Qs and As on Lawsuit Against Department of Labor (DOL) Fiduciar y Rule What does the new regulation technically do? The Rule expands the definition of "fiduciary investment advice" provided to retirement plans, plan participants, and IRA owners.
By broadening the definition of "fiduciary,” the Rule o exposes financial institutions and financial services providers to law lawsuits by the trial bar; o creates an entirely new regulatory regime for IRAs; o limits the types of investment advice an adviser may provide; o effectively makes DOL the primary regulator of investment advisers, agents, and other financial professionals already extensively regulated by federal and state laws
Why does your chamber care about this rule? How does it hurt people and businesses in your city? Providing retirement security helps make employers competitive. Many businesses want to provide retirement security to their employees. It’s an important tool for businesses to attract the talent they need. This Rule makes it much harder and more expensive for employers to provide retirement planning. We need to make it easier for people to save for retirement. This Rule does the opposite. The Rule is bad for employers and employees, but the Rule is a bonanza for trial lawyers. The DOL wants the new rule to be enforced by class action trial lawyers. You can bet that trial lawyers will second-guess every financial advisor’s recommendations. They will bring meritless, bet-the-business class actions that will drastically increase retirement costs. The "Fiduciary Rule" hurts businesses of all sizes, but it hurts small businesses and their employees the most. o Small businesses won’t get the same exemptions as big companies, and as a result, their retirement plans will be much more expensive. o Because of the high costs, many small businesses will be forced to drop their retirement plans. o And even if some small businesses would like to provide retirement options, the rule will force some investment professionals to stop servicing small balance accounts.
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What are your legal arguments? Congress didn’t give DOL authority to regulate Individual Retirement Accounts (IRAs). Under the federal laws that govern retirement benefits, DOL doesn’t have the authority to oversee IRAs—and Congress purposely didn't give them authority. Congress intended for the SEC, not the DOL, to take the lead on this issue. In 2010, Congress gave the SEC, not DOL, the authority to set a fiduciary standard, if needed. The SEC has much more expertise in this area than DOL. DOL didn’t conduct an adequate and transparent cost-benefit analysis. It’s just bad government to not disclose to the public how much a regulation will cost, and how much benefit it will really provide. The Rule’s costs exceed the benefits. Even though DOL didn’t really bother to show its own homework on the costs and benefits of the rule, many outside experts have done the math for them, and it doesn’t look good for DOL. We believe that the Rule will hurt investors more than help them. The DOL gave class action trial lawyers the power to enforce the Rule. Even though the DOL is barred from creating new private lawsuit rights, the DOL did just that with this Rule.