Thrivent Financial filed a surprising lawsuit Sept. 29 against the Department of Labor over its fiduciary rule.
Specifically, Thrivent’s 29-page lawsuit claimed the DOL rule will render its dispute resolution mechanism obsolete.
Thrivent’s mechanism prohibits class actions. The controversial DOL rule allows advisory clients to file class-action lawsuits as part of its Best Interest Contract Exemption, which advisors must sign if they want to receive commission-based compensation.
The surprising part is the date of the Thrivent filing. The DOL published its rule in early April, and by the middle of June several lawsuits had been filed.
Barring a court order, the DOL rules begin to take effect on April 10, 2017. Waiting nearly six months to file a lawsuit would not seem to be an effective strategy.
Thrivent seeks a preliminary and permanent injunction against the class-action provision of the DOL rule. The Christian-based financial services firm filed the lawsuit in its home state of Minnesota.
Two and a half weeks later, the judge has yet to schedule a hearing. That is also mildly surprising given the short timeframe.
By contrast, a Washington, D.C. judge scheduled a hearing five days after the National Association for Fixed Annuities filed its lawsuit on June 2.
It did take a month for a Kansas judge to schedule a hearing in the Market Synergy Group vs. Department of Labor lawsuit. But a month in June is a lot different than a month in October when compliance looms five months down the road.
In Texas, a Dallas judge was assigned three lawsuits challenging the DOL rule and multiple defendants. In two weeks, Judge Barbara M. G. Lynn had coordinated an agreement to consolidate the lawsuits. Again, the June timeframe provided more cushion.
I reached out to Mark L. Johnson, Thrivent attorney with Greene Espel in Minneapolis. Thrivent responded with a statement declining comment.
The Thrivent case is more nuanced for sure, challenging a way of doing business that contrasts with its business model. But the company does have 2.3 million members and more than 2,300 financial advisors.
One would think Thrivent would want to move its case along as quickly as possible. Meanwhile, the rest of us are watching and waiting for any chink in the DOL armor.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]
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