As discussed in an earlier blogpost (and here, and here), the Fifth Circuit Court of Appeals, covering Louisiana, Mississippi, and Texas, determined that the rule is impermissible (by a 2-1 vote on a 3 judge panel). Several organizations, including AARP, requested standing as defendants but those motions were denied, and the Department of Labor, which issued the rule, did not appeal the ruling, so (unless they ask the Supreme Court to review the ruling, but that is unlikely, given that the Trump administration did not seem to favor the rule)…the fiduciary rule is apparently gone, dead, null, kaput!
It’s astounding. The rule was years and years in the making, with delayed effective dates from the date it was announced (some of those dates have not even passed). Investment houses, recordkeepers, and administrators spent countless hours trying to comply with the rule, and now – it has never existed. As I’ve said before, it was a well-intentioned rule; there’s no doubt something is needed to prevent unscrupulous actors from taking advantage of retirement plan participants and their assets. But they (the DOL) never had authority to go after IRA money and they did it anyway (the court said something about squeezing an elephant through a mouse hole). I guess we just move on…
…except the Securities and Exchange Commission, which actually does have authority in this area, issued a revision of its conflict-of-interest rules for brokers in April! Stay tuned.