Funds Associations Ask SEC to Consider Aggregate Cost of Rule Proposals
The Managed Funds Association ("MFA") and the National Association of Private Fund Managers ("NAPFM") urged the SEC to consider the aggregate cost of recently proposed rulemakings on private fund advisers and fund investors.
In their Comment Letter, the MFA and NAPFM expressed concern that the "sheer volume and scope" of the recent proposals would have "negative unintended consequences that the [SEC] has not fully considered." They said that the proposals’ cost-benefit analyses do not consider the real costs associated with the proposals, overstate potential benefits, and lack consideration for less burdensome alternatives. The associations also noted that the SEC failed to conduct a "comprehensive, holistic cost-benefit analysis" of all of the proposals. The MFA and NAPFM projected that if the proposals were to be adopted, they would impose "staggering aggregate costs, as well as unprecedented operational and other practical challenges," which would disproportionally impact new and smaller advisers.
The MFA and NAPFM underscored the importance of allowing interested parties to provide meaningful comment. They argued that the SEC has "deprived the public of [this] ability" due to the "number and interlocking nature" of the proposals. They added that most of the SEC's requests for comment include "hundreds of questions" and consideration of "numerous" alternatives.
Should the SEC decide to move forward with the rulemakings, the MFA and NAPFM recommended "grandfathering for existing arrangements where applicable (e.g., in connection with the Private Fund Adviser Proposal)" (see previous coverage) and proposing a workable schedule for adoption and implementation of the final rules.
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