The US Department of Labor has asked the 5th Circuit Court of Appeals to pause its appeal of a stayed rule that would have expanded the definition of a “fiduciary” under the Employment Retirement Income Security Act (ERISA), according to a report from AM Best.
In August 2024, the US District Court for the Northern District of Texas stayed the fiduciary rule following a legal challenge from insurance trade organizations.
The Department of Labor’s motion for abeyance stated that the pause is necessary to allow new leadership time to review the issue and determine how the agency will proceed.
The plaintiffs, including the American Council of Life Insurers, did not oppose the motion and declined to comment on the latest development.
The motion, filed on Feb. 11, eliminates the department’s Feb. 14 deadline for filing briefs. If the court denies the motion, all parties have requested a one-week extension to submit their filings.
If implemented, the rule would extend fiduciary duty requirements to broker-dealers, including agents and brokers advising consumers on retirement plans. The rule is similar to a 2016 proposal that the department later rescinded following political and legal opposition.
Attempts to obtain comment from the Labor Department were not immediately successful, the report said.
While insurance trade groups opposed the federal rule, they have expressed support for state-level regulations on annuity sales, which focus on aligning transactions with consumers’ insurance needs and financial objectives.
A Labor Department spokesperson previously stated that the proposed fiduciary rule is broader and stricter than state regulations, emphasizing ERISA’s role in limiting conflicts of interest and ensuring a uniform standard for retirement investors.
