In a letter sent Thursday to SEC Chair Mary Jo White, Warren said firms could have violated securities laws by issuing conflicting comments about a proposed rule that would require financial advisors to act in the best interest of their clients, rather than the best interest of their own profit.
Warren is referring to the so-called fiduciary rule, which the White House estimates could help Americans trying to retire save $17 billion a year. Current law allows financial advisors to work on commission when they offer suggestions to savers about retirement accounts, such as 401(k)s and Individual Retirement Accounts (IRAs). Advisors are allowed to earn money from mutual fund companies for steering clients to specific funds, even if those funds are bad for the client.
Financial firms have been loudly against the fiduciary rule since last year, when it was first proposed by the Labor Department. But at the same time that firms have been complaining about the proposal, Warren’s letter pointed out that they’ve also been reassuring investors that it wouldn’t be that big of a burden.
Warren wrote in her letter that those conflicting statements “justify initiating a prompt and thorough SEC investigation.”
Her letter points to to four instances where executives made such remarks.
For instance, Dennis Glass, the president and CEO of Lincoln Financial Group, an insurance and investment management company, said the rule was so “immensely burdensome” and “extremely intrusive” that “financial advisors and firms will not be able to use it.” Two months earlier, Glass was far more laid back, saying the proposed rule wouldn’t be “a significant hurdle for continuing to grow that business,” per Warren’s letter.
The senator cites similar examples from executives at Jackson National Life Insurance, Prudential and Transamerica, other companies that offer investment products.
Warren’s blunt assessment is that “both sets of industry claims — that the proposed rule will harm them and their business model, and that the proposed rule will not harm them and their business model — cannot possibly be true.”
That kind of anti-regulatory two-step — arguing publicly about how terrible a new regulation would be, while quietly saying it won’t actually hurt business — is a decades-old strategy for corporations and their lobbyists, Warren notes. The trouble is, she said, is that investors are forced to sort through the conflicting statements.
“Corporate interests have become accustomed to saying whatever they want about Washington policy debates,” Warren wrote, “with little accountability when their predictions prove to be inaccurate.”
Eric Samansky, a spokesman for Lincoln National, told The Huffington Post, “We have consistently supported the [Labor Department’s] objective of making sure consumers receive financial advice that is in their best interests.” The company’s comments to regulators and investors “address different issues,” he said, and “are in no way contradictory.”
Greg Tucker, a spokesman for Transamerica, said the company had been consistent and that its executive’s “comments to shareholders in no way contradict Transamerica’s view.”
Scot Hoffman, a spokesman for Prudential, also stressed the company’s consistent opposition to the rule.
Jackson National did not immediately respond to a request for comment.
Original Article
Source: huffingtonpost.com/
Author: Ben Walsh
No comments:
Post a Comment