A U.S. federal judge on Wednesday upheld an Obama-era rule designed to avoid conflicts of interests when brokers give retirement advice, in a possible setback for President Donald Trump's efforts to scale back government regulation.
The stinging 81-page ruling comes just days after Trump ordered the Labor Department to review the "fiduciary" rule - a move widely interpreted as an effort to delay or kill the regulation.
The decision by Chief Judge Barbara Lynn for the U.S. District Court for the Northern District of Texas is a stunning defeat for the business and financial services industry groups that had sought to overturn it.
And while it is not expected to stop the Labor Department from delaying the rule's April 10 compliance deadline while it conducts the review, some legal experts say it could make it more difficult for the Labor Department to find a way to justify scrapping or significantly altering the rule.
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Three courts have now carefully considered the full range of industry attacks on the DOLs best interest fiduciary rule, and they have firmly rejected all of them," said Stephen Hall, the legal director of Better Markets, a non-profit group that supports the rule.
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The Labor Department's "fiduciary" rule requires brokers to put their clients' best interests first when advising them about individual retirement accounts or 401(k) retirement plans.
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The decision in the Labor Department's favor came just a few hours after the Justice Department had petitioned the court to stay issuing a ruling because of the Feb. 3 White House request to review the rule to determine if it should be revised or scrapped.
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Lynn also rejected other arguments, including claims that the rule violated free speech rights of brokers and that the rule violated federal laws governing arbitration.
The case could still be appealed to a higher court.
Source: http://www.reuters.com/article/us-usa-labor-fiduciary-idUSKBN15N2HF
Lynn was appointed by Clinton.
The stinging 81-page ruling comes just days after Trump ordered the Labor Department to review the "fiduciary" rule - a move widely interpreted as an effort to delay or kill the regulation.
The decision by Chief Judge Barbara Lynn for the U.S. District Court for the Northern District of Texas is a stunning defeat for the business and financial services industry groups that had sought to overturn it.
And while it is not expected to stop the Labor Department from delaying the rule's April 10 compliance deadline while it conducts the review, some legal experts say it could make it more difficult for the Labor Department to find a way to justify scrapping or significantly altering the rule.
......
Three courts have now carefully considered the full range of industry attacks on the DOLs best interest fiduciary rule, and they have firmly rejected all of them," said Stephen Hall, the legal director of Better Markets, a non-profit group that supports the rule.
......
The Labor Department's "fiduciary" rule requires brokers to put their clients' best interests first when advising them about individual retirement accounts or 401(k) retirement plans.
......
The decision in the Labor Department's favor came just a few hours after the Justice Department had petitioned the court to stay issuing a ruling because of the Feb. 3 White House request to review the rule to determine if it should be revised or scrapped.
......
Lynn also rejected other arguments, including claims that the rule violated free speech rights of brokers and that the rule violated federal laws governing arbitration.
The case could still be appealed to a higher court.
Source: http://www.reuters.com/article/us-usa-labor-fiduciary-idUSKBN15N2HF
Lynn was appointed by Clinton.