Sens. Warren, Murray Probe DOL on Fake Fiduciary Rule Comments
After the 2016 fiduciary rule drew a flood of fake comments, the senators want to know what preventive measures Labor has taken this time.
Sens. Elizabeth Warren, D-Mass., Patty Murray, D-Wash., and Tina Smith, D-Minn., are pressing Labor Secretary Eugene Scalia to lay out steps he’s taking to ensure this round of fiduciary rule comments aren’t fake.
The senators cite a 2017 Wall Street Journal analysis, which found that 40% of the respondents to Labor’s now-defunct 2016 fiduciary rule “didn’t write the posts that were attributed to them,” with “most of the 345 comments [analyzed] critical of the fiduciary rule,” the senators told Scalia Friday in a letter, which was led by Smith.
The three lawmakers, all members of the Senate Health, Education, Labor and Pensions Committee, questioned “the integrity of public comments” now as Labor reviews comments on its new prohibited transaction exemption aligning with the Securities and Exchange Commission’s Regulation Best Interest, as well as a final rule reinstating the five-part test under the Employee Retirement Income Security Act.
As of Friday, Labor said it had received 105 comments on its fiduciary plan.
“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,” the senators wrote.
“Furthermore, 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.”
A similar issue plagued the Securities and Exchange Commission in 2019. A proposal related to proxy voting prompted at least 20 letters purported to be from Main Street investors that turned out to be the result of a public relations campaign funded by corporate interests.
In their letter, the senators added that during his confirmation process, Scalia agreed “that manipulation and falsification of public comments is a concern,” and he committed that “[i]f confirmed, I would support the Department’s staff in an effort to understand the scope and sources of this problem, and to devise solutions to protect the integrity of the public comment process.”
The three senators asked Scalia to answer questions by Sept. 3 on steps he’s taken to prevent fake comments regarding the current rule, and whether Labor has identified and taken action in regard to the previous fake comments.
The senators also probed Scalia on why the department allowed only 30 days to comment on the new fiduciary rule proposal.
Murray had previously asked Jeanne Klinefelter Wilson, acting head of Labor’s Employee Benefits Security Administration, to hold public hearings on the new fiduciary plan as Labor did in 2015 when it was seeking feedback on the previous fiduciary rule that was vacated by the U.S. Court of Appeals for the 5th Circuit.
Murray also asked for an extended comment period. However, on Aug. 6 Labor denied both of her requests.