November 2016
The U.S. Department of Labor (DOL) scored an initial victory in what is sure to be a long legal battle over the so-called “fiduciary rule.” Judge Randolph D. Moss of the U.S. District Court for the District of Columbia issued a 92-page ruling denying a motion for summary judgment and motion for preliminary injunction filed by Plaintiff National Association of Fixed Annuities (NAFA) against the DOL. Judge Moss then granted the DOL’s cross motion for summary judgment, holding that the DOL had the authority to amend the definition of who is a fiduciary and finding the DOL promulgated the fiduciary rule after sufficient rule-making and administrative process. 

The decision, from an influential district court well versed in administrative procedure, may well impact other legal challenges to the fiduciary rule, including the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association (SIFMA) in U.S. District Court in Texas. However, the number of challenges – at least a half-dozen -- and divergent legal theories make it unlikely this decision is the last the securities industry will hear about the rule before it goes into effect April 1, 2017. Nonetheless, Judge Moss’s decision sends a message to the financial services industry to prepare to comply with the rule.

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