SEC Withdraws Key Proposed Regulatory Rules Affecting Investment Advisers

The Securities and Exchange Commission (SEC) has formally withdrawn several significant rule proposals that had been issued under former SEC Chair Gary Gensler from early 2022 to late 2023. This action confirms that the SEC does not intend to finalize any of the affected proposals and will instead issue new proposed rules if it chooses to revisit these topics in the future.

This development is particularly noteworthy for investment advisers who have been preparing for potential compliance requirements tied to these rules. The withdrawals provide clarity and temporary regulatory relief, enabling firms to reallocate resources and adjust planning and budgeting accordingly.

Withdrawn Investment Adviser Rule Proposals

The withdrawn proposals include a number of high-impact, closely monitored regulations. Among the most consequential for investment advisers are:

• Conflicts of Interest Associated with the Use of Predictive Data Analytics (PDA/DEPs) By Broker-Dealers and Investment Advisers
• Safeguarding Advisory Client Assets (Custody Rule Amendments)
• Cybersecurity Risk Management for Investment Advisers, Registered Investment Companies, and Business Development Companies
• Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices
• Outsourcing by Investment Advisers

In addition to these, the SEC has also withdrawn several other rule proposals that were not specific to advisers but were broadly relevant to the securities industry. Full details can be found at SEC.gov.

Key Takeaways for Compliance Officers and Compliance Programs:

• The withdrawal halts assessment of proposal impacts and operational changes.
• Firms should continue to monitor new rulemaking for proposed replacements.

For more information or assistance evaluating how these changes impact your compliance program, please contact Bates Group today.