This is according to 33 Democratic members of Congress who, together, sent a letter this week to Department of Labor Secretary Hilda Solis requesting that her department start working closely with the SEC. Signatories include Rep. Barney Frank (D-Mass.) and Carolyn McCarthy (D-N.Y.), the cosponsor along of the so-called Bacchus bill before the house that would open the door for FINRA to become the industry’s self regulatory organization.
“This lack of coordination is particularly concerning,” the lawmakers write, “because the SEC's project is driven by a statutory directive in the Dodd-Frank Act and is thus subject to clear Congressional guidelines, while the Department's is not. In our view, real coordination between the Department and SEC would better reflect the intent of Congress … This would entail jointly requesting information, developing guidance in a parallel fashion based on this information, and ensuring consistency in that guidance by promulgating rules simultaneously. On the contrary, the Department has shown little interest in engaging in joint data requests or coordinated rulemaking.”
In fact, the lawmakers say that the department’s requests for data from the industry have been “unrealistic in scope and timing.”
“We agree that the Department should consult with industry in gathering its cost benefit information,” they write. “But the Department asked industry representatives for detailed data on every investment, every investor, and every recommendation for the last 10 years in every context (IRAs, plans, and regular retail accounts). Such a sweeping request seems impractical on its face.”
Calls to spokespeople at the department were not returned by press time.
Kent Mason, a lawyer with Washington D.C.-based Davis & Harman who is representing banks and other parties that support the appeal, says the letter intends to redirect the efforts of the department back to the ultimate point of reform.
“What we really should be focusing on is how do we expand saving by enhancing … certain investor services. And none of the proposed regulations or any of the public utterances or the data requests [from the department] reflected that goal,” Mason says.
The data requests from the department come as it works to reformulate its definition of a fiduciary. In October 2010, the department released a draft definition that prompted protests within the industry. As a result, the department withdrew that definition in September of last year. A rewritten proposed definition was expected in the first half of this year, but it has not yet been released.
