Regulatory Compliance Watch Quotes Brian Daly on SEC and Funds Industry

For its article “Private fund advisers before the Fall,” Regulatory Compliance Watch quoted Akin investment management & private equity partner Brian Daly. The article looks at actions upcoming by the Securities and Exchange Commission (SEC) that could be impactful for the private funds industry, beginning with an August 23 vote on the private funds compliance rule.

Said Brian, “The private funds compliance rule is coming next week, there’s no mystery about that. I would think at this point, the Enforcement Division is doing its usual year-end wrap-up for matters in or entering a resolution stage. We’ve also just entered the comment period for the ‘predictive data analytics’ proposal. So, overall, we’re hunkering down for a busy next 15, 16 month period—at least until there’s a new president sworn in.”

On SEC Chairman Gary Gensler’s term leading the agency, Brian notes that he accelerated, not created, current trends, adding, “The gravitational pull on this is toward a large, integrated financial services model. When I started in this business, the hedge fund managers generally were refugees from the large investment banks. And they universally shared a disdain for ‘bureaucracy.’ In 2023 and beyond, the ‘bureaucracy’ of running a private fund is now rivaling that of a pre-Dodd-Frank asset management unit at a global investment bank.”

He noted that this model is the one that Washington has accepted, stating, “They want to see centers of control—centers of risk control, centers of compliance controls—the SEC wants to have a closer relationship with a smaller number of large, sophisticated advisers, and wants to worry less about a diffuse number of smaller players.”