House and Senate committee leaders are calling for investigations into potentially fraudulent public comments after thousands of near-identical comments were submitted in support of Department of Labor proposals that would allow more alternative assets in 401(k) plans.
As first reported by Bloomberg, Representatives Bobby Scott (D-VA) and Jamie Raskin (D-MD) and Senator Bernie Sanders (I-VT) have requested an immediate investigation into the authenticity of the comments.
“It is imperative to find out whether federal law was
violated in this case and, if it was, ensure that those who broke the law are held accountable.”Scott, Raskin and Sanders’ letter to federal law enforcement
The comments were part of an unusually large volume of submissions made in support of the proposed rule, Fiduciary Duties in Selecting Designated Investment Alternatives. If finalized, it would significantly reshape the fiduciary framework for selecting designated investment alternatives in participant-directed retirement plans, including investments containing alternative assets.
The demands were made in a letter sent Sept. 17 to Attorney General Todd Blanche and Federal Bureau of Investigation Director Kash Patel. As noted in the letter, “It is imperative to find out whether federal law was violated in this case and, if it was, ensure that those who broke the law are held accountable.”
Scott, who serves as House Committee on Education and Workforce ranking member, and Sanders, the Senate’s Health, Education, Labor and Pensions Committee ranking member, also wrote to the DOL’s inspector general, demanding an audit take place. An additional letter was sent to DOL acting secretary Keith Sonderling, calling for further investigation.
The Democrats’ and Independent Sanders’ letters and complaints were prompted by original Bloomberg News reporting which identified almost 12,000 grassroots-styled public submissions on the proposed rule that showed clear signs of being manufactured, including many attached to the names of dead people.
The phenomenon of potentially inauthentic comments, known as “astroturfing,” has become a more common issue as government bodies deal with increasingly politicized methods taken to influence public commentary on policy. As Bloomberg noted, it has proven difficult for those governments to detect and enforce—from small-town city councils to major federal agencies.
Unusually Large Response to Proposed Rule
The DOL’s proposed rule came in response to President Donald Trump’s Executive Order 14330, which called for expanded access to private market investments and other alternative assets in retirement plans. The DOL was tasked with reexamining its guidance and clarifying its position on the fiduciary process regarding alternative assets, with process-based safe harbors created for prudently selecting those designated investment alternatives.
The proposed ruling elicited almost 50,000 total comments during a two-month comment period earlier this year. That contrasts with only 20,000 public comments made in early 2024 related to the since-vacated Retirement Security Rule: Definition of an Investment Advice Fiduciary.
Bloomberg’s forensic analysis of this year’s submitted comments found that almost 12,000 roughly followed five nearly identical templates, and were mostly submitted with few variations in text, or personalizing features including signatures or location. They had also been submitted en masse over the course of a week, and then the submissions ceased.
Scott and Sanders’ letter to Anthony D’Esposito, DOL Inspector General, said the news organization’s reporting suggested an audit of the DOL’s public comment process.
Scott, Sanders and Senator Elizabeth Warren (D-MA) have previously pressed the Trump administration to reject the alternative investments ruling, saying it lacks necessary investor protections.
Status of the proposed rule
In the meantime, the alternative assets regulation is progressing through the steps necessary to become effective. According to a Prime Capital Financial webinar earlier this week featuring noted ERISA attorney Fred Reish, DOL must consider the comments submitted through the rulemaking process as it develops any final regulation, including responding to significant issues raised by commenters. A final rule would then passed along to the White House’s Office of Management and Budget for review, typically taking about 60 days.
If DOL proceeds with a final regulation, it would generally undergo OIRA review before publication in the Federal Register. Its effective date would be specified in the final rule and could be subject to the Congressional Review Act’s 60-day waiting period if designated a major rule.
Reish said he expects the cumulative process to produce a final regulation that becomes effective toward the end of the first quarter of 2027, with significant impacts for all fiduciaries involved in selecting investments.
SEE ALSO:
• DOL Alternative Assets Rule Draws Final Industry Comments
• DOL 6-Factor Safe Harbor May Redefine 401(k) Fiduciary Duty
• DOL Unveils Fiduciary Rule Opening Door to Alternative Investments in 401(k)s