DALLAS (Legal Newsline) - Groups challenging the Department of Labor's new rules concerning who can be considered a "fiduciary" and held liable for the loss of retirement funds say courts have already rejected this effort.
A group of plaintiffs, featuring the Federation of Americans for Consumer Choice, filed a lawsuit against the United States Department of Labor and Martin J. Walsh, the former Secretary of Labor.
The complaint is related to the DOL's "Fiduciary Rule" that reinterpreted who would be considered an "investment advice fiduciary" under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code.
The DOL's 2016 rule replaced a five-part test for who would be considered a fiduciary and therefore liable for investment losses. But the Fifth Circuit vacated the rule, finding the five-part test "captured the essence of a fiduciary relationship."
Now, the DOL is trying once again to change the rules with a new Prohibited Transaction Exemption that features 64 pages devoted to who will be considered a fiduciary.
"This new interpretation carries forward the core problem the Fifth Circuit identfiied in vacating the Fiduciary Rule the first time: DOL's impermissible effort to rewrite and expand the definition of a fiduciary under ERISA and the Code," the suit says.
"Pouring the same old wine into a new bottle does not change the result."
Other plaintiffs are Lown Retirement Planning, David Messing, Miles Financial Services, Bellman Financial, Golden Age Insurance Group ProVision Brokerage and V. Eric Couch.
They are represented by Don Colleluori of Figari + Davenport in Dallas.