Updated Memorandum: SEC Expands the Definition of "Broker-Dealer" under the SEA
Commentary by Steven Lofchie
In February 2024, the SEC adopted two new rules requiring certain market participants to register with the SEC as broker-dealers.
In the original comment memorandum, US Regulatory Intelligence reviewed the rule, the consequences and numerous legal questions raised. This updated memorandum adds two Appendices: (i) a detailed discussion of the application of the registration requirement to multi-strategy firms and (ii) considerations on how to develop a compliance strategy. A summary on how to register as a broker-dealer is now included in a third Appendix.
Commentary
The updated memorandum includes new analysis on the application of the registration requirement to multi strategy firms, and recommendations on compliance strategy. It also includes a discussion of the two legal challenges that have been filed since the adoption of the final rule, as well as recent statements by SEC Chair Gensler in defense of the new rules.