The U.S. Court of Appeals for the D.C. Circuit has denied the request to delay the implementation of Department of Labor's controversial fiduciary rule which is set to take effect next year.
The National Association for fixed Annuities filed for a motion for postponement because it believed that the new regulation threatens to jeopardize the future of American retirement. The court concluded that the group's injunction to block the fiduciary rule has not satisfied the requirements for the appeal.
This, however, was not the first setback for the association. Earlier, a U.S. district court also rejected NAFA's bid to overturn the rule.
When NAFA filed its emergency motion, its Executive Director Chip Anderson argued that the regulation has been creating a major compliance burden for the firms. However, he has not yet released any statements after the court decision came out.
The new regulation has been widely criticized by industry members for being unworkable. Some firms have announced their plans to bar IRA commissions. Other firms looked towards establishing a dual-track system to serve different clients. The system plans to retain commissions for large clients while implementing fee-based accounts for smaller investors. The firms have been making major changes in their systems in order to comply, although the move has also incurred additional costs.
"With every passing day NAFA members are incurring excessive and unrecoverable expenses as they attempt to navigate the rule's byzantine compliance regime," Anderson said at the time.
"Without this injunction, even if NAFA ultimately prevails on the merits of the case, a win on appeal will only be a Pyrrhic victory. The DoL's dangerous overreach and creation of such an unworkable regulatory landscape poses a glaring and immediate threat to NAFA membership and those it serves as they struggle to address a sea of unknowns and the potential for an environment fraught with private action," he said.
After the court's rejection to the bid for injunction, the association has the option to appeal the ruling to the full D.C. Circuit or bring the matter before the U.S. Supreme Court.
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