Securities Regulation Daily Wrap Up, INVESTMENT ADVISERS—IAA letter to Atkins lists association's regulatory priorities, (May 2, 2025)

By Rodney F. Tonkovic, J.D.

IAA's wish list includes principles-based regulation, the review of certain new regulations and meaningful industry engagement before proposing rule changes.

The Investment Adviser Association sent a letter to new SEC Chairman Paul Atkins to share its membership's concerns as the agency's priorities take shape. The letter outlines several specific regulatory recommendations, including the extension of compliance dates for certain new requirements reviewing existing rules. The letter also urges process reforms for SEC staff to follow in rulemaking, guidance, examinations, and enforcement.

Principles. IAA first takes note of its own guiding principles, which it encourages the Commission to incorporate into the regulatory framework for investment advisers. The letter urges the SEC to reject its "recent prescriptive one-size-fits-all approach to adviser regulation" in favor of the "evergreen and adaptable approach" found in the principles-based framework of the Advisers Act. The letter also encourages the SEC to align its practices with the distinct needs of the full range of adviser business models, noting that most advisers are small businesses.

Regulatory measures, the Association says, must remain neutral and avoid favoring or disfavoring particular strategies and products. Such neutrality would allow advisers and investors to have access to a full spectrum of strategies and products to meet their goals.

Recommendations. Following up on a letter sent to Acting Chair Uyeda in January, the letter makes a series of policy recommendations. Most urgent to IAA's members is reopening the comment periods for new anti-money-laundering and Customer Identification Program rules. The letter asks that the comment periods for both rules be reopened in order that IAA members can review them in context. IAA also suggests providing reasonable compliance periods for both rules, "once they are better tailored to the business models and resources of advisers, including their level of AML risk."

IAA also recommends extending the compliance dates for new rules. The compliance date for Regulation S-P should be extended by 12 months, and by 6 months for Form PF. Among other benefits, the extensions would allow advisers to incorporate new technical, operational, and disclosure requirements.

The letter also contains recommendations for existing rules. E-delivery should be made the default option for required disclosures, IAA says, since it is easier and more efficient. IAA also believes that there are unnecessary restrictions on access to the markets and recommends the expansion of the accredited investor and qualified institutional buyer definitions. The association also requests a re-evaluation of the pay-to-play and custody/safeguarding rules and for additional guidance on the marketing rule.

Process reforms. Finally, IAA urges the SEC to adopt internal agency policies to guide the staff in rulemaking, guidance, examinations, and enforcement. Regulations, the letter says, should be efficient, effective, and appropriately tailored. To that end, IAA suggests that a comprehensive impact analysis be included in the internal policies for Investment Management staff. IAA also suggests a number of key principals for internal SEC processes, including obtaining industry feedback before issuing guidance or proposing rule changes; prioritize addressing misconduct and investor harm over technical infractions; and not using enforcement to establish new regulatory requirements.

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