President Trump Issues Executive Order on Financial Regulation, and Memorandum on Department of Labor Fiduciary Rule

February 6, 2017

Last Friday, February 3, 2017, President Trump took two executive actions relating to U.S. financial markets and institutions.  First, the President issued an executive order titled “Core Principles for Regulating the United States Financial System.”[1]  The Executive Order articulates “core principles” with respect to financial regulation and directs the Secretary of the Treasury to advise the President within 120 days of actions being taken to promote those principles and to identify legal requirements that are inconsistent with the principles.  Second, the President issued a memorandum directing the Department of Labor to review its controversial “Fiduciary Rule” and to consider whether to revise or rescind it.[2]

Together, these executive actions indicate that the new Administration is prepared to undertake a vigorous re-appraisal of a number of the restrictions imposed on financial institutions during the Obama Administration.

Executive Order

The Executive Order announces seven “core principles” to guide the regulation of the American financial system:

  • “empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth”;
  • “prevent taxpayer-funded bailouts”;
  • “foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry”;
  • “enable American companies to be competitive with foreign firms in domestic and foreign markets”;
  • “advance American interests in international financial regulatory negotiations and meetings”;
  • “make regulation efficient, effective, and appropriately tailored”; and
  • “restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.”[3]

The Executive Order directs the Secretary of the Treasury to “consult with the heads of the member agencies of the Financial Stability Oversight Council”[4] and to report to the President within 120 days regarding the laws, treaties, regulations, other administrative requirements and guidance, and “other government policies” that “promote” or “inhibit” these core principles, and the steps being taken to “promote and support” the principles.[5]

The Executive Order builds upon the prior order titled “Reducing Regulation and Controlling Regulatory Costs” that the President signed earlier last week.  As explained in our analysis of that order, the requirement that agencies offset the costs of any new regulations with reductions in existing regulatory burdens–and that two rules be repealed for every new rule adopted–“will provide a significant incentive for agencies to examine current regulations to identify those that may be rescinded or modified to reduce regulatory burdens.”[6]  The most recent Executive Order indicates that financial regulation will be an area of special focus as the Administration undertakes its general efforts to reduce federal regulation.

Presidential Memorandum

The Presidential Memorandum addresses a package of rules adopted by the Department of Labor in April 2016.  These rules vastly expanded the definition of who is a fiduciary for purposes of ERISA and tax-favored investment accounts such as IRAs, and placed a range of new requirements, restrictions, and liabilities on advisers, broker-dealers, insurance agents, and others who offer financial services and products to retirement savers.  Several lawsuits have been filed challenging this “Fiduciary Rule”–including one in which Gibson Dunn represents the challengers–and the Rule has been criticized by legislators, industry participants, and some experts as burdensome, costly, and harmful to retirement savers, whose investment options they contend would be limited by the Rule.

The Presidential Memorandum takes heed of these criticisms and states that the Fiduciary Rule “may significantly alter the manner in which Americans can receive financial advice and may not be consistent with the policies of my Administration.”[7]  Accordingly, the Presidential Memorandum instructs the Department to review the Rule and “prepare an updated economic and legal analysis concerning the likely impact of” the Rule.[8]  The Department is to consider whether the Rule “has harmed or is likely to harm investors,” “has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees,” and “is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.”[9]  If the Department makes an “affirmative determination” as to any of those considerations or finds that the Rule “is inconsistent with the priority identified” in the memorandum, the Department is directed to “publish for notice and comment a proposed rule rescinding or revising the Rule.”[10]

Shortly after issuance of the President’s memorandum, the Acting Secretary of Labor released a statement that “[t]he Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”[11]

*   *   *

Reaction to the two actions on Capitol Hill has been mixed.  Rep. Jeb Hensarling (R – Tex.), Chairman of the House Financial Services Committee said that he was “very pleased” and that the President’s action “closely mirrors provisions” of his proposed Financial CHOICE Act, which is meant to “end and replace the Dodd-Frank mistake with legislation that holds Wall Street and Washington accountable.”[12]  Sen. Elizabeth Warren (D-Mass.) predicted that the President’s actions will result in “gutting the rules that protect [the public] from financial fraud and another economic meltdown.”[13]

Both the Executive Order and the Presidential Memorandum portend significant changes to the executive branch’s approach to regulation of the financial services industry.  By directing the Department of Labor to re-evaluate its legal and economic justifications for the Fiduciary Rule, the Presidential Memorandum takes the first concrete steps toward a repeal of the Rule or a substantial reduction in its scope.  And the Acting Labor Secretary’s press statement indicates that the Department may take action soon to delay the current April 10 deadline for some of the Rule’s principal requirements to come into effect.

Meanwhile, the Judge presiding over three of the pending lawsuits challenging the Rule issued an order on Thursday of last week indicating that she would issue her decision in the case by February 10, 2017.[14]

Similarly, the Executive Order gives clear shape and impetus to the Trump Administration’s unfolding reconsideration of the Obama Administration’s implementation of the Dodd-Frank Act.  Aspects of Dodd-Frank that have been the subject of criticism since the bill’s passage now have the potential to be deemed by the Treasury Secretary as inconsistent with the Executive Order’s “core principles,”[15] including:

  • the authority of the Financial Stability Oversight Council to designate particular companies as posing systemic risk;
  • the Orderly Liquidation Authority contained in Title II of Dodd-Frank;
  • U.S. implementation of Basel III capital requirements, particularly with respect to small institutions;
  • the extent to which U.S. regulators’ participation in international forums like the Basel Committee affects rulemakings;
  • banking agency enforcement of the Volcker Rule;
  • the extent of regulatory transparency in the Dodd-Frank stress testing and CCAR processes;
  • the regulations and enforcement approach of the Consumer Financial Protection Bureau;
  • the extent to which regulations place direct and indirect burdens on commercial end-users’ ability to manage risks;
  • the regulations and enforcement by U.S. banking agencies, the Commodity Futures Trading Commission, and the Securities and Exchange Commission of capital and margin rules related to derivatives; and
  • the Commodity Futures Trading Commission’s rules and interpretive guidance related to cross-border regulation of derivatives transactions.

Although the Executive Order does not itself pare back any regulations, it is another early signal of the Trump Administration’s intent to reduce the regulatory burdens on American businesses in general and the financial services industry in particular.

Gibson Dunn will continue to monitor these developments and the effect they may have on our clients.

    [1]  See Presidential Executive Order on Core Principles for Regulating the United States Financial System,, (Feb. 3, 2017).

    [2]  See Presidential Memorandum on Fiduciary Duty Rule,, (Feb. 3, 2017); Fiduciary Rule, 81 Fed. Reg. 20946 (Apr. 8, 2016).

    [3]  Order § 1.

    [4]  The FSOC member agencies are:  the Board of Governors of the Federal Reserve System; the Commodity Futures Trading Commission; the Federal Deposit Insurance Corporation; the Federal Housing Finance Agency; the National Credit Union Administration; the Office of the Comptroller of the Currency; the Securities and Exchange Commission; the Treasury Department; and the Consumer Financial Protection Bureau.

    [5]  Order § 2.

    [6]  Client Alert: President Trump Issues Executive Order on Reducing Regulation and Controlling Regulatory Costs,,–Controlling-Regulatory-Costs.aspx (Feb. 3, 2017).

    [7]  Memorandum.

    [8]  Id. § 1(a).

    [9]  Id.

    [10] Id. § 1(b).

    [11] Press Release, U.S. Department of Labor, US Department of Labor to Evaluate Fiduciary Rule (Feb. 3, 2017), available at

    [12] Press Release, Chairman Jeb Hensarling, House Financial Services Committee, President’s Executive Action Mirrors Financial CHOICE Act (Feb. 3, 2017), available at; see Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).

    [13] Press Release, Senator Elizabeth Warren, Statement on President Trump’s Executive Orders to Roll Back Dodd-Frank, DOL Conflict-of-Interest Rule (Feb. 3, 2017), available at

    [14] Chamber of Commerce of the U.S. v. Hugler, 16-1476, dkt. 134 (N.D. Tex. Feb. 2, 2017).

    [15] Order § 2.



The following Gibson Dunn lawyers assisted in the preparation of this client alert  Eugene Scalia, Helgi Walker, Michael Bopp, Arthur Long, Jeffrey Steiner, Carl Kennedy, Catherine Conway, Jason Schwartz, Jason Mendro, James Springer and Russell Falconer.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Administrative Law and Regulatory, Financial Institutions, Labor and Employment, or Public Policy practice groups, or the following practice group leaders:

Administrative Law and Regulatory Group:
Eugene ScaliaWashington, D.C. (+1 202-955-8206, [email protected])
Helgi C. Walker – Washington, D.C. (+1 202-887-3599, [email protected])

Financial Institutions Group:
Arthur S. Long – New York (+1 212-351-2426, [email protected])
Stephanie L. Brooker – Washington, D.C. (+1 202-887-3502, [email protected])

Labor and Employment Group:
Catherine A. Conway – Los Angeles (+1 213-229-7822, [email protected])
Jason C. Schwartz – Washington, D.C. (+1 202-955-8242, [email protected])

Public Policy Group:
Michael D. Bopp Washington, D.C. (+1 202-955-8256, [email protected])


© 2017 Gibson, Dunn & Crutcher LLP

Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.