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Labor Pick Will Seek Ethics Advice on Brokers Conflict Rule

Associated Press

   President Donald Trump's pick for Labor secretary sought to quell
   concerns among Democrats that he's too close to the corporate world,
   telling lawmakers Thursday that if confirmed he'll ask ethics officials
   if he can participate in the crafting of a conflict of interest rule
   for stockbrokers.

   As a private sector attorney, Eugene Scalia helped undo an Obama-era
   regulation to put stricter requirements on financial professionals who
   dispense advice for retirement planning and other investments. The
   Labor Department is expected to propose a fiduciary rule that aligns
   with a new Securities and Exchange Commission measure backed by the
   financial services industry but criticized as too lax by consumer
   groups.

   During testimony before the Senate Health, Education, Labor and
   Pensions Committee, Scalia tried to assure lawmakers that his years of
   legal work for corporate clients would not influence his actions as a
   Cabinet member. He emphasized the "public trust" he embraced during the
   year he spent as the Labor Department's top lawyer during the George W.
   Bush administration.

   "I'm not necessarily my clients," Scalia said. "I will seek to defend
   them, to vindicate their rights but that doesn't mean that I
   necessarily think what they did is proper."

   But the possibility he may have to recuse himself from Labor's
   fiduciary rulemaking was a reminder that most of his career has been
   spent as a partner in the Washington office of the Gibson, Dunn and
   Crutcher firm, where he has run up a string of victories in court cases
   on behalf of business interests challenging labor and financial
   regulations.

   The government's fiduciary rules could affect how hundreds of billions
   of dollars in Americans' retirement and other investments are handled
   by brokers. Critics of the current system say investors lose billions
   of dollars a year because of advice from brokers with conflicts of
   interest.

   Obama's more stringent fiduciary duty rule required all financial
   professionals, not just registered investment advisers, to act as
   trustees obligated to put their clients' interests before their own. It
   was targeted for watering-down by President Donald Trump in early 2017
   and Scalia, representing the Chamber of Commerce and other industry
   clients, convinced a federal appeals court to throw the rule out.

   Scalia, who called the Obama rule "controversial," said he agreed that
   families who are seeking professional investment advice about their
   retirement savings should get advice in their interest, and not the
   brokers.
   "We just need to look at the arguments he's made in court and what he's
   advocated for," said Micah Hauptman, financial services counsel at the
   Consumer Federation of America. "That counts more than what he said in
   a job interview."

   Critics, supporters

   Scalia's nomination is opposed by the AFL-CIO, which has described him
   as a union-busting lawyer who has eroded labor rights and consumer
   protections. The committee's top Democrat, Sen. Patty Murray of
   Washington, called Scalia "an elite corporate lawyer who has spent his
   career fighting for corporations and against workers."

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