Investment Adviser Compliance: Latest Developments, Changes Likely Coming Under the New Trump Administration

Description

Under the Biden administration, RIAs were subject to increased SEC scrutiny, regulation, and compliance reporting obligations. The SEC under a second Trump administration will likely lean towards less regulation, a shift in enforcement priorities, and possibly more interpretive guidance rather than regulation by enforcement.

On June 5, 2024, the Fifth Circuit in Nat'l Assoc. of Private Fund Mgrs. v. SEC vacated the Private Fund Adviser Rules adopted by the SEC in August 2023. The rules made significant changes to the business, operations, and practices of private fund advisers and the ruling was considered a big win for the private funds industry. It is unlikely that the SEC under the Trump administration will seek to reinstate these rules in any significant way.

The SEC's Marketing Rule, enacted in late 2020, significantly impacted RIAs' marketing materials and other investor communications, performance calculations, and related disclosures, requiring RIAs to revise their compliance policies and procedures and recordkeeping practices. Due to the industry's views and the increased burdens to RIAs, it is likely that the new Republican-led SEC will explore deregulation in this area.

Other SEC changes likely to occur under the new administration include: less dramatic overhaul of the Safeguarding Rule and instead, new proposed rules to address unresolved issues pertaining to how RIAs hold client assets; ESG rulemaking and public company disclosures will likely be rewritten, repealed, or amended; and continued implementation of anti-money laundering requirements for RIAs.

Listen as our authoritative panel discusses the latest developments in investment adviser compliance and reporting.