The Department of Labor declined Wednesday to challenge a court ruling that struck down the fiduciary rule enacted by the Obama administration.
On March 15, the 5th U.S. Circuit Court of Appeals in New Orleans vacated the entire rule in a 2-1 decision, saying that it represented regulatory overreach. The court gave the DOL several deadlines to appeal the decision, including a June 13 cutoff for the final option of asking the U.S. Supreme Court to review the case.
The final legal step is for the 5th Circuit to issue a mandate making the March 15 decision effective.
Attention now shifts to the Securities and Exchange Commission, which on April 18 voted 4-1 to propose a package of rules and interpretations "designed to enhance the quality and transparency of investors' relationships with investment advisers and broker-dealers." The proposed "best interest" rule has three parts and is focused on retail investors.
Several ranking members of Senate and House committees overseeing the SEC and the Department of Labor said now that the SEC is taking "this long-awaited action" that was authorized by the Dodd-Frank Act of 2010, "we must ensure the final rule provides the necessary protections so that workers and families are not ripped off when investing their hard-earned savings.
"We urge the chairman and commissioners to issue a final rule that matches the Department of Labor rule's protections, and requires financial advisers to put the interests of savers and retirees first — not their own," the congressional members said in a statement after the SEC vote.