(Adds details, background about rule and legal challenge)
By Sarah N. Lynch
WASHINGTON, Feb 8 (Reuters) - The U.S. Labor Department asked a federal district court on Wednesday to put the brakes on a pending ruling in a legal challenge to its “fiduciary” rule that governs how brokers give retirement advice to their customers.
The request to the U.S. District Court for the Northern District of Texas, filed by the Justice Department on the Labor Department’s behalf, said a stay is needed in light of a Feb. 3 request by the White House to conduct a review of the rule to determine if it should be revised or scrapped altogether.
“It would not serve judicial economy to issue a ruling at this point,” the filing says.
It adds that a ruling issued while the review is pending could also “cause confusion with the affected public.”
The controversial “fiduciary” rule requires brokers to put their clients’ best interests first when advising them about individual retirement accounts or 401(k) retirement plans.
It is championed by consumer advocates and retirement non-profit groups, but has been staunchly opposed by the financial services sector, which argues it will make retirement advice too costly and harm lower income retirees in particular.
Wednesday’s court filing was made as part of an ongoing legal battle between the Labor Department and the U.S. Chamber of Commerce and other financial services trade groups.
The groups are seeking to have the rule overturned on a number of legal grounds, including claims that the department overstepped its legal boundaries and violated federal rulemaking laws by conducting a flawed economic analysis.
The judge presiding over the case indicated last week that she plans to issue a ruling no later than Feb. 10.
However, last week the Labor Department said in a statement it planned to weigh its legal options for delaying the April 10 implementation date of the rule in light of President Donald Trump’s request for it to be reviewed.
The Labor Department said in its filing that the ultimate outcome of its review of the rule could lead to changes that differ from the current version being challenged.
“Although the (Labor) Department conducted an exhaustive regulatory impact analysis in this rulemaking, its cost-benefit analysis was challenged in this litigation and could be updated,” the department said in the filing.
The department also asked the judge if it could present an “initial joint status report” by March 10 to provide an update to the court. (Reporting by Sarah N. Lynch; Editing by Jonathan Oatis and Paul Simao)