New SEC agenda will keep boards hopping during 2023

The latest update to the SEC’s regulatory agenda includes enough proposed and finalized regulations to keep fund boards at least as busy during 2023 as they were during 2022.

The most recent edition, which was published Jan. 4,  includes 52 items – 29 of which are listed as being in the final rule stage that could mean more implementation work during 2023.

“I support this agenda as it reflects the need to modernize our ruleset, moving deliberately to update our rules in light of ever-changing technologies and business models in the securities markets,” SEC chair Gary Gensler said in remarks posted to coincide with publication of the agenda. “Our ability to meet our mission depends on having an up-to-date rulebook…The SEC’s regulatory actions on this unified agenda would help make our markets more efficient, resilient, and fair, including through rulemaking items we have been directed by Congress to implement.”

Some of the new rules, such as the climate-risk disclosure rule proposal aimed at public companies, are likely to be delayed, possibly for years, by lawsuits and administrative battles.

Others, such as the rules on the reporting of proxy votes and changes in shareholder reporting, have already been approved and will begin to go into effect early this year.

SEC officials have given no indication the pace of rulemaking will be any less aggressive this year than it was last year, which could increase even further a workload registered fund companies have been complaining about since mid-2022 .

The SEC proposed so many new rules or rule changes so quickly – despite requests from the Senate, House of Representatives, White House, various industry associations and even SEC commissioners – that fund boards had trouble keeping up with which proposals were new, which had been revived after laying dormant for months or years and which were ready for final approval that would add even more to the workload of fund boards needing to approve and oversee the results of plans fund advisers laid out about how to comply with the new rules.

“This year was already going to be pretty busy,” Carolyn McPhillips, president of the Mutual Fund Directors Forum told Fund Directions in June, as it became clear that the SEC’s rulemaking had really kicked into high gear.

“Then we have two rule proposals on ESG, and on cybersecurity and money-market funds, and then outstanding rulemakings on proxy voting, tailored shareholder reports, securities lending – all of which are past the comment periods now,” she said. “Add to that things on the commissioner’s agenda that might come out – so custody, maybe third-party service providers and changes to the liquidity rule – it’s a lot just to keep up with, just to read and be able to comment on, let alone implement.”

Only a subset of the full regulatory agenda applies specifically to registered investment advisers, most of which fall under the direction of the Division of Investment Management.

Below are details about 16 of those proposals, their current status, SEC officials responsible for them, and links to pages of public comment that show what fund advisers, fund boards and their allies think of those rules.

We’ll also be touching base frequently with fund boards, their legal advisors and others among the Fund Directions audience to keep track of how the SEC’s agenda is affecting your own. But don’t wait for us to call.

Fund Directions exists to further discussion even among board members who are not comfortable taking a public stance on an issue that is important to the community.  If you want to talk, discreetly or not, with a Fund Directions writer, or offer your own analysis in an opinion article or Q&A, please let us know at FDLetters@withintelligence.com.

In the meantime we will continue to monitor these rules and others that readers might suggest, and update information as it becomes available.

SEC Regulatory Agenda, Fall 2022

      (Unified Agenda of Regulatory and Deregulatory actions, posted Jan 4)