Business and financial services groups that successfully challenged the Department of Labor's fiduciary rule asked the 5th U.S. Circuit Court of Appeals in New Orleans Monday to deny a bid by AARP and the attorneys general of New York, California and Oregon to intervene in the case.
With the rule set to become ineffective May 7, the requested delay "is unjustifiable," said the motion from the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute and Securities Industry and Financial Markets Association.
Convinced that DOL officials would not fight the ruling, the states and AARP filed motions April 26 to intervene in the case, and to have all 17 judges of the 5th Circuit review a March 15 decision where the court ruled 2-1 that the DOL had overstepped its legal authority to issue the fiduciary standard. The DOL had until Monday to appeal the ruling.
AARP asked the court to delay the May 7 effective date for 14 days or longer while it decides on the motions.
The business groups argued that AARP and the states' motions "do not come close to justifying their unprecedented bid to intervene for purposes of filing a motion for rehearing en banc, itself an exceptional motion," their motion said.
Fred Reish, a partner in the Washington law firm Drinker Biddle & Reath, said that the DOL's decision to not appeal the decision won't affect plan sponsors because the so-called new fiduciary rule and the ruling deals with non-discretionary fiduciaries like record keepers and advisers, not discretionary fiduciaries like plan sponsors who are still covered by DOL regulations from 1975.
In the meantime, Mr. Reish said at the Plan Sponsor Council of America annual conference that while a fiduciary standard from the Securities and Exchange Commission will take 18 months or more to finalize, the best thing for sponsors to do is "go beyond the fiduciary rule … You have the option to do best practices," including reviewing expense ratios, getting the lowest available share class costs and monitoring record-keeper compensation. "Everybody has a duty to ask," Mr. Reish said.