At least some members of the House Financial Services Committee say that fake public commenters have hurt the integrity of the public comment processes for new federal regulations — including the U.S. Department of Labor’s fiduciary rule effort.
The House Financial Services oversight subcommittee held a hearing on public comment integrity in Washington, last week. The subcommittee gave the hearing the title, “Fake It Till They Make It: How Bad Actors Use Astroturfing to Manipulate Regulators, Disenfranchise Consumers and Subvert the Rulemaking Process.”
Rep. Al Green, D-Texas, the subcommittee chairman, said “astroturfing” is “the practice of creating the false appearance of grassroots support for a particular policy or position where none exists, often to the benefit of shadowy, well-financed interests, and to the detriment of the general public.”
Witnesses talked about the effects of fake comments on efforts to develop environmental regulations, banking regulations, and financial services sales standards.
- Links to House Financial Services astroturfing hearing resources are available here.
- An article about financial professionals’ efforts to comment on the Labor Department’s fiduciary rule effort is available here.
Bartlett Naylor, a financial policy advocate at Public Citizen, gave a U.S. Department of Labor public comment period for the department’s fiduciary rule effort as an example of what he sees as manipulation of the public comment process.
Naylor said a business group claimed to have located several dozen businesses that were afraid implementation of the Labor Department’s fiduciary rule would lead to loss of their trusted financial advisors.
“I called them all,” Naylor said. “Some of them were, in fact, Wall Street brokers themselves. Others didn’t answer the phone.”
One woman had said that her trusted advisor had helped her grow her business, but, in reality, Naylor said, the woman said she had added just one employee over the last decade.
“In other words,” Naylor said, “these were pawns.”