“The second issue the court really honed in on was that the department by way of the amendment was left with virtually unfettered discretion in determining whether a violation had occurred,” he added.
Any of the merits of the case can be revisited on appeal, Faegre partner Mark Taticchi said. The court will not be limited to the finding of constitutional vagueness.
“We’re assuming an appeal happens, so it will be interesting to see what the appeals court would choose to do even if they’re inclined to affirm the results of the Supreme Court’s decision,” he said.
“Any issue that was raised at the trial is fair game for the Court of Appeals,” Taticchi added.
Faegre Partner Bradford Campbell said the fact that the Department of Labor under the Biden administration is resurrecting its fiduciary rule could be a factor that impacts how New York decides to respond this court action, and whether it will appeal or write a new rule instead.
DFS cited the fact that the Obama-era DOL fiduciary rule was vacated as a chief reason why N.Y. consumers needed the protection it said its best interest amendment provided.
“It’s a very dynamic situation really at the state and federal level now and it’s worth noting the complexity of how these rules interplay,” Campbell said.
“If a registered rep of a broker dealer was recommending a variable annuity in New York you’d have to comply with Rule 187, [the] SEC’s Regulation Best Interest and the DOL’s Erisa fiduciary standard because you’re making the recommendation as a rollover, all at the same time, and that raises a lot of questions for all of us for compliance,” he added.