Fake comments hit regulators seeking input on proposed rules

Fraudulent posts criticize the DOL fiduciary rule, and other groups overseeing advisers are similarly vulnerable

Dec 28, 2017 @ 4:38 pm

By Ryan W. Neal

Several public comments collected by the Department of Labor that criticize the proposed fiduciary rule are fake, according to an analysis by the Wall Street Journal and Mercury Analytics.

Of more than 3,000 comments, WSJ surveyed 345 people, most of whom were critical of the fiduciary rule. Fifty people responded, and 20 of them said they did not post the comment that was attributed to the name, address, phone number and email.

It is unclear who is responsible for the fraudulent comments, but that didn't stop people from taking to social media to voice opinions.


Congressman Frank Pallone (D- N.J.) said on Twitter he was "not surprised that many comments criticizing a rule requiring financial advisors to act in the best interest of their clients are fake."

At least one financial adviser, who asked not to be named for compliance reasons, wondered on Twitter if the fake commentary was the result of institutions looking to "keep the veil pulled over investors' eyes."

"The DOL rule has always been surrounded by conspiracy theories of bad actors trying to manipulate the outcome," said Tim Welsh, the president and founder of Nexus Strategy.

Mr. Welsh said the resistance to the rule is usually attributable to firms who want to preserve the status quo. "So it makes sense that the anti-fiduciaries would be up to using underhanded tactics to influence the process."

A spokesman for the DOL said fraudulent comments are removed when they are brought to the agency's attention, and that there are criminal penalties for submitting fraudulent statements to the federal government.


The WSJ also reported fraudulent postings made to the Consumer Financial Protection Bureau and the Securities and Exchange Commission.

"We generally post all of the comments as we receive them regardless of their authorship or views, but we exercise considerable judgment when evaluating comments during the rulemaking process," said SEC spokesman John Nester.

The CFPB did not respond to requests for comment.

Government agencies are required by the Administrative Procedure Act to take public comment on proposed legislation, but are not required to heed them. While fraud is obviously frowned upon, the comments wouldn't necessarily sway the decision-making of the agency.

"It's not an opinion poll; it's not a voting process," said Leo Rydzewski, the general counsel of the Certified Financial Planner Board, which is opening up a comment period of its own from Jan. 2 to Feb. 2 for proposed revisions to its Standards of Professional Conduct.

(More: Ask the Ethicist: Help the CFP Board improve its revised standards)

The CFP Board doesn't verify who submits comments, but Mr. Rydzewski said the organization considers more what someone says than who says it.

"Most important is what did the person have to say, what did we think of what they had to say, and what conclusions do we want to reach based on the comment that was submitted," Mr. Rydzewski said.


Mr. Rydzewski added that the CFP Board isn't aware of fake comments submitted during its own comment periods, but that it is something the organization plans to pay attention to in the future.

He wouldn't speculate as to where the fake comments to the fiduciary rule are coming from, but did say that it's unfortunate people are commenting inappropriately.

"Government organizations are relying on individuals to be honest when they're submitting their comments," Mr. Rydzewski said. "If there's been a concerted effort to distort that process, the government should take steps to determine who it is who sought to undermine the comment-making process."


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