The Financial Services Institute Inc. fired off an angry note to two congressional members Tuesday, fuming about the Labor Department's IRA data harvest for its soon-to-be-released fiduciary regulation.
The e-mail, written by FSI chief executive Dale E. Brown, was sent to John Kline, R-Minn., chairman of the House Education & the Workforce Committee, and George Miller, D.-Calif., ranking member of that committee.
“We were surprised at Assistant Secretary Borzi's letter expressing disappointment in light of the facts surrounding the data request because her depiction of events stands in stark contrast to the fact,” Mr. Brown wrote.
In his note, Mr. Brown referred to a June 20 letter Phyllis Borzi, assistant secretary at the Employee Benefits Security Administration, sent to the congressmen. Ms. Borzi updated the lawmakers on the agency's progress on re-proposing a regulation that would broaden the definition of “fiduciary.” In that letter, she also reviewed the DOL's requests for individual retirement account data from the financial services industry late last December.
Ms. Borzi mentioned that the department “was disappointed not to receive many of the suggested data elements from industry sources” but that the agency had met with industry representatives and asked them to provide “whatever information they had that would be useful to our efforts.”
But in his latest letter, Mr. Brown insisted that the Labor Department's request “was impractical on its face.” He stated that the department gave the group 30 days to provide “detailed data on every investment, every investor and every recommendation in every context for the last 10 years.”
Not only did the request come at a time when many FSI and broker-dealer staff members were away for the holidays, but firms don't have access to much of the data the Labor Department sought. “Neither broker-dealers nor investment advisers are required to maintain 10-year records of customer investment histories,” Mr. Brown wrote.
He also noted that to develop even a partial set of requested data would cost between “several hundred thousand to several million dollars, depending on the size of the firm.” In addition, he claimed that the data dive could not be completed in 30 days.
Still, after meeting with DOL staff Jan. 27, the FSI passed along its broker-dealer financial performance studies, spanning from 2009 to 2011, according to Mr. Brown's letter. That information covers the management and operation of member broker-dealer firms but does not include data on IRAs.
“On Feb. 24, 2012, we sent the department copies of the 2009-11 studies,” Mr. Brown wrote. “To date, we have yet to receive confirmation from the department that they have received or viewed the studies.”
Ms. Borzi's letter also stated that the DOL had been communicating with the Securities and Exchange Commission after industry members called for the two agencies to harmonize their upcoming fiduciary regulations. In fact, Ms. Borzi met with Mary Schapiro, SEC chairman, June 6 to discuss “high-level regulatory issues.”
Still, the FSI “[remains] concerned that there is a lack of meaningful coordination between the department and the SEC — despite the fact the SEC is engaged in a parallel project.”
“Thus far, the department has shown little to no interest in engaging in joint data requests or coordinated rule making,” Mr. Brown wrote.
A call and an e-mail to Jason Surbey, a spokesman for the Labor Department, were not immediately returned.