“Dear Chair” Letter: Regulation of Investment Advisers
May 17, 2021
The Honorable Gary Gensler
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: Regulation of Investment Advisers
Dear Chair Gensler:
Congratulations on your confirmation as Chair of the Securities and Exchange Commission. On behalf of the Investment Adviser Association (IAA), I am writing to share our policy principles and highlight issues of concern to our members as you assess the agency’s priorities. We look forward to working with you, the Commission, and its staff and serve as a resource as you consider the many critical issues facing the approximately 13,000 registered investment advisers under the Commission’s primary jurisdiction and the more than 42 million clients that investment advisers serve as fiduciaries.
The IAA is the leading organization dedicated to advancing the interests of investment adviser firms. For more than 80 years, the IAA has been advocating for advisers before Congress and U.S. and global regulators, promoting best practices, and providing education and resources to empower advisers to effectively serve their clients, the capital markets, and the U.S. economy. The IAA’s more than 600 SEC-registered member firms reflect the broad investment adviser industry and range from many of the world’s largest asset managers to smaller and medium-sized firms that reflect the core of the profession.
The IAA’s member firms manage more than $25 trillion in assets for a wide variety of individual and institutional clients, including pension plans, trusts, mutual funds, private funds, endowments, foundations, and corporations, both in the U.S. and globally. These firms are all registered as investment advisers with and, as such, subject to the primary regulation of the SEC under the Investment Advisers Act of 1940 (Advisers Act) and its fiduciary duty framework. As fiduciaries, investment advisers have a special relationship of trust and confidence with their clients, acting in their clients’ best interest throughout and with respect to all aspects of their advisory relationship.
Fiduciary advice has never been more important to consumers’ ability to save and invest for the future. The IAA’s members, which typically provide ongoing advice and portfolio management over the long term, play an important role in helping individuals navigate the complex financial markets and meet their financial goals, including investing for retirement, home ownership, or education. In addition, our members’ investments on behalf of clients in businesses large and small help those companies grow and create jobs. The investment adviser industry itself is a strong contributor to our economy, steadily adding firms, jobs, and new investors. And as the “buy-side,” our members are critical to the efficiency and vibrancy of our world-class capital markets.
II. Executive Summary
As you begin to develop your regulatory priorities for the Commission, we ask that you consider the following policy issues and regulatory challenges affecting investment advisers.
- Policy Issues
- The IAA believes that the standards of conduct rulemaking package contains the tools to achieve its investor protection goals through the Commission’s meaningful interpretation, implementation, and enforcement of its provisions. We also support the need for investor testing as to the effectiveness of Form CRS. We stand ready to work with the Commission to ensure the package as implemented is effective in educating and protecting investors.
- The IAA supports policies that facilitate advisers’ ability to engage in sustainable investing, including development of a framework for issuer disclosure to inform such investing.
- The IAA supports promoting the values of diversity, equity, and inclusion at all levels of the investment adviser industry.
- The IAA believes that regulation should be strategy neutral. Investment advisers should have the flexibility to consider factors and pursue investment strategies that best meet their client’s specific goals and policy should not explicitly or implicitly favor one type of investment strategy over another.
- The IAA also believes that regulation should be technology neutral in order to foster innovation and efficiency in our capital markets, while maintaining investor protection. For example, as the Commission has recognized, the use of technology by digital advisers to offer investment services does not change the fiduciary nature of their advice or the regulatory environment in which they operate.
- Smaller advisory firms face unique challenges as small businesses. The IAA recommends that the Commission consider the economic impact of regulations on smaller advisory firms more carefully, and conduct a more realistic assessment of the cumulative impact of policy and regulatory decisions on these firms’ businesses and their ability to serve the investing public.
- The IAA supports the dedication of robust SEC resources for investment adviser oversight. We believe that the Commission – an experienced and accountable government regulator – is in the best position and should continue to provide direct oversight over advisers and should be appropriately funded to do so.
- Specific Recommendations for the SEC’s Regulatory Agenda
- The IAA strongly supports modernization of the SEC’s framework for delivery of required information by facilitating e-delivery of client communications as the default option.
- The IAA supports reconsideration by the Commission of recent actions that make it more difficult and more expensive for investment advisers to engage in proxy voting on behalf of their clients, or to use proxy advisory firms, and recommends a focus on improving proxy infrastructure.
- The IAA believes that the Custody Rule under the Advisers Act should be reconceptualized and rewritten to better achieve the goal of safeguarding client assets while reducing confusion. We also recommend that the Commission adopt a principles-based approach to the safekeeping of digital assets, which would allow for continued evolution in this space.
- The IAA recommends that the Commission streamline and update the unnecessarily complex Pay-to-Play Rule.
- SEC Coordination with Other Regulators
- The IAA supports unified, federal coordination to address data breach, cybersecurity, and privacy regulation in order to create consistency and reduce complexity. A complex maze of federal and state requirements makes implementation and compliance extremely challenging and underscores the need for a uniform federal response.
- The IAA encourages the Commission, as the primary regulator of investment advisers with deep expertise in this area, to take the lead for the Financial Stability Oversight Council (FSOC) in evaluating any risks that may arise from asset management.
- The IAA supports strong coordination and information sharing among both U.S. and international financial regulators to ensure that requirements imposed benefit from shared expertise and minimize inconsistency.
In addressing these and other regulatory issues, we support adhering to the overarching principle of making regulations efficient, effective, and appropriately tailored to the stated objective. This includes applying more robust and comprehensive cost-benefit analyses to regulations, both new and old, as well as consideration of alternative approaches to regulation and factoring in the complexity and cumulative effect of all applicable regulations. We welcome the opportunity to engage with you, other Commissioners, and the staff to discuss each of these and other important issues in greater detail. We provide our specific comments on each of these topics below.
III. Policy Issues
- The Standards of Conduct Rulemaking Creates a Framework Through Which the Commission Can Achieve Its Investor Protection Goals
We commend the Commission for tackling the longstanding issue of the appropriate standards of conduct for financial professionals. The IAA has long advocated that all financial professionals who provide investment advice about securities to clients should be required to act in the best interest of their clients pursuant to strong fiduciary principles. The IAA actively engaged with the Commission and its staff on all aspects of this landmark rulemaking package and look forward to working with you as the Commission continues to implement and evaluate the effectiveness of the rulemaking. We believe that the rulemaking package provides a framework for strong investor-protective enforcement of financial professional conduct. For this reason, we believe it is unnecessary for the Commission to reopen the rulemaking.
The Commission’s fiduciary interpretation reaffirmed the special relationship of trust and confidence that advisers have with their clients. As fiduciaries, investment advisers have an overarching duty of care, loyalty, and the utmost good faith to act in the best interest of their clients throughout their relationship and must put their clients’ interests first at all times. In addition to full and fair disclosure, advisers must ensure that their conflicts do not taint their advice in any way. This strong principles-based standard remains at the heart of an investment adviser’s relationship with its clients and the fiduciary interpretation provides the Commission with the tools to enforce this robust standard.
We also believe that Regulation Best Interest (Reg BI), if strongly interpreted, implemented, and enforced, contains tools the Commission can work with to protect brokerage customers. It is critical for the Commission to continue to take steps to ensure compliance with all standards of conduct and we are encouraged that the Division of Examinations is reviewing compliance in this area.
As part of its implementation of the rulemaking, we are also of the view that the Commission should take action against financial firms and professionals that hold themselves out in a way that states or implies that they are fiduciary investment advisers or as having an ongoing relationship with their customers when that is not the case. Unfortunately, the Commission’s 2019 interpretation of the “solely incidental” provision in the Advisers Act that excepts broker-dealers from the definition of “investment adviser” is overbroad and contributes to continued blurring of the lines between advisory and brokerage services and a mismatch between investor expectations and reality. We do not agree with the Commission’s broad historic construction of “solely incidental” as advice that is “provided in connection with and is reasonably related to” brokerage activities. That said, we believe that stronger examination and enforcement of how brokers hold themselves out would help alleviate some of these concerns.
It is still unclear whether Form CRS is meeting the goal of educating investors about a particular firm or, critically, about the differences between investment advisers and broker-dealers such that investors can make an informed decision. IAA members have worked diligently to develop the new form and we appreciate the engagement of SEC staff as we have worked to help our members understand and implement the new requirement. We remain concerned, however, that the form may increase rather than alleviate investor confusion in this area. This is particularly true for sections of the form that require virtually identical boilerplate text for advisers and brokers, including the description of the standard of conduct, but also with respect to the description of services and conflicts. Accordingly, we recommend that the Commission conduct further investor testing of the form. Such testing would, we believe, identify areas where clarification or amendment of the form is needed.
It would also be helpful for the Commission to continue to engage in ongoing consumer education to help investors understand the important distinctions among various types of “financial advisors,” particularly the differences in services and whether duties apply on a transaction-by-transaction basis or throughout the relationship. The IAA looks forward to working with you and Commission staff to educate investors and ensure the rules serve investors well.
- The IAA Strongly Supports Policies that Facilitate Sustainable Investing
The IAA strongly supports policies that facilitate sustainable investing. An increasing number of investment advisers engage in sustainable investing strategies on behalf of their clients and consider ESG factors as an integral part of a prudent investment process and risk management, both as a way to maximize return for their clients over a long-term horizon and to respond to increased investor interest in sustainable investing. We believe that more consistent and comparable ESG disclosures by corporate issuers of material information will foster more effective sustainable investing by advisers on behalf of their clients by providing greater transparency to investors and facilitating apples-to-apples analysis of issuers. While our members support consistent and comparable issuer disclosure in this area, we are still developing our recommendations for a Commission approach in response to then-Acting Chair Lee’s March 15, 2021 request for public input, and plan to file our letter in the coming weeks.
The IAA also believes that advisers must have the flexibility to invest to meet a client’s goals and neither be restricted from nor mandated to consider a particular set of factors when making investment decisions, ESG or otherwise. We were disappointed with certain regulatory actions by the Department of Labor (DOL) that had a potentially chilling effect on advisers’ ability to consider ESG factors or pursue sustainable investment strategies on behalf of their clients. We are, however, encouraged by your statements during your recent confirmation hearing in support of the ability of investors and their advisers to follow sustainable strategies.
- The IAA Supports Tangible Progress on Issues of Diversity, Equity, and Inclusion in the Adviser Industry
The IAA recognizes that the investment adviser profession benefits from expanded diversity, equity, and inclusion (DEI). Our community must address the core issues underlying the gaps in diversity in the profession and must make meaningful progress. To that end, the IAA is committed to working collectively with our members to seek to promote DEI as a value for our industry and to providing education, information, and resources to help foster significant change.
The IAA supports the Commission’s goal of promoting DEI in the investment community, including through its Office of Minority and Women Inclusion (OMWI). We believe data is foundational to addressing diversity in the asset management industry and support legislative efforts to strengthen OMWI’s ability to collect data to monitor progress and trends and to identify and highlight diversity and inclusion policies and practices that have been successful. In addition, we are pleased that the Commission’s Asset Management Advisory Committee (AMAC) established a Diversity and Inclusion Subcommittee and has convened panels to discuss these important issues. We look forward to reviewing the recommendations of the AMAC and working with the Commission as it considers these recommendations for our industry.
- The IAA Supports an Approach to Regulation that is Strategy Neutral
The economic and investment landscape evolves continually and often rapidly. Investment advisers serve a wide range of clients with unique financial situations and goals. Investment advisers need the flexibility to make decisions and consider factors that they, in their expert judgment, reasonably believe advance the best interests of their clients. For that reason, regulations should not explicitly or implicitly favor one investment strategy over another, in effect selecting investments or investment strategies for clients. Such actions create a high risk of unintended and adverse consequences for investors, including making it more difficult for an adviser to invest prudently in investment options for a particular client or type of client based on the adviser’s expert assessment and the client’s specific goals.
For example, regulatory policies should not explicitly or implicitly favor passive or active management. There is broad agreement among experts that both passive and active management – and variations in between – have important roles to play in investment management and the markets. Active management, for example, can help investors meet their specific risk, return, and tax management goals. Active management is foundational to sustainable investing and it is critical to price discovery and market efficiency. Policymakers should recognize that value is not fairly measurable by a single metric of cost. Other aspects, including risk management, investor objectives, and investor preference for investments that reflect their values, also add value for that client. Investors should have access to a full range of investment strategies to meet their goals.
- The IAA Supports an Approach to Regulation that is Both Technology-Neutral and Investor Protective
We commend the Commission for being proactive in emerging technology implementation and for encouraging innovation while appropriately balancing investor protection. In particular, the SEC’s Strategic Hub for Innovation and Technology (FinHub) is a model for agency engagement in technology innovation. The IAA and our members look forward to continuing our open dialogue with the Commission in general and FinHub and the staff of the Division of Investment Management in particular to help foster responsible innovation. As the Commission considers the use of technology in financial services, we ask that you consider the following general principles:
- Continue to focus on investor protection, market integrity, and efficiency while supporting and facilitating exploration and implementation of innovation for the benefit of investors.
- Consider both the potential and the risks of new and emerging technology.
- Ensure that Commission regulations and standards are technology-neutral and not based solely on the presence, absence, or type of technology.
- Support financial institutions taking a reasonable, risk-based approach when assessing, implementing, and applying technology to their businesses.
- Coordinate with other federal, state, and international regulators with a view to avoiding imposing unduly burdensome, duplicative, or inconsistent requirements.
An example of the importance of being technology neutral is when traditional investment advice is provided to investors through the use of digital investment tools and algorithms. This past year digital advisers have added nearly three million new clients as the fastest growing area of new investment adviser clients. Digital advice reaches many individual investors who may not have typically invested or saved for important life events, providing a straightforward and low entry-point path for investment. The services provided by digital advisers are thus an important component in empowering Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth. Notwithstanding their vastly different businesses, all of these advisers continue to operate effectively as fiduciaries within the flexible, principles-based regulatory structure of the Advisers Act. They simply offer a modernized and accessible approach to traditional fiduciary investing.
We do not believe that these advisers should be treated differently from other SEC-registered investment advisers simply because of the medium through which they provide advice. Regulations also should facilitate the ability of firms to continue to develop and innovate in this area, including by developing new ways of communicating with and onboarding investors. The Commission issued helpful guidance to digital advisers in 2017 on how to meet their disclosure, suitability, and compliance obligations under the Advisers Act. Importantly, the SEC’s guidance reaffirmed that digital advice is subject to the Advisers Act fiduciary duty.
- It is Important that the Economic Impact and Compliance Challenges of Regulations on Small Advisory Firms be Factored into Rulemaking and Examinations
Small businesses are the backbone of the investment adviser community. They play an important role in helping individuals in their communities meet their financial goals. They have a special relationship of trust and confidence with their clients at a local, personal level. As of May 2020, 57.4 percent (7,749) of SEC-registered investment advisers reported on Form ADV that they employ 10 or fewer employees, and 87.6 percent (11,819) reported employing 50 or fewer individuals. The median number of employees of all SEC-registered advisers is eight. The vast majority of investment advisers are small businesses by any logical measure and they should be treated accordingly. Smaller advisers have been significantly burdened by “one-size-fits-all” regulations – and related staff guidance and Division of Examinations expectations – that effectively require substantial fixed investments in infrastructure, technology, personnel, and systems relating to documentation, monitoring, operations, custody, business continuity planning, cybersecurity, and more. The unique challenges facing smaller advisory firms would be recognized if the Commission conducted a more realistic assessment of the cumulative impact of policy and regulatory decisions on their businesses and their ability to serve the investing public.
Federal agencies are required by the Regulatory Flexibility Act (RFA) to analyze the economic impact of proposed regulations when there is likely to be a significant impact on a substantial number of small entities. They are also required to consider regulatory alternatives that will achieve the agency’s goal while minimizing the burden on small entities. However, as a practical matter, the Commission is not required to analyze the economic impact of its regulations on small advisers because, inexplicably, its definition of “small business” or “small organization” includes only advisory firms with less than $25 million in AUM. With rare exceptions, an advisory firm must have a minimum of $100 million AUM to fall under SEC jurisdiction. This definition thus makes the Commission’s economic impact analysis virtually meaningless. Moreover, because regulatory compliance depends on financial and human resources, using an AUM-based test as the only measure risks missing the true burdens of regulation on advisers. We recommend that the Commission utilize a more meaningful metric, such as number of employees, as well as increase the AUM threshold, to develop an alternative method for classifying investment advisers as small entities for purposes of the RFA.
We also urge the Commission to use the ever-increasing amount of data at its disposal to tailor regulations and its examination program more appropriately for smaller advisers, just as it has in other contexts. For example, public companies that meet the definition of a “smaller reporting company” under Rule 12b-2 of the Securities Exchange Act of 1934 (Exchange Act) are not required to report certain information, or are permitted to provide scaled disclosure or report information in lieu of some requirements in their periodic reports. Further, a smaller reporting company that qualifies as a “non-accelerated filer” is not required to provide an auditor attestation of management’s assessment of internal control over financial reporting and, in contrast to other reporting companies, has more time to file its periodic reports. In addition, the SBA Study identified other independent federal agencies that have differing compliance requirements for small businesses, involving partial exceptions, a choice of alternative methods for compliance, extended compliance timetables, and tiered requirements. We encourage the Commission to consider similarly tailored approaches to regulation and examination of smaller advisers.
- The IAA Supports Increased Commission Resources and Robust Oversight and Examinations of Investment Advisers
Effective oversight of and engagement with the advisory profession are critical to investor protection as well as investor confidence. The IAA believes that oversight of registrants is inherently a government function. We recognize and strongly support the Commission’s role as our industry’s primary regulator, and stand ready to assist in finding ways to enhance the Commission’s oversight of advisers. Indeed, we support full funding of the Commission to ensure that it is able to perform its critical oversight functions.
Effective oversight depends on efficient use of resources and up-to-date information. We thus support the use of examinations and other informal engagement with the industry as a means by which the Commission can both learn about and communicate its priorities and observations to the industry. Publication of the Division of Examinations’ annual examination priorities and frequent risk alerts helps maintain constructive lines of communication with advisers. We also commend the Commission for establishing the AMAC to help provide the Commission with diverse perspectives on asset management.
IV. Recommendations for the SEC’s Regulatory Agenda
We have engaged with SEC Commissioners and staff over many years on initiatives of importance to advisers, most recently on the Investment Adviser Marketing Rule. This new rule is a testament to the staff’s dedicated efforts. Collecting decades of guidance, accounting for all of the information technology, social media, and marketing practice advancements over more than half a century, working with stakeholders including the IAA to ensure informed public input, and fusing this all into a modern, principles-based, evergreen, workable framework presented a Herculean task. The final rule will significantly improve the information delivered by advisers to their current and potential clients about their advisory services.
The staff’s collaborative approach has also been evident in its outreach to the IAA and the industry more broadly in response to COVID-19. The business and economic disruptions caused by the pandemic created unexpected and unprecedented challenges for us all and we are proud of how well the investment adviser industry responded to the crisis. The IAA engaged with Commission staff throughout the past year to explain the many challenges advisers were facing and we appreciate the important regulatory relief that the Commission provided related to the crisis. We look forward to continuing to work with the Commission and Commission staff to address issues arising from post-pandemic office reentry and use of technology.
The investment advisory landscape has evolved significantly over the last 80 years, led by dramatic changes in technology and communications and affected also by lessons learned from the pandemic. The SEC and its staff have appropriately been taking a fresh look at certain core regulations governing investment advisers – as with the Marketing Rule – to make sure they are modernized and updated. In addition, existing rules and their burdens should be affirmatively re-evaluated on a regular basis to ensure they are effective, efficient, tailored, and appropriately targeted to protecting investors and the integrity of our markets and fostering capital formation.
To that end, we recommend: (A) facilitating e-delivery of required disclosures; (B) updating proxy infrastructure and revisiting Commission actions that make it more difficult and expensive for investment advisers to vote proxies on behalf of their clients and use the services of proxy advisory firms; (C) conducting a comprehensive review and rewrite of the Advisers Act Custody Rule; and (D) easing the needlessly complex strict liability provisions of the Pay-to-Play Rule. We also encourage the Commission to balance individual responsibility with the risk of personal liability of Chief Compliance Officers and others to whom the Commission designates responsibility in rulemakings (e.g., Liquidity Risk Management Program officers). We think it is unfortunate when dedicated and qualified individuals may be discouraged from serving in these roles because of an unduly high risk of personal liability.
- We Strongly Support Commission Action to Facilitate Electronic Delivery of Required Client Communications
We recommend that the Commission facilitate the use of e-delivery as a reliable and cost-efficient means for advisers to deliver required disclosures to clients. Current relevant guidance dates back to a series of SEC interpretive releases between 1995 and 2000. Under that guidance, an investment adviser may satisfy its ongoing disclosure delivery obligations by providing notice that the information is available electronically, ensuring effective access to such information, and either evidencing actual delivery or obtaining informed consent from clients. In practice, many advisers have been reluctant to use e-delivery due to the costs involved, implementation issues, and lack of clarity associated with the current consent requirements, even though it would be much more efficient and secure for those advisers to do so.
The pandemic has further underscored the urgency of addressing an issue that the industry and the SEC have been grappling with for some time now – how to modernize delivery to clients of regulatory disclosures while ensuring that the information is delivered reliably and that investor preferences continue to be respected. One of the biggest pain points for advisers adjusting to the new normal has been dealing with paper delivery of information to clients where these clients had not earlier authorized electronic delivery. Physical constraints on access to offices, printer disruptions, and safety concerns around handling mail have created new obstacles for firms to overcome as they prepare and send out required information.
We urge the Commission to make e-delivery of required disclosures the default option for required investment adviser communications. E-delivery isn’t just easier, more efficient, and more cost-effective for firms, but its greater flexibility allows for enhanced communications with investors. Investor preferences also have evolved, accelerated by the pandemic. Advancements in technology – like the Internet and social media – have changed the way people communicate across all facets of their lives, including with respect to their investments. An overwhelming majority of investors now have access to the Internet, and for many of them, going online or using social media, often on their smartphones, is the primary way they prefer to access, share, and receive information.
The IAA has long advocated for a shift in approach for e-delivery from the current “delivery with consent” model to a “notice and access” approach whereby an adviser would satisfy its delivery obligation by posting required disclosures on its website or other electronic medium and providing clients either a paper or electronic notice that informs a client that the information is available and explains how to access it. Advisers should also be able to satisfy delivery obligations by simply providing required disclosures directly electronically (e.g., by providing a PDF). Clients would have the option of opting out and receiving paper copies of the disclosures at any time. We look forward to the opportunity to collaborate with the SEC staff to improve the quality of investor communications and modernize the Commission’s framework for delivery of required information. We also recommend that the Commission conduct investor testing as it considers changes in this area.
- We Support Reconsideration of Recent Actions on Investment Adviser Proxy Voting and the Use of Proxy Advisory Firms
Investment advisers of all sizes routinely vote proxies on behalf of their clients consistent with their fiduciary duty. They often use proxy advisory firms for a wide variety of essential services, including assistance in managing the mechanics and administrative process of voting and reporting on proxies. Proxy advisory firms also provide substantial research and analysis and voting recommendations. We believe that the Commission should revisit policy choices that make it more difficult and more expensive for investment advisers to engage in proxy voting on behalf of their clients, or to use proxy advisory firms. In 2019, the Commission issued guidance for investment advisers on proxy voting and the use of proxy advisory firms. In 2020, the Commission issued supplemental guidance to investment advisers on the use of proxy advisory firms in connection with a rule that classifies proxy voting advice as a solicitation under the proxy rules, and requires proxy advisory firms to satisfy a number of requirements in order to be exempt from the proxy rules’ information and filing requirements. While the final rule addressed many of the issues that we raised with the Commission during the comment period, we remain concerned that the rule, combined with the supplemental guidance and the 2019 guidance, will chill proxy voting by advisers, particularly those that use proxy advisory firms. Accordingly, the Commission should withdraw the proxy advisory firm rulemaking and the 2020 supplemental guidance for investment advisers.
We were also extremely disappointed that, in seeking to address problems in the U.S. proxy voting system in recent years, the Commission chose to focus on proxy advisory firms rather than proxy infrastructure, which is in urgent need of attention. Investment advisers voting on behalf of investors should be able to rely on the integrity of the proxy process and there are serious deficiencies in that process that cast doubt on its integrity. Our members want assurances, for example, that the proxy votes that they cast on behalf of their clients are in fact counted and counted correctly. We suggest that the Commission study the data and feedback that it collected during the 2018 SEC Staff Roundtable on the Proxy Process to help its consideration of how to improve proxy infrastructure.
- We Support a Reconceptualization of the Custody Rule to Better Achieve the Goal of Safeguarding Client Assets
Safeguarding client assets is of paramount importance to investors, and we strongly support the important investor protection goals of the Custody Rule under the Advisers Act. However, we believe that the regulatory framework under the Custody Rule is overly complex and unduly burdensome, and has caused unnecessary confusion for advisers. In addition, the Custody Rule is an ill-fitting framework for assuring that safeguards of client assets are appropriately tailored to address the attendant risks. We believe that a comprehensive review and re-write of the Custody Rule are needed in order to make it workable, better tailor safeguards to risks, and avoid using this rule as a means to address policy concerns that are not truly custody in nature. We offer the following brief summary of our views on the rule.
Contrary to a plain English understanding of the rule’s “custody” title, the rule extends far beyond actual custody of client assets to include constructive or technical custody, including authority to withdraw client funds or securities or acting in a capacity that gives the adviser access to client funds or securities (e.g., acting as general partner of a partnership or trustee of a trust, or having legal ownership by virtue of establishing an omnibus account at a broker-dealer for the benefit of clients). By using the single term “custody” to cover physical possession as well as access and authority, the rule has created enormous confusion in the investment adviser industry. We believe that custody should be distinguished from access to or authority over client assets or securities. The Custody Rule should be reconceptualized so that the term “custody” applies only to actual custody of client assets, in the plain English sense of the word, and that safeguards to address risks arising from access to or authority over client assets are addressed through requirements for policies and procedures tailored to the specific risks.
In the absence of reconceptualizing the Custody Rule as we have suggested, there are several revisions that we believe should be made to the rule that would simplify its operation without reducing investor protections. We suggest, among other things, that the Commission specifically reconsider the provisions of the Custody Rule regarding: (i) exceptions from the definition of custody; (ii) surprise examinations; and (iii) the treatment of private securities under the rule. In addition, we address below two specific custody-related issues that have arisen in recent years: safeguards relating to transactions that settle on a non-delivery versus payment (non-DVP) basis and the treatment of digital assets.
- Custody Should Not Turn on the Method of Settlement of an Authorized Transaction
A particular area of concern under the Custody Rule is the treatment of trading that settles on a non-DVP basis. It is well established that authorized trading is not considered to confer custody on advisers. As we have previously commented to the staff, investment advisers have long understood that “authorized trading” includes, but is not limited to, trading that settles on a delivery versus payment (DVP) basis. That understanding was seemingly contradicted by the staff’s 2017 inadvertent custody guidance, which appears to take the position that an adviser could have custody if the instruments it trades settle on a non-DVP basis. This staff view is, in our assessment, inconsistent with the position taken by the SEC in 2003, and would effectively reverse the SEC’s prior position. It also could sweep into the Custody Rule a broad swath of securities transfers and settlement processes and a significantly larger number of advisers than appears to be anticipated in the Commission’s cost-benefit analyses under its prior amendments to the Custody Rule. The Commission should make clear that the authorized trading exception includes all authorized trading effected by investment advisers on behalf of their clients, regardless of the method of settlement.
- The Framework Developed for the Safekeeping of Digital Assets Should be Principles-Based
As digital assets evolve, investment advisers face a number of challenges under the Custody Rule. As a threshold matter, we believe it would be extremely helpful for the Commission to clarify when digital assets are securities so that advisers have greater certainty regarding their Custody Rule compliance obligations when advising clients on investing in digital assets. We are pleased that the Commission is continuing to develop its approach to how to safeguard digital assets and commend the Commission and staff for recently taking important steps to permit registered broker-dealers to take custody of digital assets. This action together with recent actions by the Office of the Comptroller of the Currency authorizing national banks to serve as custodians of digital assets are important steps to address this challenge while permitting advisers to assist clients in investing in digital assets. The Commission might consider working with stakeholders and other regulators to establish certain technology-neutral general principles for digital asset safekeeping that will keep up with the pace of innovation. We encourage the Commission to provide a framework for safekeeping of digital assets that is flexible, so as not to impede the development of this evolving market or improved technology. We look forward to working with the Commission as it considers the safekeeping of digital assets.
- We Support Streamlining and Updating the Pay-to-Play Rule
We recommend that the Commission review the efficiency and effectiveness of the Pay-to-Play Rule under the Advisers Act governing political contributions by investment advisers. The IAA strongly agrees with the SEC’s goal of preventing investment professionals from “buying business” through campaign contributions. However, the Pay-to-Play Rule is unnecessarily complex, costly, and burdensome, requiring extensive policies and procedures and significant efforts by compliance officers, and it should be more narrowly tailored to its intended purpose.
The Pay-to-Play Rule imposes a two-year compensation ban if an investment adviser or its “covered associate” makes certain political contributions to an “official” of a government entity client. The draconian penalties imposed under the rule strictly apply without regard for the intent underlying such contributions, and without regard for how minor the violation, and on a presumption that even a relatively modest and routine campaign contribution is per se problematic. We urge the Commission to move away from a strict liability approach and consider alternative approaches that are more tailored to its underlying objectives.
V. SEC Coordination with Other Regulators
- The IAA Supports Strong Coordination Among U.S. Financial Regulators
- We Support Unified, Federal Coordination to Address Data Breach, Cybersecurity, and Privacy Regulation
As cybersecurity threats continue to increase at breakneck speed, it is imperative for policymakers and regulators to act in concert to provide a framework to help companies, including investment advisers, address cyber risks. The IAA thus strongly supports a uniform, national approach to cybersecurity regulation in order to create consistency and reduce complexity. In addition, we support federal laws that facilitate cybersecurity information sharing, both among companies and between companies and law enforcement agencies. The IAA also supports creation of a single, national data breach notification regime that would make it easier for affected companies to comply with the law while ensuring that clients and customers are protected.
Today, investment advisers face a complex maze of federal and state requirements relating to cybersecurity and the reporting of data breaches that is difficult to navigate. Multiple federal agencies have issued regulations or statements regarding data security. To add to the complexity, many states also are considering or have issued their own cybersecurity regulations. States have adopted an array of inconsistent data breach notification laws and regulations that add to the confusion and regulatory burdens. For example, state laws differ from one another and from federal regulation in several respects, including timing of notice to individuals and regulators, as well as thresholds for reporting to a state attorney general. We urge the SEC to work with other federal regulators to adopt a uniform standard regarding data breach notification that is risk-based and based on the facts and circumstances surrounding the breach. We would also support preemption of separate state regulation in this area.
Data privacy laws are another area where federal coordination and preemption of state regulation are needed. The advent of the watershed General Data Protection Regulation in Europe in 2018, followed by the California Consumer Privacy Act in 2020, the soon-to-be-effective California Privacy Rights Act, and the recently enacted Virginia Consumer Data Protection Act have inspired other states to consider adopting their own comprehensive data protection laws. These laws are expected to expand state definitions of personal data to include a mix of categories and expand consumer rights to access, correct, delete, and obtain a copy of personal data provided to or collected by a company, and to opt out of processing of the personal data for purposes of targeted advertising, sale, or profiling of the personal data. Again, a patchwork of state laws makes implementation and compliance extremely challenging for investment advisers and underscores the need for a unified federal response.
- We Encourage the SEC to Take the Lead in Evaluating Any Risks That May Arise from Asset Management
Traditional asset management is not a source of systemic risk. Asset management is fundamentally an agency business where the asset manager is neither a counterparty to nor a guarantor of its clients’ investment risks, and its clients’ assets are held away at a qualified custodian. As the primary regulator of the asset management industry, the SEC should take the lead in evaluating whether new data, regulations, or other tools are necessary for asset management industry oversight. The SEC’s professional staff in the Division of Investment Management, economists specializing in asset management assessment in the Division of Economic and Risk Analysis, and market experts in the Division of Examinations are best positioned to evaluate whether there may be potential information gaps related to the industry and to recommend to the Commission appropriately tailored responses to emerging areas of focus. To the extent that specific activities are determined to raise systemic risk concerns, we believe that they should be evaluated across all firms and sectors, not through designation of individual asset managers as SIFIs.
- We Urge Collaboration with Other Federal Agencies on Regulations that Affect Investment Advisers
While the SEC is the primary regulator of U.S. investment advisers, many of our members are subject to other federal regulatory regimes as well, including those of the DOL, the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC). We believe as a general matter that these regulators should collaborate on issues affecting the entities subject to their joint jurisdiction to ensure that the requirements imposed are efficient, effective, and appropriately targeted. To the extent possible, they should share information and coordinate efforts to benefit from one another’s expertise and minimize duplication and inconsistency.
For example, we encourage the Commission to collaborate with the FTC and the Department of Justice (DOJ) in the antitrust area, such as with respect to the FTC’s recent proposal to amend Hart-Scott-Rodino (HSR) Act regulations. In December 2020, the FTC proposed significant changes to the HSR antitrust pre-merger filing requirements, the effect of which would dramatically increase HSR filings and impose significant costs and burdens on asset managers and investors without a commensurate benefit to competition. We believe the SEC’s expertise would help the FTC better understand how the fiduciary duty under the Advisers Act informs the way in which affiliated asset managers generally invest on behalf of their different clients.
We also suggest that the SEC collaborate with the FTC in studying CUSIP licensing practices. CUSIP identifiers are assigned to new securities by the CUSIP Service Bureau, which is operated by Standard & Poor’s (S&P). We understand that S&P’s efforts to obtain licensing fees for use of CUSIPs have become increasingly aggressive in recent years, with S&P threatening to freeze advisers’ ability to maintain CUSIPs in their database unless they not only pay the fee as determined by S&P but also allow S&P access to their databases to audit their use of CUSIPs. Because the use of CUSIPs is so prevalent, including by virtue of being required by numerous SEC regulations, S&P effectively has a monopoly over securities identifiers. We strongly recommend that the Commission work with the FTC (and the DOJ as appropriate) to initiate a review of S&P’s licensing practices and consider whether requiring the use of licensed identification numbers in regulatory filings poses potential liability, creates a monopoly on use fees, or is otherwise problematic.
- We Support Coordination of Efforts with International Regulators
The IAA supports the SEC’s coordination with relevant non-U.S. regulators and we believe that the SEC should lead or at least engage contemporaneously in such efforts as much as possible so that it is not in a position of having to follow policy that affects SEC-registered advisers that is set by non-U.S. regulators. In particular, we believe that the SEC should work with international regulators, including through memoranda of understanding, with the goals of ensuring that non-U.S. regulators understand the U.S. investment adviser industry and the implications of regulations for advisers and the clients and investors they serve, and limiting the challenges of inconsistent and duplicative regulation on advisers with a global footprint.
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We appreciate the continued willingness of the Commission and its staff to engage in a dialogue with the investment adviser community and look forward to continuing our constructive engagement during your tenure. Please do not hesitate to contact me if we may provide any additional information.
Karen L. Barr
President & CEO
The Honorable Hester M. Peirce, Commissioner
The Honorable Elad L. Roisman, Commissioner
The Honorable Allison Herren Lee, Commissioner
The Honorable Caroline A. Crenshaw, Commissioner
Sarah ten Siethoff, Acting Director, Division of Investment Management
Peter B. Driscoll, Director, Division of Examinations
Christian Sabella, Acting Director, Division of Trading and Markets
John Coates, Acting Director, Division of Corporation Finance
 For more information about the IAA, please visit www.investmentadviser.org.
 See 2020 Evolution Revolution, A Profile of the Investment Adviser Profession, available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/resources/Evolution_Revolution_2020_v8.pdf.
 See Commission Interpretation Regarding Standard of Conduct for Investment Advisers, 84 FR 33669 (July 12, 2019), available at https://www.govinfo.gov/content/pkg/FR-2019-07-12/pdf/2019-12208.pdf.
 See Statement on Recent and Upcoming Regulation Best Interest Examinations from the SEC Division of Examinations, Division of Examinations Staff (Dec. 21, 2020), available at https://www.sec.gov/news/public-statement/examinations-regulation-best-interest-2020-12-21.
 See Public Input Welcomed on Climate Change Disclosures, Statement by then-Acting Chair Allison Herren Lee (Mar. 15, 2021), available at https://www.sec.gov/news/public-statement/lee-climate-change-disclosures.
 Of course, investment advisers should clearly articulate their investment strategies so that investors understand an adviser’s philosophy and can make informed investment decisions. As fiduciaries, advisers must ensure that their disclosures, through the Form ADV framework or otherwise, match their investing strategies. Advisers must also address portfolio management in their required compliance programs.
 See Financial Factors in Selecting Plan Investments, Employee Benefits Security Administration, Department of Labor, 85 FR 72846 (Nov. 13, 2020), available at https://www.govinfo.gov/content/pkg/FR-2020-11-13/pdf/2020-24515.pdf. We commend the DOL for its recent announcement that it intends to review this rule and, in the meantime, that it will not enforce the rule. U.S. Department of Labor Statement Regarding Enforcement of its Final Rules on ESG Investments and Proxy Voting by Employee Benefit Plans (Mar. 10, 2021), available at https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/erisa/statement-on-enforcement-of-final-rules-on-esg-investments-and-proxy-voting.pdf.
 See Gary Gensler Testimony before the Senate Committee on Banking, Housing, and Urban Affairs (Mar. 2, 2021), available at https://www.banking.senate.gov/hearings/02/22/2021/nomination-hearing. See also Speech by then-Acting Chair Allison Herren Lee, A Climate for Change: Meeting Investor Demand for Climate and ESG Information at the SEC (Mar. 15, 2021), available at https://www.sec.gov/news/speech/lee-climate-change; and Statement by Commissioner Caroline A. Crenshaw, Remarks at Asset Management Advisory Committee Meeting (Mar. 19, 2021), available at https://www.sec.gov/news/public-statement/crenshaw-amac-remarks-031921. We strongly encourage the Commission to engage with the European Commission (EC) and other regulators with a view to ensuring that requirements that will affect U.S. investment advisers benefit from the SEC’s expertise.
 See IAA Letter to House Financial Services Committee, H.R. __, Diversity and Inclusion Data Accountability and Transparency Act (Apr. 19, 2021), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/about/Comment_Letter_Compendiums/2021/April_19__2021-_WatersMcHenryLetter041921Final.pdf.
 The IAA’s Active Managers Council supports education, research, and advocacy in this area. See www.activemanagers.com.
 See SEC Staff Issues Guidance Update and Investor Bulletin on Robo-Advisers (Feb. 23, 2017), available at https://www.sec.gov/news/pressrelease/2017-52.html. Should the Commission consider any recommendations relating to the use of technology to provide investment advice, we agree with the approach set out in this guidance, which recognizes the importance of a principles-based flexible fiduciary framework that applies uniformly to all advisers.
 17 CFR 275.0-7(a)(1) (defining an investment adviser as a small entity for purposes of the Advisers Act and the RFA if it: (i) has assets under management having a total value of less than $25 million; (ii) did not have total assets of $5 million or more on the last day of its most recent fiscal year; and (iii) does not control, is not controlled by, and is not under common control with another investment adviser that has assets under management of $25 million or more, or any person (other than a natural person) that had total assets of $5 million or more on the last day of its most recent fiscal year).
 This data is readily available in Form ADV and often used in other contexts to define the relative size of companies. See, e.g., Independent Regulatory Agency Compliance with the Regulatory Flexibility Act, for the Office of Advocacy, United States Small Business Administration (SBA Study) (noting, among other things, that the SBA’s definition of small business incorporates number of employees), available at https://www.investmentadviser.org/wp-content/uploads/2023/03/Independent-Regulatory-Agency-Compliance-with-the-Regulatory-Flexibility-Act-May-2013.pdf.
 The IAA thus supported bipartisan legislation that was passed by the House in the 116th Congress in 2018 as part of JOBS Act 3.0 but was not acted upon in the Senate. It was designed to ease the regulatory burden on smaller advisory firms by requiring the SEC to analyze the impact of regulations and consider alternative approaches that minimize the burden on small businesses in accordance with the RFA. See H.R. 2436, Investment Adviser Regulatory Flexibility Improvement Act, available at https://www.congress.gov/bill/116th-congress/house-bill/2436?s=1&r=3.
 By the same token, it is important for the Commission to ensure that its existing data reporting requirements remain warranted (i.e., the data are being used and serve a valid purpose) and that additional data requests are carefully considered, especially in light of data security risks.
 We support the Division of Examinations’ risk-based approach to selecting advisers for examination. While the exam rate is important, we agree with the notion that the adequacy of SEC oversight should not be driven by exam rate statistics. See 2021 Examination Priorities, Division of Examinations at 7, available at https://www.sec.gov/files/2021-exam-priorities.pdf; and 2020 Examination Priorities, Office of Compliance Inspections and Examinations at 4, available at https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2020.pdf. See also Speech by former Division of Enforcement Co-Director Stephanie Avakian, Measuring the Impact of the SEC’s Enforcement Program (Sept. 20, 2018), available at https://www.sec.gov/news/speech/speech-avakian-092018.
 According to our most recent Investment Management Compliance Testing Survey of compliance professionals, while nearly two-thirds (64 percent) of respondents cited COVID-19-related business continuity plans as the hottest compliance topic, an overwhelming 88 percent reported that COVID-19 had caused no material impact to their firm. Fully 81 percent of responding firms reported that all of their employees were working from home. The results of our annual surveys are available at https://www.investmentadviser.org/publications/investment-testing.
 As a recent example, we strongly support modernizing the applicable regulatory framework for cross trading under Investment Company Act Rule 17a-7 and increasing potential benefits to funds and fund shareholders. See IAA Letter to Sarah ten Siethoff, Acting Director, Division of Investment Management, Comments on Division of Investment Management Staff Statement on Investment Company Cross Trading Rule 17a-7 (Apr. 11, 2021), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/about/Comment_Letter_Compendiums/2021/April_11__2011_-_IAA_Cross_Trading_Rule_17a-7_Comment_Letter.pdf.
 See Use of Electronic Media for Delivery Purposes, 60 FR 53458 (Oct. 13, 1995); Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information; Additional Examples Under the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Company Act of 1940, 61 FR 24644 (May 9, 1996); and Use of Electronic Media, 65 FR 25843 (Apr. 28, 2000).
 See, e.g., Asset Management Advisory Committee Recommendations Regarding COVID-19 Operational Issues (Nov. 5, 2020) (offering recommendations to the SEC to improve core processes, including delivery of required disclosures, that were impacted due to the health and safety concerns brought about by COVID-19), available at https://www.sec.gov/spotlight/amac/operational-issues-amac-recommendations-final-110520.pdf.
 We note that the Commission has already allowed the use of the Internet as a platform for providing required disclosures to investors. For example, the Commission successfully adopted a notice and access approach with respect to the delivery of proxy materials and a variation of the approach with respect to the delivery of mutual fund shareholder reports. In doing so, the Commission has recognized the “vital role of the Internet and electronic communications in modernizing the disclosure system under the federal securities laws….” See Commission Guidance on the Use of Company Websites, 73 FR 45862 (Aug. 7, 2008), available at https://www.sec.gov/rules/interp/2008/34-58288.pdf.
 In fact, the Commission has cited its investor testing efforts and other empirical research concerning investors’ preferences for the use of the Internet as the primary medium for receiving required disclosures. See Investment Company Reporting Modernization, 80 FR 33590 (June 12, 2015) (citing studies showing that only 15 percent of American adults ages 18 and older do not use the Internet or email and that 94 percent of U.S. households owning mutual funds have Internet access), available at http://www.gpo.gov/fdsys/pkg/FR-2015-06-12/pdf/2015-12779.pdf.
 More recently, the IAA along with several other industry trade groups issued a discussion paper that lays out, at a high level, a path forward for the SEC to modernize its regulatory framework for investor communications to meet investor needs and preferences now and into the future. See E-Delivery: Modernizing the Regulatory Communications Framework to Meet Investor Needs for the 21st Century (Sept. 2020), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/publications/Electronic-Delivery-with-SIFMA-9-15-2020.pdf. We also support expanding the ability of advisers to use electronic signatures.
 See Commission Guidance Regarding Proxy Voting Responsibilities of Investment Advisers, 82 FR 47420 (Sept. 10, 2019), available at https://www.federalregister.gov/documents/2019/09/10/2019-18342/commission-guidance-regarding-proxy-voting-responsibilities-of-investment-advisers. Unfortunately, this guidance was issued without notice and comment. We support the notice-and-comment process under the Administrative Procedure Act before formal Commission action is taken. Commission and staff guidance can be helpful in appropriate circumstances but we believe it is important not to set new regulatory expectations in guidance without providing a notice-and-comment process.
 See Supplement to Commission Guidance Regarding Proxy Voting Responsibilities of Investment Advisers, 85 FR 55155 (Sept. 3, 2020), available at https://www.govinfo.gov/content/pkg/FR-2020-09-03/pdf/2020-16338.pdf; and Exemptions from the Proxy Rules for Proxy Voting Advice, 85 FR 55082 (Sept. 3, 2020), available at https://www.govinfo.gov/content/pkg/FR-2020-09-03/pdf/2020-16337.pdf.
 We recently submitted a letter addressing certain aspects of the Custody Rule and will be submitting additional recommendations in the near future. See Letter to the Commission, Engaging on Non-DVP Custodial Practices, from the IAA, SIFMA AMG, and the LSTA (May 13, 2021), available at https://www.investmentadviser.org/publications/comment-letters.
 See Letter to Dalia Blass, former Director, Division of Investment Management and Peter B. Driscoll, Director, Office of Compliance Inspections and Examinations, IM Guidance Update No. 2017-01 – Inadvertent Custody: Advisory Contract Versus Custodial Contract Authority, from SIFMA AMG and the IAA (Mar. 7, 2018), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/publications/SIFMA_AMG_IAA_Letter_to_SEC_Re_February_2017_Guidance_on_Custody.pdf.
 See Guidance Update, Inadvertent Custody: Advisory Contract Versus Custodial Contract Authority (Feb. 2017), available at https://www.sec.gov/investment/im-guidance-2017-01.pdf.
 See Custody of Digital Asset Securities by Special Purpose Broker-Dealers, 86 FR 11627 (Feb. 26, 2021), available at https://www.govinfo.gov/content/pkg/FR-2021-02-26/pdf/2020-28847.pdf.
 See Authority of a National Bank to Provide Cryptocurrency Custody Services for Customers, Office of the Comptroller of the Currency, Interpretive Letter #1170 (July 22, 2020), available at https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2020/int1170.pdf (clarifying national banks’ and federal savings associations’ authority to provide cryptocurrency custody services for customers).
 For more specific recommendations, see IAA Letter to then-Chairman Walter J. Clayton, Regulation of Registered Investment Advisers (May 10, 2017), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/publications/170510cmnt.pdf; and IAA Letter to the Commission, List of Rules to be Reviewed Pursuant to the Regulatory Flexibility Act (Aug. 9, 2019), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/about/Comment_Letter_Compendiums/2019/August_9__2019_-_IAA_Comment_Letter_Reg_Flex.pdf.
 We also note that many index providers have experienced consolidation, which is also resulting in aggressive pricing. Because the SEC requires that mutual funds use a broad-based benchmark in Form N-1A – the registration form for open-end mutual funds – and clients and distribution partners have come to expect “name brand” indices, advisers have little choice but to acquiesce to the index providers’ prices.
 We have commented previously to the SEC regarding CUSIP matters (see, e.g., Letter from The Bond Dealers of America, the IAA, and the Government Finance Officers Association of the United States and Canada, Request for Commission Action With Respect to CUSIP Identifiers (Sept. 9, 2014), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/publications/140909cmnt.pdf (expressing deep concerns regarding the operation of the CUSIP system, Commission rules that require the use of CUSIP numbers, and the collection of fees by S&P for usage of CUSIP’s standard security identifiers); see also Letter from The Bond Dealers of America, the IAA, and the Government Finance Officers Association of the United States and Canada, Request for Commission action re CUSIP identifiers (Nov. 10, 2010), available at https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/publications/101110cmnt.pdf.