The Department of Justice, on behalf of the Department of Labor, has asked a federal court to pause two cases challenging the DOL’s Biden-era fiduciary investment advice rule so Trump administration officials can familiarize themselves with the pending litigation.
“To allow new DOL officials sufficient time to become familiar with the issues in these cases and determine how they wish to proceed, the government respectfully moves to place these consolidated appeals in abeyance, with status reports due at 60-day intervals,” the DOJ said in a Feb. 11 filing with the 5th U.S. Circuit Court of Appeals in New Orleans.
In April, under the Biden administration, the DOL finalized the Retirement Security Rule, which, among other things, changed the five-part test so one-time advice, such as rollovers to IRAs or annuity purchases, must be in an investor’s best interest.
Biden-era officials said the rule was needed to better protect retirement savers and was more narrowly tailored than a 2016 Obama-era rule, which swept up virtually any recommendation to a retirement investor, that was struck down in 2018 by the 5th Circuit.
Insurance and annuity groups filed two separate lawsuits challenging the rule, and in July, two U.S. District Court judges stopped implementation of the rule, which was slated to take effect in September.
The DOL subsequently filed an appeal with the 5th Circuit, but the new administration may be changing course.
Prior to November’s election, experts predicted that a win by Donald Trump would likely cease the DOL’s defense of the rule.
Lisa M. Gomez, who previously led the DOL's Employee Benefits Security Administration, said she's taking the government's Feb. 11 filing as a positive.
"They could have very easily just withdrawn (their defense) immediately without giving consideration, so I’m hopeful that the fact that didn’t happen is a signal that they’re waiting for leadership to come into the department and into EBSA to give this a more careful look and decide how they want to approach," Gomez said.
