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Update: 5th Circuit Confirms Decision To Vacate DOL Fiduciary Rule

After much anticipation, the US Court of Appeals for the Fifth Circuit on Thursday confirmed its earlier decision to vacate the Department of Labor’s “fiduciary advice rule.”

The controversial rule became effective June 2017 and significantly expanded the universe of broker-dealers and other financial advisers subject to ERISA’s fiduciary standards. In March of this year, however, in Chamber of Commerce of the USA vs. US Dep’t of Labor the Fifth Circuit determined that the DOL exceeded its authority in implementing the rule and ordered its vacatur. Following the unsuccessful attempt by various parties to intervene in the litigation and expiration of the parties’ right to appeal the decision to the US Supreme Court, the Fifth Circuit gave effect to its earlier decision by issuing its mandate — officially vacating the rule.

It remains unclear how financial advisers and institutions will react to the fiduciary rule’s vacatur, including those institutions that made significant changes to their business practices following its issuance. In addition, this past April the SEC issued its own “best interest” regulations, and various states have undertaken similar initiatives to regulate the investment advice provided to retirement investors. While the fiduciary rule’s vacatur is no doubt welcomed by many in the financial industry, it appears that, in the near term, regulation in this area will remain uncertain.

We will continue to monitor these developments and provide additional information as it becomes available. More information on this topic is available in prior advisories: “Closer Look at the 5th Circuit Decision Vacating the Fiduciary Rule,” and “5th Circuit Vacates DOL Fiduciary Rule.”

This post was also written by Shannon Smith.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume VIII, Number 174


About this Author

Robert Stone, Katten Law Firm, Employee Benefits Attorney

Robert Stone is a partner in Katten's Employee Benefits and Executive Compensation practice. Robert advises clients on the investment and management of benefit plan assets, including the fiduciary standards and prohibited transaction rules of ERISA. He regularly advises hedge fund and private equity clients investing on behalf of benefit plan investors and compliance with the ERISA "plan asset" regulations. He also has significant experience advising asset managers and broker-dealers on a broad range of securities and financial products offered to US pensions. Robert...

Special Counsel

Gabriel Marinaro serves as special counsel in the Employee Benefits and Executive Compensation group. His practice focuses on all aspects of employee benefits and executive compensation. He regularly counsels publicly traded and privately held companies, tax-exempt organizations, and governmental entities on a variety of employee benefits and executive compensation matters.

Gabe regularly advises both employers and executives on a wide range of executive compensation matters, including drafting employment agreements, equity compensation arrangements, severance agreements and bonus plans. Gabe provides guidance on nonqualified deferred compensation plans both for for-profit companies and tax-exempt clients. Gabe regularly drafts nonqualified deferred compensation arrangements, including supplemental executive retirement plans, and change in control agreements. Additionally, Gabe advises employers and executives on issues under Code Sections 409A, 457(f), 457A, 162(m), 280G and 83 regarding compensation arrangements for executives.