{"id":24766,"date":"2018-03-29T10:30:43","date_gmt":"2018-03-29T14:30:43","guid":{"rendered":"http:\/\/cfif.org\/v\/freedom_line_blog\/?p=24766"},"modified":"2018-04-03T15:44:16","modified_gmt":"2018-04-03T19:44:16","slug":"court-reverses-another-obama-administration-regulatory-abuse","status":"publish","type":"post","link":"https:\/\/cfif.org\/v\/freedom_line_blog\/24766\/court-reverses-another-obama-administration-regulatory-abuse\/","title":{"rendered":"Court Reverses Another Obama Administration Regulatory Abuse"},"content":{"rendered":"

Bit by bit, Obama Administration regulatory abuses are being dismantled<\/a> by the executive, legislative and judiciary branches.\u00a0 This month, the Fifth Circuit Court of Appeals<\/a> overturned one of the worst.<\/p>\n

The Dodd-Frank Act, which itself made matters worse rather than better in the wake of the government-fueled financial downturn of 2008, explicitly empowered the Securities and Exchange Commission (SEC) as the agency to formulate rules relating to investment advisers who offer “personalized investment advice about securities to a retail customer.”\u00a0 The statute also explicitly prevented the prohibition of commission-based compensation.<\/p>\n

But as was too often the case, a rogue federal agency under Obama felt unconstrained by mere laws and norms of conduct.\u00a0 Specifically, Labor Department Tom Perez decided to dictate the exact opposite<\/a>:<\/p>\n

Mr. Perez essentially rewrote the 1974 Employee Retirement Income Security Act (ERISA), which regulates employer- and union-sponsored plans differently from individual retirement accounts.\u00a0 For instance, individuals are allowed to sue fiduciaries of employer and union plans for charging a commission.\u00a0 Labor applied the more rigorous protections for employer and union plans to IRAs.\u00a0 Mr. Perez also extended Erisa’s definition of ‘investment advice fiduciaries,’ who provide advice ‘on a regular basis,’ to broker-dealers and financial-insurance agents who merely\u00a0 sell a product.”<\/p><\/blockquote>\n

The Fifth Circuit Court of Appeals, however, was unamused and eviscerated Mr. Perez’s lawless maneuver.\u00a0 Judge Edith Jones, one of the most reliably impressive judges<\/a> in the entire judiciary branch, wrote for the majority that, “Transforming sales pitches into the recommendations of a trusted adviser mixes apples and oranges.”\u00a0 She added that this created an impossible dilemma to navigate, as, “Thousands of brokers and insurance agents who deal with IRA investors must either forgo commission based transactions and move to fees for account management or accept the burdensome regulations and heightened lawsuit exposure required by the [best interest contract exemption] contract provisions.”<\/p>\n

The inescapable consequence of such a rule raised costs for small investors most of all, who would’ve faced no alternative to what The Wall Street Journal labels “robo-advice.”\u00a0 Indeed, several investment firms had already stopped offering services in those parts of the retirement investment marketplace.<\/p>\n

There’s still much work to do in reversing eight years of Obama Administration malfeasance, including at the Internal Revenue Service (IRS), as we have constantly emphasized<\/a>.\u00a0 But the good news is that the job is underway, as this latest appellate court ruling illustrates.<\/p>\n","protected":false},"excerpt":{"rendered":"

Bit by bit, Obama Administration regulatory abuses are being dismantled by the executive, legislative and judiciary branches.\u00a0 This month, the Fifth Circuit Court of Appeals overturned one of the worst. The Dodd-Frank Act, which itself made matters worse rather than better in the wake of the government-fueled financial downturn of 2008, explicitly empowered the Securities […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[2895,4861,1186,5015],"class_list":["post-24766","post","type-post","status-publish","format-standard","hentry","category-posts","tag-dodd-frank","tag-fiduciary-rule","tag-labor","tag-tom-perez"],"_links":{"self":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/24766","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/comments?post=24766"}],"version-history":[{"count":2,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/24766\/revisions"}],"predecessor-version":[{"id":24771,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/24766\/revisions\/24771"}],"wp:attachment":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/media?parent=24766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/categories?post=24766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/tags?post=24766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}