Battle Continues Over Fiduciary Rule for Retirement Investments

Fight centers over whether proposed regulatory proposal is truly in retirees’ best interest

PHOTO: CHRISTINE GLADE/GETTY IMAGES

By

DAISY MAXEY

June 14, 2015 11:13 p.m. ET

24 COMMENTS

Of all the regulatory battles in Washington, one in particular could affect the retirement savings of millions of investors for years to come.

At the center of the conflict is a proposal by the Department of Labor that it says offers a new level of protection for investors in their dealings with brokers and other financial professionals who give advice on retirement accounts and defined-benefit plans. The proposal would require these professionals to always act in the best interest of their clients. The so-called best-interest standard is known as a fiduciary duty.

Financial advisers registered with the Securities and Exchange Commission already are held to this standard. But brokers for the most part are held to a standard of “suitability,” which requires them to reasonably believe that any investment recommendation they give is suitable for an investor’s objectives, means and age.

JOURNAL REPORT

• Insights from The Experts
• Read more at WSJ.com/WealthReport

MORE IN WEALTH MANAGEMENT

• What Keeps People From Smart Investing
• Popular Tax Deductions Remain in Limbo
• Why People Don’t Buy Long-Term-Care Insurance
• Expats: How to Take Advantage of a Strong Dollar

Consumer advocates say that because of the lack of a fiduciary standard, stock brokerages, insurance firms and other financial-service providers for years have recommended investment products that line their own pockets with fees and commissions instead of giving customers options that could be less expensive and provide better returns for their retirement savings. The fiduciary proposal, these consumer advocates say, would close regulatory loopholes that make such behavior possible.

Reliance on professionals

“As a matter of policy, we have chosen to put the responsibility for saving for retirement on individuals who don’t have the financial sophistication to make sound investment decisions on their own,” says Barbara Roper,director of investor protection at the Consumer Federation of America, a nonprofit in Washington, D.C. “They rely on financial professionals to help them with these decisions, and they desperately need advisers who serve their best interest.”

If adopted, the proposal would have a big impact on large parts of the financial-services industry, particularly brokers and insurance agents who sell retirement products. In addition to affecting product recommendations, it would require that professionals act in clients’ best interest when offering advice on distributions from retirement plans and the investment of assets to be rolled over or distributed from plans or IRAs.

The proposal also would help clarify the advisory landscape for investors who are confused by stockbrokers who call themselves advisers but who needn’t act in their clients’ best interest, backers of the proposal say.

The Labor Department says a review of academic literature provided by the White House Council of Economic Advisers suggests that advice from professionals who have a financial incentive to put investors in a specific product takes a $17 billion bite out of the retirement savings of working- and middle-class families each year. Such conflicts of interest in the mutual-fund segment alone could cost IRA investors more than $210 billion over the next 10 years and nearly $500 billion over the next 20 years, the department says.   

 

Full transcript of judge’s luggage rant at British Airways lawyers emerges

Jul 29 2015 9:45am 34

By Jonathan Ames 

 

Editor's note: Justice Smith is Your ProbateShark's kind of judge.  If  Cook County had a judge as Justice Smith, the crooked Probate Court would be cleaned up super fast.  Lucius Verenus, Schoolmaster, ProbateSharks.com                                            

• 196
• 74
• 25
• 0
• Total: 295

What appears to be court stenographer’s note appears online after Mr Justice Peter Smith stands up for airline passengers everywhere
A document appearing to be the full transcript of a judge’s bench badgering of British Airways over his lost luggage has emerged.
Fleet Street last week cast the Chancery Court’s Mr Justice Peter Smith — whom The Times newspaper described as “one of the legal profession’s more colourful figures” — as the common air travellers hero after he castigated lawyers for the “world’s favourite airline”.
But the bench-slapping had nothing to do with their submissions in the £3 billion lawsuit Smith was hearing — a spat in which BA was accused of colluding to fix air cargo charges. Instead it related to an entirely unrelated incident which had seen Smith’s luggage go missing on a BA flight during a recent trip to Italy.
Legal Cheek cannot verify the authenticity of the document that is doing the rounds of legal London. However, it appears to be a comprehensive transcript of the court stenographer’s note.


http://www.legalcheek.com/2015/07/full-transcript-of-judges-luggage-rant-at-british-airways-lawyers-emerges/

New Assisted Living Regulations Go Into Effect

By Rebecca J. Benson

Effective July 1, 2015, Massachusetts assisted living residences (ALRs) are subject to new regulations of theExecutive Office of Elder Affairs (EOEA). The ALR regulations were last revised in 2006. The new regulations are intended to enhance the safety of the residents in the state's 236 facilities. Changes to the regulations address controlled substances, screening and assessment, training, and incident reporting. Among other things, ALRs are now required to develop detailed safety and evacuation plans to protect residents in the event of a disaster.

In an effort to promote residents' right to self-determination, ALRs are now required to document, upon admission, whether residents have advance directives in place for finances and health care. ALRs must also distribute information about a full range of end of life treatment options to residents with serious advancing illness or for whom palliative care would be helpful. These regulations will enhance residents' rights to control their personal finances and health care. They will also ensure that ALR residents have access to a full range of palliative care options.

Several of the new requirements apply specifically to so-called memory care units, known as "Special Care Residences," which serve the most vulnerable ALR residents - those with cognitive impairment. For example, providers must provide structured activities for memory impaired residents, address the residents' physical safety needs and provide a secure outdoor space for their residents.

The proposed regulations included a provision that prohibited ALRs from allowing residents with "Skilled Nursing Care" needs to age in place. During EOEA's public comment period, the National Academy of Elder Law Attorneys, along with other advocates and consumers, unanimously opposed this proposed change. Among other thing, the proposed regulation was unlikely to benefit ALR residents but risked confusing and intimidating residents and their families. To the extent that it infringed on the rights of ALR residents to contract for services and age in place to the same extent as persons living in private homes, the proposed regulation ran afoul of the state's ALR statute and regulations, as well as the Americans with Disabilities Act. Fortunately, it was deleted from the final regulations.

By nearly any measure, sunny South Florida is tops in fraud

By nearly any measure, sunny South Florida is tops in fraud from ID theft to mortgage scams

 

By Curt Anderson, AP Legal Affairs Writer22 hours ago

• 
• 
• 
• 

0:17

 

Yahoo Finance: Investing

 

• 
   
  
  

  2:22

  NOW WATCHING
   
  South Florida: Fraud Central

  6,300 views
• 2
   
  
  

  2:32

  
  
   
  Expedia, Orbitz deal likely not getting DC approval: UBS
• 3
   
  
  

  1:18
   
  Twitter drops as Yelp hits 52-wk low; Buffalo Wild Wings soars
• 4
   
  
  

  3:32
   
  Fed on verge of policy change like MLB in midsummer
• 5
   
  
  

  2:38
   
  Still not time to invest in gold: investment strategist
• 6
   
  
  

  1:15
   
  UPS delivers on profit; Baidu disappoints; Blackberry upgraded
• 7
   
  
  

  3:42
   
  Time again for investors to list “hierarchy of fears”
• 8
   
  
  

  2:48
   
  Gilead Sciences and Humana earnings preview
• 9
   
  
  

  2:19
   
  Why UBS is bullish on Twitter and Facebook ahead of earnings
• 10
   
  
  

  2:55
   
  Twitter and Facebook light up social media earnings

Editor's note: Your ProbateShark believes that the Irving Faskowitz Florida Estate was pillaged because of the fertile corrupt environment that exists in Florida. Lucius Verenus, Schoolmaster, ProbateSharks.com

 

MIAMI (AP) -- Psssst — Need a phony ID? A fraudulent tax refund? Insurance money from a sham car crash? Florida may have just what you're looking for.

Since the first settlers hacked their way into the mangrove tangles and drained much of the swampland, sunny South Florida has been virtually synonymous with shady deals and scams.

Over the past decade or so, the three most populous South Florida counties — Miami-Dade, Broward and Palm Beach — have become less renowned for old-school "Miami Vice"-style drug shootouts than for scammers stealing hundreds of millions from the government, banks and individuals by using laptops, stolen identities and fake medical procedures.

The endlessly creative crooks come up with fake Jamaican lotteries, false marriages for immigration purposes, mediocre seafood marketed as better seafood, insurance rip-offs from fake accidents and fires — even foreign substandard cheese passed off as domestic top shelf. But the big money is in a trio of major fraud trends: Medicare, mortgage and identity theft-tax refunds.

By almost any measure, South Florida is the nation's organized fraud capital, although authorities say it's not entirely clear why.

"Is it the weather? Is it because it's beautiful and the fraudsters want to live here? Is it because it's such a melting pot and you have organized crime from all ethnic groups?" said Kelly Jackson, top agent in the Internal Revenue Service's criminal investigative division in South Florida. "Any fraud, it always seems to start here."

Take the most popular current trend: identity theft coupled with income tax fraud. According to the Federal Trade Commission, Florida ranks first in identity theft complaints at about 193 per 100,000 residents in 2013. But that's dwarfed by the greater Miami area, which had 340 complaints per 100,000 residents that year.

The number of false federal income tax returns, meanwhile, is 46 times the national average in South Florida, according to a Treasury Department report.

George Piro, special agent in charge of the FBI's South Florida office, said in many cases criminal organizations are shifting from violent crimes to those involving mostly digital data.

"Identity theft, the fastest growing crime here, is as easy as one, two, three. One, criminals steal someone's name and Social Security number. Two, they use that identity to file a fraudulent tax return online. And three, they collect the refund check. Repeat thousands of times," Piro said.

Criminal organizations have used people from all walks of life to steal identities: hospital workers, prison employees, high school cafeteria workers, people at state agencies and assistants in law offices.

It's even become dangerous to be a letter carrier, because mail is great way to steal identities. The U.S. Postal Inspection Service is offering a $50,000 reward for information leading to the arrest and conviction of anyone involved in 13 recent robberies of letter carriers in South Florida. One was slain in 2010 for his mailbox key.

Nationally, the Treasury Department's Inspector General for Tax Administration estimated in April that in 2012 more than 787,000 potentially undetected fraudulent tax returns were filed totaling more than $2.1 billion in refunds.

View gallery

FILE - In this May 2, 2012, file photo, Federal agents with the Office of Inspector General load co …

"The number of stolen identities and the dollar amount of the tax fraud involved in these cases is staggering," said Miami U.S. Attorney Wifredo Ferrer.

The lure of stealing huge amounts of government money also drives fraud in the Medicare program, which provides services to America's elderly. Since 2007, nine regional "strike forces" of the Justice, Treasury and Health and Human Services departments have charged about 2,300 people who had falsely billed Medicare for $7 billion.

The South Florida unit's share of that? More than 1,500 defendants through last September.

Stealing from Medicare can require a large organization: crooked doctors, people to handle the billing, patients willing to accept kickbacks, and so on.

Among those recently charged is Dr. Salomon Melgen, a prominent Palm Beach County eye doctor also accused in a corruption indictment with his friend, New Jersey Democratic Sen. Bob Menendez. Melgen, who has pleaded not guilty in both cases, stands accused of falsely diagnosing patients with eye conditions and performing unnecessary procedures to bilk Medicare out of as much as $105 million.

Meanwhile, since at least 2009, Florida has led the nation in mortgage fraud as a percentage of the number of loans originated, according to the LexisNexis research company. The company reports that a financial industry index of mortgage fraud ranks the South Florida metropolitan area No. 1 nationally, with 12.3 percent of all such fraud reports in 2013, the most recent year available.

A trio of recent guilty pleas shows how a typical scheme works. Hector Hernandez, 57, admitted in court that his company, Great Country Mortgage Bankers, paid kickbacks to borrowers whose applications for Federal Housing Administration loans were falsified so they would qualify. Great Country would then sell the loans to banks and other institutions for a profit.

In all, Great Country stole $64 million. To date, 25 people have pleaded guilty in the scam.

Paul George, a Miami-Dade College history professor who specializes in South Florida, noted that the region's reputation as a haven for schemers dates to the land speculation boom of the 1920s, when alligator-infested swampland was marketed to Northerners as a slice of tropical paradise. Today, with the area such a melting pot, it's no wonder South Florida is also a cauldron of creative crime, he said.

"It goes back to the roots of Miami. It's always been a place for starting over again," George said. "People move here either from the north or the south. People have some anonymity, maybe they think they can pull off something here."

___

Follow Curt Anderson on Twitter: http://twitter.com/Miamicurt