The attorneys general of New York, California and Oregon are asking the Fifth Circuit Court of Appeals to reconsider its decision denying the states’ motion to intervene in the case against the Department of Labor’s fiduciary rule.
A three-judge panel of the Fifth Circuit ruled in March to vacate the rule, which would have required retirement investment advisors to put the best interests of their clients ahead of their own. The states, along with AARP, filed motions to intervene to get the full court to hear the case. They were denied, leading to the states’ motion to reconsider.
“The fiduciary rule is worth fighting for—plain and simple. American families saving their hard-earned money for retirement deserve to know that the investment advice they receive is unbiased and in their best interest,” California Attorney General Xavier Becerra said in a statement. “This is about doing what is right and protecting retirees. We hope to be given the chance to defend the fiduciary rule in court.”
In their motion, the attorneys general argue that the Court’s decision to vacate the fiduciary rule will deprive millions of Americans of basic safeguards as they seek advice regarding their retirement investments. In addition, states will lose millions of dollars in tax revenue—$38 million over the next 10 years in California alone, according to Becerra’s office.
The states’ latest attempt to save the fiduciary rule comes after the DOL missed an April 30 deadline to file for a rehearing in the case. It has until June 13 to take the case to the Supreme Court, but it’s unlikely to do so.
The Fifth Circuit also has yet to finalize its decision to vacate the rule, leading the DOL to issue a temporary enforcement policy, stating the department “will not pursue prohibited transactions claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have been exempted in the BIC Exemption and Principal Transactions Exemption, or treat such fiduciaries as violating the applicable prohibited transaction rules.”
Meanwhile, the Securities and Exchange Commission recently voted to propose a rule package that purports to set a best interest standard for broker/dealers.