SEC’s Reg Flex Agenda Promotes Transparency While Adding Potential Compliance Burdens

The SEC recently published its latest semi-annual Regulatory Flexibility Agenda (Agenda) setting forth rulemaking actions that Chair Jay Clayton and his staff intend to pursue over the next several months. Investment advisers and hedge funds will be directly affected by several of the Agenda items, such as the reporting of proxy votes on executive compensation. Likewise, the Agenda’s provisions relating to business continuity and transition plans will affect investment advisers, although those proposed rules may be difficult to apply, given the variance in hedge fund manager sizes, profiles and leadership structures. Despite implementation and other challenges, the Commission’s push to publicize its rulemaking priorities helps fund managers prepare for possible major regulatory developments and marks a step toward greater transparency and accountability. To that extent, the publication of the Agenda aligns with the Trump administration’s stated pro-business stance. To cast light on the above issues, this article analyzes the Agenda’s provisions that are most relevant to private fund managers and provides insights from legal professionals with experience in SEC enforcement matters. For coverage of recent SEC enforcement trends, see “SEC Enforcement Action Highlights Highly Specific Regulatory Focus on Conflicts of Interest” (Jan. 25, 2018); and “SEC Signals Aggressive Stance on Individual Responsibility, Including Potential CCO Liability, in FY 2017 Annual Report” (Dec. 14, 2017).

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