SEC should pause work on rules, suspend compliance dates — Investment Company Institute

The Investment Company Institute, a trade association representing regulated investment funds, asked SEC Chair Gary Gensler to suspend compliance dates for certain agency rules and halt the work on rules not yet finalized, given likely leadership changes with the incoming Trump administration.

“Given the likelihood that the President-elect will seek leadership changes at the SEC, it is imperative that the next SEC Chair be given the opportunity to determine whether and how to advance recent rule adoptions and outstanding proposals impacting investors, funds, investment advisers, and the capital markets overall,” wrote Eric Pan, ICI’s president and CEO, and Paul Cellupica, ICI’s general counsel, in a letter to Gensler dated Nov. 18.

Former President Donald Trump, who is also the president-elect, previously said he would fire Gensler if elected, though it’s common practice for SEC chairs to step down when a new party takes over the White House.

In their letter, the trade association officials ask Gensler to suspend upcoming compliance deadlines for eight different rules, five of which are being challenged in court. That includes a rule expanding the statutory definition of a dealer, which faces one lawsuit filed in March as well as one filed in April.

“This backdrop further increases uncertainty — and quite possibly adds needless expense — for market participants,” Pan and Cellupica wrote in the letter. “We therefore recommend that the commission stay the effectiveness of new requirements currently being challenged until the courts issue their decisions.”

In addition, the ICI asked the SEC to halt its work on any proposals not yet finalized, contending that “new leadership at the commission should have the opportunity to evaluate the administrative record and determine next steps.”

“Rather than rush forward with final adoptions or re-proposals in these areas in the coming weeks, we strongly urge the commission to stop all work on these proposals,” Pan and Cellupica wrote.

The letter also urges “either the SEC or SEC staff extend any relevant relief directly or indirectly impacting funds, advisers, and their clients that is set to expire in the coming months,” specifically asking the agency to extend no-action relief related to the application of a rule, known as Rule 15c2-11, to fixed-income securities.