Three senior senators are calling on Labor Secretary Eugene Scalia to explain the steps he is taking to ensure that the reported deluge of fake comments that poured into the U.S. Department of Labor the last time the agency proposed a fiduciary investment advice won’t happen again.
Sens. Elizabeth Warren (D-Mass.), Patty Murray (D-Wash.) and Tina Smith (D-Minn.) asked Scalia to outline the steps he has taken to ensure there isn’t a repeat of the 2017 scandal, where analysis by the Wall Street Journal found that 40% of respondents to the DOL’s first fiduciary proposal were fake.
“We write to request an update on your efforts to address the rash of fake comments that plagued the Department’s prior fiduciary rulemaking process,” the senators wrote in a letter obtained by Financial Advisor magazine.
“Preventing industry-favored fake comments would be an important step to restoring Americans’ confidence that federal regulators are on their side,” they said.
WSJ analysis found that most of the 345 comment letters that poured into the DOL in 2017 were critical of the fiduciary rule and 40% of respondents said they didn’t write the posts that were attributed to them.
The senators gave Scalia until September 3 to detail steps the agency has taken to analyze the scope and sources of the fake comment problem and asked for detailed solutions that have been implemented, including referrals to the Department of Justice or other law enforcement agencies.
“In reviewing comments ... have you identified any fake or suspicious comments? If so, how have you handled them?” the lawmakers asked.
“As you know, making false statements to the federal government can be a criminal offense, and the widespread submission of fake comment letters raises troubling questions about potential abuses by industry groups hiding behind false identities while seeking to defeat a key investor protection initiative,” they added.
Even if the fake comments “did not unduly bias the rulemaking process, ordinary Americans should not have their reputations harmed by having false comments submitted in their names by unknown advocates in support of industry-favored positions,” the senators said.
While Wall Street opposed the first DOL fiduciary rule, successfully overturning it in court, Scalia’s DOL fiduciary proposal is opposed by consumer and fiduciary groups, who say it allows advisors to offer conflicted and thus more costly advice to ERISA retirement plans.