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BLAINE LUETKEMEYER 4500 a COMMITTEE ON
MEMBER OF CONGRESS FINANCIAL SERVICES:
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1 Longo Sipe Bion Congress of the Anited States oes Noms
pale ptaneaeeni2 House of Representatives
Washington, BE 20515
"June 15, 2011

The Honorable Phyllis Borzi . 1
Assistant Secretary, Employee Benefits Security Administration = <
U.S. Department of Labor
200 Constitution Ave, NW a
Washington, D.C. 20210 *

Dear Assistant Sccretary Borzi:

Thank you for taking time to meet with Representative Clay and me carlicr this month to
discuss the U.S. Department of Labor’s (Department) proposed rule on the definition of the term
“fiduciary.” I very much value the conversation and your overall objective in forming this rulc.
T also appreciate your offer to meet with interested private sector parties. I believe it is critical
that you hear directly from both the consumers and the companies that stand to be directly
impacted by this rule.

I agree that, as in every profession, the investment advisor field is not without its share of
bad actors. While I share your perspective that it is important to protect individuals and small
businesses from malicious investment guidance, I remain concerned that your proposed rule is
unnecessarily broad and will result in many unintended consequences that will negatively impact
legitimate investment advisors and consumers alike. First and foremost, I find it troubling that
the Department is in the process of promulgating a rule that will have great bearing on an entire
industry without first having empirical data quantifying the prevalence of the issue at hand.
Without proof that this problem is indeed widespread, as you maintain, il is irresponsible to
continue on the current course.

To address your concern that little viable information has been presented from industry I
have enclosed a copy of the Oliver Wyman report, conducted on behalf of twelve retail
investment services firms and published this April. This report, sent to your Office of
Regulations and Interpretations on April 12, 2011, shows the effects of the Department’s
proposed rule on both the investment services industry and small investors. My colleagues and I
continue to hear from investment professionals that the implicit costs associated with this rule
will force many of them out of the marketplace, particularly those in rural and urban areas who
represent small dollar investors. I urge you to review this report in its entirety and take into
consideration its findings and other potential implications that the Department’s actions will have
on legitimate investment advisors and their clients across the nation.

Lastly, I have some apprehension over your comments that the Department is likely to
use its broad statutory authority to issue exemptions on a case-by-case basis after the rule is
finalized. It is worrisome that the Department is already discussing the availability of and

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‘Couumoia, MO 65203 ‘WastingTon, MO 63030 HanrasaL, MO 63401
Phone: (573) 443-1041 Puone: (636) 239-2276 Puone: (673) 231-1012

Faxc (573) 443-1050 Fax: (636) 239-0478 Fax: (873) 231-1014


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probable need for exemptions for a rule that has yet to be finalized. Additionally, I am afraid
that the current timeline will not allow for a proper review of potential new prohibitive
transaction exemptions.

Given the many outstanding questions that surround this rule I again urge you to consider
a full re-proposal. This will give the Department the time necessary to take into consideration
the broad implications of the proposal and promulgate a rule that is an appropriate response to
the problem at hand.

Again, I appreciate your time and look forward to a continuing dialogue on this important
issue. Please do not hesitate to contact me if I can provide additional information or help to

facilitate additional conversations with industry representatives.

Sincerely,

Blaine Lue eye!
Member of Congre:

ce: The Honorable Ililda Solis
Secretary of Labor

The Honorable Jacob Lew
Director, Office of Management and Budget

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