The Securities and Exchange Commission published its Reg Flex Agenda for the Spring of 2019. This gives us some insight to what regulatory changes are in the works. Three items caught my eye as likely to apply to private funds.
Harmonization of Exempt Offerings. Chairman Clayton had previously noted that the regulations around exempt offerings is a mess.
The Division is considering recommending that the Commission seek public comment on ways to harmonize and streamline the Commission’s rules for exempt offerings in order to enhance their clarity and ease of use.
Amendments to the Custody Rules for Investment Companies and Investment Advisers . The Custody Rule is full of footfaults. Most CCOs I’ve talked to have run into problems trying to figure out how the Rule applies to some particular circumstance. The abstract does not provide much insight into what aspect of the Rule is being discussed.
The Division is considering recommending that the Commission propose amendments to rules concerning custody under the Investment Company Act of 1940 and the Investment Advisers Act of 1940.
Amendments to the Marketing Rules Under the Advisers Act. Changes to the marketing regulations have been mentioned by the Commissioners several times. The regulations are well out of date from the age of digital communication. Plus, there is well of practice and unofficial law buried in No-action letters. It sounds like there is a lot of support to formalize that unofficial through a formal rulemaking.
The Division is considering recommending that the Commission propose amendments to rules 206(4)-1 and 206(4)-3 under the Investment Advisers Act of 1940 regarding marketing communications and practices by investment advisers.
These are merely items the Commission are working on or thinking about for regulatory action. It will take a consensus of the Commissioners to agree to start the rulemaking and agree to language. That may not happen. But at least they are thinking about them.