The Attorney General Has Been Busy

I continue to be pleasantly surprised at how progressively proactive our Attorney General has been. Over the last few weeks, Attorney General Kathy Jennings has filed suits against the wealthy family behind Purdue Pharma over their role in the opioid crisis, against the Securities & Exchange Commission (SEC)’s for failing to provide basic investor protections that were laid out in the 2010 Dodd-Frank Act, and warned students against for profit companies offering for sale rape evidence kits.

First, on behalf of the State of Delaware, she has sued the Sackler family in the Delaware Superior Court, alleging that they, as the owners of the opioid manufacturer Purdue Pharma, falsely and deceptively marketed opioids to pharmacies, doctors and unsuspecting patients. “The Sacklers have blood on their hands,” said Attorney General Jennings. “More than 1,400 Delawareans suffered fatal drug overdoses from 2014 to 2018, and nearly 200 Delaware lives have been claimed by addiction this year alone.  We cannot bring back the loved ones, friends and neighbors who have been taken by the opioid crisis—but we can and must seek justice and accountability for the victims of the Sacklers’ avarice, callousness and fraud.” Delaware, under AG Jennings, had already filed suit against Purdue Pharma and other drug companies in the opioid supply chain for their role in the opioid crisis.  That case is also pending in the Delaware Superior Court.

Second, Jennings joined a coalition of eight attorneys general from around the nation to file a federal lawsuit challenging the Securities & Exchange Commission’s “Regulation Best Interest” for failing to provide basic investor protections that were laid out in the 2010 Dodd-Frank Act. 

“Thousands of Delawareans entrust their financial futures to broker-dealers and trust that they are receiving the best investment advice possible,” said Jennings. “But the federal agency responsible for protecting investors has failed to follow Congress’ direction to ensure that broker-dealers are held to the same high fiduciary standard that investment advisors must follow under federal law.  Investors deserve to know that whomever they seek investment advice from will be acting in their best interest.  The SEC’s misleadingly named regulation fails to do that.  Investors deserve better from the SEC; we’re fighting to make sure they get it.”

While many investors believe that brokers must place investors’ interests first, federal law has generally only required that broker-dealers’ recommendations be “suitable” with respect to the investor’s objectives, meaning that a broker could sell an investor a lower-quality, higher-cost investment as long as that investment otherwise met the investor’s investment objectives. That changed in 2010, when the Dodd-Frank Act authorized the SEC to draft regulations to impose a uniform fiduciary duty on broker-dealers and investment advisors, and require that their recommendations be made “without regard” to their own interests. This uniform fiduciary duty would ensure that investors were protected and treated fairly.

However, in June, under the direction of the Trump Administration, the SEC adopted Regulation Best Interest, which, according to the agency, is supposed to investor confusion concerning the standards of care applicable to broker-dealers providing investment advice. Here is a shock: it doesn’t. First, the regulation fails to meaningfully elevate broker-dealer standards beyond their existing suitability requirements. Second, Regulation Best Interest is likely to produce continued investor and industry confusion because it relies on a vague “best interest” standard and leaves key terms undefined. 

Third, last week, Jennings released the following statement regarding reports of “at-home” sexual assault kits being marketed to universities and sexual assault survivors:

Our office has been made aware of a new company selling sexual assault evidence kits for “at-home” use, seemingly targeted at college students. I empathize with survivors’ vulnerability and desire for privacy, but I am extremely skeptical of any business that would charge for evidence kits that are available for free in Delaware. I am concerned that this business disrupts a continuum of care that connects survivors with free, professional medical and mental health evaluations and treatments. And I am disturbed that this company’s inability to answer basic evidentiary questions could undermine our ability to prosecute rape. Securing justice and proper care for survivors is one of our highest priorities, and evidence collection is too important to that process to be used as a business opportunity. Survivors of sexual assault can receive free medical care from trained, professional Sexual Assault Nurse Examiners in Delaware hospitals, and can find victim services and crisis support resources at https://dvcc.delaware.gov/victim-service-resources/.

Finally, in two weeks, on September 28, Jennings will be speaking and answering questions at the Delaware Democratic Party’s training session on how to organize and campaign for stricter gun laws. If you want to register for this event, please email Executive Director Jesse Chadderdon at jesse@deldems.org. The location of this training session has not yet been determined, but there is a preliminary agenda, with Jennings speaking first at 9 am.

Agenda

8:30 a.m. – 9 a.m.: Coffee, networking and registration

9 a.m. – 9:40 a.m.: Kickoff Keynote and Q and A: Kathy Jennings

9:40 a.m. – 10 a.m.: The Toll of Gun Violence: A Survivor’s Story

10 a.m. – 10:25 a.m.: Federal efforts to curb gun violence

10:25 a.m. – 10:45 a.m.: City efforts to curb gun violence

10:45 a.m. – 11:15 a.m.: State efforts to curb gun violence: David Bentz and Laura Sturgeon

11:15 a.m. – 11:30 a.m.: BREAK

11:30 a.m. – 11:50 a.m.: Moms Demand Action Advocacy efforts: Sarah Stowens

11:50 a.m. – 12:10 p.m.: March for Our Lives Advocacy efforts: Wyatt Patterson

12:10 p.m. – 12:30 p.m.: Delaware Coalition Against Gun Violence Advocacy efforts: Traci Manza Murphy

12:30 p.m. – 12:45 p.m.: Delaware Democratic Party efforts and priority Red to Blue elections: Jesse Chadderdon

12:45 p.m. – 1:15 p.m.: Networking