In a surprising legal maneuver, the AARP has asked the Fifth Circuit Court of Appeals to reconsider its surprise decision to reject the U.S. Department of Labor’s fiduciary rule.
The rule requiring all financial professionals who work with retirement accounts to provide conflict-free, fiduciary advice, disappears in May because of the court’s decision that the DOL had exceeded its authority by attempting to regulate the brokerage industry and its commission-based compensation.
“The principals are very simple,” David Certner, AARP's legislative counsel and policy director, told reporters at a press conference. “We believe that retirees are entitled to retirement advice that is not clouded by the conflicted interest of a financial advisor.”
The government estimates undividual investors lose an estimated $17 billion dollars annually because of hidden fees and conflicts of interests, Certner said.
The AARP, a nonprofit which represents 38 million members age 50 or older, is asking the appeals court to reinstate the fiduciary rule because it anticipates the U.S. Department of Labor (DOL) will not request a rehearing or fight for the rule, Certner said.
In effect, if the court accepts its motion, the AARP will become the defendant in the case.
Meanwhile, the plaintiffs who successfully sued the DOL to overturn the fiduciary rule are vowing to fight on. Plaintiffs include the Financial Services Institute, the Securities Industry and Financial Markets Association, the Financial Services Roundtable and the U.S. Chamber of Commerce.
“The 5th Circuit got it right. ... We will oppose any motion to intervene in this case at this late stage,” the plaintiffs said in a joint statement.
The AARP is arguing that the Fifth Circuit’s three-judge panel decision, which split 2-1 in vacating the DOL rule, ran counter to several previous federal court decisions favoring retirement savings protections, including a decision by the U.S. District Court for the Northern District of Texas and a decision by the Tenth Circuit Court of Appeals.
In its 16-page filing today, the AARP wrote that “the (Fifth Circuit) decision creates an irreconcilable intra-circuit split (within the circuit itself) and conflicts with Supreme Court precedent.”