DOL Fiduciary Rule Vacated by 5th Circuit Court of Appeals

By a 2-1 vote, the U.S. Court of Appeals for the 5th Circuit has reversed a district court’s 2016 ruling in favor of the Department of Labor (DOL) fiduciary regulations. The Court’s opinion states that the DOL exceeded its statutory authority in issuing its fiduciary regulations, particularly as it relates to the best-interest-contract (BIC) exemption. The ruling went on to state that the DOL’s actions were not valid, as they were not authorized by ERISA Titles I and II, and were “far afield” from ERISA’s original intent.

This marks the first defeat the DOL has suffered in a court case related to its fiduciary regulations since the issuance of the regulations in 2016.

This ruling comes on the heels of a DOL victory in the 10th Circuit Court early in March 2018, and so has created a split in rulings at the District Court level. Whether any cases related to the fiduciary regulations will be seen by the Supreme Court remains unknown, but a split at the District Court level often creates a need for the Supreme Court to end the split by issuing their own ruling.

It is also unclear if the DOL, under the Trump administration, deems the further pursuit of a court victory necessary, as the fiduciary regulations were issued under the Obama administration.

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