A trio of senators pressed the Department of Labor on the likelihood of "fake comments" on its controversial investment advice rule.
The comment period closed Aug. 6 with 105 comments on the rule, which was designed to replace a tougher Obama-era regulation. A letter drafted Friday by Sen. Tina Smith, D-Minn., and signed by Sen. Elizabeth Warren, D-Mass., and Sen. Patty Murray, D-Wash. questioned whether the comments are all genuine.
It is the third rule put forth by the DOL. Under Obama, a 2010 rule was pulled following the public comment period after vehement opposition. The DOL returned with a new fiduciary rule in 2015 and the ensuing comment period, which was reopened at one point, generated 3,134 comments. That rule was later tossed out by a federal appeals court.
But before the rule was tossed out, the comment period was plagued by "fake comments," the senators noted.
In 2017, after an analysis of public comments on the Obama version, The Wall Street Journal reported that “40% of respondents didn’t write the posts that were attributed to them,” with “most of the 345 comments [analyzed] critical of the fiduciary rule.”
"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."
Pressure For Longer Comment Period
A spokesman for the DOL vowed this morning to look into the issues raised in the letter.
The Trump replacement rule has two main parts: a new exemption allowing advisors to provide "conflicted" advice for commissions; and a reinstatement of the "five-part test" from 1975 to determine what constitutes investment advice.
The new investment advice rule has come under fire from industry analysts for vague language and the confusion it could create. Meanwhile, consumer groups say the rule opens the door for industry sales abuses.
While comments were supposed to be limited to the exemption, many letters pointed out issues in other areas. Others ripped the 30-day comment period and too short to credibly assess the rule impact. The senators picked up on this issue as well.
Executive Order 12866 directs “each agency [to] afford the public a meaningful opportunity to comment on any proposed regulation, which in most cases should include a comment period of not less than 60 days,” the senators noted.
"We would like to better understand why you chose to limit the length of the comment period and its effect on the comment process," the letter read.
The DOL rejected calls for a longer comment period.
The senators closed their letter with seven questions related to these issues and asked Secretary of Labor Eugene Scalia to respond by Sept. 3.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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