1 00:00:01,520 --> 00:00:05,000 Speaker 1: You're listening to Taking Stocks with pin Box and Kathleen 2 00:00:05,040 --> 00:00:10,160 Speaker 1: Hayes on Bloomberg Radio. From big banks to the US 3 00:00:10,280 --> 00:00:14,480 Speaker 1: Chamber of Commerce, Wall Street and business lobbying groups are 4 00:00:14,520 --> 00:00:18,000 Speaker 1: teaming up to fight the Obama Administration's new rules for 5 00:00:18,120 --> 00:00:23,279 Speaker 1: US brokers managing retirement accounts, saying the new regulations include 6 00:00:23,360 --> 00:00:29,200 Speaker 1: a quote deliberately unworkable fiduciary standard. Joining us now to 7 00:00:29,240 --> 00:00:33,080 Speaker 1: talk about this story, which just continues to develop day 8 00:00:33,120 --> 00:00:38,000 Speaker 1: after day, is Jacqueline Willie. She is legal editor for 9 00:00:38,159 --> 00:00:43,519 Speaker 1: Bloomberg b n A. So uh now they are filing 10 00:00:43,560 --> 00:00:46,800 Speaker 1: a lawsuit Wednesday. This this amalgamama of groups led by 11 00:00:46,840 --> 00:00:50,720 Speaker 1: the Chamber of Commerce. They're filing a lawsuit in Dallas 12 00:00:50,720 --> 00:00:53,920 Speaker 1: Federal Court as of yesterday, and of course the suit 13 00:00:54,080 --> 00:00:57,560 Speaker 1: is being lodged against the Department of Labor Secretary UH, 14 00:00:57,760 --> 00:01:01,680 Speaker 1: the Tartar Labor and its secretary Tom Perez. How aggressive 15 00:01:01,760 --> 00:01:05,000 Speaker 1: is this step and what is driving it? Well, the 16 00:01:05,080 --> 00:01:07,840 Speaker 1: lawsuit is UM. It's got a lot of groups behind it, 17 00:01:07,920 --> 00:01:10,840 Speaker 1: and I think that what they're upset about is, uh 18 00:01:10,959 --> 00:01:14,320 Speaker 1: the strict standards that this new fiduciary rule UM imposes 19 00:01:14,319 --> 00:01:17,880 Speaker 1: on financial advisors. The Department's trying to eliminate what it 20 00:01:17,920 --> 00:01:21,559 Speaker 1: considers to be conflicted investment advice. Basically where the person 21 00:01:21,600 --> 00:01:24,080 Speaker 1: giving you advice on how to invest your retirement savings 22 00:01:24,440 --> 00:01:26,319 Speaker 1: is steering you towards funds that are going to provide 23 00:01:26,400 --> 00:01:29,360 Speaker 1: him with a kickback or commission. Um. And the rule 24 00:01:29,440 --> 00:01:32,080 Speaker 1: is pretty broad. It's over a thousand pages, and it's 25 00:01:32,120 --> 00:01:35,680 Speaker 1: detractors do think it's very aggressive. Uh. The lawsuit challenges 26 00:01:35,680 --> 00:01:38,480 Speaker 1: the rule on several fronts, the way it was passed, UH, 27 00:01:38,560 --> 00:01:41,640 Speaker 1: the department's process, and the department's authority for regulating in 28 00:01:41,640 --> 00:01:44,600 Speaker 1: this space. They're also bringing a First Amendment claim, which 29 00:01:44,600 --> 00:01:47,360 Speaker 1: I think is pretty interesting, arguing that the rule places 30 00:01:47,640 --> 00:01:50,680 Speaker 1: so many restrictions on the way financial advisors can communicate 31 00:01:50,680 --> 00:01:52,960 Speaker 1: with their clients that it's a violation of free speech. 32 00:01:54,160 --> 00:01:58,120 Speaker 1: So the the what is what is the Labor Department? 33 00:01:58,160 --> 00:02:02,520 Speaker 1: How will they respond? Uh? Well, I think the very 34 00:02:02,560 --> 00:02:05,080 Speaker 1: first fight might be about where they hear the case. 35 00:02:05,120 --> 00:02:07,840 Speaker 1: The lawsuit was filed in a federal court in Dallas. 36 00:02:07,880 --> 00:02:09,480 Speaker 1: I think a lot of people were expecting to see 37 00:02:09,520 --> 00:02:13,480 Speaker 1: it in Washington, d c. Um. So it's gonna come 38 00:02:13,480 --> 00:02:15,280 Speaker 1: down to whether or not the Department thinks it should 39 00:02:15,320 --> 00:02:17,280 Speaker 1: be moved to Washington, d C. And what the judge 40 00:02:17,320 --> 00:02:21,519 Speaker 1: thinks about that. Um. I suspect that the plaint was 41 00:02:21,560 --> 00:02:25,160 Speaker 1: filing suit the financial services industry groups think that the 42 00:02:25,800 --> 00:02:27,840 Speaker 1: president in the in the Fifth Circuit is going to 43 00:02:27,880 --> 00:02:29,520 Speaker 1: be a little more favorable to them. So we'll see 44 00:02:29,560 --> 00:02:31,239 Speaker 1: how that shakes out. But the first fight is likely 45 00:02:31,280 --> 00:02:32,880 Speaker 1: to be about where the case is going to be heard. 46 00:02:35,120 --> 00:02:40,280 Speaker 1: What would you say the likely outcome of this is, well, um, 47 00:02:40,280 --> 00:02:43,560 Speaker 1: it's it's pretty interesting. There's a lot of the claims 48 00:02:43,560 --> 00:02:45,679 Speaker 1: in the lawsuit are are pretty rare. You don't see 49 00:02:45,720 --> 00:02:47,919 Speaker 1: them every day. UM. I think that the First Amendment 50 00:02:47,960 --> 00:02:50,840 Speaker 1: claim is probably a bit of a wild pitch. UM, 51 00:02:50,840 --> 00:02:52,760 Speaker 1: I don't. I don't know if that's gonna go anywhere. 52 00:02:52,800 --> 00:02:54,600 Speaker 1: But a lot of the other claims in the lawsuit, 53 00:02:54,800 --> 00:02:58,840 Speaker 1: UM seem pretty reasonable. If you read the complaints. UH, 54 00:02:58,880 --> 00:03:01,200 Speaker 1: they really raised a lot of tuat of arguments about 55 00:03:01,200 --> 00:03:05,280 Speaker 1: the way the Department UH passed this regulation about you know, 56 00:03:06,120 --> 00:03:08,640 Speaker 1: whether or not the Department had the authority. You know, 57 00:03:08,880 --> 00:03:10,519 Speaker 1: they seem to think that it should be the SEC 58 00:03:11,800 --> 00:03:14,639 Speaker 1: regulating in this space rather than the Department of labor. Um. 59 00:03:14,680 --> 00:03:16,799 Speaker 1: On the other hands. The Labor Department has been really 60 00:03:16,880 --> 00:03:19,920 Speaker 1: vocal in defending the process that it employed in the 61 00:03:19,960 --> 00:03:23,040 Speaker 1: hearings it had in the notice and comment period, So 62 00:03:23,120 --> 00:03:24,640 Speaker 1: I'm not really sure what a federal judge is going 63 00:03:24,720 --> 00:03:26,640 Speaker 1: to make of all that. Um, there's good arguments on 64 00:03:26,639 --> 00:03:28,640 Speaker 1: both sides, of course. Well, and that's gonna keep you 65 00:03:28,760 --> 00:03:30,640 Speaker 1: very busy, Jack, and thank you so much for joining 66 00:03:30,720 --> 00:03:31,680 Speaker 1: us today.