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Remarks Prepared for Delivery by
U.S. Secretary of Labor Elaine L. Chao
Signing of Memorandum of Understanding with
Securities and Exchange Commission
Washington, D.C.
Tuesday, July 29, 2008
Thank you, Brad. Welcome everyone. Chairman Cox, thank you for being here and for your leadership in ensuring the integrity of America's economic system.
We are pleased to announce that the Department and the Securities and Exchange Commission have reached an agreement to establish a formal, permanent working relationship focused on the protection of American workers' and investors' retirement savings.
This Memorandum of Understanding reflects the crucial role of 401(k) plans in the economic security of Americans as workers and as investors in the market. There are currently about 437,000 401(k)-type plans holding nearly $2.3 trillion in assets and covering an estimated 65 million workers. Clearly, we've become a nation of investors.
The Department and the SEC have a mutual interest in protecting retirement plans for American families. The Department approaches the issue from its responsibilities under ERISA focusing on 401(k) plans and participants, and the SEC from its responsibilities under the securities laws focusing on investors and the markets.
Last week the Department proposed a regulation that will require 401(k)-type plans to provide workers with concise, useful information about their plans and investment options. By presenting this basic information in a short, comparative format — instead of buried in dozens of pages of "legalese" — this regulation will give workers the information they need to make informed investment decisions. Our proposal complements the SEC's ongoing efforts to simplify information provided to investors through a summary prospectus.
Our two agencies have historically worked together on a wide variety of initiatives, including sharing enforcement information and cooperating on investigations. This informal arrangement has produced results for both agencies:
- For example, we formed an effective team to address the conflict of interest issue with pension consultants and developed guidance to help plans discover such conflicts.
- Following investigations of late trading and market-timing abuses, we coordinated legal action against several mutual funds and the subsequent distribution of recoveries to investors, including plan participants.
- Perhaps most significantly, the Department and the SEC, in cooperation with other federal agencies, recovered more than $300 million for thousands of workers as a result of our investigations into Capital Consultants.
Despite this record of success, there has never been a formal agreement between the Department and the SEC to consult and exchange information.
To strengthen our relationship, the Department and the SEC worked together to draft this MOU. It will establish the framework, policies, and procedures guiding our cooperative efforts and help us carry out our mission to serve America's workers, investors, and their families.
The agreement creates a process for the Department and the SEC to consult and exchange information about matters of mutual interest. It will expand and codify the procedures used by the Department's Employee Benefits Security Administration in accessing non-public SEC enforcement information.
This enhanced access will assist the Department's enforcement program and further strengthen the gains made by DOL/EBSA. Since 2001, EBSA has achieved monetary results of nearly $11 billion and recorded more than 800 criminal indictments. Our monetary results have consistently been double or greater than ALL those of previous administrations.
Similarly, under the agreement, the SEC will be able to receive information from the Department to the extent allowed by law. The MOU also establishes regular meetings between the two agencies and initiates joint training opportunities.
The MOU reflects the intersection of regulatory responsibilities between the Department and the SEC regarding retirement saving and investing. It underscores the close coordination between our agencies. And, it provides the Department with more effective tools for protecting the retirement security of American workers and their families.
Thank you to everyone who helped us reach this agreement. Millions of Americans depend on defined contribution-type plans for their financial independence in retirement. You have reaffirmed our commitment to those workers that the system will be fair and lawful, and that their hard-earned savings will be there when they most need it.
And now you're going to hear from someone who has made enforcement of the national securities laws a top priority, enhanced regulation of the global markets, and improved access to information for investors. Let me introduce the 28th Chairman of the SEC Christopher Cox.
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