July 26, 2023
Contact:
IAA VP of Communications & Marketing Janay Rickwalder.
Attribution to Gail Bernstein, IAA General Counsel
Based on our preliminary review and statements made by some of the Commissioners at the open meeting, the IAA is deeply concerned about the proposed rules around advisers’ use of technology. The proposal continues a troubling pattern in the Commission’s approach to rulemaking in the investment adviser space. The proposal again appears not to identify and support with data the need for a new regulation, seeming to dismiss existing regulatory obligations that already govern the conduct the proposal is trying to address. It also doesn’t seem to seriously consider operational difficulties or accurately describe the likely costs advisers will bear, particularly smaller advisers. These operational difficulties and costs will be on top of the many other new requirements coming at advisers at an unprecedented speed and scale.
This proposal is also another example of the Commission’s moving away from the principles-based regulatory framework for advisers – which includes their overarching fiduciary duty — towards more prescriptive and rigid requirements that will likely result in advisers’ judgments being second guessed in hindsight. The IAA will analyze the proposal carefully and engage constructively with the Commission through the comment process.
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