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DOL Fiduciary News: March 22, 2018

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DOL fiduciary rule: 5th Circuit decision could be big win for indexed annuities

InvestmentNews; Mar 21, 2018 @ 2:07 pm

Indexed annuities — and the intermediaries that sell them — appear to be the biggest benefactors of an appellate court's decision last week to vacate the Department of Labor fiduciary rule.

While observers are divided on the ruling's implications, a consensus seems to be growing that the fiduciary rule would be erased nationwide if the DOL doesn't appeal — a potential outcome given the Trump administration's deregulatory agenda.

The Securities and Exchange Commission is working on its own fiduciary standard, but it would only cover products registered as securities. This creates a situation in which, absent the DOL rule, products not registered as securities, like indexed annuities, would fall into a sort of regulatory gap — not covered by any fiduciary standard.

"It's certainly good news for those who were under the thumb of this [DOL] regulation where the SEC doesn't have any authority," said Andrew Oringer, a partner at Dechert.

Last Thursday, the 5th Circuit Court of Appeals shot down the fiduciary rule in a split 2-1 vote, arguing the DOL didn't have the authority to promulgate the regulation.

Industry advised to continue to comply with fiduciary rule amid uncertainty after 5th Circuit ruling

BenefitsPRO | March 21, 2018 at 07:19 PM

The 5th Circuit Court of Appeals decision vacating the Labor Department’s fiduciary rule has spawned competing views among legal experts over whether the regulation is still in effect in some areas of the country.

Attorneys for Gibson Dunn, the law firm that argued before the 5th Circuit on behalf of the U.S. Chamber of Commerce and industry trade groups, have said that the ruling categorically removes the rule throughout the country.

“Because the effect of vacatur is, in essence, to remove a regulation from the books, its effect is nationwide,” wrote attorneys for Gibson Dunn in a client briefing.

But other experts have said the decision only applies in states under the 5th Circuit’s jurisdiction—Louisiana, Texas, and Mississippi.

The rule “remains in effect in the rest of the country,” wrote attorneys for the Wagner Law Group, basing that position of a ruling in the 10th Circuit Court of Appeals, which upheld the rule’s treatment of fixed indexed annuities.

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