Democratic senators criticize Acosta for rushing to conclusion on DOL fiduciary rule

Sens. Murray, Warren, Booker and interest groups say that the labor secretary has only met with opponents of the regulation

May 19, 2017 @ 2:15 pm

By Mark Schoeff Jr.

Democratic senators who sit on the committee with jurisdiction over the Labor Department criticized Secretary Alexander Acosta on Friday for appearing to jump to a conclusion about the agency's fiduciary rule.

In a letter to Mr. Acosta, Sen. Patty Murray, D-Wash. and ranking member of the Senate Health Education Labor and Pensions Committee, referenced a report on the website of the National Association of Plan Advisors that indicated that Mr. Acosta had made a priority of freezing the regulation in a way that the halt would "stick."

"The definitiveness of your statements, after merely three weeks as secretary, gives us reason for serious concern," Ms. Murray wrote along with her committee colleague, Sen. Elizabeth Warren, D-Mass., and Sen. Cory Booker, D-N.J. "Instead of meeting with all stakeholders and considering multiple points of view, you appear to have prejudged the outcome of the review your agency was tasked with conducting. In fact, it seems as though you have already arrived at your decision."

A spokesman for Mr. Acosta declined to comment.

Implementation of the regulation, which would require financial advisers to act in the best interests of their clients in retirement accounts, has already been delayed from April 10 to June 9 while the agency reassesses the measure under a directive from President Donald J. Trump that could result in its modification or repeal.

At the end of the delay, two provisions of the rule will become applicable. One would expand the definition of who is a fiduciary when working with retirement accounts. The other would set impartial conduct standards for advisers. The agency has said it would complete the review by the Jan. 1 implementation deadline for the whole rule.

Financial industry opponents of the rule and Republican lawmakers are seeking an extension of the delay so that the whole rule is halted during the review. They made their case before a House subcommittee on Thursday, citing what they call new evidence of its potential harm to investors.

In their letter, the Democratic senators warned Mr. Acosta not to stymie the parts of the rule slated to go into effect on June 9.

"You no doubt are aware of the steep legal standards the department must overcome to justify further delaying, substantially revising or rescinding the rule," the lawmakers wrote.

Their missive comes amid a flurry of letters to Mr. Acosta on Friday from supporters of the rule, who say it is required to protect workers and retirees from conflicted advice that leads to inappropriate, high-fee investments that erode savings.

Better Markets sent its second letter to Mr. Acosta requesting a meeting with him. The investor advocacy group expressed concern that he is only hearing from critics of the rule, who contend it is too complex and costly and will make advice too expensive for investors with modest assets.

"[I]t is important that you hear from both sides before making a final decision about how the department will proceed," wrote Dennis Kelleher, president and chief executive of Better Markets. "That is why we are troubled by reports that you have held a number of meetings solely with opponents of the [rule]."

The Consumer Federation of America, which also sent a letter to Mr. Acosta along with the National Employment Law Project and several other groups on Friday, also has said it is not getting access to Mr. Acosta.

"It doesn't appear like they're interested in listening to us," said Micah Hauptman, CFA's financial services counsel.

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