Washington, DC-  Representative Edward Markey (D-MA), a senior Democratic Member of the House Energy and Commerce Committee, and Rep. George Miller, the Ranking Democratic Member of the House Education and the Workforce Committee, today issued the following statements in response to confirmation that Wilshire Associates received a subpoena from the Department of Labor (DOL) in connection with DOL’s investigation of conflicts of interest among investment consulting firms. 

Rep. Markey said, “The subpoena of Wilshire Associates, which also provides consulting services to the Pension Benefit Guaranty Corporation (PBGC), raises questions about whether pension funds under the control of the Federal Government are being properly managed.  Rep. Miller and I intend to seek further information about Wilshire’s work for the PBGC.  Last year, Rep. Miller and I asked the Government Accountability Office (GAO) to investigate problems with government regulation and enforcement of pension statutes, including whether the PBGC currently, or in the past, employs any consultants the Securities and Exchange Commission (SEC) has identified as having potential conflicts of interest.  The GAO investigation is ongoing, and I look forward to the results.”

Rep. Miller said, “Hopefully the DOL’s subpoena signals their serious commitment to uncovering more information about how troubling and significant conflict-of-interest issues within the pension plan consultant industry can affect the financial health of pension plans. With massively under-funded plans, like those at United Airlines, being terminated and dumped onto the PBGC, the PBGC cannot afford to turn a blind eye to the practices of its pension consultants.  Rep Markey and I urge the PBGC to disclose all relevant information about the services it was provided by Wilshire, and examine whether there were conflicts of interest or unlawful management of terminated plans for which Wilshire may have consulted.  As the GAO investigation continues, the DOL and SEC must also continue to look into these practices at Wilshire and other pension consulting firms, so we can guard against this kind of foul play and make pension plans whole – both before and after termination.”

After the Securities and Exchange Commission (SEC) released its May 2005 report that found significant conflicts of interest within the pension consulting industry, Reps. Markey and Miller wrote to SEC Chairman Cox and DOL Secretary Chao to request specific information about the report, including what, if any, action the SEC and DOL have taken to notify the clients of the firms determined to have conflicts uncovered by the report. The Congressmen also urged the Department of Labor to initiate a full-scale audit of the financial circumstances surrounding the failure of United Airlines to meet its pension obligations to its employees and retirees.  In response to the Miller-Markey inquiry, the Labor Department reported that “EBSA enforcement officials are currently reviewing the documents to determine what DOL investigative action may be necessary.  Based on this review, several matters have been referred to EBSA regional offices for investigation.”

Rep. Markey concluded, “The SEC report released in May 2005 exposed a disturbing pattern of conflicts of interest in the pension consulting industry.  For many workers and retirees across the country, the promised pension benefits they earned over the course of their careers have been substantially reduced or eliminated.  I am hopeful that the Labor Department’s subpoena of Wilshire Associates will signal the start of a sweeping, systematic movement by the Department and SEC to bring enforcement actions across the pension consulting industry whenever it is determined that advice provided by consultants is colored by conflicts of interest, rather than provided objectively in fulfillment of fiduciary duties. “

For a copy of Rep. Markey’s and Rep. Miller’s correspondence with SEC, DOL and GAO on this issue, visit http://markey.house.gov

 Copy of Original Letter to DOL and SEC, August 12, 2005
 Copy of Letter from Securities and Exchange Commission, September 1, 2005
 Copy of Letter from Department of Labor, February 1, 2006