Sen. Elizabeth Warren on Thursday called on the Securities and Exchange Commission to investigate businesses that are lobbying against a pending Labor Department rule aimed at preventing companies from steering people toward high-fee investments.
The Massachusetts senator and high-profile critic of Wall Street said Labor should look into the loudest opponents of the rule, and suggested they may have misled investors by claiming in comments about the rule that it would hurt their business, after separately telling investors they wouldn’t be affected.
“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 the letter to SEC Chairwoman Mary Jo White.
Warren asked how 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.”
Without directly accusing the financial firms of violating securities laws, Warren said that the mismatched statements “raise significant questions,” and asked for an investigation.
Warren has been among the top congressional backers of the labor rule, which would extend the category of financial advisers who must act in their clients’ best interest to nearly anyone who provides advice or help related to retirement accounts.
The rule, a final version of which is expected in a matter of weeks, is meant to prevent brokers and other financial agents from steering clients into inappropriate, high-fee investment products for which they, the brokers, receive kickbacks.
Such conflicted advice costs U.S. savers $17 billion a year, according to a White House study.
The industry, and congressional Republicans, have argued that requiring all brokers, insurers, and advisers to be legal “fiduciaries” would impose undue paperwork and legal burdens on them, making it impossible to serve low-income individuals or small businesses.
