Major business and financial industry groups are taking the Obama administration to court over its efforts to impose strict new standards on retirement investment advisers.
A coalition of nine industry groups announced Thursday that it had filed a lawsuit in the U.S. District Court for the Northern District of Texas challenging the Labor Department regulation imposing a so-called fiduciary duty on such advisers.
The suit was filed by some of the biggest industry groups in the country, including the U.S. Chamber of Commerce, Financial Services Roundtable and the Securities Industry and Financial Markets Association.
Legal action had been expected from those groups, which had fought for years to derail the regulatory effort. They argue it would be burdensome and make it impossible to provide retirement advice for some investors.
“The Department of Labor’s new, 1,023-page rule, however, creates sweeping changes to existing regulations that will make saving for retirement more difficult for the very same hardworking American families and individuals it claims to protect,” the groups said in a joint statement. “This lawsuit is necessary to prevent the Labor Department from exceeding the authority that was assigned to it by Congress.”
The suit charges that the Labor Department overstepped its bounds in crafting the new rules and that instead the Securities and Exchange Commission should have led any such rule-writing effort. The SEC does primarily oversee investment professionals, but had been slow to advance any similar rulemaking efforts.
The long-running regulatory effort was finally completed in April after years of intense pushback from the financial industry. Initial efforts to write such a rule were scrapped years ago, but a late push from President Obama to get the rule done saw it completed in 2016.
Under the new rules, investment advisers providing retirement advice must act solely in the interest of their clients, adopting a fiduciary duty. Proponents of the rule argue that such a standard will ensure that investors are not steered into pricey, less effective investments that yield higher commissions for advisers.
The rules have attracted a host of support from consumer rights groups and Democrats.
A trio of top House Democrats — Reps. Elijah Cummings (Md.), Maxine Waters (Calif.) and Bobby ScottRobert (Bobby) Cortez ScottWatchdog: 7 members of Congress allegedly failed to disclose stock trades Pressure builds on Democratic leadership over HBCU funding Democrats hit crunch time for passing Biden agenda MORE (Va.) — blasted the lawsuit Thursday. They hold the top spots on the House Oversight, Financial Services, and Education and Workforce Committee, respectively.
"Quite simply, the Department of Labor's new rule helps ensure our workers and seniors receive retirement investment advice that's in their best interest," they said in a joint statement. "The industry's lawsuit seeks to block this much-needed and long overdue rule."
But the issue has also been a hotly partisan one, with Republicans singling out the rule as a disaster for the private sector. The office of Speaker Paul RyanPaul Davis RyanPaul Ryan researched narcissistic personality disorder after Trump win: book Paul Ryan says it's 'really clear' Biden won election: 'It was not rigged. It was not stolen' Democrats fret over Trump-district retirements ahead of midterms MORE (R-Wis.) criticized the rule Tuesday, billing it as "Obamacare for financial planning."
The House passed a bill trying to bar the regulation shortly after it passed, and a similar resolution has been introduced in the Senate. The White House has threatened to veto such efforts.
This post updated at 12:13 pm.