As many readers have likely seen from the client updates going out from law firms, the Fifth Circuit struck down the Department of Labor’s fiduciary rule on March 15th.  A divided panel ruled that Labor overstepped its authority when issuing the rule.  A copy of the opinion is available here.  

One thing that jumped out to me as I read the opinion was the characterization of persons that hold themselves out to the public and advertise their services as financial advisers as mere “salespeople.”  Admittedly, the law here is a mess.  The biggest problem I see is that the SEC never held the line on only allowing stockbrokers to give “incidental” advice to make use of the broker-dealer exception to the Investment Advisers Act.  That provisions exempts brokerage houses from the Investment Advisers Act if it’s “a “broker or dealer” whose advice is “solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor.” 15 U.S.C. § 80b-2(a)(11)(C).  Of course, one wonders why someone would work with a self-described financial adviser if not for the advice.

Labor has until April 30 to make a decision about whether to seek en banc review.