The Securities and Exchange Commission published its twice-annual rule list agenda for the Fall 2023.
Back in June, four items caught my attention: Private Fund Reform, Cybersecurity, Outsourcing, and Safeguarding. Only one made it to publication. Unless you’ve been on vacation for a few months, you know the Private Fund Reforms became effective last month.
Cybersecurity (3235-AN08) has been pushed back to the Spring of 2024. It proposed mandatory cyber breach reporting and cybersecurity policies and procedures. The breach reporting was proposed as 48 hours. In my view that is way to short.
Outsourcing (3235-AN18) had been pushed back to Spring 2024 and it remains there. That rule had some fuzzy requirements about appropriateness of outsourcing and a requirement to conduct due diligence on service providers. I know the Division of Examinations has been compiling information as part of their exams.
Safeguarding (3235-AM32) has been pushed back to the Spring 2024. This replacement of the Custody Rule went too far in requiring custodians for more than just cash and securities.
What else caught my attention?
Regulation D and Form D Improvements (3235-AN04) is letting us know that the SEC is thinking about “amendments to Regulation D, including updates to the accredited investor definition, and Form D to improve protections for investors.” Nothing proposed, just a thought.
Predictive Data Analytics (3235-AN14) is an interesting swing in this current era of Artificial Intelligence mania and fear. I’m not sure the SEC is taking the right approach on this. On the other hand, one research report showed that the AI GPT-4 will insider trade knowing its against company policy and then lie about. (The Robots will Insider Trade). The SEC has a final action set for Spring 2024.
I missed the proposed rule amending the internet investment adviser rule in August. (I was on my bike for the Pan-Mass Challenge) It would amend Rule 203A-2(e) and narrow the exemption. Examinations are finding some abuse of the exemption.
“We are blessed with the largest, most sophisticated, and most innovative capital markets in the world. But we cannot take this for granted. Even a gold medalist must keep training.” – Chair Gary Gensler’s Statement
What proposed rules are catching your attention?
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