wrote.
The trade groups in their preliminary injunction argued three other points, according to Ms. Lynn.
They would suffer irreparable harm without an injunction due to unrecoverable compliance costs because of the April 10 date of the rule. Next, the DOL itself would not be harmed by an injunction. And finally, the public interest favored granting the injunction.
The trade groups failed to meet the burden to satisfy those four factors required to obtain an injunction, according to Ms. Lynn.
SIFMA said it will appeal Ms. Lynn's rejection of the injunction.
"We had anticipated that possibility, but hoped for a different decision," said Ira Hammerman, SIFMA executive vice president and general counsel. "Now we want to get in front of the Fifth Circuit Court of Appeals as quickly as possible."
