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March 31, 2016 at 09:54 AM
Sen. Elizabeth Warren asked Securities and Exchange Commission Chairwoman Mary Jo White in a Thursday letter to investigate whether financial services companies violated securities laws by making contradictory statements to investors about the Department of Labor’s forthcoming rule to amend the definition of fiduciary for retirement advice.
Warren, D-Mass., told White in her letter that four firms — Jackson National Life Insurance Co., Lincoln National, Prudential Financial and Transamerica Corp. — have misled investors with contradictory statements about the impact of DOL’s fiduciary rulemaking.
DOL’s rule is expected to be released by the Office of Management and Budget as early as Monday.
Warren asked White to apprise her staff on whetherthe SEC would conduct an investigation and to brief them on how the regulator interprets the securities laws with regard to companies’ public statements about pending or possible rules or legislation, including official comments to government agencies and editorial and press statements. She asked for a response by April 11.
“Corporate interests have become accustomed to saying whatever they want about Washington policy debates, with little accountability when their predictions prove to be inaccurate,” Warren wrote in her letter to White. “But the information we have obtained raises questions about how, in this specific case, the companies could have knowingly provided such dramatically different public statements about the impact of the DOL Conflict of Interest Rule – in one example, saying almost simultaneously that the rule would be ‘unworkable’ and that the rule would not be ‘a significant hurdle’ – without misleading investors.”
Warren told White that the companies may have violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and SEC Rule 10b-5, which, “broadly speaking,” prohibit companies from misleading investors about facts that could affect their business and their stock price.
Warren along with Rep. Elijah Cummings, D-Md., ranking member of the House Committee on Oversight and Government Reform, sent a similar letter in early February to OMB Director Shaun Donovan and Labor Secretary Thomas Perez, citing the double talk.
The SEC, Warren told White, has enforced Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 provisions for “decades – including in instances in which company officials made misleading statements on investor calls.”
