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Bloomberg's Wille on Lawsuit Challenging Fiduciary Rule(Audio) · Bloomberg Intelligence

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  Speaker 1: You're listening to Taking Stocks with pin Box and Kathleen
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  Speaker 1: Hayes on Bloomberg Radio. From big banks to the US
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  Speaker 1: Chamber of Commerce, Wall Street and business lobbying groups are
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  Speaker 1: teaming up to fight the Obama Administration's new rules for
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  Speaker 1: US brokers managing retirement accounts, saying the new regulations include
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  Speaker 1: a quote deliberately unworkable fiduciary standard. Joining us now to
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  Speaker 1: talk about this story, which just continues to develop day
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  Speaker 1: after day, is Jacqueline Willie. She is legal editor for
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  Speaker 1: Bloomberg b n A. So uh now they are filing
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  Speaker 1: a lawsuit Wednesday. This this amalgamama of groups led by
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  Speaker 1: the Chamber of Commerce. They're filing a lawsuit in Dallas
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  Speaker 1: Federal Court as of yesterday, and of course the suit
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  Speaker 1: is being lodged against the Department of Labor Secretary UH,
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  Speaker 1: the Tartar Labor and its secretary Tom Perez. How aggressive
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  Speaker 1: is this step and what is driving it? Well, the
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  Speaker 1: lawsuit is UM. It's got a lot of groups behind it,
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  Speaker 1: and I think that what they're upset about is, uh
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  Speaker 1: the strict standards that this new fiduciary rule UM imposes
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  Speaker 1: on financial advisors. The Department's trying to eliminate what it
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  Speaker 1: considers to be conflicted investment advice. Basically where the person
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  Speaker 1: giving you advice on how to invest your retirement savings
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  Speaker 1: is steering you towards funds that are going to provide
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  Speaker 1: him with a kickback or commission. Um. And the rule
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  Speaker 1: is pretty broad. It's over a thousand pages, and it's
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  Speaker 1: detractors do think it's very aggressive. Uh. The lawsuit challenges
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  Speaker 1: the rule on several fronts, the way it was passed, UH,
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  Speaker 1: the department's process, and the department's authority for regulating in
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  Speaker 1: this space. They're also bringing a First Amendment claim, which
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  Speaker 1: I think is pretty interesting, arguing that the rule places
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  Speaker 1: so many restrictions on the way financial advisors can communicate
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  Speaker 1: with their clients that it's a violation of free speech.
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  Speaker 1: So the the what is what is the Labor Department?
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  Speaker 1: How will they respond? Uh? Well, I think the very
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  Speaker 1: first fight might be about where they hear the case.
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  Speaker 1: The lawsuit was filed in a federal court in Dallas.
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  Speaker 1: I think a lot of people were expecting to see
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  Speaker 1: it in Washington, d c. Um. So it's gonna come
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  Speaker 1: down to whether or not the Department thinks it should
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  Speaker 1: be moved to Washington, d C. And what the judge
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  Speaker 1: thinks about that. Um. I suspect that the plaint was
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  Speaker 1: filing suit the financial services industry groups think that the
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  Speaker 1: president in the in the Fifth Circuit is going to
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  Speaker 1: be a little more favorable to them. So we'll see
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  Speaker 1: how that shakes out. But the first fight is likely
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  Speaker 1: to be about where the case is going to be heard.
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  Speaker 1: What would you say the likely outcome of this is, well, um,
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  Speaker 1: it's it's pretty interesting. There's a lot of the claims
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  Speaker 1: in the lawsuit are are pretty rare. You don't see
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  Speaker 1: them every day. UM. I think that the First Amendment
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  Speaker 1: claim is probably a bit of a wild pitch. UM,
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  Speaker 1: I don't. I don't know if that's gonna go anywhere.
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  Speaker 1: But a lot of the other claims in the lawsuit,
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  Speaker 1: UM seem pretty reasonable. If you read the complaints. UH,
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  Speaker 1: they really raised a lot of tuat of arguments about
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  Speaker 1: the way the Department UH passed this regulation about you know,
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  Speaker 1: whether or not the Department had the authority. You know,
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  Speaker 1: they seem to think that it should be the SEC
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  Speaker 1: regulating in this space rather than the Department of labor. Um.
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  Speaker 1: On the other hands. The Labor Department has been really
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  Speaker 1: vocal in defending the process that it employed in the
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  Speaker 1: hearings it had in the notice and comment period, So
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  Speaker 1: I'm not really sure what a federal judge is going
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  Speaker 1: to make of all that. Um, there's good arguments on
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  Speaker 1: both sides, of course. Well, and that's gonna keep you
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  Speaker 1: very busy, Jack, and thank you so much for joining
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  Speaker 1: us today.