The attorneys general from California, New York, and Oregon filed a motion at an appeals court Thursday, seeking to protect the interests of millions of their current and future retirees after the court vacated the Department of Labor’s fiduciary rule on March.
The AGs say that the Department of Labor “appears ready to abandon its effort to protect retirement investors” by failing, so far, to act to defend the rule itself, even though, the AGs say in the motion, “every other court to issue a final judgment on the Rule’s legality has upheld it.”
California Attorney General Xavier Becerra told reporters on Thursday, “We think at the end of the day, the Courts will agree: anything that helps the people understand their choices for retirement is crucial. We believe the fiduciary rule is lawful in its role. And we believe if given the opportunity to litigate this, we can succeed.”
It’s a rule Becerra says he worked on for several years while in Congress in partnership with the Department of Labor “to make sure we got something to done to protect the interests of savers in America – not the interest of the financial advisors who are supposed to guide those savers on the best decisions on their investments.”
Three federal district courts and the Tenth Circuit Court of Appeals have upheld the DOL fiduciary rule. In addition to filing the motion to intervene, the attorneys general also filed a petition for rehearing with the full 17-judge Fifth Circuit Court of Appeals to ask them to overturn the decision made by the three-judge panel.
See also: Fiduciary rule takes a hit in the Fifth Circuit
The DOL began reconsidering its definition of “investment advice” for fiduciaries in 2010, in response to dramatic changes in the retirement investment market. It adopted a package of reforms and changes in 2016 known as the fiduciary rule that requires financial advisors to act in their client’s best interest and provides safeguards against retirement advisors’ conflicts of interests.
Becerra, a Democrat and former congressman represented Downtown Los Angeles in Congress from 1993 to 2017, also told reporters on the call, he is leading a coalition of 16 states “to stand up for the consumer protection bureau.” He said that Mick Mulvaney, the acting director of the CFPB, “seems to be taking the CFPB in a direction that would diminish the capacity of the CFPB to actually seek information and evidence to prove that consumers have been abused. If the CFPB were to lose what are called civil investigative demands, essentially subpoena power, it would make it very difficult for consumers to have their rights protected in court.”
MarketWatch asked Becerra what impact the Securities and Exchange Commission’s recent proposal for a “code of conduct” for all investment advisors and broker-dealers has on this effort.
“We’ll certainly watch what the SEC is doing, but we are focused on the rule that protects savers that is already in place.”
Read: Here’s what investors will learn about their brokers, if the SEC gets its way
Read: SEC’s new code of conduct rules may eclipse fiduciary standard initiatives
AARP, the nonprofit, nonpartisan organization that advocates for people 50 and older, also asked a federal appeals court on Thursday to reconsider its decision to reject the DOL rule, saying in a statement that it anticipated that the U.S. Department of Labor itself might not request a rehearing. AARPalso filed a motion asking the full Fifth Circuit for permission to intervene in the case and, in addition, to reconsider the adverse decision made by the smaller three judge panel.
Source : MTV
