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States May Enact Fiduciary Laws

The future of the U.S. Department of Labor’s (DOL) fiduciary rule remains uncertain, as President Donald Trump ordered the DOL to perform a new analysis of the rule aimed at revising or repealing it...
April 17, 2018

The future of the U.S. Department of Labor’s (DOL) fiduciary rule remains uncertain, as President Donald Trump ordered the DOL to perform a new analysis of the rule aimed at revising or repealing it. Moreover, the U.S. Court of Appeals for the Fifth Circuit voted to overturn the rule in March, leading some experts to believe its future will be left to the U.S. Supreme Court to decide.

In response, some states are taking steps to enact their own fiduciary rules, with legislation adopted in Nevada and Connecticut; New York and New Jersey considering legislation; and the Maryland Senate approving a measure that instructs its consumer protection agency to determine whether the state should enact a fiduciary law.

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The National Association of Insurance Commissioners also is considering ways that state regulators could use language contained in the DOL rule to regulate annuity sales. Meanwhile, courts in four states — California, Missouri, South Carolina, and South Dakota — have imposed fiduciary standards on broker-dealers, while courts in 14 other states have found that there is no fiduciary duty between brokers and clients.