SEC Releases New Rules Agenda

The SEC has released an updated rulemaking agenda for this year. New Chairman Gary Gensler has been in office a few months now and is beginning to put his stamp on the Commission. As part of that, the rulemaking agenda has been updated to address recent concerns of the SEC. The new list of rules on the Spring agenda include prerule stage items, proposed rules, and rules within the final stage of acceptance.

In this ComplianceAlert we will highlight those rules that will affect the investment management industry if put into place. Those rules are highlighted below, by stage.

Prerule Stage

These are rules under consideration, but in the early development by Staff:

  • Exempt offerings under Reg D to further promote investor protections; another update to the accredited investor definition is on the table.
  • Third party service providers such as index and model providers will be reviewed for rulemaking by the Division of Investment Management
  • A new specific anti-fraud rule for security-based swaps (proposed Section 9j of the Exchange Act)

Proposed Rules

The list of proposed rules is not yet released as official proposals, but will be made public for comment:

  • SPAC rules
  • Proxy voting rules (in addition to what has been previously proposed)
  • Rule 206(4)-2 Custody Rule amendments
  • Rule 17a-7 cross trade rule amendments for investment companies
  • Form PF amendments for private funds
  • New ESG rules for investment advisers and investment companies
  • Short sale disclosure reforms
  • Securities lending rules

Final Rules

Rules that make it to the final stage are rules that have already been released as proposals and have undergone public comment. These are proposed rules that may be revised and sent again for public comment or finalized mostly as proposed. There are currently only a few final stage rules on the agenda and only one directly impacts money managers:

  • Shareholder reporting rules will be updated under the Investment Company Act of 1940 to modernize the rule and report formats.

Another item that has been proposed as a prerule item is gamification.The SEC is looking into how it may approach rules aimed at addressing this issue due to the frenzy of activity in meme stocks. Rules here could have an impact on firms that trade in meme stocks.

Based upon the Agency Rule List, it appears that any action by the SEC on the above rules would not take place until the Fall of 2021 or Spring of 2022. FrontLine will keep you informed of any meaningful developments as they occur.

View the complete Securities and Exchange Commission “Agency Rule List – Spring 2021”