On February 17, 2017, a federal district Court in Kansas upheld the U.S. Department of Labor’s conflict of interest rule and related exemptions in a suit brought by Market Synergy Group, Inc. This ruling on the merits follows the court’s prior ruling in November 2016 denying Market Synergy Group’s request for a temporary injunction. The court determined that: (1) the Department satisfied the Administrative Procedure Act’s requirement of providing fair notice of the proposed rule change; (2) the Department’s decision to treat fixed indexed annuities differently than all other fixed annuities in PTE 84-24 was not arbitrary and capricious; (3) the Department adequately considered the economic impact that the final rule would impose on independent insurance agent distribution channels; and (4) the Department’s issuance of PTE 84-24 does not exceed the agency’s statutory authority. The case is Mkt. Synergy Grp., Inc. v. United States Dep’t of Labor, No. 16-CV-4083-DDC-KGS, 2016 WL 6948061 (D. Kan. Nov. 28, 2016).

Like the prior rulings, the court’s decision relates only to the Department’s authority to issue the rule. It does not address the Trump administration’s proposal to delay or change the rule. A delay proposal is currently being reviewed by the Office of Management and Budget, and is expected to be released in the next couple weeks.