Senator Murray Blasts Secretary Scalia For Inadequate Proposal to Replace Retiree Protection He Fought to Strike Down

Statement

Today, U.S. Senator Patty Murray (D-WA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released the following statement in response to a new proposal from the Department of Labor (DOL) which represents a severely watered down version of the Obama-era fiduciary standard, and would leave retirement savers and investors vulnerable to receiving conflicted financial advice.

"This inadequate proposal will leave financial advisers free to put their interests ahead of their clients'. We need a strong fiduciary rule to protect people's hard-earned savings--and we had one before Scalia sued the Department of Labor to strike it down. Then he took over the Department of Labor and replaced it with this subpar proposal. Instead of moving ahead with this proposal that will leave people across the country vulnerable, the Department should go back to the drawing board and come up with one that actually protects them and meets the high standard that Congress mandated in ERISA."

In 2018, now-Secretary Scalia sued the Department of Labor on behalf of the Chamber of Commerce and other financial services trade groups to challenge the Obama-era fiduciary standard which required financial advisers to put their clients' financial security ahead of their own interests. Despite previous court rulings upholding the Obama-era standard, the Trump Administration chose not to defend it in court after the Fifth Circuit ruled against it, effectively killing the rule. Even though Secretary Scalia played a key role in striking down the rule, and once wrote an op-ed referring to it as a regulatory "Godzilla," Secretary Scalia did not recuse himself in the Department's work on a new standard.

The new proposal cedes the Department of Labor's central role in protecting retirement savers to the Securities and Exchange Commission (SEC)--which is contrary to Congressional intent in enacting the Employee Retirement Income Security Act of 1974 ("ERISA")--and demonstrates a disregard for the intentional choices that Congress made over 40 years ago when it enacted ERISA and explicitly rejected giving SEC jurisdiction as Congress wanted to ensure the highest levels of protections for retirement savers in adopting a fiduciary standard of care because of the special nature and purposes of employee benefit plans. The SEC standards which the Department of Labor have aligned their proposal with do not meet ERISA's high bar of protection for retirement savers as the SEC's Regulation Best Interest is explicit in providing that it is not a fiduciary standard.

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