Displaying items by tag: DoL

Thursday, 22 September 2022 05:13

DOL Claims Fiduciary Rule Lawsuit Lacks Standing

The Department of Labor has asked a Texas federal judge to toss a fiduciary rule lawsuit brought by a group of licensed independent insurance agents and the trade group Federation of Americans for Consumer Choice Inc. The agents and the trade group had sued the agency in February arguing that a December 2020 DOL regulation advances policies that the Fifth Circuit invalidated in 2016. Their complaint alleges that the 2020 rule illegally expands the definition of an Employee Retirement Income Security Act fiduciary. The plaintiffs moved for summary judgment in July asking the court to vacate the new interpretation of the law. They reasoned that the rule allows the DOL to "rewrite and expand" the definition of a fiduciary, much in the same way that the Fifth Circuit had ruled against it. The DOL, in a recent memorandum, said the plaintiffs adopted "several extreme positions" to conflate a 2016 agency rule with a newer version from 2020 and that they distorted Fifth Circuit precedent.

Finsum:The DOL asked a federal judge in Texas to toss a fiduciary rule lawsuit against the agency that claims its 2020 regulation advances the same policies that the Fifth Circuit invalidated in 2016.

Published in Wealth Management
Friday, 02 September 2022 05:35

ACLI Supports Challenge to Fiduciary Rule

The American Council of Life Insurers (ACLI) has put its support behind a lawsuit challenging the Labor Department’s subsequent guidance on the fiduciary rule. The ACLI is the nation’s largest life insurance trade association. The group added an amicus brief to an ongoing lawsuit by the Federation of Americans for Consumer Choices against the DOL. The suit, which was filed in March, claimed that agents “oftentimes make rollover recommendations for purchase of annuities to IRA owners and participants in employer-sponsored 401k and similar benefit plans, for which they receive commissions or other compensation from annuity issuers.” The concern is that these agents will be adversely affected by the DOL’s new interpretation of the Fiduciary Rule that categorizes their status as investment advice fiduciaries under ERISA. ACLI believes that the new interpretation would achieve the same outcome as the 2016 Fiduciary Rule, which was rejected in the Fifth Circuit court. ACLI was one of the lead plaintiffs in that decision.

Finsum:The American Council of Life Insurers has put its support behind an ongoing lawsuit against the DOL and their new interpretation of the Fiduciary Rule.

Published in Wealth Management
Thursday, 01 September 2022 14:16

Fiduciary: rewrite all but rules

Anyone see the copy desk? It appears the definition of the fiduciary might be in for a rewrite, according to winkintel.com.


At this point, the Department of Labor needs to rewrite its fiduciary definition to all but make all first time advice fiduciary is just about the lone thing still on the table, analysts concur.

In that event, the alternation would pull weight and basically revert the DOL back to its maiden 2016 fiduciary rule, said Brad Campbell, partner at Faegre Drinker law firm. As it stands, the DOL’s package known as the investment advice rule makes rollover advice fiduciary, the site continued.


Valuable investment advice consists of two primary elements. One evolves around a new prohibited transaction exemption. Here, advisors can provide conflicted advice for commissions. The other is a reinstatement of the 1975 “live part test” in order to ascertain that which constitutes advice on investments.


Campbell noted the initiative’s “likely to be a very substantial proposal that will harken back to legal fights of 2016, which the DOL ultimately lost,” according to fa-mag.com.

The DOL, he continued, “is taking the position that fiduciary starts with the initial or rollover conversation. That's a pretty aggressive reinterpretation of what they historically had said, which frankly was ... that most rollovers were not fiduciary,”.

Published in Eq: Total Market
Tuesday, 16 August 2022 14:11

A Reg BI Lawsuit Could Cost You Millions

Western International Securities Inc., which is the first broker-dealer to be sued by the SEC for alleged violations of its Regulation Best-Interest fiduciary rule, is expected to spend at least $1 million on its defense. The broker-dealer is accused of failing to meet its fiduciary obligations by selling $13.3 million in high-risk, unrated junk bonds that were not in the best interest of retirees and other risk-averse retail customers. Western said it plans to “actively defend” itself against the SEC’s allegations. Brian Rubin, a partner at Eversheds Sutherland LLP, estimated that Western’s legal fees will cost anywhere from several hundred thousand dollars to well over $1 million. He believes that it’s likely that the SEC demanded too much to settle due to it being its first Reg BI enforcement case. Since the conduct took place after the effective date of Reg BI in June 2020, the SEC brought the charges under Reg BI as opposed to its predecessor suitability standard. 

FinsumWestern International Securities is expected to spend at least $1 million on attorney fees as it fights the first Reg BI lawsuit.


Published in Wealth Management
Friday, 12 August 2022 04:15

Senate Bill Would Curb ESG In Retirement Plans

If a new bill in the Senate gets passed at some point, ESG investing in retirement plans may become a thing of the past. On July 26th, Senator Mike Braun of Indiana introduced The Maximize Americans’ Retirement Security Act (S. 4613), legislation that would clarify that the fiduciary duty of plan administrators is to select and maintain investments based solely on “pecuniary” financial factors. Based on the legislation, pecuniary factors are defined as any factors that a fiduciary prudently determines are expected to have a material effect on the risk or return of an investment. The bill, which was co-sponsored by seven other GOP senators, would curb the Department of Labor’s efforts to make it easier for plan fiduciaries to consider ESG factors when selecting plan investments. ESG investing has become a hot political topic as of late, and its recent underperformance during the bear market has only further added to the scrutiny.

Finsum: With ESG becoming a hot political issue, GOP Senators introduced a bill that would curb the DOL’s efforts to make it easier for plan fiduciaries to consider ESG factors in plan investments. 

Published in Wealth Management
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