Critics of the Securities and Exchange Commission’s proposed increase in disclosure requirements for private advisors are getting a second chance to register disapproval as the agency announced it is extending the public comment period by an additional 30 days. It’s a victory for the financial services industry, which has largely come out in opposition to the changes, but does it signal the agency’s willingness to make concrete adjustments?
The move is potentially significant. Lawyers advocating for private advisers previously told me one limitation of an abbreviated comment period is that there wasn’t enough time to conduct research into the effects of the proposed changes. The month-long extension hardly sounds like fodder for a longitudinal study, but it could give affected parties time to kick the tires of proposed rule changes in more depth.
As global co-leader of Sidley Austin’s investment funds practice Elizabeth Fries frames it, industry participants could welcome additional time. “There are unforeseen consequences that have not been considered and at the end of the deal, with the short comment period and many questions posed, [the SEC] aren’t suggesting they want to think about those consequences,” Fries told me previously.
That perceived indifference could be another angle of the proposal—the extended comment period might provide political cover for what former SEC official and current Kroll’s head of financial services compliance Ken Joseph says are rule changes (largely) likely to take shape whatever objections are raised.
Despite the potential challenges on the timing for adopting new rules, Joseph says the agency’s mooted fall decision horizon is likely to stay. Political considerations could make it prudent for regulators to act before a potential electoral change in Congress changes the balance of power at the agency. Knowing this, SEC Chair Gary Gensler could see the window for action as brief.