Yesterday, the U.S. Court of Appeals for the 5th Circuit on a 2-1 split voted to vacate the U.S. Department of Labor’s (DOL) Fiduciary Rule finalized during the Obama Administration.
The Kentucky Chamber opposed the rule and expressed concern when the rule was finalized. Specifically, the Ky. Chamber expressed concerns that the rule would unfairly target small businesses that provide critical retirement savings options for citizens by subjecting them to additional burdens.
The U.S. Chamber along with several other industry groups applauded the decision and released the following joint statement, “The court has ruled on the side of America’s retirement savers, preserving access to affordable financial advice. Our organizations have long supported the development of a best interest standard of care and the Securities and Exchange Commission should now take the lead on a clear, consistent, and workable standard that does not limit choice for investors.”
The court ruled that the U.S. DOL overstepped its authority regarding the best interest contract exemption which replaced former exemptions with “a web of duties and legal vulnerabilities.”
The Trump Administration had delayed the implementation of the best interest contract provision of the rule until Jan. 2019 and the Securities and Exchange Commission has already begun working on a broader fiduciary rule with the U.S. DOL.
With this decision, the U.S. DOL can either appeal the decision to the U.S. Supreme Court or ask the full Fifth Circuit Court of Appeals to rehear it.