On February 3, 2017, the new administration of President Donald J. Trump issued a pair of executive actions with a potentially dramatic impact on the financial sector and the investment funds market in the U.S. and beyond. One is an executive order, entitled “Core Principles for Regulating the United States Financial System” (Core Principles Memorandum), and the other is a presidential memorandum concerning the Department of Labor’s fiduciary duty rule (DOL Fiduciary Rule). Both actions are expressions of a general pro-business and anti-regulation stance on the part of the new President and administration, and they both contain provisions that may help the financial sector generally and the hedge fund industry in particular. The review and reevaluation of portions of the Dodd-Frank Act – as well as the delay and possible redrafting or even rescission of the DOL Fiduciary Rule – could provide huge benefits for a funds sector struggling under onerous regulations in recent years. To help readers understand the content, purpose and potential impact of the Core Principles Memorandum and the DOL Fiduciary Rule memorandum, the Hedge Fund Law Report has prepared this two-part series, summarizing both executive actions and including insights from attorneys specializing in financial regulations and employment and labor law. This first article addresses the Core Principles Memorandum, exploring the basic principles set forth therein and analyzing the action’s goals and the ways it may specifically benefit hedge funds. The second article
will analyze the possible impact that the presidential memorandum will have on the DOL’s Fiduciary Rule and what those changes would mean for hedge funds. For additional analysis of actions by the Trump administration, see “How Tax Reforms Proposed by the Trump Administration and House Republications May Affect Private Fund Managers
” (Feb. 9, 2017).