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February 3, 2017

YELLOW ALERT: Today’s Presidential Actions on Fiduciary Rule and Financial Services Regulations

Today, the White House issued two releases of import to the financial services community: a memorandum to the Department of Labor directing it to re-examine the fiduciary rule, and an executive order on financial services regulation.  Both actions are discussed in more detail below.

Memorandum Directing DOL to Re-Examine the Fiduciary Rule

President Trump released a memorandum instructing his Department of Labor to re-examine the fiduciary rule to determine whether it may have an adverse impact on: consumers’ access to retirement savings advice or products; the price of retirement services; the broader retirement services industry; and/or increased litigation risk.

Notably, the memo is silent on whether the Department should delay the rule’s pending applicability date while it conducts this assessment.  Some media outlets are reporting that the fiduciary rule has been delayed, which is not correct. The reports may stem from this DOL statement released earlier today: “The Department of Labor will now consider its legal options to delay the applicability of the date as we comply with the President’s memorandum.”

The president’s memo specifically instructs the Department to prepare “an updated economic and legal analysis” concerning the aforementioned issues.  To the extent it concludes that the rule will have adverse effects in any of these areas or concludes “for any other reason” that the [rule] is inconsistent with the Administration’s priorities of empowering Americans to make their own financial decisions and save for retirement, the Department is directed to “publish for notice and comment a proposed rule rescinding or revising the [rule], as appropriate and as consistent with law.”

While the memo signals some willingness on the part of the Administration to re-open the contentious rule (and potentially withdraw the measure altogether or significantly amend its content down the road), the release does not contain a clear directive to halt the implementation momentum already underway.

Interestingly, the memo calls for a formal rule-making process only if the Department unilaterally concludes that a longer-term measure (i.e., substantial amendment or rescission) is warranted.  However, if the Department opts to delay the rule’s applicability date on the basis of further policy and legal analysis—a move within the Department’s authority without explicit direction from the White House—it likely will require some formal process (e.g., public notice of a proposed delay and solicitation of public comments on the desirability and/or necessity of the delay, as well as comments on the merits of the impact-related inquiries discussed above) to avoid litigation challenges under the Administrative Procedures Act.

We will closely monitor the Department’s response to the President’s memorandum and provide additional updates, as appropriate.

Executive Order on Financial Services Regulation

President Trump also issued an executive order instructing the Treasury Department, in consultation with other Financial Stability Oversight Council agencies, to report to the White House within 120 days (and periodically thereafter) on the extent to which current laws, treaties, regulations, guidance, etc., promote or inhibit the Administration’s “Core Principles” for regulating the U.S.’s financial system.

According to the order, those principles include: empowering Americans to make independent and informed financial decisions; prevention of taxpayer-funded bailouts; fostering economic growth and vibrant markets through more rigorous analysis of systemic risk and market failures; enabling American companies to be competitive with foreign firms in domestic and foreign markets; advancing U.S. interests in international negotiations; making regulation efficient, effective and tailored; restoring public accountability within the federal financial regulatory agencies; and rationalizing the federal financial regulatory framework.

While the order only directs the agencies—for now—to study and report, it may be viewed as a springboard into broader Dodd-Frank reform efforts.

Please contact Joel Wood at or Joel Kopperud at or with any questions.