WASHINGTON A U.S. District Court judge on
Wednesday upheld the Labor Department’s controversial “fiduciary” rule governing retirement investment advice, in a
stunning defeat for the business and financial services groups
that had sought to overturn it.
In a stinging 81-page ruling, Chief Judge Barbara Lynn for
the U.S. District Court for the Northern District of Texas
rejected all of the business groups’ arguments, saying the Labor
Department did not exceed its legal authority and conducted a
proper economic analysis to justify the rule.
“The court finds the DOL adequately weighed the monetary and
non-monetary costs on the industry of complying with the rules,
against the benefits to consumers,” Lynn wrote.
“In doing so, the DOL conducted a reasonable cost-benefit
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
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 (SIFMA), among others.
The ruling in the Labor Department’s favor came just a few
hours after the Justice Department had petitioned the court to
stay issuing a ruling because of a Feb. 3 White House request to
review the rule to determine if it should be revised or
Lynn, who was appointed to the bench by President Bill
Clinton, denied that request shortly after her ruling was filed.
The judge’s ruling marks a severe reproach to President
Donald Trump, who just last week issued a memorandum that
directed the Labor Department to go back and conduct a legal and
economic analysis of the rule.
His order did not explicitly call for a delay, but a Labor
Department spokeswoman later said the department is weighing
legal options on how it can stay the April 10 compliance
The groups that challenged the rule said in a statement that
they plan to “pursue all of our available options to see that
this rule is rescinded.” A spokesman for the Labor Department
did not immediately respond to a request for comment.
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