On February 3, 2017, President Trump signed a memorandum addressed to the Secretary of Labor directing that the Conflict of Interest Rule Retirement Investment Advice, 81 Fed. Reg. 20946 (April 8, 2016) (the “DOL Fiduciary Rule” or “Fiduciary Rule”) be examined “to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice.” (See full text here.) Acting Labor Secretary Ed Hugler promptly issued a statement indicating that the DOL would “consider its legal options to delay the applicability” of the Fiduciary Rule, currently set to take effect on April 10, 2017.
Also on Friday, the President issued an executive order setting out his “Core Principles” on financial regulation. (See full text here.) The order instructs the Secretary of the Treasury to consult with the Financial Stability Oversight Council and report back within 120 days and periodically thereafter on the “extent to which existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other Government policies promote the Core Principles” with particular attention to such policies that “inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles.” The Core Principles favor independence in financial investing, economic growth, prevention of taxpayer-funded bailouts, competition, preservation of American interests in international financial negotiations, and restoration of public accountability. Ironically, many of these are the same principles the Dodd-Frank Act aimed to strengthen.
While widely touted as the first step to repealing the Dodd-Frank Act, the wording of this executive order is so ambiguous that it is difficult to fathom how it will be implemented or what effect the first report in 120 days (assuming no extensions) may have on the financial regulatory system. While the order will likely stymie any further rule-making under the Act for the time being, financial institutions would be reckless to assume that any existing regulation would not be enforced while this plays out.