Warren asks if financial firms broke the law in 'fiduciary' rule fight

Warren asks if financial firms broke the law in 'fiduciary' rule fight
© Greg Nash

Sen. Elizabeth WarrenElizabeth Ann WarrenHatch mocks Warren over DNA test with his own results showing '1/1032 T-Rex' Warren DNA test reinvigorates fight with Trump On The Money: Deficit hits six-year high of 9 billion | Yellen says Trump attacks threaten Fed | Affordable housing set for spotlight in 2020 race MORE (D-Mass.) is calling for a government probe into whether financial companies are breaking the law when discussing a contentious retirement adviser rule.

In a letter sent to the Securities and Exchange Commission (SEC) Wednesday, Warren demanded an investigation into whether companies are violating securities law by offering conflicting takes on how harmful a new rule imposing a “fiduciary duty” on retirement investment advisers would be.


Warren had previously charged that companies were telling policymakers the Labor Department initiative would be a disaster for their business while telling investors they would be able to weather any changes and remain successful.

But now, she wants the SEC to determine if the firms actually broke the law in offering those differing views, by misleading investors.

“Corporate interests have become accustomed to saying whatever they want about Washington policy debates, with little accountability when their predictions prove to be inaccurate,” she wrote. “But the information we have obtained raises questions about how, in this specific case, the companies could have knowingly provided such dramatically different public statements about the impact of the DOL Conflict of Interest Rule … without misleading investors."

In an earlier letter sent to the Labor Department, Warren and Rep. Elijah Cummings (D-Md.) highlighted several examples in which the heads of financial firms would call the new rule hugely burdensome and a massive challenge when discussing it in Washington while calling it a blip on the radar and a minor speedbump on Wall Street.

The new rule initiative, which is entering its final stages, would require retirement investment advisers to act solely in the interest of their clients. Advocates of the rule, including President Obama, have argued it would ensure people are not being steered toward pricier, but less effective, investments by profit-seeking advisers.

But the financial industry has mounted an all-out campaign to block it, arguing it could actually make it impossible for many Americans, particularly poorer ones, to even obtain advice at all.

After years of fits and starts, the rule appears set to soon be finalized, perhaps as soon as the coming weeks.