A new Senate report alleges the Department of Laborfailed to consider recommendations from non-partisan experts at theSecurities and Exchange Commission, the Treasury Department and theOffice of Management and Budget in crafting its proposed fiduciary rule.

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It also alleges the Obama Administration was “predetermined toregulate the industry” and sought economic evidence to “justify itspreferred action,” according to a majority staff report of theCommittee on Homeland Security and Governmental Affairs.

The report comes after a year-long inquiry into the rulemakingprocess, initiated by Sen. Ron Johnson, R-Wisconsin, chair of theCommittee on Homeland Security and Governmental Affairs.

Read: For some, DOL fiduciary rule is proverbialroad to hell

Johnson was one of a handful of Republican lawmakers in bothchambers of Congress who began requesting the DOL release all ofits communications with the SEC and the White House as early asFebruary 2015, before the proposal was released.

To date, the DOL has not released the communications it sharedwith the White House to Johnson, according to the report.

The DOL did release a “limited subset of self-selectedcommunications” between Labor and the SEC, the report says.

A request for comment to the DOL as to whether or not the agencyreleased the extent of its communications with the White House andSEC was not returned before press time.

Ultimately, the SEC provided Johnson and his staffcommunications between DOL and the White House, even after Laborurged the SEC to reject the Senator’s requests, the reportclaims.

In at least two appearances before Congressional hearings lastyear, Labor Secretary Thomas Perez assured lawmakers of DOL’scoordination with the SEC throughout the rulemakingprocess.

And in a March 2015 interview with CNBC, Perez said DOL worked “very closely” withthe SEC, citing staff meetings and his own meetingswith SEC Chair Mary Jo White.

The Senate Committee report claims the communications it hasbeen able to access reveal that Labor indeed sought input from SECin crafting its proposal, but that DOL disagreedwith and ultimately ignored SEC’s input.

In November 2014 the SEC received a full version of the proposaland provided edits and comments to DOL in January 2015, about threemonths before the proposal was released in April 2015.

SEC staff identified at least 26 areas of concern in its reviewof the proposal.

Sen. Johnson’s report claims DOL “repeatedly provided anincomplete response” to SEC’s comments, “declined to accept the SECstaff’s recommendations, or incorrectly implemented the SECexpert’s recommendations,” according to the report.

Two SEC recommendations related to cost-benefit analysis ofalternatives to the rule were ignored, the report claims.

An email exchange in the report between the SEC’s then chief ofstaff and a senior counsel to Labor Sec. Perez shows Labor didimplement “several changes” to the proposal pertaining to concernsraised by the SEC, but that the SEC continued to have concernsregarding the complexity of the proposal.

Specifically, the SEC suggested Labor clarify the meaning of theterm “best interest,” language central to the proposal’s BestInterest Contract Exemption, a core provision of the fiduciaryrule.

But Labor declined that recommendation, explaining it intendedto wait for comments from stakeholders concerning specific languagechanges.

The SEC’s recommendation that DOL conduct cost-benefit analysesof alternatives to the rule, which Johnson’s report suggests arerequired by two executive orders governing regulatory procedures,were rejected by the DOL on the grounds that the qualitativeanalysis of the proposal was sufficient.

“We think this would be extraordinarily difficult and wouldappreciably delay the project for very little return,” wrote theDOL in comments to the SEC. The DOL said it would wait for feedbackfrom the OMB before undertaking further cost-benefit analyses.

A request for comment to the DOL as to whether or not theagency’s rulemaking was in compliance with relevant executiveorders was not returned before press time.

Sen. Johnson’s report also alleges the DOL ignored a criticalrecommendation from OMB’s Office of Information and RegulatoryAffairs concerning the protection of all existing compensationpractices.

The report goes on to claim that it is “difficult to concludeobjectively” that DOL fully considered comments from Treasuryregarding DOL’s authority to regulate IRAs.

That claim is made in spite of a letter Treasury’s assistantsecretary for legislative affairs sent to Sen. Johnson in December2015, which said Treasury believes DOL gave its recommendationsfull consideration.

The OMB is set to release a final rule as early as the secondweek in March, though an official date has not been set.

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