Fiduciary Rule

As of February 4, a memorandum to the Secretary of Labor directing a review of the new Fiduciary Rule that is due to be phased in beginning April 10, 2017 is the only executive action related to this item posted on the White House website. News reports refer to an executive order that delays implementation of 180 days, but so far there is no evidence of such an order.

I have done some online searching for information related to this rule and memorandum, and found at least some of the news reports to be either flat out wrong or at best less than accurate. For example, this Business Insider article is both helpful and misleading. It is helpful in that is posts the full text of the memorandum, but very misleading, especially in this sentence:  “The executive order gives power to the Secretary of Labor to rescind or revise the rule.” First, it is not an official executive order, and second, the Secretary of Labor does not have the power to rescind or revise rules unilaterally, even if directed by the president to do so.

At least an Investopedia article gives a more nuanced view and reports that many industry groups have supported the rule and will be unhappy if it is rescinded.

The official memorandum directs review of the new Fiduciary Rule and where changes are deemed needed “…then you shall publish for notice and comment a proposed rule rescinding or revising the Rule, as appropriate and as consistent with law.” This sentence at least recognizes the legal process for establishing or rescinding rules for implementation of legislation.

As I understand the fiduciary rule, I believe it is very important and should be kept, not revised or rescinded. Investors have not had the protections needed and the old rule dating back to 1974 needed revision in light of so many changes in the financial world since then.

[Ed. Note: Again in this memorandum, bad editing of the document posted on the website is evident. This time I had the version published by Business Insider to compare with the White House website version. In the White House version, the first paragraph is printed twice, both times ending without a period. The second paragraph is missing the first part that cites the law the rule applies to. Pretty shoddy work. I hope the official, signed version was not full of errors. That would be pretty embarrassing for the official archive.]

Presidential Memorandum signed February 3, 2017.


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