A Kansas judge has ruled against plaintiffs seeking an injunction to stop the controversial fiduciation rule.
Judge Daniel Crabtree, who was appointed by President Obama rejected Market Synergy Group’s request for a preliminary injunction. According to Crabtree, the plaintiff failed to meet the four-part standard necessary to win an injunction.
However, Crabtree did subject government attorneys to harsh questioning during the September 21 hearing. Ultimately however, Crabtree ruled that “any injunction thus will produce a public harm that outweighs any harm the plaintiff may sustain from the rule change.” MSG had stated in its argument that it would suffer irreparable harm if fixed indexed annuity sales were to require a Best Interest Contract Exemption.
Preliminarily, the DOL rule stated that FIAs were to be placed under the Prohibited Transaction Exemption 84-24. However, when the final rule was published in April they were place under the more stringent BICE. MSG had contended in its case that the industry was denied the opportunity to provide input on that change during the public comment period as the DOL never indicated that it might view FIAs as unlike other fixed annuities or discussed FIAs.
The DOL asked the court to follow the doctrine of “harmless error,” and forgive the failure of notice since public comments were considered and the public was not prejudiced by the failure of notice.
Although this was the second time a request for injunction was denied (the first was Nov 4 in DC District Court), the election of Donald Trump and Republic control of both the House and the Senate may see opponents of the rule in a stronger position going forward. The next challenge to the rule will be heard on March 2 in St. Paul, Minnesota, in Thrivent Financial vs the Department of Labor.
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Kansas Judge Rejects DOL Rule Injunction | Insurance News Net