A judge in the U.S. District court for the Northern District of Texas ruled yesterday that the Department of Labor acted within its statutory authority in issuing the fiduciary rule last year, which greatly expanded the definition of “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code. Nine plaintiffs, including a number of financial trade associations, filed the suit against DOL, arguing that the rule would limit consumer access to financial advice and impose onerous new requirements and liabilities on financial advisors.
While the court ruling favored DOL, the fiduciary rule may see further challenges in the days ahead. Last Friday, President Trump signed an executive order calling for a thorough review of the rule by the secretary of labor to determine its effect on Americans’ ability to access financial advice. The acting secretary noted that DOL “will now consider its legal options to delay the applicability date as we comply with the president’s memorandum.”
ABA has strongly advocated for changes to the fiduciary rule, as well as a longer implementation period to give banks of all sizes time to comply. The rule is scheduled to take effect in April.