By Carolina Mandl
The Managed Funds Association and five other groups have requested the Securities and Exchange Commission (SEC) to withdraw three proposed rules targeting investment advisers. This comes after a recent decision by the 5th U.S. Circuit Court of Appeals, which stated that the SEC lacked the authority to regulate the sector.
The court's ruling, which overturned an SEC rule on fee transparency for private funds, has prompted calls for the withdrawal of proposed rules on artificial intelligence, cybersecurity, and outsourcing. The trade groups argue that the SEC should reconsider its authority in light of the court's decision.
These developments have significant implications for the SEC's regulatory powers, especially in the face of ongoing legal challenges from corporate groups. The agency's ability to enforce rules and regulations has also been called into question by recent Supreme Court rulings.
While the SEC has not commented on the letter from the fund groups, it has stated that it will review all feedback from the public. The proposed rules aim to address conflicts of interest in the use of AI for investment decisions, ban certain outsourcing practices, and establish cybersecurity policies for advisers and funds.
Analysis:
In summary, private fund groups are pushing back against the SEC's proposed rules on AI, cybersecurity, and outsourcing following a court ruling that questioned the agency's authority. These rules could have far-reaching implications for investment advisers and their clients. It is important to monitor how these developments unfold and how they may impact the financial industry as a whole.