- The U.S. Department of Labor (DOL) overstepped its statutory authority in promulgating the fiduciary rule, the 5th U.S. Circuit Court of Appeals held Thursday, vacating the regulations. The rule largely set conduct standards for financial advisers.
- The court, in a divided decision, said that parts of the rule were "arbitrary and capricious," a standard courts use to examine, among other things, the reasonableness of agency regulations.
- The decision comes just two days after the 10th Circuit upheld the rule, creating a circuit split.
DOL had already delayed certain parts of the Obama-era regulations, which some experts described as an attempt at death by delay.
Still, the agency continued to defend most parts of the rule in court, even after the administration changed. It hasn't said why in this case, but in defending other regulations from the previous administration, DOL has sought to protect its authority to regulate in general.
The agency can now ask the full 5th Circuit to rehear the case — a move that could include a stay of this ruling — or it may ask the U.S. Supreme Court to resolve the split among the circuit courts of appeal.