SEC Plans to Finalize Multiple Proposed Rules for 2023

Vigilant Insights

Brief Introduction

The SEC proposed twenty-four rules in 2022. According to recent announcement, the rules are expected to be potentially finalized in their entirety by the end of 2024.

The first set of rules could be finalized in April, with the remaining rules potentially being finalized around October.

Who Is This Applicable To?

• These rules have implications for all member of the securities industries including, but not limited to:
  • Registered Investment Advisers
  • Registered Broker Dealers
  • Mutual Funds
  • ETFs

Rules Expected To Be Final In Spring 2023

1. Release No. 33-11028 Related to Cyber Security Risk Management for Funds and RIAs
   • Goal for the Rule:
     • Advisers and funds would need adopt and implement proper written policies and procedures to combat cybersecurity risks and properly address cybersecurity in their disclosures, among other requirements.
2. Release No. 33-11042 Related to Climate Change Disclosures
   • Goal for the Rule:
     • The impact of climate change on the registrant’s business, and how the business contributes to climate risk, would be just some of the information required in routine disclosures.
3. Release No. 33-11048 Related to SPACs, Shell Companies, and projections disclosures
   • Goal for the Rule:
     • Enhance investor protections in SPAC initial public offerings and other business combination transactions through increased disclosures, reported transactions, reported conflicts of interest, and reduced use of projections.
4. Release No. 33-11038 Related to Cyber Security Risk Disclosure For Public Companies
   •  Goal for the Rule:
     • Cybersecurity incidents would be required to be disclosed within four business days. Periodic disclosures should highlight cybersecurity risks and management strategies to combat the risks, among other requirements.
5. Release No. 34-93783 Related to Share Repurchase Disclosure
   • Goal for the Rule:
     • Publicly traded companies would be required to fill out a new Form SR with a multitude of information before EOD the next business day after a stock buyback.
6. Release No. 33-11030 Related to Beneficial Owner Reporting Regulation 13D-G.
   • Goal for the Rule:
     • Initial filing requirements for Schedule 13D and 13G shortened from ten days to five days with amendments of 13D being filed within one business day, along with expansion of Reg 13D-G and definitional clarifications.
7. Release No. IA -5950 Amendments to Form PF
   • Goal for this Rule:
     • For large hedge fund advisers and advisers to private equity funds, new current reporting of large events, losses, etc. within one business day of occurrence along with lower reporting thresholds.
8. Release No. IC -34441 Amendments to Rule 2a-7 for Money Market Funds
   • Goal for this Rule:
     • Increase minimum liquidity requirements, remove liquidity fees and redemption gates below certain thresholds, require certain funds to implement swing pricing, and enhance reporting requirements.
9. Release No. IA -5955 Regulating Private Fund Advisors
   • Goal for this Rule:
     • Significantly increase requirements for annual and quarterly disclosures, annual audits, fees disclosures, and prohibitions on a list of activities and practices contrary to public interest and those of other investors.
10. Release No. IA -6083 Amending Form PF and Other Hedge Fund Reporting Requirements
    • Goal for this Rule:
      • Provide greater insight into private funds’ strategies, operations, trends and exposure to systemic risk.
11. Release No. 34-93784 Exchange Act Rule 9j-1, 15Fh-4(c), and 10B-1
    • Goal for this Rule:
      • Prohibition of fraud and misconduct involving security-based swaps, coercion of a SBS Entity’s CCO, and a requirement to file with the SEC if a security-based swap position is above a certain threshold.
12. Release No. 34-94499 Removing Credit Ratings from Regulation M
    • Goal for this Rule:
      • To prevent artificial influence over a market for a security via references to credit rating.
13. Release No. 34-94062 Amendments to Exchange Act Rule 3b-16b
    • Goal for this Rule:
      • Expands Regulation ATS and extends Regulation SCI to alternative trading systems that trade government securities.
14. Release No. 34-89632 Amendments to the National Market System Plan
    • Goal for this Rule:
      • To enhance the security of the consolidated audit trail.
15. Release No. 34-94196 Amendments to Securities Transaction Settlement
    • Goal for this Rule:
      • Shorten standard settlement cycle from T+2 to T+1 and repeal T+4 standard for firm commitment offerings priced after 4:30pm.
16. Release No. 34-94524 New Rules 3a5-4 and 3a44-2 Related to Definition of a Dealer
    • Goal for this Rule:
      • To add further definition to the term “dealer” and “Government securities dealer” under Section 3 of the Securities Exchange Act of 1934.

Rules Expected To Be Final In Fall 2023

1. Release No. 34-95267 Shareholder Proposals under Rule 14a-8
   • Goal for this Rule:
     • Revise three of the substantive bases for exclusion of shareholder proposals to provide greater certainty and transparency to shareholders.
2. Release No. 33-11067 Amendments to Section 35(d) Involving Company Names
   • Goal for this Rule:
     • Increase investor protection by improving and clarifying the requirement for certain funds to invest at least 80% of their assets in accordance with the investment focus that the fund’s name suggests.
3. Release No. 33-11068 To Enhance Disclosures Related to ESG
   • Goal for this Rule:
     • To create a consistent, comparable, and decision-useful regulatory framework for ESG advisory services
4. Release No. 34-95431 Related to Clearing Agency Governance
   • Goal for this Rule:
     • Reducing the likelihood that conflicts of interest may influence the board of directors or equivalent governing body of a registered clearing agency.
5. Release No. 34-94615 Related to Security-Based Swap Execution and Registration
   • Goal for this Rule:
     • To create a regime for the registration and regulation of security-based swap execution facilities and address other issues relating to SBS execution.
6. Release No. 34-94313 Related to Short Sale Disclosure Reform
   • Goal for this Rule:
     • Greater transparency in the market through publication of short sale related data to investors and other market participants.
7. Release No. 34 -93613 Related to the Lending of Securities
   • Goal for this Rule:
     • Increasing the transparency and efficiency of the securities lending market by requiring any person loaning a security to report the material terms of the lending transactions to a RNSA.
8. Release No. 34-95388 Related to the Exemptions for Certain Exchange Members
   • Goal for this Rule:
     • Narrowing the exemptions from the requirement that broker-dealers register with a national securities association

Vigilant’s Final Conclusion

Not only was 2022 a record setting year for SEC proposals and amendments, but there are some indicators that 2023 may see even more aggressive regulation from the SEC.

As firms sift through the significant number of new rules and rule amendments, it is vital that compliance programs stay up to date with all SEC announcements.

Vigilant is prepared to help your firm make sense of this new regulatory climate. Allow us to evaluate how your firm may be affected by the implementation of these rules, and help craft a personalized plan to help your firm stay compliant while achieving your business goals.  

Contact Vigilant Today If You Need Compliance Assistance Staying Up To Date With These New Rules and Regulations