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SIFMA asks the SEC to reconsider its proposed new business continuity and transition planning rules

SIFMA’s Asset Management Group (SIFMA AMG) has submitted a letter to the US Securities and Exchange Commission asking the SEC to re-evaluate its proposal to require registered investment advisers to engage in and maintain records regarding business continuity and transition planning.

SIFMA AMG states that its members support the SEC’s goal to mitigate the risks of business disruptions for investors and have historically prioritized the implementation of comprehensive and robust principles-based business continuity programs, however, SIFMA AMG “respectfully asks that the SEC re-evaluate key elements of the proposed rule before any new rule is adopted or guidance is issued.” 

“The SEC has developed a very helpful discipline of providing investment advisers with timely guidance around best practices for successful business continuity planning,” said Timothy Cameron, managing director and head of SIFMA AMG. “We are concerned that the proposed rule would depart from this practice and establish cumbersome and ill-fitting expectations for advisers that could raise the possibility of fraud charges for firms that encounter even temporary interruptions in business operations. We are committed to working with the SEC to ensure robust business continuity practices that promote resilient and efficient operations.”   

Specifically, SIFMA AMG suggests that the SEC build upon its successful approach to business continuity planning under Rule 206(4)-7 under the Investment Advisers Act of 1940 by issuing additional guidance rather than a new rule. Should the SEC determine that a new rule is necessary, SIFMA AMG strongly urges the SEC to avoid imposing ‘fraudulent’ liability for business continuity practices and establishing a new, unprecedented level of accountability for functions carried out by third-party service providers.  

Additionally, SIFMA AMG believes separate transition planning requirements for advisers are unnecessary since current operational management practices and the existing regulatory framework already address any transition-related concerns cited by the SEC that may impact investors. 

Read SIFMA AMG’s comment letter.

More about the SEC's proposals.



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