Sen. Elizabeth Warren urged Office of Management and Budget Director Shaun Donovan Wednesday to “quickly finalize” the Department of Labor’s rule to change the definition of fiduciary on retirement advice because large insurance companies and financial services firms have been exaggerating the negative impacts of the rule.
In her letter to Donovan and Labor Secretary Thomas Perez, which was sent jointly with Rep. Elijah Cummings, D-Md., ranking member of the House Committee on Oversight and Government Reform, Warren states that while firms like Prudential Financial, Lincoln National, Jackson National and Transamerica have publicly chided DOL’s rule to change the definition of fiduciary under the Employee Retirement Income Security Act, they are telling their investors the rule “will have no significant impact on their companies.”
Warren cites the firms’ “doomsday predictions” made in earnings call transcripts, comment letters to DOL and in published articles.
In earnings calls, Warren says officials have told investors such things as they don’t see DOL’s rule as “a significant hurdle,” and that they are well-positioned to “adapt to any regulatory framework that emerges.”
Said Warren: “Publicly traded companies are rarely held accountable for the assertions they make when lobbying in Washington, even if these assertions are untrue. But when communicating with investors, publicly traded companies are required by law to provide full and accurate information about any material matters that may affect their business models and valuations.”
The information that companies provide to their investors, Warren continued, “must represent their true and accurate assessments of the impact of the proposed rule or they would be in violation of federal securities laws.”
Contrary to their “dire and unsupported public predictions and public comments” to DOL about the proposed conflicts of interest rule, Warren said, “insurers and financial firms provide much more optimistic assessments when they speak to their own investors and are required by law to provide accurate reports of material information.”
As OMB works to finalize the DOL rule, “we hope that you will make careful note of these statements.”
DOL sent its fiduciary rule to OMB for review on Jan. 29; it is expected to undergo an expedited review and be out before April.
--- Check out How Annuities Will Be Transformed by DOL Fiduciary Rule on ThinkAdvisor.