April 12, 2021


McHenry Calls for a Hearing on Financial Fraud & Exploitation

House Financial Services Committee Ranking Member Patrick McHenry (R-NC) requested the committee hold a hearing to investigate financial exploitation and fraud and prevention strategies. In the letter to Committee Chairwoman Maxine Waters (D-CA), Rep. McHenry noted that an increase in retail investment has come with a corresponding rise in bad actors “exploiting this increased activity for their benefit…Criminals are financially exploiting older adults through scams and cyber-attacks: roughly five million older Americans are victims of financial scams every year, losing an estimated $36.5 billion annually. Likewise, the retirement industry has seen an increase in cyber theft of personal information and savings in recent years.” The letter follows the publication of a Government Accountability Office (GAO) report on cybersecurity risks in retirement plans. The GAO report’s findings align with the results of a House Financial Services Committee Republican Staff Report on cybersecurity threats as a result of the COVID-19 pandemic. 

Increasing protections to safeguard Americans from financial exploitation and fraud remains a top priority for IRI and is an objective outlined in our Federal Retirement Security Blueprint. Last week, IRI submitted a letter of support for the Financial Exploitation Prevention Act of 2021. This bill would enable a “registered open-end investment company or a transfer agent for that company” to delay the “redemption period of any redeemable security if it was reasonably believed that such redemption was requested through the financial exploitation of a security holder who is a senior or an individual unable to protect their own interests.”

IRI will continue to monitor Congress for action and legislation related to preventing financial exploitation and fraud. 

Any questions should be referred to John Jennings.


Gensler Nomination Before the Full Senate Later this Week

The nomination of Gary Gensler to serve as the Chair of the Securities and Exchange Commission (SEC) is expected to be considered by the full Senate this week. Gensler’s nomination advanced out of the Senate Banking Committee last month by a vote of 14-10. Gensler previously served as the Chairman of the Commodity Futures Trading Commission under President Obama and, more recently, as Chairman of the Maryland Financial Consumer Protection Commission. During his chairmanship, the Maryland Commission recommended adopting an expanded definition of fiduciary, against which IRI successfully advocated. 

IRI will provide an update once the Senate votes on the Gensler nomination.

Any questions should be referred to Paul Richman or Jason Berkowitz.


IRI Joins Trades Effort on Reclassification of Independent Contractors

Last week, IRI signed onto a letter submitted to the Department of Labor (DOL) by a number of financial services and insurance industry trade associations in opposition to the proposed withdrawal of the DOL’s final rule on Independent Contractor Status under the Fair Labor Standards Act (FLSA). “Our foremost concern remains to work with the Department on promoting and protecting Americans’ financial well-being through the insurance, savings and investment, and other financial services our members provide. The work that those operating as independent contractors within our industry performs is vital to this goal.” The letter further notes that “financial professionals choosing to operate as independent contractors help generate economic growth and financial security to the local communities they serve throughout the nation.” 

The letter also comments on how the DOL’s notice of proposed rulemaking (NPRM) highlights that the economic realities test is based in established law and previous DOL guidance. Considering this, the attempt to withdraw the rule and establish a stricter ABC test in inconsistent with the DOL’s established principles.

In the last month, a letter signed by IRI President and CEO Wayne Chopus and a dozen other joint trades chief executives was transmitted to Congressional leadership expressing concerns with efforts to redefine “independent contractors” under H.R. 842, the Protecting the Right to Organize (PRO) Act. The letter highlights the disruptions the legislation would have on independent advisors and the clients they serve by eliminating the advisor’s choice to function in that capacity.

IRI will continue to monitor for federal action that would impact the classification of independent advisors.

Any questions should be referred to Emily Micale or John Jennings

Nebraska Standard of Conduct Approved by Governor 

Nebraska LB22, updating the suitability in annuity standards, has been approved by Governor Ricketts. IRI supported the legislation. The bill goes into effect on July 1, 2021. IRI will work with the Department of Insurance on the implementation of the new standards. 

Any questions should be referred to Jason Berkowitz

Eric Dunning Named Nebraska Insurance Director

Last week, Eric Dunning was named as the new director of the Nebraska Department of Insurance. Dunning currently serves as the Director of Government Affairs for Blue Cross and Blue Shield of Nebraska. He was previously an attorney within the state department for 15 years. He will be replacing Bruce Ramge, who is retiring this month after a decade as the director.

Governor Pete Ricketts (R-NE) said “he is a highly respected leader in our state’s insurance industry,” and “under Eric’s leadership, Nebraska’s regulatory climate for insurers will continue to be a model for states across the nation.”

Any questions should be referred to Jason Berkowitz.