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DOL Secretary Scalia Should Recuse Himself From Participating in the Fiduciary Duty Rulemaking Process After Fighting for Years to Kill It

FOR IMMEDIATE RELEASE
Tuesday, October 29, 2019
Contact:  Christopher Elliott, 202-618-6433

Washington, D.C.  –  Dennis Kelleher, Chief Executive Officer of Better Markets, issued the following statement in response to reports that government ethics rules won’t prevent Eugene Scalia from participating in the Department of Labor’s re-write of a key investor protection rule:

“On behalf of his financial industry clients, Eugene Scalia worked overtime to weaken, gut or kill the fiduciary duty rule adopted by the Department of Labor and strongly supported by investor, consumer and retiree advocates.  After many years of careful consideration, that rule was going to save tens of millions of Americans tens of billions of dollars every year, which would otherwise go into industry pockets. 

“Scalia led the charge to kill that rule and he was successful, which was cheered by the industry.  Scalia now apparently wants to nonetheless participate in the DOL’s reconsideration and re-proposal of a new fiduciary duty rule to replace that prior rule.  The new rule is expected to be highly favorable to the industry and consistent with his prior private sector representation.  Thus, Scalia, as Secretary of the Department of Labor, would appear to be advancing the positions of his former private sector clients, creating a conflict of interest that should be prohibited.

“Nevertheless, the DOL’s lawyers have reportedly concluded that now-Secretary Scalia does not have to recuse himself from participating in that upcoming DOL fiduciary duty rulemaking.  Whether or not that is technically correct as a legal matter, it is shockingly bad policy and practice.  At the very least, it has the appearance of impropriety, something that ethics rules are also meant to prevent.  

“Such actions just feed the public’s cynicism about senior government officials doing the bidding of their former private sector paymasters rather than prioritizing the public interest.  This is a perfect illustration of why Americans look at Washington as a rigged system greased by the revolving door and cash.

“This will not only make Secretary Scalia look bad but also taint any fiduciary rulemaking by the DOL, forever casting a cloud over the resulting rule.  Secretary Scalia should voluntarily recuse himself from any direct or indirect involvement in any rulemaking related to a fiduciary duty.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

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