With rallies today in the financial districts of Boston and San Francisco, the AFL-CIO will launch a nationwide grass-roots campaign against President Bush's Social Security plan, arguing that scandal-ridden financial services firms in Boston and other cities should not be entrusted with private retirement accounts.

Secretary of State William F. Galvin, who has pressed improper-trading cases against several prominent financial firms, will be the featured speaker at the Boston rally, joining other opponents of the Bush Social Security plan who say the industry will reap huge profits on fees from workers' investments if the president's proposal is approved by Congress.

''These firms have a history of cheating their customers," Galvin, a Democrat, said yesterday. ''They are trying to gut Social Security for the benefit of Wall Street, which has done nothing to earn the confidence of working men and women."

The criticism of the financial services industry represents a new strategy for the heavily Democratic AFL-CIO, which is intent on blocking congressional approval of the Bush plan. The Boston rally is organized by the Greater Boston Labor Council, with logistical support from the national AFL-CIO office in Washington, and it will be mirrored by an event in San Francisco's financial district.

''This privatization is a racket for them," said Rich Rogers, executive secretary of the Greater Boston Labor Council.

One local industry official was not impressed with the strategy.

T. Neil Bathon -- president of Financial Research Corp., which provides market intelligence to investment firms -- acknowledged that the political leaders and unions have found easy targets in the investment industry, because of recent scandals that have hit giant firms such as Putnam Investments and Fidelity Investments.

But Bathon added: ''They are really blowing way out of proportion the actual damages done by firms that have been caught up in the scandals, in order to create hysteria meant to block Bush's initiative."

Bush's plan, aimed at what the president says is a projected future cash shortage in the program, would allow younger workers to use part of their payroll taxes to establish private accounts that could be invested in stocks and bonds. The president called Republican leaders to the White House yesterday to talk about his plans to get his proposal through Capitol Hill.

The president's Social Security plan is generating a huge lobbying campaign, pitting the AARP, many labor unions, and their allies among Democrats in Congress against businesses and free market advocates who argue that workers should have more control over their investments.

Democrats and their union allies are determined to block the president, saying his claims of a crisis in Social Security funding are exaggerated and that a privatization program would undercut one of the nation's most successful social programs. They say Bush's plan could lead to a cut in benefits for retired workers and add $2 trillion to the national debt.

''This is a priority of the AFL-CIO," said Bill Patterson, director of the AFL-CIO's Office of Investment. ''Dare I say, the priority."

Patterson and others at the AFL-CIO national headquarters said yesterday that the rallies will be followed by events in other major cities. Another phase will include an Internet campaign urging investors to try to force their investment managers to take a public position on the creation of private accounts.

Some major players in the financial services industry support the Bush plan, including Fidelity Investments, the Boston mutual fund giant.

According to Bloomberg News, Fidelity is part of group of major companies that also includes Boeing Co. and Pfizer Inc. that plans to spend ''significantly more" than $5 million to promote the Bush Social Security proposal.

Today's rally also highlights a major issue that has come to define Galvin's tenure as secretary of state and his carving out a role as an aggressive securities regulator. The issue would surely be a significant part of his possible candidacy for governor.

Galvin has pursued Putnam and Franklin Resources and has won some attention in Business Week recently for pressing some firms to admit guilt in settlements with regulators. Customarily, language in settlement agreements allows firms to say they neither admit nor deny wrongdoing.

In a September settlement with Galvin's securities division, Franklin Resources agreed to pay a fine of $5 million for allowing an investor to rapidly trade in and out of Franklin funds.

In April, Putnam agreed to pay $110 million to settle charges with state and federal regulators that it permitted certain clients and several of its own mutual fund managers to improperly trade Putnam funds. The Globe has reported that federal investigators are conducting a probe into improper gifts allegedly accepted by traders at Fidelity.

''There is no secret that this industry is salivating over all the fees that this effort is going to create," Galvin said.

Financial firms deny that they are seeking new revenues from fees. In fact, some of Wall Street's large firms are remaining silent on the Bush plan, and their analysts say that while the private Social Security accounts could pump $54 billion a year into the markets, the low margin in profits from running such small accounts is not necessarily appealing.

Galvin denied that his efforts to crack down on industry wrongdoing are related to a possible campaign.

''I have been out front on this issue since I first became secretary of state," said Galvin, who was first elected to the post in 1994.

© 2005 the Boston Globe

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