A second judge has refrained from admonishing the Department of Labor’s fiduciary rule earlier this week. The Kansas federal judge rejected the insurer Market Synergy Group Inc.’s request for a preliminary injunction to block the rule, which aims to diminish conflicts of interest in the retirement advice market. Details were reported in a recent article from The National Law Journal.
U.S. District Judge Daniel Crabtree spelled out, in a 63-page ruling, why he believes that Market Synergy did not prove that the Labor Department failed to follow appropriate procedures under the Administrative Procedures Act and Regulatory Flexibility Act of 1980. The fiduciary rule places fixed indexed annuities under the best interest contract exemption, or BICE, which is what many are taking issue with.
Crabtree said, “because this lawsuit challenges the DOL’s action under the Administrative Procedure Act and Regulatory Flexibility Act of 1980, the court must determine whether plaintiff is likely to succeed on the merits of its claim that the DOL failed to follow the appropriate procedures in exacting the rule changes. The court concludes…that plaintiff is not likely to succeed on the merits of this claim. And, thus, plaintiff is not entitled to the injunctive relief that it seeks by its motion.”
Oral arguments against the Labor Department’s rule began on September 23, where Market Synergy stated that regulators failed to prove that the current regulations on fixed indexed annuities are not sufficient. They urged the judge to “hit the pause” button on including them in the rule.
Similar arguments were presented in a different court, brought by the National Association for Fixed Annuities in Washington last August. U.S. District Judge Randolph Moss also denied the annuities group’s request for a preliminary injunction. Subsequently, the annuities group has filed an appeal of the decision.
To that, Moss said “The new rules were adopted to protect retirement investors from conflicted advice and potential losses to their retirement savings. Enjoining the rule would delay this protection. It would also interfere with the implementation of three regulations that were lawfully adopted after nearly six years of study, public comment and consideration.”
Written by Rachel Summit