Earlier this month, a U.S. federal court judge in Texas upheld the Department of Labor’s fiduciary rule. Now the nine plaintiffs, including several industry trade groups, are appealing the decision.
The U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association (SIFMA), the Financial Services Institute, Financial Services Roundtable and Insured Retirement Institute filed the appeal in the U.S. Court of Appeals for the Fifth Circuit on Friday.
“We have long supported a best interest standard, adopted by the appropriate regulatory authority and across all individual investor accounts—not just retirement,” the groups said in a statement. “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. 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 other plaintiffs include the Greater Irving-Las Colinas Chamber of Commerce, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce, and Texas Association of Business.
The suit argues that the agency overstepped its boundaries and that the Securities and Exchange Commission is the agency with jurisdiction to develop a uniform fiduciary standard of care. It also alleges the rule violates the First Amendment right to free speech.
The appeal comes as the DOL is gearing up to delay the implementation of the fiduciary rule. On Feb. 3, President Trump ordered the DOL to undertake an economic and legal review of the pending fiduciary rule.
The agency recently sent two documents to the Office of Management and Budget for approval, according to published reports. One document is a proposed rulemaking that simply delays the regulation's effective date for 180 days. That proposal has a comment period as short as 15 days. The second document would start another round of public comment on the rule.