By: Tom Scriven
New York, New York – The Securities and Exchange Commission (“SEC”) has formally withdrawn 14 proposed rules, stating that it does not intend to issue final rules with respect to these proposals. Among the withdrawn rules are regulations that would have increased or modified the compliance requirements of private funds and their investment advisers, and registered investment advisers. If the Commission decides to pursue future regulatory action in any of the areas covered by the withdrawn rules, it will issue a new proposed rule.
Withdrawn Rules Relevant to Investment Advisers and Private Funds
The following withdrawn proposed rules are particularly relevant to registered investment advisers, private funds and their investment advisers:
Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices
Originally proposed June 17, 2022
This proposal would have required registered investment advisers, certain exempt advisers, registered investment companies, and business development companies to include enhanced disclosures regarding their environmental, social, and governance investment practices in regulatory filings, offering documents, and investor reports.
Safeguarding Advisory Client Assets
Originally proposed March 9, 2023
This proposal aimed to address how registered investment advisers safeguard client assets and would have amended certain provisions of the current custody rule.
Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers
Originally proposed August 9, 2023
This proposal would have addressed certain interactions between broker-dealers or investment advisers and investors through these firms’ use of predictive data analytics.
Cybersecurity Risk Management for Investment Advisers, Registered Investment Companies, and Business Development Companies
Originally proposed March 9, 2022
This proposal would have required registered investment advisers and investment companies to adopt and implement written cybersecurity policies and procedures, disclose information about cybersecurity risks and incidents, and report information to the Commission about certain cybersecurity incidents.
Outsourcing by Investment Advisers
Originally proposed November 16, 2022
This proposal would have prohibited advisers from outsourcing specific services or functions without first meeting certain requirements and would have required related form amendments to collect information about service providers.
Additional Withdrawn Rules
The SEC also withdrew nine additional proposed rules relating to a broker-dealer’s duty of best execution, public markets, exchange operations, and market structure, including rules on shareholder proposals, securities exchange operations, and market data systems.
Looking Forward
The SEC has not yet published its Spring 2025 regulatory agenda. The withdrawn proposals represented potential compliance obligations that will not be implemented. Should the SEC decide to pursue regulatory action in these areas in the future, it will need to issue new proposed rules subject to new comment periods.
Prior RPCK Coverage: RPCK previously addressed SEC scrutiny of ESG investing practices in our January 2020 client alert “SEC Scrutiny of ESG Investing” and discussed private fund adviser regulations in our September 2023 client alert “A Review of the SEC’s Sweeping Final Private Fund Adviser Rules.”
This alert provides general information and should not be construed as legal advice. For specific guidance on how these developments affect your organization, please contact your counsel.
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