Remember a few weeks ago when AIG said it had to sell off its broker-dealer network because of a new rule the administration is implementing? That rule requires advisors to tell their clients seeking retirement advice when they have a conflict of interest, and says that brokers should be advising clients based on what's best for the client. Which is the worst thing in the world, says pretty much the whole investment advisor community and what they've been telling the Department of Labor in the comment period about the new rule.
But guess what? They're lying about that, and Sen. Elizabeth Warren has got the goods to prove that lie.
[B]ehind the scenes, in earnings calls with their own shareholders, these same companies are downplaying the impact of the rule, reassuring that they could easily handle the changes.This contradiction was revealed in a letter from Senator Elizabeth Warren and Congressman Elijah Cummings made public Thursday. The letter highlights four companies with investment advisory units, contrasting their public and private statements, and implicitly raising the question: Are they lying to the Department of Labor, or to their shareholders?
For example, in a letter to the Labor Department last July, Jackson National Life Insurance Company president James Sopha called the proposal "bad for investors and for America," and said that "it will be very difficult, if not impossible for financial professionals and firms to comply with the requirements."
But in a call with shareholders, the CEO of Jackson's parent company, Prudential U.K., said that the company would "build whatever product is appropriate… and adapt faster and more effectively than competitors."
Warren and Cummings provided this example, and many more, to the Department of Labor and to the Office of Management and Budget, which is providing the final review for the new rule. "Publicly traded companies are rarely held accountable for the assertions they make when lobbying in Washington," the two write. "But when communicating with investors, publicly traded companies are required by law to provide full and accurate information about any material matter that may affect their business models or stock valuations." Thus, they conclude, the information these companies are providing to investors "must represent their true and accurate assessments of the impact of the proposed rule or they would be in violation of federal securities law."
In other words, believe what they're telling investors—these new rules are no big thing—instead of the sky-will-fall-in-on-us threats they're making to the regulators.
