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July 29, 2024 at 12:54 PM
What You Need to Know
- A second court in Texas has issued a decision to halt the rule's Sept. 23 implementation date.
- The decision also blocks the amended prohibited transaction exemption (PTE) 84-24 on annuities.
- The Labor Department could move to appeal one or both of the stays, says an attorney.
The U.S. District Court for the Northern District of Texas has issued the second decision to halt the Sept. 23 implementation date for the Labor Department’s new fiduciary rule.
A Labor spokesperson told ThinkAdvisor on Monday, however, that despite two court actions the fiduciary rule is “essential to ensuring that retirement investors are protected.”
On Thursday, the U.S. District Court for the Eastern District of Texas Tyler Division granted the request of the Federation of Americans for Consumer Choice and several independent insurance agents to delay the implementation of Labor’s new fiduciary rule and that of the amended prohibited transaction exemption (PTE) 84-24 on annuities until a further court order.
Late Friday, the U.S. District Court for the Northern District of Texas issued its own stay of the fiduciary rule — known as the “Retirement Security Rule” — and the prohibited transaction exemptions 2020-02 on rollovers and 84-24 on annuities, as requested by nine insurance trade groups in American Council of Life Insurers, et. al. v. U.S. Department of Labor, et. al., filed on May 21.
The Friday decision in the suit brought by the trade groups “is broader than the FACC case as it applies to the entire DOL rule plus the associated PTE rules,” 84-24 as well as PTE 2020-02, a spokesperson for the Insured Retirement Institute told ThinkAdvisor in an email Monday.
“The court orders for [the nine insurance groups'] case and FACC are only to halt implementation of the rule while the courts decide on the merits of each case,” the spokesperson said.
The Friday order — which came down close to midnight — means that the regulations “will not take effect until the court rules on the merits of the case” brought by nine trade associations, the IRI spokesperson said.
The stay of the effective date “provides consumers with a needed reprieve from these devastating consequences as the court considers the substantial legal issues we have raised regarding this ill-advised rule,” the insurance groups said Monday in a statement.
