FOR IMMEDIATE RELEASE
Friday, August 7, 2020
Contact: Pamela Russell at 202-618-6433 or prussell@bettermarkets.com
Washington, D.C. – Stephen W. Hall, Legal Director and Securities Specialist for Better Markets, issued the following statement on the filing of a comment letter urging the Department of Labor (“DOL”) to withdraw its proposed rule that will allow financial advisers to continue pocketing hard-earned savings from retirement accounts:
“In this rule, rather than protecting retirees and those saving for retirement, the DOL is protecting the profits of the financial services industry. That is a terrible abdication of responsibility by the DOL, which is supposed to look after the best interests of the tens of millions of Americans who are struggling to save some of their hard-earned money for a decent retirement. The financial firms that are cheering this weak rule are the same brokers and insurance companies that hired Labor Secretary Eugene Scalia when he was in private practice to kill the very strong rule that the DOL issued in 2016 under the Obama administration. That rule actually protected retirement savers rather than Scalia’s former financial industry clients.
“For years, many financial advisers have been allowed to peddle overpriced and under-performing investments to retirement savers. Those advisers pocket large fees and commissions while their clients overpay for poor investments that drain down their 401(k)s and IRAs. That conflicted investment advice costs Americans tens of billions of dollars a year, money that hard-working Americans simply cannot afford to lose as they struggle to plan for retirement.
“In 2016, the DOL issued a powerful rule that would have dramatically reduced these conflicts of interest and required advisers to act as fiduciaries that always put their clients’ interests first. But Secretary Scalia, then a private-sector lawyer, attacked the rule relentlessly and ultimately persuaded the reliably corporate-friendly Fifth Circuit Court of Appeals to nullify the rule, based on a tortured reading of the law that numerous other courts had rejected. After President Trump installed Scalia as the Labor Secretary, Scalia refused to recuse himself and he has now presided over a complete re-write of the 2016 rule.
“While the DOL claims its new proposal is a “best interest” or fiduciary duty rule, it’s nothing of the sort. It restores huge loopholes in the protections intended for retirement savers, and for any investment advice that’s still covered, it adopts weak conditions that will allow harmful conflicts of interest to continue flourishing.
“Adding insult to injury, the DOL gave Secretary Scalia a free “ethics” pass to work on the rule, and the department even cut the public comment period by more than half the usual time. It’s no surprise that the financial services industry and its allies at the DOL want to rush this shameful process along, but it’s a slap in the face to millions of Americans who count on their regulators to protect them from abuses at the hands of banks, brokers and financial advisers. Worse, it will degrade the quality of life that Americans can expect in retirement.”
###
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
