ARTICLE
17 September 2024

DOL Seeks To Keep ERISA Investment Advice Regulations In Place

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Hall Benefits Law

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Strategically designed, legally compliant benefit plans are the cornerstone of long-term business stability and growth. As such, HBL provides comprehensive legal guidance on benefits in M&A, ESOPs, executive compensation, health and welfare benefits, retirement plans, and ERISA litigation matters. Responsive, relationship-driven counsel is the calling card of the Firm.
The U.S. Department of Labor (DOL) recently filed a reply brief in a lawsuit brought by insurance industry groups seeking to block new regulations that expand the definition of fiduciary...
United States Texas Employment and HR

The U.S. Department of Labor (DOL) recently filed a reply brief in a lawsuit brought by insurance industry groups seeking to block new regulations that expand the definition of fiduciary under the Employee Retirement Income Security Act (ERISA). In its brief, the DOL asked the Court to deny a motion for a preliminary injunction that would prevent the agency from implementing and enforcing the new regulations. The case is Federation of Americans for Consumer Choice Inc. et al. v. U.S. Department of Labor et al., case number 6:24-cv-00163, U.S. District Court for the Eastern District of Texas.

On April 23, 2024, the DOL released a final rule and three changes to ERISA-prohibited transaction exemptions. The changes were intended to create a much broader definition of an investment advice fiduciary. Under the new regulations, insurance industry professionals and financial professionals who advise retirement investors qualify as fiduciaries under ERISA.

The insurance industry groups, led by the named plaintiff and nonprofit trade group Federation of Americans for Consumer Choice Inc., argued that the new regulations are arbitrary and capricious under the Administrative Procedure Act (APA). The plaintiffs also claimed that the regulations violated ERISA. Finally, they characterize the new regulations as "virtually indistinguishable" from the DOL's previous attempt to issue new regulations, which the U.S. Court of Appeals for the Fifth Circuit invalidated in a 2018 court decision.

In response, the DOL pointed out that the new rule is much narrower than the 2016 rule that the Fifth Circuit eventually invalidated and addresses the issues raised in that court ruling. Whereas the previous rule included any degree of recommendation to an investor as investment advice, the new rule imposes fiduciary status only if certain criteria are met.

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