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WASHINGTON The U.S. Labor Department asked a
federal district court on Wednesday to put the brakes on a
pending ruling in a legal challenge to its “fiduciary” rule that
governs how brokers give retirement advice to their customers.
The request to the U.S. District Court for the Northern
District of Texas, filed by the Justice Department on the Labor
Department’s behalf, said a stay is needed in light of a Feb. 3
request by the White House to conduct a review of the rule to
determine if it should be revised or scrapped altogether.
“It would not serve judicial economy to issue a ruling at
this point,” the filing says.
It adds that a ruling issued while the review is pending
could also “cause confusion with the affected public.”
The controversial “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.
Wednesday’s court filing was made as part of an ongoing
legal battle between the Labor Department and the U.S. Chamber
of Commerce and other financial services trade groups.
The groups are seeking to have the rule overturned on a
number of legal grounds, including claims that the department
overstepped its legal boundaries and violated federal rulemaking
laws by conducting a flawed economic analysis.
The judge presiding over the case indicated last week that
she plans to issue a ruling no later than Feb. 10.
However, last week the Labor Department said in a statement
it planned to weigh its legal options for delaying the April 10
implementation date of the rule in light of President Donald
Trump’s request for it to be reviewed.
The Labor Department said in its filing that the ultimate
outcome of its review of the rule could lead to changes that
differ from the current version being challenged.
“Although the (Labor) Department conducted an exhaustive
regulatory impact analysis in this rulemaking, its cost-benefit
analysis was challenged in this litigation and could be
updated,” the department said in the filing.
The department also asked the judge if it could present an “initial joint status report” by March 10 to provide an update
to the court.
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