A group of financial services associations filed an appeal to overturn a ruling by a Texas federal court judge Barbara M. G. Lynn earlier this month that upheld the Department of Labor’s (DOL) rule that expands the definition of fiduciary to include retirement plan advisors.
The plaintiffs – which include the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, Securities Industry and Financial Markets Association — filed an appeal with the U.S. Court of Appeals for the Fifth Circuit on Feb. 25.
“We remain confident in the merits and strength of our case and stand by our assertion that the Department of Labor exceeded its authority,” the plaintiffs said in a their statement. “We have long supported a best interest standard, adopted by the appropriate regulatory authority and across all individual investor accounts, not just retirement. This is a misguided rule that will harm retirement savers and financial services firms that provide needed assistance and options to their clients, including modest savers and small business employees.”
The Greater Irving-Las Colinas Chamber of Commerce, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce, and Texas Association of Business were also part of the appeal.
“Further the ‘private right of action’ mechanism creates unwarranted litigation risk for financial advisors, who will face the threat of meritless class action lawsuits challenging their every move,” the plaintiffs said.
The DOL’s fiduciary rule was set to take effect April 10, but implementation was delayed by 180 days by a Feb. 3 directive from President Trump.