Recently, two Democratic members of the US Congress, Bobby Scott from Virginia and Jamie Raskin from Maryland, along with Senator Bernie Sanders from Vermont, sent a letter to Attorney General Todd Blanche and FBI Director Kash Patel, urging them to investigate public feedback on a proposed rule by the Department of Labor (DOL).
The proposed regulation by the Department of Labor, released at the end of March, argues that Americans with 401(k) retirement plans are missing out on the investment returns and portfolio diversification advantages that private equity and hedge funds can offer, assets that have long been pillars of public retirement fund portfolios.
In response, the proposed rule sets up a “safe harbor” provision for employers: if they offer such investment products (which may come with higher risks, costs, and lower liquidity), they can be protected under this provision even if faced with lawsuits alleging breaches of fiduciary duty.
The lawmakers’ letter dated September 17th (Thursday) referred to recent reports by Bloomberg.
According to the media report, among the nearly 12,000 public comments supporting this proposed rule, there were indications that some feedback might be artificially manufactured to create an illusion of “grassroots support,” with at least two comments appearing to be submitted under the names of deceased individuals.
During the two-month feedback collection period, the Department of Labor received around 47,000 comments on the proposal. Bloomberg analyzed these comments and found that nearly 12,000 lacked any personalized information (such as signatures or locations), with identical content using 5 different templates. The volume of comments received by the Department of Labor remained consistent for a week in the spring, followed by a sudden cessation of submissions.
Bloomberg reporters contacted over twenty organizations supporting the proposal, but none could explain who orchestrated the language used in this activity. By utilizing public records, reporters identified over 30 individuals who signed the comments among the nearly 12,000, and attempted to reach out to them, with 5 individuals vehemently denying any connection to the submitted comments.
Bloomberg reported that there were no signs of “astroturfing” in the public comment collection effort.
Scott, Raskin, and Sanders wrote in their letter, “This situation is deeply concerning. The priority is to determine whether this case violates federal law; if there are illegal activities, the perpetrators must be held accountable.”
Scott and Sanders are senior members responsible for overseeing committees for the Department of Labor and the Department of Justice, respectively, and they also separately wrote to the Inspector General of the Department of Labor, requesting an audit of the proposed rule.
Scott also individually wrote to Acting Secretary of Labor Keith Sonderling, urging an investigation into the matter.
The alternative asset management industry (specializing in managing investments outside traditional publicly listed stocks, fixed-income bonds, or cash) has actively lobbied for this regulation, aiming to manage approximately $10 trillion in retirement account funds.
Last month, a Department of Labor spokesperson declined to disclose to Bloomberg whether they would investigate the public feedback, stating that the agency “focuses on the substance of the opinions, rather than the personal identities of the comment submitters, and is not concerned with how many individuals express the same viewpoint.”
(This article referenced reports by Bloomberg)