The Advice Trap

Financial Advisers Want to Rip Off Small Investors. Trump Wants to Help Them Do It.


One of the most important investor protections in decades took effect on June 9. The new rule, issued by the Department of Labor, sets in motion a seemingly commonsense requirement that those who advise on retirement investments must put their clients’ interests ahead of their own. Yet it marks a revolution in retirement security, the result of an epic seven-year battle between consumer advocates and the financial industry that sunk millions of dollars into white shoe lobbying firms, industry-sponsored studies, congressional campaign contributions, and major lawsuits in an effort to block the rule.

“Investment advisers shouldn’t be able to steer retirees, workers, small businesses, and others into investments that benefit the advisers at the expense of their clients,” Assistant Labor Secretary Phyllis Borzi, who developed the rule, said in 2011. “The consumer’s retirement security must come first.”

The rule, finalized in April 2016, was scheduled to take effect a year later in order to give firms time to comply. It only survived till now thanks to a veto by President Obama of legislation that would have permanently blocked its implementation; Rep. Paul Ryan, who led the charge in Congress, had tarred the rule as “Obamacare for financial planning.”

Since the rule was already final when President Trump took office, it was invulnerable to his day one directive freezing all pending rule making. Nevertheless, within two weeks Trump signed a memo directing the DOL to review the rule and potentially rescind it. In March, before Trump’s labor secretary had even been confirmed, the Department of Labor issued a proposed rule delaying implementation for 60 days — bringing us to June 9 of this year.

In April, Sen. Elizabeth Warren joined consumer groups and the AFL-CIO to unveil a “Retirement Ripoff Counter,” a digital projection tallying the costs to retirement savers of delaying implementation of the rule — which they calculated at $46 million a day.

And in late May, Alexander Acosta, Trump’s newly minted labor secretary, announced in the pages of the Wall Street Journal that the administration had exhausted every “principled legal basis” for further delaying the rule. And so it was that key portions of the fiduciary rule finally went into effect last month.

Whether the rule will survive the Trump administration’s deregulatory campaign is an open question.

Like the dozen or so others gathered for the chicken noodle casserole at Johnny’s CharHouse that cold day in January 2007, Stephen Wingate, then 59, had received an invitation in the mail to learn more about financial planning for retirees. “I was interested in trying to get my affairs in order because I was getting closer to retirement,” said Wingate, who’d begun putting away money in 1986 when he was a supervisor at Ideal Industries, a local company that manufactures wire connectors, hand tools, and other equipment. “I’d been saving 10 percent of my income right along.”

He liked what he heard from Jack W. Teboda that evening in Sycamore, Illinois. A handout described Teboda as an adviser who employed conservative strategies and chose investments “that are best suited for my clients.” His two-page bio ended on a personal note. His wife of 30 years had been his high school sweetheart, and they attended the Harvest Bible Chapel in nearby Elgin. “Our relationship with God is the most important aspect of our lives,” it read.

But it was Teboda’s seemingly prudent investment strategy that attracted Wingate most. “What he basically promised was safety,” he said. “He said he could offer us financial peace of mind.”

Sitting beside his wife in Teboda’s office later that month, Wingate moved his entire retirement account of $282,000 from IRAs that had been invested in plain-vanilla Vanguard and Janus mutual funds into two risky, real-estate investment trusts, known as REITs, that invested in and operated commercial properties.

The funds that Wingate liquidated had annual fees of less than one-half of 1 percent. Andrew Stoltmann, the Chicago lawyer who will represent Wingate in an upcoming arbitration against Teboda and the broker-dealer he is registered with, said that the REITs that replaced them, which were highly illiquid and not publicly traded, offered Teboda a 7 percent commission off the top, immediately zapping more than $20,000 from Wingate’s savings.

As he signed the stack of documents, Wingate says he asked about a disclosure that said he could lose some or all of his money, but Teboda was reassuring. “He said, ‘Don’t pay attention to that because they all say that,’” said Wingate. In one of the documents that Wingate signed, Teboda had written that one reason the REITs had been chosen was to “minimize risk.”

It didn’t turn out that way.

Wingate was thunderstruck three years later by news that the private market value of one of the REITs, Behringer Harvard REIT I, had dropped from $10 to $4.25 a share.
He fired off an email to Teboda. “How do I recommend your company to others when I am totally disappointed with what you have done with my account?” he wrote on June 28, 2010. “These are my life savings in your hands.”

Teboda said to hang tight, but Behringer Harvard didn’t rebound. Last year, after consulting with a new adviser, Wingate sold both REITs at a loss of $147,000, half the original value of his retirement account. Like other securities linked to real estate, Wingate’s REITs lost value during the collapse of real estate prices during the financial crisis. But even under the best of circumstances, these products were too risky for anyone approaching retirement. A Vanguard stock index fund, by contrast, had almost completely recovered its pre-crash value by the end of 2010.

Wingate’s personal financial crisis was part of a larger public one. According to a 2015 White House report, Americans lose $17 billion a year from their retirement accounts as the result of advice compromised by conflicts of interest. And such advice has always been perfectly legal for financial advisers who were not specifically charged by regulators to put their clients’ interests ahead of their own, a level of care known as a “fiduciary duty.” Many retirement advisers skated by under a lower standard that investment need only be “suitable.”

The Dodd-Frank reforms passed in 2010 tackled some of the blatant investment risks to average Americans. In addition to measures designed to rein in too-big-to-fail banks, the law sought to protect consumers by mandating the creation of a Consumer Financial Protection Bureau, putting new restrictions on the packagers of asset-backed securities, and directing the Securities and Exchange Commission to study whether stockbrokers should be held to a “fiduciary” standard. But it did not target the excessive fees that cut into the returns of the nation’s retirement savers.

The same year that Dodd-Frank was signed into law, the Department of Labor, which has jurisdiction over retirement accounts, unveiled its own draft fiduciary rule. While the SEC dragged its heels, the DOL doggedly pushed its proposal through the federal rule-making process.

Experts say that advice like Teboda’s would have been a violation under the DOL’s new rule. “I don’t see how non-traded REITs as they are currently structured and sold would ever comply with the new DOL rule,” said Micah Hauptmann, financial services counsel at the Consumer Federation of America. Craig McCann, a former economist at the Securities and Exchange Commission who has studied the poor performance and conflicts related to non-traded REITs, said in a 2014 blog post that “No investors should buy these illiquid, high-commissioned, poorly diversified non-traded REITs and no un-conflicted broker would recommend them.”

In July 2009, an outspoken former House staffer and public health professor was taking her seat at a daily staff meeting on the fifth floor of DOL headquarters in Washington, D.C. Phyllis Borzi, who had just been sworn in as assistant secretary, charged with running the Employee Benefits Security Administration, had asked her nine office directors to come prepared with a list of their top priorities, the issues they would want on the agency’s agenda if they had her job.

As Borzi listened, most of the directors singled out the same concern: Retirement accounts were hemorrhaging money because of high fees and inappropriate investments, but the agency had limited legal tools to hold the offenders accountable.
The law at the time typically put the fiduciary onus on sponsors of retirement plans, often small employers struggling to set up 401(k)s for their workers. Many of those sponsors, Borzi’s team suggested, were making bad decisions based on the advice of financial experts, resulting in avoidable losses for participants.

“So the employer in many cases was as much a victim of the broker as the employees were,” she said. “They’d paid money to a broker and followed their advice.”

Many of these advisers were free from any fiduciary obligation to their clients thanks to loopholes in the Employee Retirement Income Security Act. That law, known as ERISA, only covered advisers who were giving advice on a regular basis and who had a “mutual understanding” with their client that their advice would serve as the driving force behind investment decisions. One-time consultants advising on which mutual funds to offer in a 401(k) did not have to act as fiduciaries. When their faulty advice blew up, Borzi said, advisers could simply tell her investigators, “‘Yeah, I gave advice, but how could I know they would rely on it?’”

For years, those loopholes hadn’t mattered much, as Americans had relied on employer pensions that provided a steady stream of income in retirement. But by 2013, after decades of corporate cost-cutting, pensions constituted only 35 percent of retirement assets; more than half were in so-called defined contribution plans such as and IRAs and 401(k)s.

Just as investors faced the new challenge of managing their own retirement money, the financial industry was adding complex products like REITs to retirement offerings.

Savers like Wingate, trying to sort through the dizzying options, turned to brokers and advisers for help. “I knew I needed a very knowledgeable person handling our retirement money,” Wingate said. “I wasn’t qualified to do that.”

Brokers had an irresistible opportunity to steer naïve clients to opaque products that offered the biggest commissions, said Sarasota investment adviser Raul Elizalde. They were also legally permitted to choose funds whose annual fees were higher than equivalent investments. “The model of the financial industry under the suitability rule is to take it little by little – and many times,” he said.

Perhaps most perilous for the burgeoning ranks of small investors was a shift in the industry’s marketing strategy: Stockbrokers, once understood as salespeople, began to call themselves “advisers,” a title that had been used previously only by so-called registered investment advisers who were required to operate as fiduciaries.

In a rule published in 2005, the Securities and Exchange Commission conceded that investors were confused about the titles that advisers were using and the obligations they were under. Six out of 10 investors had come to the wrongheaded conclusion that brokers had a fiduciary responsibility, the SEC said, citing research by a brokerage firm. The confusion, the SEC said, raised “difficult questions.”

That year the SEC ordered up focus groups of investors. In a typical response, one Baltimore participant said that he regularly received invitations to free dinners from financial people but was clueless as to what their titles meant. “I don’t know if they’re a financial consultant, financial adviser or financial planners,” he said. “How would I even know the difference?”

Despite the conclusions of its own research, the SEC chose to do nothing about the misleading titles. “We are concerned that any list of proscribed names we develop could lead to the development of new ones with similar connotations,” it wrote at the time.

By October 2010, just after Dodd-Frank was signed into law, Borzi and her team had designed a proposed fiduciary rule that would shut down ERISA’s loopholes and introduce a new definition of fiduciary advice. But her first stab at a rule was met by ferocious attacks in comment letters and public statements from the securities industry, afraid it would undermine its commission business, and the insurance industry, concerned the rule would make it harder to sell lucrative annuity products. In the year following the release of the proposed rule, not a single consumer group registered to lobby in support of the rule. But the Chamber of Commerce; industry lobby groups including the Securities Industry and Financial Markets Association (SIFMA) and the Financial Services Roundtable; major firms that offer mutual funds and annuities such as Fidelity Investments and Prudential Financial; and major financial firms including JPMorgan Chase, Charles Schwab, and Blackrock sent lobbyists to quash various aspects of it — altogether 37 organizations that cumulatively spent more than $61 million on lobbying that included the fiduciary issue during that period.

“They have more money than God,” Borzi said. “For every 15 or 20 meetings we had with opponents, we would have one conference call or meeting with supporters, and that’s probably overstating the number of supporter meetings.”

By September 2011, the DOL had withdrawn the rule, and she and her staff had regrouped to work on a new version. “We have said all along,” Borzi said in a press release, “that we will take the time to get this right.”

Dodd-Frank had required the SEC to study a possible fiduciary standard, too. As part of that process, the SEC solicited public comment and held sit-down meetings with industry and consumer groups. Of the 111 meetings the SEC held between August 2010 and October 2012, only 31 were with groups promoting stronger fiduciary requirements.

The SEC’s 80 meetings with industry included 15 with SIFMA, which represents security firms and banks; eight with the Financial Services Institute, which represents brokers; and 14 with insurance companies and trade groups. After producing a study that recommended establishing a fiduciary standard, the SEC’s efforts stalled. “They had been ‘studying’ the issue for years but never took the next step and actually proposed something,” said the Consumer Federation’s Hauptman.

In the years that followed, Borzi said, as she oversaw the development of a new rule, the disproportionate influence of the financial industry was constantly an issue. As the DOL moved toward a final rule in 2016, the number of organizations registered to lobby against it multiplied. Throughout, consumer advocates, who universally support the rule, have been outflanked.

Of the 98 organizations that declared they lobbied the Senate on the fiduciary rule in 2016, only 11 were unambiguously in favor of the rule. Members of the financial industry prefaced many of their public comments with vague endorsements of a best-interest standard, but these letters typically went on to complain about portions of the rule that didn’t serve their interests.

Those lobbying in favor, including the AARP, the American Association of Justice, which represents trial attorneys, and the AFL-CIO, spent a total of $23.9 million on lobbying during the quarters when they were active on the rule.

By comparison, those who lobbied against the rule, including the U.S. Chamber of Commerce, SIFMA, the Financial Services Roundtable, the American Bankers Association, the Investment Company Institute, Nationwide, Allstate, and Americans for Prosperity, collectively spent $187.3 million in the quarters when they were registered to lobby on the rule. (The filings don’t break down how much was spent lobbying on the fiduciary rule in particular.)

Along with its big spending on lobbyists, the financial industry has also splashed its largesse directly to lawmakers. In a study released in March based on public filings, Americans for Financial Reform found that the financial sector was by far the biggest business category contributing to federal candidates for office and their leadership PACs during the 2015-16 election cycle, spending $1.1 billion.

Among the top 20 contributors? The American Bankers Association, SIFMA, Wells Fargo, New York Life Insurance, and the Investment Company Institute, the trade group for the mutual fund industry — all of which have filed comment letters opposed to the DOL’s rule.

The brokerage industry argues that since the new rule discourages use of the commission-based accounts that are common among small investors, it will effectively cut off average retirement savers from access to investment advice. The insurance industry claims that the rule will impede access to products, including annuities, which provide investors with guaranteed income.

The stakes, apparently, are high. The consulting firm A.T. Kearney calculated last year that it will cost the financial industry as much as $20 billion in lost revenue by 2020 to comply with the rule, in part because it will dramatically reduce the fees the industry collects from investors.

While hearings about the rule were in progress in August 2015, a coalition of insurance companies called Americans to Protect Family Security aired a classic scare-tactic television ad that featured a couple heading home in the car after dropping their daughter off at college.

When the wife says that government bureaucrats want to “make it really hard” to get advice from “Ann,” their financial adviser, her husband is indignant. “We’re gonna call our senators,” he says with resolve.

In another ad that month, this one sponsored by the conservative group American Action Network, an investor who can’t get through to a human at his brokerage firm hears the doorbell ring only to discover a drone hovering at his front door. Hanging from the drone is a sign that reads “NOTICE: NO PERSONAL SERVICE FOR YOUR IRA.” The group, founded by Fred Malek, a former assistant to Presidents Richard Nixon and George H.W. Bush, spent $5.6 million during the 2016 federal elections, according to OpenSecrets.

More recently, the U.S. Chamber of Commerce released a slick 20-page report featuring cartoon graphics depicting “Jane,” an investor with a small account, whose broker “Steve” was dumping her because the oppressive new rule would make it uneconomical to advise her. “Sadly,” the caption reads, “Steve’s company no longer allows him to serve accounts less than $25K.” Chamber spokesperson Stacy Day declined to comment, but referred me to an article in which a Chamber executive said small investors will be “dumped from their plans” or subject to high fees “that may not be the right option for them.”

The research behind these claims is sometimes thin. The Investment Company Institute, the mutual fund trade group, filed a comment letter to the DOL this year in opposition to the rule, claiming that it had “informally surveyed” its mutual fund members and discovered that 31 out of 32 funds had either received “orphaned” accounts from brokerage firms or gotten notice about accounts that would be orphaned by the firms that previously held them. An ICI spokesperson said in an email that this would be harmful to investors because they would lose access to financial advice and the convenience of having a single financial institution hold all their funds in one place.

“A lot of the pushback is a little bit too hysterical,” said Charles Rotblut, vice president at the Chicago-based American Association of Individual Investors, a nonprofit that educates investors on how to manage their money. “These are accounts that the investor has likely forgotten about. The loss of access to financial advice is a weak argument because the investor probably wasn’t using the advice anyway.”

As for the risk of modest investors losing access to a brokers’ advice? “I’m not so sure at the end of the day that that’s bad for the investor,” Rotblut said. “In fact, quite the opposite – some of these so-called advisers are just glorified salespeople who’ve passed a regulatory exam.” He recommends that investors consult with an hourly financial adviser instead.

The Chamber of Commerce report, issued in May, outlined “new information” about a wave of class-action litigation expected in response to a provision of the rule that allows investors to bring class-action lawsuits for systemic abuses. The Chamber cited a February report by Morningstar, Inc. in claiming that the wealth management industry would pay between $70 million and $150 million annually in new legal costs. The Chamber never mentioned that the same Morningstar report said the risk of litigation could serve as an incentive for firms “to create and adhere to prudent policies and procedures that protect retirement investors’ best interests.”

Michael Wong, the Morningstar senior equity analyst who authored the report, said in an interview that his estimates could actually be too high. “If no investors are harmed, there is no basis for class lawsuits and class settlements,” he said. “Through many lenses, it looks like the benefits outweigh the costs of this rule.”

The Chamber report also referred to a post by Meghan Milloy, director of financial services policy at the conservative American Action Forum, in which she suggests that most consumer claims are baseless. Citing Milloy, the report said that consumers filed nearly 4,000 arbitration cases last year with FINRA, the Financial Industry Regulatory Authority, alleging wrongdoing by brokers, but that only 158 — about 4 percent — of those cases were decided in favor of the consumer.

But Milloy’s denominator was off by a factor of 10. Only 389 cases were decided by arbitrators in 2016, meaning that those 158 customer wins represented 41 percent of the cases decided by arbitrators. The reference to the 158 customer wins appeared on a FINRA chart which clearly shows that customers had won 41 percent of the cases they brought, out of 389 cases decided, not Milloy’s “nearly 4,000.”

In a telephone interview, Milloy initially said that the FINRA arbitration statistics were evidence of the prevalence of “baseless claims” by investors. When I pointed out her substantial error, she responded that it was “still less than a majority” of cases decided in favor of consumers. She has not corrected her original post, which on June 29 was cited in a letter to the SEC from lobbyist Kent A. Mason of the Washington, D.C., law firm Davis & Harman on behalf of an unnamed “group of firm clients.” Mason told the agency that its role protecting IRA investors would be “reduced dramatically” under the rule.

To boost its claim that the fiduciary rule will hurt average Americans, the Chamber features on its website small business owners who express deep concern over the new standard. The government watchdog group Public Citizen got in touch with some of those businesspeople, only to learn that several had little knowledge of the rule.
One business owner, Richard Schneider of Ellisville, Missouri, was quoted on the Chamber’s website saying that the rule would mean more paperwork and hurt his employees. “The Labor Department should just fix this rule already,” he said. When contacted by Public Citizen to hear more about his views, though, Schneider said he didn’t follow the rule closely.

Another person featured on the Chamber’s site, Jim Dower, runs a nonprofit in Chicago. The Chamber quoted him as saying that the “DOL may have the right intention … but I’m worried they’ll still get it wrong in the end.” When Public Citizen emailed him about his comment, Dower responded, “Who do I call to get this down?” The Chamber has since removed him from its site.

In a March 16 letter to the DOL on behalf of unnamed clients, lobbyist Mason slammed the agency for taking “the stunning position that selling is advising.” Yet a study earlier this year by the Consumer Federation of America demonstrates that is precisely the message that the financial industry has been delivering to the public.

Even as securities firms assailed the fiduciary rule in the lead-up to its June 9 effective date, they continued to deliver marketing messages suggesting they already were serving clients at the elevated standard. On their websites, firms large and small pledge to variations on the themes of “clients first” and advice given “with our clients’ best interests in mind,” despite allowing brokers to pitch high-commission products or illiquid investments, like the non-traded REITs sold to Wingate, that are ill advised for all but the wealthiest investors.

In a study of 81 non-traded REITs published in 2015, McCann, the former SEC economist, found that REIT investors over the past 25 years would have earned as much or more by investing in U.S. Treasury securities. More than half their underperformance, he found, resulted from the upfront fees charged to investors, which largely went to brokers.

“The entire industry is built around practices that would be a crystal clear violation of a fiduciary duty,” said Wingate’s lawyer, Stoltmann. “There is no faster way to clean up the securities industry than imposing a mandatory fiduciary rule.”

Opponents of the DOL rule suggest that improved disclosure would solve many of the problems the rule was designed to fix. But Anthony Pratkanis, a professor of psychology at the University of California, Santa Cruz, who has studied the characteristics of financial fraud victims, said that’s nonsense: “Consumers and investors do not read disclosures. Period.” Multiple studies have shown that even the people who do read them don’t understand them, he said.

A 2012 report from the SEC found that investors often don’t even understand the information they get from brokers about their trades: Only 53 percent of respondents in an online survey of 1,200 investors could correctly identify a trade confirmation as having been for a stock purchase.

Nevertheless, President Trump’s new secretary of labor, Alexander Acosta, has publicly opposed the rule based on an argument that the government should trust in investors’ “ability to decide what’s best for them.”

White House National Economic Council Director Gary Cohn, one of Trump’s closest advisers, has gone further. “We think it is a bad rule,” he told the Wall Street Journal. “This is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”

After five more years, four more days of public hearings, thousands of comment letters, and hundreds of meetings, mostly with industry representatives, the DOL finally published its new rule on April 8, 2016. It took the U.S. Chamber of Commerce and eight other business organizations less than two months to file suit against the agency, saying it had exceeded its authority.

In February, a Dallas federal judge ripped apart their arguments in an 81-page opinion denying summary judgment. To a complaint that the DOL had violated the freedom of speech of insurance agents and brokers, Chief Judge Barbara M.G. Lynn of the Northern District of Texas said, “At worst, the only speech the rules even arguably regulate is misleading advice.” The Chamber and the other litigants have appealed.
Just days before that ruling, on February 3, President Trump signed his memo in the Oval Office directing the DOL to review the rule. He then handed his pen to Rep. Ann Wagner, the Republican from Missouri, standing just to his right, and suggested she say a few words. Wagner isn’t the top recipient of Wall Street money in Congress, but support from the sector looms large for her, and she has returned the favor, sponsoring bills to rein in the power of the DOL and the SEC. According to the online publication Investment News, in a 2015 speech to insurance professionals, Wagner said that if efforts to kill the rule fail, “By God we’ll just defund them.”

In a draft bill in early July, Wagner proposed that the rule be eliminated and replaced with a new standard of conduct that would require investment recommendations to “be in the retail customer’s best interest.” But Wagner’s bill lacks the protections of the DOL rule and fails to adequately address the “complex web of toxic financial incentives” that lead to bad advice, according to a July 11 letter to members of the House Financial Services subcommittee from the Consumer Federation of America.

In the 2015-16 election cycle, insurance companies, securities firms, and commercial banks were the top three industries backing Wagner’s campaign, donating more than $549,000. The two firms that gave the most were Jones Financial Companies, a brokerage firm, and the insurance company Northwestern Mutual. Both wrote to the DOL to oppose the rule. Over the last two election cycles, the financial industry contributed more than $1.1 million to her campaigns.

There in the Oval Office, she referred to the executive order as “my baby,” claiming that the edict would help “low- and middle-income investors and retirees.” It was, she said, a “big moment” for Americans who invest and save. A Wagner spokesperson did not respond to requests for comment.

Three months later, in a May 22 Wall Street Journal op-ed, Acosta said that the DOL should examine ways to revise the rule and open up yet another comment period. Acosta’s arguments, said Barbara Roper, director of investor protection at the Consumer Federation of America, were “straight from the talking points of industry.” A DOL spokesperson declined to comment.

Acosta’s op-ed appeared just weeks before the House Financial Services Committee passed the Financial CHOICE Act, an omnibus bill designed to roll back many of the Dodd-Frank reforms. The bill would repeal the DOL’s fiduciary rule and block the DOL from promulgating a new one until at least 60 days after the SEC issues a final fiduciary rule of its own.

On June 1, shortly before the CHOICE Act passed the full House, the SEC suddenly woke up from its slumber. Trump’s new SEC chairman, Jay Clayton, released a request for public comment about the standards of conduct expected of investment advisers and brokers, asking for feedback about possible investor confusion over “the type of professional or firm that is providing them with investment advice.”

“The timing of the request is troubling,” said Stephen W. Hall, legal director at Better Markets, a nonprofit that promotes financial reform. “It appeared after years and years of SEC inaction, but just as the DOL rule came under fresh scrutiny by the new administration.”

In his request for comment letters, Clayton noted that Acosta wanted the two agencies to work together to analyze the standards of conduct for brokers and investment advisers.

Ben Edwards, associate professor of law at the University of Nevada, Las Vegas, said that a new fiduciary rule from the SEC could give Acosta the legal ammunition he needs to scrap the DOL’s rule. “An SEC rule would materially change the regulatory environment,” he said, because it could provide “a basis to question the need” for a DOL rule. That would be a win for the insurance industry in particular, Edwards said, because the SEC’s authority “does not ordinarily extend to insurance products.”
Judith Burns, an SEC spokesperson, declined to comment.

Lisa Donner, executive director at the consumer advocacy group Americans for Financial Reform, worries that the DOL rule, just weeks after taking effect, is already “in danger of being undone.” On June 29, the undoing began, with a request for comment from the DOL asking whether the remaining aspects of the rule, which as of January 2018 would require legally enforceable contracts between clients and any brokers who receive commissions, should be further delayed.

Wingate, now retired, said the catastrophic loss to his retirement account has been “really rough” on his wife, who at 69 continues to work as a nurse to compensate for the lost savings. To make ends meet, they sold the family vacation condo in Florida earlier this year. “It was a real strain on our marriage,” Wingate said.

On Saturday mornings at 7 a.m., Wingate’s former adviser, Teboda, has a radio show on Chicago’s AM 560. On a recent Saturday, Wingate said he listened in frustration as he heard the adviser describe himself as a fiduciary who had clients’ best interests at heart. “My wife said, ‘I can’t take it anymore, so please turn it off.’” On Teboda’s June 17 show, he similarly referred to his “fiduciary firm” several times, noting that he worked in clients’ “best interest.”

Wingate and his lawyer, Andrew Stoltmann, say they will face off in November against Teboda and the broker-dealer he was formerly registered with, ProEquities, at a FINRA arbitration hearing. ProEquities spokesperson Eva T. Robertson and Teboda declined to comment, but ProEquities said in its answer to Wingate’s complaint that he is a sophisticated investor who was able to “talk intelligently” with Teboda.

While they await their day in Finra’s closed-door court, the battle over the kind of advice Teboda got will go on. “It’s a profoundly broken system,” said Donner of Americans for Financial Reform. “If there wasn’t so much money at stake for people making money off the broken system, it would not have taken seven years to get this rule done.”

This article was produced in partnership with The Investigative Fund at The Nation Institute.


CNN Journalists Resign: Latest Example of Media Recklessness on the Russia Threat

By Glenn Greenwald

Three prominent CNN journalists resigned Monday night after the network was forced to retract and apologize for a story linking Trump ally Anthony Scaramucci to a Russian investment fund under congressional investigation. That article — like so much Russia reporting from the U.S. media — was based on a single anonymous source, and now, the network cannot vouch for the accuracy of its central claims.

In announcing the resignation of the three journalists — Thomas Frank, who wrote the story (not the same Thomas Frank who wrote “What’s the Matter with Kansas?”); Pulitzer Prize-winning reporter Eric Lichtblau, recently hired away from the New York Times; and Lex Haris, head of a new investigative unit — CNN said that “standard editorial processes were not followed when the article was published.” The resignations follow CNN’s Friday night retraction of the story, in which it apologized to Scaramucci:

Several factors compound CNN’s embarrassment here. To begin with, CNN’s story was first debunked by an article in Sputnik News, which explained that the investment fund documented several “factual inaccuracies” in the report (including that the fund is not even part of the Russian bank, Vnesheconombank, that is under investigation), and by Breitbart, which cited numerous other factual inaccuracies.

And this episode follows an embarrassing correction CNN was forced to issue earlier this month when several of its highest-profile on-air personalities asserted — based on anonymous sources — that James Comey, in his congressional testimony, was going to deny Trump’s claim that the FBI director assured him he was not the target of any investigation.

When Comey confirmed Trump’s story, CNN was forced to correct its story. “An earlier version of this story said that Comey would dispute Trump’s interpretation of their conversations. But based on his prepared remarks, Comey outlines three conversations with the president in which he told Trump he was not personally under investigation,” said the network.

But CNN is hardly alone when it comes to embarrassing retractions regarding Russia. Over and over, major U.S. media outlets have published claims about the Russia Threat that turned out to be completely false — always in the direction of exaggerating the threat and/or inventing incriminating links between Moscow and the Trump circle. In virtually all cases, those stories involved evidence-free assertions from anonymous sources that these media outlets uncritically treated as fact, only for it to be revealed that they were entirely false.

Several of the most humiliating of these episodes have come from the Washington Post. On December 30, the paper published a blockbuster, frightening scoop that immediately and predictably went viral and generated massive traffic. Russian hackers, the paper claimed based on anonymous sources, had hacked into the “U.S. electricity grid” through a Vermont utility.

That, in turn, led MSNBC journalists, and various Democratic officials, to instantly sound the alarm that Putin was trying to deny Americans heat during the winter:

Literally every facet of that story turned out to be false. First, the utility company — which the Post had not bothered to contact — issued a denial, pointing out that malware was found on one laptop that was not connected either to the Vermont grid or the broader U.S. electricity grid. That forced the Post to change the story to hype the still-alarmist claim that this malware “showed the risk” posed by Russia to the U.S. electric grid, along with a correction at the top repudiating the story’s central claim:

But then it turned out that even this limited malware was not connected to Russian hackers at all and, indeed, may not have been malicious code of any kind. Those revelations forced the Post to publish a new article days later entirely repudiating the original story.

Embarrassments of this sort are literally too numerous to count when it comes to hyped, viral U.S. media stories over the last year about the Russia Threat. Less than a month before its electric grid farce, the Post published a blockbuster story — largely based on a blacklist issued by a brand new, entirely anonymous group — featuring the shocking assertion that stories planted or promoted by Russia’s “disinformation campaign” were viewed more than 213 million times.
That story fell apart almost immediately. The McCarthyite blacklist of Russia disinformation outlets on which it relied contained numerous mainstream sites. The article was widely denounced. And the Post, two weeks later, appended a lengthy editor’s note at the top:

Weeks earlier, Slate published another article that went viral on Trump and Russia, claiming that a secret server had been discovered that the Trump Organization used to communicate with a Russian bank. After that story was hyped by Hillary Clinton herself, multiple news outlets (including The Intercept) debunked it, noting that the story had been shopped around for months but found no takers. Ultimately, the Washington Post made clear how reckless the claims were:

A few weeks later, C-SPAN made big news when it announced that it had been hacked and its network had been taken over by the state-owned Russian outlet RT:
That, too, turned out to be totally baseless, and C-SPAN was forced to renounce the claim:

In the same time period — December 2016 — The Guardian published a story by reporter Ben Jacobs claiming that WikiLeaks and its founder, Julian Assange, had “long had a close relationship with the Putin regime.” That claim, along with several others in the story, was fabricated, and The Guardian was forced to append a retraction to the story:

Perhaps the most significant Russia falsehood came from CrowdStrike, the firm hired by the DNC to investigate the hack of its email servers. Again in the same time period — December 2016 — the firm issued a new report accusing Russian hackers of nefarious activities involving the Ukrainian army, which numerous outlets, including (of course) the Washington Post, uncritically hyped.

“A cybersecurity firm has uncovered strong proof of the tie between the group that hacked the Democratic National Committee and Russia’s military intelligence arm — the primary agency behind the Kremlin’s interference in the 2016 election,” the Post claimed. “The firm CrowdStrike linked malware used in the DNC intrusion to malware used to hack and track an Android phone app used by the Ukrainian army in its battle against pro-Russia separatists in eastern Ukraine from late 2014 through 2016.”

Yet that story also fell apart. In March, the firm “revised and retracted statements it used to buttress claims of Russian hacking during last year’s American presidential election campaign” after several experts questioned its claims, and “CrowdStrike walked back key parts of its Ukraine report.”

What is most notable about these episodes is that they all go in the same direction: hyping and exaggerating the threat posed by the Kremlin. All media outlets will make mistakes; that is to be expected. But when all of the “mistakes” are devoted to the same rhetorical theme, and when they all end up advancing the same narrative goal, it seems clear that they are not the byproduct of mere garden-variety journalistic mistakes.

There are great benefits to be reaped by publishing alarmist claims about the Russian Threat and Trump’s connection to it. Stories that depict the Kremlin and Putin as villains and grave menaces are the ones that go most viral, produce the most traffic, generate the most professional benefits such as TV offers, along with online praise and commercial profit for those who disseminate them. That’s why blatantly inane anti-Trump conspiracists and Russia conspiracies now command such a large audience:

because there is a voracious appetite among anti-Trump internet and cable news viewers for stories, no matter how false, that they want to believe are true (and, conversely, expressing any skepticism about such stories results in widespread accusations that one is a Kremlin sympathizer or outright agent).


German Intelligence Also Snooped on White House

German Chancellor Angela Merkel is famous for the terse remark she made after learning her mobile phone had been tapped by the NSA. "Spying among friends, that isn't done." As it turns out, Germany was spying on America too, even targeting the White House.

By , and

The chapter is only a few pages long, but it addresses a potentially explosive suspicion: Did Germany's foreign intelligence agency, the BND, spy on its most important partner, the United States, in the past? 

For Chancellor Angela Merkel's government, the answer is clear. The BND has never spied on the United States, members of both the conservative Christian Democrats (CDU) and their government coalition partner, the center-left Social Democrats, are fond of saying, quoting former BND President Gerhard Schindler. And if it was true, then it was only a "coincidental capture" of data, that has since been deleted.

After three years of work, the German parliament committee of inquiry investigating NSA spying on Germany will release its final report next week. It will also contain a chapter drafted by the coalition on "findings about EU and NATO partners." The committee, the draft version of the report states, had no doubts about the statements made about the U.S.

But it should.

Documents that SPIEGEL has been able to review show that the BND, until a few years ago, actually had considerable interest in the United States as a target of espionage. The document states that just under 4,000 search terms, or selectors, were directed against American targets between 1998 and 2006. It is unknown whether they continued to be used after those dates.

The German intelligence agency used the selectors to surveil telephone and fax numbers as well as email accounts belonging to American companies like Lockheed Martin, the space agency NASA, the organization Human Rights Watch, universities in several U.S. states and military facilities like the U.S. Air Force, the Marine Corps and the Defense Intelligence Agency, the secret service agency belonging to the American armed forces. Connection data from far over 100 foreign embassies in Washington, from institutions like the International Monetary Fund (IMF) and the Washington office of the Arab League were also accessed by the BND's spies.

The entries also prove the existence of a top-secret anti-terror alliance between Western intelligence services, including those of Germany, the United States and France. SPIEGEL already reported back in 2005 on the elite unit, which is named Camolin. The papers now show several BND selectors were "Camolin-related."

It's Unlikely Spying Was Unintentional
Also on the selector list were lines at the U.S. Treasury Department, the State Department and the White House. Were they really all just "coincidental capture" as the former BND head claimed? Was it just an oversight?

That's unlikely.

Germany's foreign intelligence agency does not comment publicly on its operations. The BND's current president, Bruno Kahl, who has been in office for just under a year, is only willing to point to the future. "The question of who the BND is permitted to surveil, and who it cannot, will not only be the subject of a stricter approval process in the future, but also more ambitious controls."

It also remains unclear just how extensive was the U.S. data captured by the BND -- or what it contained. But it does help to explain why the German government remained so reserved initially when revelations about the NSA's spying first emerged. People either knew or likely suspected that their own service had been just as unscrupulous in monitoring its closest partners. In light of the documents, the efforts by the chancellor's office to come to a so-called no-spying agreement with the Americans now appear to have been a farce. The truth is that the Germans were snooping far more extensively than they ever wanted to admit.

Originally, the parliamentary inquiry committee had been tasked with investigating cooperation between Germany's BND and the NSA. The investigation was launched in response to the revelations about the NSA spying on Germany that were exposed by whistleblower Edward Snowden. But in October 2015, it emerged that the BND, even absent a request to do so from the U.S., had conducted extensive spying on its partners in the European Union and NATO. As the papers relating to the selectors show, nearly every foreign embassy in Berlin had been monitored. When the news emerged that the NSA had surveilled her own mobile phone, Angela Merkel said, "spying among friends, that simply isn't done." Looking back from today's perspective, it's clearly a hollow statement.

Spying on the British Library
But how forthcoming was the intelligence service with the members of parliament sitting on the inquiry committee? And what did their work achieve? Ultimately, the parties on the panel proved unable to agree. The closing report includes two different assessments -- one from the coalition parties in government, and another from the opposition.

For their part, the Christian Democrats and the SPD claim that the new BND law passed recently "takes the correct and necessary action from the substantiated evidence, even before the end of the investigation." But opposition parties claim that the new rules are insufficient and even go in the wrong direction.

And so it is that, after 134 meetings of the investigative committee, decisive questions remain unanswered. Questions such as why the BND, which is actually supposed to be hunting terrorists, weapons dealers and money-launderers, is so interested in academic institutions like the British Library. One of its lending sites had been on the list of surveillance targets since the early 2000s.

Ralph Nader: The Democrats Are Unable to Defend the U.S. from the “Most Vicious” Republican Party in History


The Democratic Party is at its lowest ebb in the memory of everyone now alive. It’s lost the White House and both houses of Congress. On the state level it’s weaker than at any time since 1920. And so far in 2017 Democrats have gone 0 for 4 in special elections to replace Republican members of Congress who joined the Trump administration.

How did it come to this? One person the Democratic Party is not going to ask, but perhaps should, is legendary consumer advocate and three-time presidential candidate Ralph Nader.

Nader, who’s now 83 and has been been based in Washington, D.C. for over fifty years, has had a front row seat to the Democrats’ slow collapse. After his bombshell exposé of the U.S. car industry, Unsafe at Any Speed, he and his organizations collaborated with congressional Democrats to pass a flurry of landmark laws protecting the environment, consumers and whistleblowers. Journalist William Greider described him as one of America’s three top models for small-d democratic activism, together with Saul Alinsky and Martin Luther King, Jr. Meanwhile, the 1971 “Powell Memo,” which laid the groundwork for the resurgence of the corporate right, named him as a key enemy of “the system,” calling him “the single most effective antagonist of American business.”

But of course Nader has been persona non grata with the Democratic Party since his 2000 Green Party candidacy for president. George W. Bush officially beat Al Gore in Florida by 537 votes, with the state’s electoral votes putting Bush in the White House even though he lost the national popular vote. (In reality, a comprehensive, little-noticed study released soon after 9/11 found that Gore would have won Florida if all disputed ballots had been recounted.)

Democrats excoriated Nader, who received over 97,000 votes in Florida, for handing the election to Bush. Since it’s impossible to rerun history, there’s no way to know whether Gore would have won without a Nader candidacy. He certainly might have, but it’s also possible that — since the Nader threat noticeably pushed Gore to take more popular, progressive positions — Gore would have performed even worse in a Nader-less election.

In any case, it’s now undeniable that the Democratic Party has significant problems that can’t be blamed on Ralph Nader in 2000. In a recent interview, Nader provided his deeply-informed, decades-long perspective on how U.S. politics got to this point:

JON SCHWARZ: I’m interested in the history of the Democrats caving, being more and more willing to do whatever the right wants, for the past 40 years. Take the recent stories about Jared Kushner. Whatever the ultimate underlying reality there, I think it’s fair to say that if a Democratic president had appointed their son-in-law to hold a position of tremendous power in the White House – if Hillary Clinton had appointed Chelsea’s husband Marc Mezvinsky – and stories had come out in the Washington Post and New York Times about him trying to set up a back channel with Russia, he would have been out the door before the day was over.

RALPH NADER: Do you want me to go through the history of the decline and decadence of the Democratic Party? I’m going to give you millstones around the Democratic Party neck that are milestones.

The first big one was in 1979. Tony Coelho, who was a congressman from California, and who ran the House Democratic Campaign treasure chest, convinced the Democrats that they should bid for corporate money, corporate PACs, that they could raise a lot of money. Why leave it up to Republicans and simply rely on the dwindling labor union base for money, when you had a huge honeypot in the corporate area?

And they did. And I could see the difference almost immediately. First of all, they lost the election to Reagan. And then they started getting weaker in the Congress. At that time, 1980, some of our big allies were defeated in the so-called Reagan landslide against Carter, we lost Senator [Gaylord] Nelson, Senator [Warren] Magnuson, Senator [Frank] Church. We had more trouble getting congressional hearings investigating corporate malfeasance by the Democrat [congressional committee] chairs. When the Democrats regained the White House [in 1992] you could see the difference in appointments to regulatory agencies, the difficulty in getting them to upgrade health and safety regulations.

The second millstone is that they didn’t know how to deal with Reagan. And the Republicans took note. That means a soft tone, smiling … You can say terrible things and do terrible things as long as you have [that] type of presentation.

[Democrats] were still thinking Republican conservatives were dull, stupid, and humorless. They didn’t adjust.

RN: Increasingly they began to judge their challenge to Republicans by how much money they raised. You talk to [Marcy] Kaptur from Cleveland, she says, we go into the Democratic caucus in the House, we go in talking money, we stay talking money, and we go out with our quotas for money. …

As a result they took the economic issues off the table that used to win again and again in the thirties and forties for the Democrats. The labor issues, the living wage issues, the health insurance issue, pension issues. And that of course was a huge bonanza for the Republican Party because the Republican Party could not contend on economic issues. They contended on racial issues, on bigotry issues, and that’s how they began to take control of the solid Democratic South after the civil rights laws were passed.

Raising money from Wall Street, from the drug companies, from health insurance companies, the energy companies, kept [Democrats] from their main contrasting advantage over the Republicans, which is, in FDR’s parlance, “The Democratic Party is the party of working families, Republicans are the party of the rich.” That flipped it completely and left the Democrats extremely vulnerable.

As a result they drew back geographically, to the east coast, west coast and so on.
And that created another millstone: You don’t run a 50-state [presidential] campaign. If you don’t run a 50-state campaign, number one you’re strengthening the opposing party in those states you’ve abandoned, so they can take those states for granted and concentrate on the states that are in the grey area. That was flub number one.

Flub number two is what Ben Barnes, the politically-savvy guy in Texas, told me. He said, when you don’t contest the presidential race in Texas, it rots the whole party down … all the way to mayors and city council. So it replicates this decadence and powerlessness for future years.

When they abandoned the red states, they abandoned five states in the Rocky Mountain area, and started out with a handicap of nine or ten senators.

You may remember from your history, the two senators from Montana were Democrats, Senator Church from Idaho was a Democrat, Senator Frank Moss, great consumer champion, Democrat from Utah. Now there’s almost nobody. The two senators from Wyoming are Republican, the two senators from Montana are Republican [John Tester, the senior Montana senator, is a Democrat], the two senators from Utah are Republican. I think the Democrats have one seat in Colorado. Then you get down to Arizona and that’s two Republicans.

So they never had a veto-proof majority even at their peak in the Senate. And of course later when they weren’t at their peak it cost them the Senate again and again. And now they’re in a huge hole, with the debacle in the Senate races in 2016, they’re facing three times as many Democrats up for reelection in 2018.

The [third] millstone is they decided to campaign by TV, with political consultants influencing them and getting their 15-20 percent cut. When you campaign by TV you campaign by slogans, you don’t campaign by policy.

Next millstone, the labor unions began getting weak, weak in numbers and weak in leadership. They began shelling out huge money to the Democrats for television. And as they became weaker they lost their grassroots mobilization on behalf of the Democrats.

The Democrats began the process of message preceding policy. No — policy precedes message. That means they kept saying how bad the Republicans are. They campaigned not by saying, look how good we are, we’re going to bring you full Medicare [for all], we’re going to crack down on corporate crime against workers and consumers and the environment, stealing, lying, cheating you. We’re going to get you a living wage. We’re going to get a lean defense, a better defense, and get some of this money and start rebuilding your schools and bridges and water and sewage systems and libraries and clinics.

Instead of saying that, they campaign by saying “Can you believe how bad the Republicans are?” Now once they say that, they trap their progressive wing, because their progressive wing is the only segment that’s going to change the party to be a more formidable opponent. Because they say to their progressive wing, “You’ve got nowhere to go, get off our back.”

And this went right into the scapegoating of the last twenty years. “Oh, it’s Nader, oh, it’s the Koch Brothers, oh, it’s the electoral college, oh, it’s misogyny, oh, it’s redneck deplorables.” They never look at themselves in the mirror.

RN: Republicans, when they lose they fight over ideas, however horrific they are. Tea Party ideas, libertarian ideas, staid Republican ideas. They fight. But the Democrats want uniformity, they want to shut people up. So they have the most deficient transition of all. They have the transition of Nancy Pelosi to Nancy Pelosi, four-time loser against the worst Republican Party in the Republican Party’s history.

If you put Republican politicians today before the ghost of Teddy Roosevelt, Dwight Eisenhower, and “Mr. Conservative” Senator Robert Taft, they’d roll over in their grave. That’s how radically extremist, cruel, vicious, Wall Street, militarist the Republican Party is. Which means that the Democrats should have landslided them. Not just beaten them, landslided them in legislatures around the country, governorships, president and the Congress.

But no, it’s always the scapegoat. Maybe Jill Stein, the little Green Party, they took Pennsylvania and Michigan from Hillary the hawk.

JS: Democrats seem to have internalized the Republican perspective on everything involving the military.

RN: [Another] millstone is they could never contrast themselves with the Republicans on military foreign policy – because they were like them. They never question the military budget, they never question the militarized foreign policy, like Hillary the hawk on Libya, who scared the generals and ran over [Defense Secretary Robert] Gates who opposed her going to the White House to [push for] toppling the regime, metastasizing violence in seven or eight African countries to this day.

So they knocked out foreign and military policy, because they were getting money from Lockheed and Boeing and General Dynamics and Raytheon and so on. Even Elizabeth Warren when she had a chance started talking about maintaining those contracts with Raytheon. Here’s the left wing of the party talking about Raytheon, which is the biggest corporate welfare boondoggle east of the Pecos.

[Another] millstone is: Nobody gets fired. They have defeat after defeat, and they can’t replace their defeated compadres with new, vigorous, energetic people. Labor unions, the same thing. They [stay in positions] into their eighties no matter how screwed up the union is. You don’t get fired no matter how big the loss is, unlike in the business community, where you get fired.

The last millstone is, they make sure by harassing progressive third parties that the third party never pushes them. I’m an expert on that. They try to get them off the ballot. We had twenty-four lawsuits in twelve weeks in the summer of 2004 to get us off the ballots of dozens of states by the Democratic Party. Whereas if we got five percent, six percent of the vote they would be under great pressure to change their leadership and change their practice because there would be enough American voters who say to the Democrats, “We do have some place to go,” a viable third party. They harass them, they violate civil liberties, they use their Democrat-appointed judges to get bad decisions or harassing depositions. Before [third parties] finally clear the deck one way or the other it’s Labor Day and they’ve got an eight-week campaign.

There are some people who think the Democratic Party can be reformed from within by changing the personnel. I say good luck to that. What’s happened in the last twenty years? They’ve gotten more entrenched. Get rid of Pelosi, you get Steny Hoyer. You get rid of Harry Reid, you get [Charles] Schumer. Good luck.

Unfortunately, to put it in one phrase, the Democrats are unable to defend the United States of America from the most vicious, ignorant, corporate-indentured, militaristic, anti-union, anti-consumer, anti-environment, anti-posterity [Republican Party] in history.

End of lecture.


Despite Concerns About Blackmail, Flynn Heard C.I.A. Secrets

WASHINGTON — Senior officials across the government became convinced in January that the incoming national security adviser, Michael T. Flynn, had become vulnerable to Russian blackmail.

At the F.B.I., the C.I.A., the Justice Department and the Office of the Director of National Intelligence — agencies responsible for keeping American secrets safe from foreign spies — career officials agreed that Mr. Flynn represented an urgent problem.
Yet nearly every day for three weeks, the new C.I.A. director, Mike Pompeo, sat in the Oval Office and briefed President Trump on the nation’s most sensitive intelligence — with Mr. Flynn listening. Mr. Pompeo has not said whether C.I.A. officials left him in the dark about their views of Mr. Flynn, but one administration official said Mr. Pompeo did not share any concerns about Mr. Flynn with the president.

The episode highlights a remarkable aspect of Mr. Flynn’s tumultuous, 25-day tenure in the White House: He sat atop a national security apparatus that churned ahead despite its own conclusion that he was at risk of being compromised by a hostile foreign power.

The concerns about Mr. Flynn’s vulnerabilities, born from misleading statements he made to White House officials about his conversations with the Russian ambassador, are at the heart of a legal and political storm that has engulfed the Trump administration. Many of Mr. Trump’s political problems, including the appointment of a special counsel and the controversy over the firing of the F.B.I. director, James B. Comey, can ultimately be traced to Mr. Flynn’s stormy tenure.

Time and again, the Trump administration looked the other way in the face of warning signs about Mr. Flynn. Mr. Trump entrusted him with the nation’s secrets despite knowing that he faced a Justice Department investigation over his undisclosed foreign lobbying. Even a personal warning from President Barack Obama did not dissuade him.

Mr. Pompeo sidestepped questions from senators last month about his handling of the information about Mr. Flynn, declining to say whether he knew about his own agency’s concerns. “I can’t answer yes or no,” he said. “I regret that I’m unable to do so.” His words frustrated Senator Ron Wyden, an Oregon Democrat and a member of the Senate Intelligence Committee.

“Either Director Pompeo had no idea what people in the C.I.A. reportedly knew about Michael Flynn, or he knew about the Justice Department’s concerns and continued to discuss America’s secrets with a man vulnerable to blackmail,” Mr. Wyden said in a statement. “I believe Director Pompeo owes the public an explanation.”

After Mr. Pompeo’s Senate testimony, The New York Times asked officials at several agencies whether Mr. Pompeo had raised concerns about Mr. Flynn to the president and, if so, whether the president had ignored him. One administration official responded on the condition of anonymity that Mr. Pompeo, whether he knew of the concerns or not, had not told the president about them.

A C.I.A. spokesman declined to discuss any interactions between the president and Mr. Pompeo.

“Whether the C.I.A. director briefed the president on a specific intelligence issue during a specific time frame is not something we publicly comment on, and we’re not about to start today,” said the spokesman, Dean Boyd.

Concerns across the government about Mr. Flynn were so great after Mr. Trump took office that six days after the inauguration, on Jan. 26, the acting attorney general, Sally Q. Yates, warned the White House that Mr. Flynn had been “compromised.”

Ms. Yates’s concerns focused on phone calls that Mr. Flynn had in late December with Sergey I. Kislyak, the Russian ambassador to the United States. When the White House faced questions about whether the two men had discussed lifting American sanctions on Russia, Vice President Mike Pence told reporters that Mr. Flynn had assured him that sanctions were not discussed. Intelligence officials knew otherwise, based on routine intercepts of Mr. Kislyak’s conversations.

“That created a compromise situation,” Ms. Yates later told Congress, “a situation where the national security adviser essentially could be blackmailed by the Russians.”
Mr. Trump waited 18 days from that warning before firing Mr. Flynn, a period in which Mr. Pompeo continued to brief Mr. Flynn and the president. The White House has offered changing explanations for why the president waited until Feb. 13 — soon after Ms. Yates’s warning made national news — before firing Mr. Flynn.

White House officials have said they moved deliberately both out of respect for Mr. Flynn and because they were not sure how seriously they should take the concerns. They also said the president believed that Ms. Yates, an Obama administration holdover, had a political agenda. She was fired days later over her refusal to defend in court Mr. Trump’s ban on travel for people from several predominantly Muslim countries.

A warning from Mr. Pompeo might have persuaded the White House to take Ms. Yates’s concerns more seriously. Mr. Pompeo, a former congressman, is a Republican stalwart whom Mr. Trump has described as “brilliant and unrelenting.”

Mr. Pompeo was sworn in three days before Ms. Yates went to the White House. He testified last month that he did not know what was said in that meeting. By that time, C.I.A. officials had attended meetings with F.B.I. agents about Mr. Flynn and reviewed the transcripts of his conversations with the Russian ambassador, according to several current and former American security officials. Separately, intelligence agencies were aware that Russian operatives had discussed ways to use their relationship with Mr. Flynn to influence Mr. Trump.

Mr. Pompeo, who briefs the president nearly every day, had frequent opportunities to raise the issue with Mr. Trump.

The President’s Daily Brief is a rundown of what America’s spies consider the most pressing issues facing the United States. On any given day, it can include details of a terrorist plot being hatched overseas, an analysis of a foreign political crisis that threatens American interests or a look at foreign hackers who are trying to breach American government computer systems.

Each president takes the briefing differently. Mr. Obama was said to prefer reading it on a secure tablet. President George W. Bush liked his briefers to talk through the document they were presenting. Mr. Pompeo has described Mr. Trump as a voracious consumer of the briefing who likes maps, charts, pictures, videos and “killer graphics.

At an event last month at Westwood Country Club in Northern Virginia, Mr. Pompeo told retired C.I.A. officials that his briefings often ran past their scheduled 30 minutes, according to one retired official in attendance. Mr. Pompeo said Mr. Trump was eager for information and asked many questions.

At his confirmation hearing, Mr. Pompeo assured senators that he would provide the president with unvarnished information, even when it would be viewed as unpleasant. “I can tell you that I have assured the president-elect that I’ll do that,” Mr. Pompeo said.

On Capitol Hill, Mr. Wyden questioned why Mr. Pompeo continued having discussions with Mr. Flynn despite the concerns of intelligence officials. “He was the national security adviser,” Mr. Pompeo said. “He was present for the daily brief on many occasions.”

Mr. Flynn had no love for the C.I.A., and the feeling was mutual. An Army general who had risen to lead the Defense Intelligence Agency, Mr. Flynn emerged in retirement as a C.I.A. critic, blaming the agency for his firing and what he called its failure to foresee the rise of the Islamic State. He insisted the Obama administration had politicized the agency, an assertion Mr. Pompeo later said he saw no evidence to support.


In Germany, a new ‘feminist’ Islam is hoping to make a mark

Inside the red-brick building that now houses the German capital’s newest and perhaps most unusual mosque, Seyran Ates is staging a feminist revolution of the Muslim faith.

“Allahu akbar,” chanted a female voice, uttering the Arabic expression “God is great,” as a woman with two-toned hair issued the Muslim call to prayer. In another major break with tradition, men and women — typically segregated during worship — heeded the call by sitting side by side on the carpeted floor.

Ates, a self-proclaimed Muslim feminist and founder of the new mosque, then stepped onto the cream-colored carpet and delivered a stirring sermon. Two imams — a woman and a man — later took turns leading the Friday prayers in Arabic. The service ended with the congregation joining two visiting rabbis in singing a Hebrew song of friendship.

And just like that, the inaugural Friday prayers at Berlin’s Ibn Rushd-Goethe Mosque came to a close — offering a different vision of Islam on a continent that is locked in a bitter culture war over how and whether to welcome the faith. Toxic ills like radicalization, Ates and her supporters argue, have a potentially easy fix: the introduction of a more progressive, even feminist brand of the faith.

“The intention is to give liberal Islam a sacred space,” Ates said. “I feel very discriminated by regular mosques where women have to pray in ugly backrooms.”

The subject of withering criticism as well as hopeful support, the house of worship is part of a small but growing number of liberal mosques founded all or in part by women.
Seen by their backers as an antidote to gender bias that often leaves Muslim women praying in smaller spaces, the new kind of “feminist mosques” amount to a rallying cry for change, observers say.

In London, for instance, the female-founded Inclusive Mosque Initiative opened its doors in 2012. Female imams routinely lead prayers in spaces that welcome male and female Muslims of any sect — gays and lesbians included. More recently, mixed-gender or all-female prayers have spread to boutique mosques from California to Switzerland to Denmark.

Women and men traditionally pray separately in mosques for reasons of modesty. Some argue that the Koran does not explicitly call for separation, but others say that female voices should not be heard during prayer.

Nevertheless, women are said to have served as imams in ancient Islam, and female Muslim activists have been challenging the norms surrounding the religion for decades. Notable among these activists is Amina Wadud, an American who famously delivered a Friday sermon at a South African mosque in 1994.

Enter Ates, who opened the Berlin mosque largely through donations. A 54-year-old Turkish Kurd, she is both well known and polarizing in Germany’s Muslim community of more than 4 million. As a student, she narrowly survived a gun attack at a counseling center for Turkish women. And after years of fighting for women’s rights, repeated death threats forced her to close her legal practice in 2006.

The debut of her mosque brought a round of fire on social media from critics. “#Mosque without #Islam. Those who know Ates know that she is in favor of an Islam that is not based on its sources,” tweeted the advocacy group Generation Islam.

Burhan Kesici, chairman of the Islamic Council for the Federal Republic of Germany, dismissed her house of worship as a fad.

“We’re observing this and are wondering . . . how what is happening there is supposed to be rooted in Islam at all,” he said.

He added, “Of course women are equal. That there’s a separation in religious practice doesn’t mean that they’re not equal. I’m curious how long this congregation will last. . . . It seems a random conglomerate of different Islam critics.”

At the inaugural service Friday, the mosque housed inside an old theater space of a Protestant church lured more journalists than worshipers, as well as a significant security presence. Among the young Muslims attending was Haithm al-Kubati, 26, a Yemeni who moved to Germany six years ago.

It was, he said, his first time praying in a mosque with women.

“It still takes a bit of getting used to. But it’s often the case when something is new that it is a bit strange, perhaps even a bit scary. But I am sure that this is the way of the future,” he said.

Elham Manea, the female imam who shared in leading the Friday prayers, said mixed worship is an issue of equality.

“How and when a woman is asked to pray mirrors her social status within her community,” Manea said. “She is asked to pray separately from men, to cover her hair during prayer . . . and to stop praying during the days of her menstruation. . . . All these restrictions are imposed on her because they mirror the social conviction that a woman is not fully complete and perfect like a man and [that] she without doubt isn’t equal.”

“I understand that change is hard, because one is used to doing the same thing for centuries, and it will of course be difficult to change it. But still the time for change is now. . . . And we’re calling for it respectfully.”


Trump’s Businesses Show Mixed Returns During Campaign and Presidency

The Trump International Hotel in Washington and the Mar-a-Lago private resort in Florida have been among President Trump’s favorite spots to visit in the months since he became president. And both were among the most lucrative properties in his portfolio during what otherwise was a mixed year for the Trump family businesses, according to a financial disclosure report released Friday.

The 98-page report is the first official look at how Mr. Trump’s private finances fared during his campaign and the early months of presidency, even as he has stepped away from the day-to-day management duties of his company. They show Mr. Trump and his related business entities reported revenue of at least $597 million, down about 3 percent from the $615 million in the period a year before. Mr. Trump reported assets valued at a minimum of $1.4 billion, down slightly from $1.5 billion in 2016.

One place where his revenue fell considerably was at Trump National Doral, a golf resort near Miami and his biggest cash flow generator. It reported revenue of $116 million, down 12 percent from Mr. Trump’s 2016 disclosure, even though the Trump Organization recently completed a major renovation there.

Revenues at his aircraft company, which the Trump campaign used to move him around the country during his presidential bid, more than doubled to $7.7 million.
Revenues also jumped at Mar-a-Lago, which Mr. Trump has called the Winter White House,” reaching $37.3 million. That was an increase from $29.8 million in a roughly corresponding 16-month period that began in January 2015, and $15.6 million in a similar time period that began in early 2014. The Trump Organization doubled the initiation fee that new members must pay to join the club, shortly after Mr. Trump was elected president.

The document released Friday provides no new information about any possible ties to Russia, echoing the statement released last month by Mr. Trump’s lawyers. Mr. Trump’s business interests, which already have been the source of constitutional challenges and ethics complaints, are more complicated than those of any previous president. Even with the disclosure offered Friday, the picture of his finances is far from complete as they lack the level of detail normally provided in tax returns, which Mr. Trump has refused to make public.

As president, Mr. Trump has helped highlight his family’s properties by repeatedly visiting his golf courses and Mar-a-Lago. Since he was sworn in, he has visited family business properties on at least 42 different days, with 25 of those at Mar-a-Lago, according to a tally by The New York Times.

Mr. Trump filed the disclosure, which generally covers a period from January 2016 to April 2017, with the assistance of the Office of Government Ethics to follow a practice set by President Barack Obama. He was technically not required to make the filing until next year. It is not known how profitable the golf clubs and resorts are, because The Trump Organization is a private business and Mr. Trump only releases revenue figures in his public disclosures. “President Trump welcomed the opportunity to voluntarily file his personal financial disclosure form; while this filing is voluntary (as no report was due until May 2018), it has been certified by the Office of Government Ethics pursuant to its normal procedures,” White House representatives said in a statement.

One of the Trump Organization’s new endeavors, Trump International Hotel in Washington, D.C., set up in a once rundown federal building that the Trump family spent $200 million to renovate, had revenue of about $20 million, the disclosure said.

The hotel opened its doors in September and since Election Day it has become a magnet for foreigners and lobbyists, with executives explicitly pitching the hotel as smart place for foreign diplomats to hold events. The hotel has been the site of Bahrain’s National Day celebration, and a prominent conference on United States-Turkey relations. It also served as the host of the American Petroleum Institute board meeting in March — an event that drew two members of Mr. Trump’s cabinet — while also making the family company a considerable fee.

Revenue from his international operations — including residential buildings, golf courses and hotels in Latin America, Asia and the Middle East — did not change significantly in the last year even though several properties, for which he collects a licensing fee, opened recently including in Manila and Dubai. There were some exceptions, including a new tower in Vancouver, which produced at least $5 million in revenue, and an entity affiliated connected to Kolkata, India, which brought in $100,000 to $1 million.

Renewed sales of his 1987 book, The Art of the Deal, also increased. The title brought in at least $100,000, double the minimum revenue listed last year.

Lawyers involved in suing Mr. Trump, based on allegations that he is violating the Emoluments Clause of the Constitution because his businesses are accepting payments from foreign governments, said that the financial disclosure, while helpful, left many of their questions unresolved. “It just elevates questions,” said Maryland state Attorney General Brian E. Frosh, who this week sued Mr. Trump, along with the attorney general from Washington, D.C., in what is one of at least three such lawsuits. “Just how much money is he getting from foreign sources, who is he getting it from and what impact does it have on his foreign policy and his actions as president?”

Mr. Trump has vowed to donate profits that his hotel makes from foreign governments and officials. But his company has found that to be more difficult in practice, because it is hard to identify foreign government officials who conduct business there.

In total, he listed at least $310 million in liabilities, about the same amount as last year, although that is debt held only by companies that his family has majority control over. His creditors include a range of financial companies and banks, from big names like Deutsche Bank and Merrill Lynch, to lesser-known ones like Amboy Bank in New Jersey.

Mr. Trump has said his net worth is more than $10 billion, but other analyses have concluded that he is worth less. In March, Forbes estimated Mr. Trump’s net worth at $3.5 billion, $200 million less than a year earlier. It attributed the decrease to money he spent on the campaign, the real estate conditions around Trump Tower and other factors, such as the sale of his liquid assets, like stocks.