By Lisa Lambert
(Reuters) - The fight over a new federal regulation on advice on investing for retirement is moving from Capitol Hill to the U.S. court system, as the number of lawsuits attempting to stop the rule grows.
Wall Street-affiliated groups, including the U.S. Chamber Of Commerce, last week filed a legal challenge in a U.S. District Court in Texas to the Labor Department's new fiduciary standard that requires financial brokers for retirement products to put clients' best interests ahead of their bottom line.
Since then, a collection of insurance companies sued in the same court on Wednesday, contesting the rule over its treatment of fixed indexed annuities.
The Indexed Annuity Leadership Council, the Life Insurance Co of the Southwest, American Equity Investment Life Insurance Co, Midland National Life Insurance Co and the North American Co for Life and Health Insurance said the new rule would create massive new costs and dislocations.
The rule, effective this week, will "upend the regulatory scheme that has for decades governed the market for fixed indexed annuities," they said in their filing. It will also "necessitate an overhaul of the ways in which these valuable products are sold" and "threaten the availability of these products for the very people the rules are intended to benefit," the filing said.
In April the Labor Department released the rule for financial brokers who sell retirement products after a bruising fight that spanned years.
The Labor Department compromised with the industry on a range of provisions, and the final rule does not restrict brokers from pushing proprietary products or recommending risky, high-fee investments in alternative assets and certain annuities.
Market Synergy Group, an insurance agency, also sued on Wednesday, over its treatment of fixed indexed annuities, those that link their returns to a stock market index. That lawsuit was filed in the U.S. District Court in Kansas.
Until this week, Congress had taken the lead in resisting the new rule, with Republicans saying it will cut lower- and middle-income investors off from receiving affordable retirement advice. It passed a resolution repudiating the rule, which President Barack Obama vetoed on Wednesday.