Check your 401(k)'s fine print! Because now Biden wants to raid YOURS

[1srelluc]

linky

Check your 401(k)'s fine print! Because now Biden wants to raid YOURS to fund net zero and 'diversity'. But why should his woke agenda put your retirement at risk, demands ANDY PUZDER

"The evening before Thanksgiving to avoid unwanted attention, Biden's Department of Labor released an Orwellian new rule misnamed 'Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.'

Don't let the mind-numbingly bureaucratic gobbledygook distract you.

The rule interprets a law that requires fund managers make investment decisions for the sole benefit of the Americans who depend on those assets.

That's certainly both a good and reasonable policy. And at one time, it was bipartisan.

Congress passed ERISA (the Employee Retirement Income Security Act) in 1974. The law makes it crystal clear that those managing such assets must do so 'solely' in the interest of and for the 'exclusive purpose' of 'providing benefits to participants and their beneficiaries.'

This patently clear language provides no basis for investing assets to prioritize say saving the planet, achieving 'equity,' or in any way advancing wokeism.

Well, enter the Biden Administration and 'environmental, social and governance' or ESG investing.

ESG is a set of ill-defined, non-financial investment criteria used to screen potential investments based on how well a company is pursuing certain social or political goals.


OK.....First off allowing companies to select 401(k) options that focus on ESG isn't the same thing as raiding your account.

However the slope is slippery, very slippery, and I believe it was Trump who made it so that ESG couldn't be a factor in the responsibilities of a fiduciary.

But hey, no more mean tweets right?

 

[Manonthestreet]

Mine is self directed.

 

[Seymour Flops]

OK.....First off allowing companies to select 401(k) options that focus on ESG isn't the same thing as raiding your account.

It is not exactly the same in the sense that nothing is ever the same an something else. But ethically and practically, it amounts to the same. The Biden administration would gleefully reduce the value of American investors' investments, if it would further their social agenda. In effect, that would force Americans to spend their money on these agenda items.

Just like we have to watch our social security "investments" be turned over the the treasury in return for worthless bonds.

With the rule having such a gobbledy gook name, no doubt it is filled with gobbledy gook language, any sentence of which could be interpretted in several different ways. So fund managers will have to figure out, not what the law actually says, but what actions would cause or prevent investigations by the SEC.

Why fear the SEC? Here is what the SEC brags about:

Enforcement Results for FY22​

The Securities and Exchange Commission filed 760 total enforcement actions in fiscal year 2022, a 9 percent increase over the prior year.

These included 462 new, or "stand alone," enforcement actions, a 6.5 percent increase over fiscal year 2021; 129 actions against issuers who were allegedly delinquent in making required filings with the SEC; and 169 "follow-on" administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders.

The SEC’s stand-alone enforcement actions in fiscal year 2022 ran the gamut of conduct, from "first-of-their-kind" actions to cases charging traditional securities law violations.

Money ordered in SEC actions, comprising civil penalties, disgorgement, and pre-judgment interest, totaled $6.439 billion, the most on record in SEC history and up from $3.852 billion in fiscal year 2021. Of the total money ordered, civil penalties, at $4.194 billion, were also the highest on record. Disgorgement, at $2.245 billion, decreased by 6 percent from fiscal year 2021. Fiscal year 2022 was the SEC’s second highest year ever in whistleblower awards, in terms of both the number of individuals awarded and the total dollar amounts awarded.

"First of their kind actions," means that there was no precedent for a case, but the went ahead and pushed it anyway. So fund managers are left to guess what might lead to such an action. They are not stupid. They know that they will not be investigated by the SEC for choosing Environmental-Social-Governance goals over investors' financial security. But they run a risk if the choose investers' financial interests over the social goals of the Biden administration.

The fund managers won't be harmed, no need to cry for them. It is their investors that will be the unwitting victims. Those managers will never send a letter to their investors saying, "BTW, I'll have to not worry so much about you making money. To keep my ass out of a sling, I'll have to focus a lot more on Biden administration social goals."

Like my 401k hasn't taken enough of a beating under the Democrats as it is . . .

More fodder for GOP congressional investigation. But we know how that will go:

GOP Congressman: Madam SEC Chair, when a fund mana . . . sorry . . . Mixem SEC Chair . . . when a fund manager chooses a stock in which to invest a client's money, what should take priority, the potential of the stock to grow and/or pay dividends, or the degree of the company's social responsibility?

SEC Chair: Thank you for the question, congressman. The SEC expects all fund managers to act in the best interest of their clients, and to manage the funds accordingly.

GOP Congressman: We have been given an internal memo by a whistle blower in which you direct your agents to quote diligently seek and prosecute to the fullest extent fund managers who choose companies that put profit over planet, earnings over equity, and greed over governance, unquote. What exactly did you mean by that?

SEC Chair: Congressman, thank you for the question. I cannot comment by law on internal deliberations, nor internal memos that may or may not have come from my office.

GOP Congressman: Really? "By law?" What law is that exactly?

SEC Chair: Congressman, that was the advice of SEC legal counsel, and I would refer you to them for any legal questions.

GOP Congressman: And they will of course claim attorney-client privilege. My time is up, Mr. Chairman.

Eh . . . maybe if the American people start tuning in to those hearing, they will finally realize how they are being buffaloed.

However the slope is slippery, very slippery, and I believe it was Trump who made it so that ESG couldn't be a factor in the responsibilities of a fiduciary.

But hey, no more mean tweets right?

Yes, Trump did. No doubt this new guidance is intended to turn that on its ear.

 

[1srelluc]

Yes, Trump did. No doubt this new guidance is intended to turn that on its ear.

The leftists leave no stone unturned to negate anything and everything Trump did to thwart the leftist agenda.

 

[Harpy Eagle]

However the slope is slippery, very slippery, and I believe it was Trump who made it so that ESG couldn't be a factor in the responsibilities of a fiduciary.

What the Trump admin did was to force retirement plan fiduciaries to base their investment decisions only on traditional financial factors, not allowing them to use ESG at all, which is just as wrong as forcing them to use it.

 

[1srelluc]

What the Trump admin did was to force retirement plan fiduciaries to base their investment decisions only on traditional financial factors, not allowing them to use ESG at all, which is just as wrong as forcing them to use it.

Which is just as wrong as forcing them to use them.

Seems the correct decision now.

 

[Harpy Eagle]

Seems the correct decision now.

Nope. Still not correct. If I want my retirement plan manager to be able to use ESGs as part of their calculations they should be allowed.

The Govt forcing either is wrong.

 

[Seymour Flops]

What the Trump admin did was to force retirement plan fiduciaries to base their investment decisions only on traditional financial factors, not allowing them to use ESG at all, which is just as wrong as forcing them to use it.

Disagree, Sir! Unless you are truly making a rare libertarian argument that government should have no role in regulating 401k’s

Since they are regulated by the nature of getting a special tax break, I see nothing wrong with regulating them so that they are used for their intended purpose, which is to help taxpayer to have a retirement savings and investment plan apart from the hideous Social Security that pays a huge negative return.

The typical 401k investor does not want or expect that their retirement savings will be used to advance the Democratic Party Woke agenda. The investment managers are damn sure not going to tell them they are using them for that purpose, no matter what their reason for doing it is.

 

[Harpy Eagle]

The typical 401k investor does not want or expect that their retirement savings will be used to advance the Democratic Party Woke agenda. The investment managers are damn sure not going to tell them they are using them for that purpose, no matter what their reason for doing it is.

And if the 401k investor does not want ESG to be taken into account they can tell their manager not to. But there should be no law/rule that keeps a said investor from telling their manger to take them into account.

I get that because you do not want them to you think everyone else is the same way, but not everyone thinks just like you...shocking as that is to you.

 

[Seymour Flops]

And if the 401k investor does not want ESG to be taken into account they can tell their manager not to. But there should be no law/rule that keeps a said investor from telling their manger to take them into account.

Totally agree for a non-subsidized investment portfolio. If we are subsidizing tax breaks to help people save for retirement then we need to make sure the savers are not taken advantage of for a political goal.

 

[Seymour Flops]

I get that because you do not want them to you think everyone else is the same way, but not everyone thinks just like you...shocking as that is to you.

I .get that you respond to the most respectful of disagreement with yet another personal attack. You were not this way before you became a Bidenista.

 

[Harpy Eagle]

If we are subsidizing tax breaks to help people save for retirement then we need to make sure the savers are not taken advantage of for a political goal.

Again, you want Big Govt to tell someone what they can and cannot do with their 401k based only on the fact you disagree with it.

I .get that you respond to the most respectful of disagreement with yet another personal attack.

You started it and now whine like a 2 year old.

Grow up

 

[Seymour Flops]

Again, you want Big Govt to tell someone what they can and cannot do with their 401k based only on the fact you disagree with it.

Wrong. I want government to make sure a federal program is administered in the interests of those who fund it.

You started it and now whine like a 2 year old.

Grow up

"You started it," followed by "grow up?" You can't parody a Democrat.

 

[Harpy Eagle]

Wrong. I want government to make sure a federal program is administered in the interests of those who fund it.

And those who fund it are the investors, why should they not be allowed to do what an investor wants other than you do not agree with it

"You started it," followed by "grow up?"

Yep, you do this almost every discussion, you throw out the first job and then whine like a 5 year old when you get back what you gave.

 

[Seymour Flops]

And those who fund it are the investors, why should they not be allowed to do what an investor wants other than you do not agree with it

Because if they follow a woke agenda instead of making money the old fashioned way they are extremely unlikely to be doing what the inverter wants and definitely not following the law that authorizes taxpayer funded subsidies to help people invest for retirement.

Yep, you do this almost every discussion, you throw out the first job and then whine like a 5 year old when you get back what you gave.

What was the "first jab" of this thread I wonder?

 

[Harpy Eagle]

Because if they follow a woke agenda instead of making money the old fashioned way they are extremely unlikely to be doing what the inverter wants and definitely not following the law that authorizes taxpayer funded subsidies to help people invest for retirement.

Once again, it is my view if the investor ask for it, their 401k manager should be allowed to use ESG as part of their calculations. You want the Govt to take this right away from the individual investor.

It is just something we will never see eye to eye on.

 

[Seymour Flops]

Once again, it is my view if the investor ask for it, their 401k manager should be allowed to use ESG as part of their calculations. You want the Govt to take this right away from the individual investor.

The government gave "rights" (priveleges, actually) under a federally funded program called 401k that creates a benefit for investers with a substantial burden to taxpayers. The taxpayers most relatively burdened are often those who cannot afford a 401k.

It is important then that such a program be used for its intended purpose and not co-opted for another.

That program's purpose is to help and encourage people to save and invest for retirement, not to further political goals. That's why its law requires fund managers to manage funds to increase their monetary value.

You are more than welcome to invest your own money in corporations who put wokeness ahead of profits. It might be more efficient to invest in profit making funds and donate the profits to woke causes. But your money your choice.

Since 401k funds are subsidized by tax breaks, you have to play by the rules.

If the rules are changed to allow woke investments rather than financially sound investments, how long before the failing woke corporations and the failing woke managed funds ask for bailouts, again at taxpayer expense?

It reminds me of a cartoon I saw in high school government. Three grinning politicians surround a nest with eggs. The caption "You have to break some eggs to make an omelette." The eggs were each labelled "nest egg."

It is just something we will never see eye to eye on.

Agree to disagree, then.