A Coalition of Attorneys General Opposes Risky Investment Proposal
Auckland — California Attorney General Rob Bonta, alongside a coalition of 23 other attorneys general and the Pennsylvania Department of Labor and Industries, has voiced opposition to a proposal from the Trump Administration that could threaten the retirement savings of millions of Americans. In a letter submitted to the U.S. Department of Labor, the coalition contends that the proposed regulations would endanger workers and retirees by increasing their exposure to high-risk alternative assets, such as cryptocurrencies and private credit. These investments, often poorly understood by average investors, could lead to significant financial setbacks. The department estimates that under these rules, $178 billion from 4.5 million workers and retirees could be funneled into such risky investments annually.
“Americans who work hard deserve the right to retire with dignity and maintain a stable financial future,” Bonta remarked. “The proposed changes by the Trump administration would put workers’ and retirees’ savings at risk, leading them to potentially disastrous investments at a time when they should be enjoying their retirement.” He called on the administration to retract the proposed rule and maintain sensible standards that protect workers and retirees.
Since the enactment of the Employee Retirement Income Security Act of 1974, a strong standard of prudence has been outlined for fiduciaries managing 401(k) plans. This rule mandates that fiduciaries select and monitor investment options cautiously to secure the plans that workers count on for their retirement. Courts have long recognized the importance of skill and caution in managing these savings.
If fiduciaries fail to comply with established legal standards, they may face legal actions from workers and retirees, who have the right to hold them accountable for poor investment choices. The proposed rule could create a loophole preventing courts from examining whether fiduciaries are making prudent investment decisions for retirement funds. The department acknowledged that these changes might redirect many retirement savings away from traditional stocks and bonds and toward riskier options like cryptocurrencies.
The coalition’s letter argues that this proposed rule shifts financial risk from fiduciaries directly onto workers, ultimately harming states and their residents. The letter highlights that a loss in retirement income could compel workers to stay in jobs beyond retirement age, putting their health and well-being at risk. Seniors facing diminished retirement savings might also have to depend on federal and state assistance programs.
In addition to Attorney General Bonta, the coalition includes attorneys general from Arizona, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Wisconsin, as well as the attorney general of Pennsylvania.
