The Federation of Americans for Consumer Choice has gone to court to try to block a U.S. Labor Department revival of an Obama-era definition of the term "fiduciary."
FACC contends that the department made the interpretation change in the preamble, or official introduction, to a "prohibited transaction exemption" revision, rather than in the actual text of the revised exemption.
The interpretation would force many insurance agents who sell annuities to retirement investors to identify themselves as fiduciaries, expose them to an unreasonable amount of liability risk, and limit their ability to use traditional commission-based compensation arrangements, according to the group.
The Dallas-based group made those arguments in a suit, Federation of Americans for Consumer Choice et al. v. the U.S. Department of Labor and Martin Walsh. (Case Number 3:22-cv-00243-k), filed Wednesday in the U.S. District Court for the Northern District of Texas.
Walsh is the Labor secretary.
One judge in U.S. District Court for the Northern District of Texas issued a ruling that nearly led to the U.S. Supreme Court throwing out the Affordable Care Act.
Another judge in that district sided with the Labor Department in a 2017 decision on the department's Obama-era fiduciary rule interpretation. That decision ultimately helped annuity issuers and distributors opposed to the interpretation kill it. The plaintiffs filed an appeal with the 5th U.S. Court of Appeals. The administration of former President Donald Trump declined to defend the interpretation, and the 5th Circuit ended up tossing it out.
