US court upholds Obama-era retirement advice rule

[TPreston]

 U.S. federal judge on Wednesday upheld an Obama-era rule designed to avoid conflicts of interests when brokers give retirement advice, in a possible setback for President Donald Trump's efforts to scale back government regulation.

The stinging 81-page ruling comes just days after Trump ordered the Labor Department to review the "fiduciary" rule — a move widely interpreted as an effort to delay or kill the regulation.

The decision by Chief Judge Barbara Lynn for the U.S. District Court for the Northern District of Texas is a stunning defeat for the business and financial services industry groups that had sought to overturn it.

And while it is not expected to stop the Labor Department from delaying the rule's April 10 compliance deadline while it conducts the review, some legal experts say it could make it more difficult for the Labor Department to find a way to justify scrapping or significantly altering the rule.

This marks the second time now a federal district court has upheld the fiduciary rule. A third court, meanwhile, rejected an effort to stay the rule's implementation.

 

 

"Three courts have now carefully considered the full range of industry attacks on the DOL's best interest fiduciary rule, and they have firmly rejected all of them," said Stephen Hall, the legal director of Better Markets, a non-profit group that supports the rule.

"The decision issued today is definitive and sends a message that ought to put a stake through the heart of industry's efforts to destroy this common-sense rule."

The Labor Department's "fiduciary" rule requires brokers to put their clients' best interests first when advising them about individual retirement accounts or 401(k) retirement plans.

It is championed by consumer advocates and retirement non-profit groups, but has been staunchly opposed by the financial services sector, which argues it will make retirement advice too costly and harm lower-income retirees in particular.

The long list of groups that sued the Labor Department in the Dallas federal court include the U.S. Chamber of Commerce, the Financial Services Institute, the Financial Services Roundtable, the Insured Retirement Institute and the Securities Industry and Financial Markets Association.

 

http://www.cnbc.com/2017/02/09/us-court-upholds-obama-era-retirement-advice-rule.html

[DocM]

When the UK implemented a similar rule about 22-23% of their smaller advisors went out of business, mainly those who advised Joe Sixpacks, because of the high reserves required. 

 

Even the Democrats in Congress had been screaming over this problem, and the rigidity of the rules, since 2015

 

http://www.benefitspro.com/2015/09/18/more-democrats-raise-issues-with-dol-fiduciary-rul

 

but the Obama people had habit of not consulting outsiders regardless of party. There's also a problem in that there are end runs open for some provisions. Their way or the highway, etc.

 

So, who really benefits, regardless of (self interested) noise?

 

The larger financial services companies. They have the reserves, and could move into the market vacated by the smaller, less funded, advisory companies.

 

Same thing that happened to small Independent, often local, banks and credit unions when Dodd-Frank required large reserves and mounds of paper for banks.

 

http://www.scotsmanguide.com/News/2016/01/NAFCU-s-Dan-Berger--Dodd-Frank-is--death-by-a-thousand-cuts--for-small-lenders/

 

[The Rev]

Poor Drumpfy...  He's been a lame duck from day one.  :-p