Sen. Elizabeth Warren, D-Mass., is calling on the Securities and Exchange Commission to investigate several critics of the Department of Labor’s fiduciary rule, claiming they misled investors through duplicitous statements.
In a letter today to SEC Chairwoman Mary Jo White, Warren noted that the companies -- Lincoln National, Jackson National, Prudential and Transamerica – claim the proposed rule is “unworkable” and will have a dire impact on their businesses.
Meanwhile, in conference calls with investors, executives for the four companies all waved off the rule’s effect on their ability to grow profits, Warren said.
“When companies make these kinds of conflicting statements, it is left to investors to unravel which statement is true and which statement is false and to determine what this means for the true value of the company and its stock,” the senator wrote. “This is exactly the scenario that our securities laws are designed to prevent and precisely why compliance with these laws is so important.”
The DOL rule is expected to be published any day now, and will uphold a fiduciary standard to advice provided to qualified retirement plans employer plans and individual retirement accounts (IRAs). The DOL has said commission-based advice creates conflicts of interest that cost consumers.
Representatives for the companies released statements defending their comments on the rule.
“We have consistently supported the DOL’s objective of making sure consumers receive financial advice that is in their best interests. In our comments to the DOL, we have requested modest changes to the proposed rule which would better allow consumers to have continued access to retirement products that offer guaranteed lifetime income,” said Eric Samansky, spokesman for Lincoln Financial Group.
“In our comments to investors, we have explained how we could respond to the rule in the event of a sales disruption as a result of consumers’ more limited access to these products. These comments, which address different issues, are in no way contradictory and we stand by them,” Samansky added.
Transamerica and Prudential re-released earlier statements made when Warren first made her accusations. Jackson did not respond to requests for comment.
A frequent critic of the financial services industry, Warren noted that the SEC has pursued cases against CVS Caremark Corp. and Citigroup over alleged misleading information provided on investor calls.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com.
© Entire contents copyright 2016 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.
Like all Socialists and Big Government Lovers, Elizabeth Warren wants to skewer any citizen who may disagree with her; The true mark of a wannabe dictator. In her socialist world there is no room for dissension or opinion only the stomping of government boots on anyone who dares disagree.
Sen. Warren has said that it’s “impossible” that the DOL rule will harm the business model of insurers. That’s an amazing and outrageous statement. During the comment period, many insurers commented that it would do precisely that, and those of us who have been following this thing closely have noted that the infrastructure changes that will be necessary to comply with the rule will surely cost a lot of money. It’s likely that some (or many) insurers, IMOs, and broker-dealers will apply the requirements of the “Best Interest Contract” Prohibited Transaction Exception (PTE) to sales even when they would be covered by the less onerous PTE 84-24, simply because supervising reps who may be wearing “two hats” is not workable. That will undeniably require new systems of data collection and analysis, not to mention supervision. Those things cost money.
For Sen. Warren to dismiss, out of hand, the objection that the new rule will harm firms which must now establish and implement new systems and procedures is simply absurd. She should know better. Indeed, I believe that she does know better but has painted herself into a corner with regard to this new rule.