Washington D.C.—Earlier today the Chamber of Commerce, several of its Texas affiliates, and four financial industry trade associations – the Securities Industry and Financial Markets Association (SIFMA), the Financial Services Institute (FSI), the Financial Services Roundtable (FSR), and the Insured Retirement Institute (IRI) – filed a lawsuit seeking to overturn the Department of Labor’s conflict of interest rule. The rule, which was finalized in April, would require all those who provide retirement investment advice to act as fiduciaries and offer advice that is in the best interests of their customers. CFA’s Director of Investor Protection Barbara Roper and Financial Services Counsel Micah Hauptman issued the following statement:
“It has been clear from the outset of this process that industry groups would challenge the DOL rule in court,” said CFA Director of Investor Protection Barbara Roper. “After all, financial firms, such as those represented by these trade associations, are able to earn billions of dollars a year in excess profits under the current regulatory regime, money that comes directly from the hard-earned retirement savings of American workers and retirees. The DOL rule goes to the heart of these anti-investor practices, so naturally firms that have profited handsomely under the current system find it threatening. Despite their oft-professed concern for low and middle income savers, it is those billions in excess profits that this lawsuit is intended to protect.”
“The lawsuit is entirely without merit,” said CFA Financial Services Counsel Micah Hauptman. “The DOL has clear authority to define what constitutes fiduciary investment advice under ERISA and the Internal Revenue Code and to set the conditions for any exemptions designed to enable firms to engage in conduct that would otherwise be prohibited. More than that, the DOL has a clear legal obligation to ensure that any such exemptions adequately protect retirement savers. In addition, the DOL is on firm procedural ground, having undertaken an open and deliberative process and amply and decisively justified the need for action.”
“The Department of Labor has produced a balanced rule that strengthens protections for retirement savers while preserving the ability of firms to operate under a variety of business models,” Roper concluded. “A number of firms have expressed their willingness to move forward with implementation of the rule. Investors should take note of those firms that are so opposed to acting in the best interest of their customers that they are prepared to spend millions on a legally questionable lawsuit to overturn this badly needed rule.”
Contact: Barbara Roper, 719-543-9468; Micah Hauptman, 202-939-1004
The Consumer Federation of America is a national organization of more than 250 nonprofit consumer groups that was founded in 1968 to advance the consumer interest through research, advocacy, and education.