德勤：2023年投資管理監(jiān)管展望 2023 investment management regulatory outlook

2023investment

management

regulatoryoutlook

CENTERfor

REGULATORY

STRATEGY

AMERICAS

Apackedagendafor2023:Gearingupfor

massivechanges1

Regulatorychurn3

Transformativeproposals

Overlappingregulatoryrequirements

Reinvigoratedenforcement10

IAmarketingrule

Electroniccommunications

Section15(c)andSection36(b)compliance

Ontheregulatoryhorizon13

Outsourcingbyinvestmentadvisers

Lookingtostayahead

ofuncertainty14

Endnotes16

Contacts17

Contents

2023investmentmanagementregulatoryoutlook

2

Thevolumeofchangewillrequire firmstobedeeply strategicintheir approachto complianceandregulatorymatters.

2023,includingoverhaulsoffirms’digitalengagementandcustodypractices.

1

Theinvestmentmanagementindustryisfacingatidalwaveofregulatorychangethatwillimpactfirmsandmarketsintransformationalandhardtopredictways.Wehaveidentifiedthreethemesthatfirmscanconsiderastheyassessthesweepingimpactsofthisregulatoryagendaontheirbusiness:

?Regulatorychurn:In2022,investmentandwealthmanagementregulatorsdevelopedapproachestoemergingtechnology,outdatedrules,andprogressivetopics.MostoftheactivitywasledbytheSecuritiesandExchangeCommission(SEC),whichapprovedmorethan30proposalstoamendexistingorcreatenewregulations.Thisambitiousagendahascreatedatremendousamountofuncertaintyandriskforfirms.Overlappingimplementationtimelinesandanticipatedlegalchallengestoruleswillmakeitdifficultforfirmstoeffectivelyallocatecompetingresources.

?Reinvigoratedenforcement:In2022thenumberofenforcementactionsbroughtbytheSECincreasedby9%.1Regulatorsalsoleanedheavilyonexistingrulestoenforceinareaswherenewregulationsarependingsuchasenvironmental,social,andgovernance(ESG)investingandcybersecurity.

?Ontheregulatoryhorizon:Despitethevolumeofinitiativesundertakenbyregulatorsin2022,weexpectseveralnewtopicstobeontheregulatoryhorizonin

2023investmentmanagementregulatoryoutlook

Apackedagendafor2023:Gearingupformassivechanges

2023investmentmanagementregulatoryoutlook

2023investmentmanagementregulatoryoutlook

2

3

2023investmentmanagementregulatoryoutlook

Regulatorychurn

Themassivenumberofruleproposalsin2022castsalongshadowofuncertaintyovertheregulatoryagendain2023.Howmanyoftheproposalsultimatelywilltranslateintofinalrulesthattheindustrymustimplement?Twobigfactorsthatlikelywilldeterminethisare(1)SECleadershipandoversightand(2)legalchallengestotheagenda.SincetheSEChasledthemarketregulators’newrulemakingactivity,theapproachofitsleadership(andspecificallyoftheChair)isparamount.ChairGensleridentifiedasweepingagendaofregulatorychangeandlikelyintendstofollowthroughonhisvision.WhileitispossiblethatexternalpressuresontheCommissionandtherealitiesofeffectuating,ratherthanproposing,changecouldforceprioritization.TheInvestmentCompanyActof1940(InvestmentCompanyAct)providestheSECwithbroadauthoritytoregulatetheindustry.2

Nevertheless,oversightoftheSEClikelywillintensifywiththenewCongress,particularlysincecontroloftheHouseflippednarrowlyinthemidtermelections.Givenitsnewleadership,weexpecttheHouseFinancialServicesCommittee(HFSC)toscrutinizeChairGensler’sagenda,andESGlikelywillbeanespeciallyhot-buttonissue.Legalchallenges,whichareallbutinevitableforthemostcontroversialproposals,arepotentiallystrengthenedbyrecentSupremeCourtrulings.3Nevertheless,firmsshouldplanasthoughtheproposedagendawillbeenactedbecauseevenifonlyafractionofitisfinalized,thechangeswillbeimpactful,andsignificantimplementationeffortswillberequired.Further,theuncertaintybroughtonbylegalchallengestofinalrulescouldlingerforyears,potentiallyplacingfirmsinanuntenablepositioniftheydonotprepareforanoutcomethatfavorstheregulators.

Despitetheuncertainty,firmsshouldbeawareoftheagendathatlikelywillbefinalizedin2023.Weidentifytwocategoriesofproposalsimpactinginvestmentmanagementfirms:(a)transformativeproposalsand(b)overlappingrequirements.Transformativeproposalsarethosethatexpandtheregulatoryperimeterorcompelseismicshiftsinindustrypracticesuchasrequiringcertainfundstoimplementswingpricing.Overlappingrequirementsreferstotherealitythattheheavyvolumeofrulemakinghasresultedinmultipleproposalsrelated

tothesametopic.Firmscouldhaveoverlappingrulesandrequirementsforhigh-prioritytopicslikeESGandcybersecurityfromasingleregulator.

Transformativeproposals

Swingpricing

TheSEChasapprovedtworuleproposalstobringswingpricingtoUSfunds.4Thefirstproposal,issuedattheendof2021,appliestocertainmoneymarketfunds(MMFs).5Thesecondproposalwouldbringswingpricingtomanyopen-endfunds.6Theproposalsaredesignedtoreduceshareholderdilutionandintendedtohelppreventrunsintimesofstress.

Table1.TheSEChasapproved

tworuleproposals

Moneymarket

fundproposal

Open-end

fundproposal

Increasesliquidityrequirementsforfunds

Amendsrule22e-4(“theLiquidityRule”)torequirefundstoassumethesaleofa“stressedtrade”sizeintheirliquidityrequirementsandremovesthe“l(fā)essliquid”investmentcategory,treatingtheseinvestmentsasilliquid

Preventsthemfromimposingliquidityfeesorhaltingredemptions

Preventsthemfromimposingliquidityfeesorhaltingredemptions

Requiresthatinstitutionalprimeandinstitutionaltax-exemptfundsimplementswingpricing

Requiresopen-endfundstoimplementswingpricing

Createsadditional

disclosureandrecord-

keepingrequirements

relatedtoanegative

interestratescenario

Requiresthesefundstoinstituteahardclose

2023investmentmanagementregulatoryoutlook

4

Implementingswingpricingwouldcreateoperationalcomplexitiesforfirmsandrequirecapabilitiestoaggregateandanalyzesignificantamountsofdatawithinashortimplementationperiod.7Theopen-endfundproposalstatesthatthehardclosewouldrequireintermediaries“tosubmitordersforfundsharesearlierthantheycurrentlydo[and]…mayaffectallmarketparticipantssendingorderstorelevantfunds,includingbroker-dealers,registeredinvestmentadvisers,retirementplanrecordkeepersandadministrators,banks,insurancecompanies,andotherregisteredinvestmentcompanies.”8TheSECestimatesthattheliquidityrequirementscouldresultinasmuchas15%offundsincreasingtheirdailyliquidassetsand50%increasingtheirweeklyliquidassets,therebyincreasingtheirdemandforrepos.9

Anotherimportantpartoftheproposedruleformoneymarketfundsrelatestohowthosewithstablenetassetvalues(NAVs)mighthandleanegativeinterestrateenvironment.Inthisscenario,fundsmayneedtoconverttoafloatingshareprice,whichwouldalsoresultinoperationalcomplexitiesandlikelynecessitatecoordinationwithserviceproviders.Theruleproposalwouldrequirefundstomaintainrecordsidentifyingthefunds’intermediariesthathavethecapacitytoadapttonon-stablesharepricesandthosethatdonot.Theproposalincreasesbarrierstoentryandmaylimittheavailabilityoftheseproducts,particularlyinstitutionalprimeandinstitutionaltax-exemptfunds.

Proposedreformsforprivatefunds

In2022,theSECapprovedaproposaltoenhancetheregulatorycomplianceobligationsofprivatefundadvisers(PFAs).Theproposalwould:

?Requireregisteredprivatefundadviserstoprovidetheirclientswithquarterlystatementsprovidingdetailsoffundperformance,fees,andexpenses.

?Requireregisteredprivatefundadviserstoobtainannualauditsforeachprivatefund.

?Requireprivatefundadviserstoobtainanddisseminateafairnessopinionforadviser-ledsecondarytransactionsaswellasawrittensummaryofanymaterialbusinessrelationshipsbetweentheadviserandopinionprovider.

?Prohibitallprivatefundadvisers(includingunregisteredPFAs)fromengagingincertainactivitiesthattheSEChasdeemednottobeinthepublicinterest,includingchargingfeesorexpensesonportfolioinvestmentsonanon-proratabasisandborrowingorreceivinganextensionofcreditfromaprivatefundclient.

?Prohibitingprivatefundadvisersfromengaginginpreferentialtreatmentwithlimitedexceptions.

TheSECisproposingaone-yearcomplianceperiodforfirmstoimplementthesechanges.Thus,firmsshouldbegintoevaluatetheproposal’simpactsontheirbusinessassoonaspossible.

Amendmentstothedefinitionofdealer

andgovernmentsecuritiesdealer

Two“definitional”proposalsexpandthescopeofentitiesrequiredtoregisterwiththeSEC.Ineffect,theseproposalswouldstretchtheregulatoryperimetertonewentities.10Thesecondofthetwoproposalsextendsthebroker-dealerregulatoryregimetomarketmakersnottypicallyunderitsumbrellabycreatingtwonewrulesthatdefinequalitativeandquantitativestandardsfordeterminingwhatconstitutesliquidityprovision“aspartofregularbusiness”undertheExchangeActof1933(ExchangeAct).11Theproposalfurtherdefines“aspartofregularbusiness”intheExchangeAct.Ineffect,theproposalwouldrequirecertainprincipaltradingfirms,privatefunds,andothermarketparticipantstoregisterasdealers.ThiswouldentailregisteringwiththeSECandtheFinancialIndustryRegulatoryAuthority(FINRA)andcomplyingwithfederalsecuritieslaws,includingreportingandcapitalrequirements.

5

wheretomakeinvestmentsandistheessenceofourthemeof“regulatorychurn.”Despiteitsuncertainfuture,itisimportantforfirmstounderstandthecontentsandobjectivesoftheproposal.

SincetheSEChasadditionalstatutoryauthorityoverinvestmentadvisers(IAs)andinvestmentcompanies(ICs),itproposedtwoadditionalprescriptiverulesrelatedtoESGfortheseentities:(1)amendmentstothefundnamesruleand(2)ESGdisclosurestandardsforIAsandICs.Thus,investmentmanagementfirmscouldhaveasmanyasthreeseparateESG-relatedruleproposalstoimplementfromasingleregulator.Thiscomplexitywillrequireagreatdealofcoordinationtoimplementeffectively.Asafirststep,firmsshouldassesswhethertheyhaveanadequateinternalstructuretomanagethecurrentvolumeofregulatorytransformation.

ESGdisclosureforinvestmentadvisersandinvestmentcompanies14

Thisproposal,approvedinMay2022,amendsrule497undertheSecuritiesActof1933andrule402ofRegulationS-TundertheSecuritiesExchangeActof1934andaseriesofreportingformstorequirespecificdisclosuresaboutESGstrategiesinfundprospectuses,annualreports,andadviserbrochures.Theproposedamendmentswouldapplytoregisteredinvestmentadvisers,certainunregisteredadvisers,registeredinvestmentcompanies,andbusinessdevelopmentcompanies.

TheproposaldefinesthreetypesofESGfundsandrequiresvaryinglevelsofdisclosureinaccordancewithhowcentralESGfactorsaretothefund’sinvestingstrategy.Asdefinedintheproposal,thethreetypesofESGfundsare:

1.Integrationfunds:Undertheproposal,integrationfundsarethosethatconsideroneormoreESGfactorsalongsidenon-ESGfactorsininvestmentdecisions,butwheresuchESGfactorsaregenerallynotmoresignificantthanotherfactorsintheinvestmentselectionprocess.ThesefundswouldberequiredtodescribehowESGfactorsareconsideredintheinvestmentprocessinthefundprospectus.

2023investmentmanagementregulatoryoutlook

Someinitialactionsthatfirmspotentiallyaffectedbytheproposalcantakeinclude:

?Workwithfirms’counseltointerpretandunderstandtheproposal.

?Conductastrategicassessmentofopportunitiesandtrade-offspresentedbyregulation.

?Identifythecurrentorfutureentitythatwouldregisterandperformaproformacapitalcomputation.

?Conductagapassessmentofthetechnologyandsystemsdesignandimplementationcapabilitiesrequired.

?Conductagapassessmentofthecomplianceprogramagainstleadingpracticesandregulatoryexpectations.

Iffinalized,firmswouldhaveoneyeartocomeintocompliancefollowingtherule’seffectivedate.Thisplacessignificanturgencyonfirmstoassesstheiralternativesanddevelopaplanbeforetheruleisfinalized.

Overlapping

regulatoryrequirements

Environmental,social,and

governance(ESG)

In2022,theSECapprovedthreeseparateESG-related

proposals:oneforpubliccompanyissuers12andtwo

specificallyfortheinvestmentmanagementindustry.13

“TheEnhancementandStandardizationofClimate-

RelatedDisclosuresforInvestors”establisheddisclosure

andreportingrequirementsforall10-Kfilers.The

proposalpresentsbothareportingobligationtopublic

firmsandanopportunityforenhanceddataandmarket

transparencyforinvestingpurposes,makingitbotha

burdenandaboon.Infact,thepotentialfortheruleto

redirectcapitalflowsisattheheartofitscontroversial

nature.In2023,weexpecttheSECtoapproveafinalrule

thatdoesnotincludereportingofScope3emissions

andforthatfinalruletobechallengedincourt.This

createsalotofuncertaintyforfirmstryingtodetermine

6

2023investmentmanagementregulatoryoutlook

2.ESG-focusedfunds:TheproposaldefinesESG-focusedfundsasthosethatfocusononeormoreESGfactorsandusesuchfactorsasasignificantconsiderationinselectinginvestmentsorintheirengagementstrategywithcompaniesinwhichitinvests.Suchfactorscouldincludescreensforcarbonemissions,boardorworkforcediversityandinclusion,orindustryspecificissues.Thesefundswouldberequiredtoprovidemoredetaileddisclosures,includingastandardizedESGstrategyoverviewtable.IfanESG-focusedfundconsidersenvironmentalfactors,thefundwouldberequiredtodisclosetwodifferentgreenhousegasemissionmetricsinthefund’sannualreport.

3.Impactfunds:Asthenamesuggests,impactfundsseektoachievespecificESGimpactsorgeneratespecificESGrelatedbenefits.Thesefundswouldhavethesamerequirementsasother“ESG-focusedfunds”butwouldalsoberequiredtodisclosethefund’smethodologyformeasuringprogresstowarditsimpactobjective.

Theproposalspecifiesthatdisclosurerequirementsforunitinvestmenttrusts(UITs)willnotdistinguishbetweenintegrationandESG-focusedmodelsduetothestagnantnatureofUITportfolios.

Firmscanconsiderseveralactionswhen

preparingforafinalrule,including:

?Evaluatingtheproposalandexistingfundstoidentifyaffectedfundsandclassifyeachaseitheranintegration,ESG-focused,orimpactfund.Incaseswherethedistinctionisnotclear,itmaybeusefultoobtainalegalopinionastotheclassificationofeachfund.

?Assessingthemarketabilityofvariousfundtypestodeterminewhethertheadditionaldisclosureburdeniscost-effective.

?Documentingeachfund’sstrategy,investmentfactors,andclassificationundertherule.

?EvaluatingandidentifyingreliablesourcesofESGdata;planningtointegratedatasourcesasneeded.

?Creatingorenhancingprocessesandcontrolstoensurethatthefunds’assetsareinvestedina

mannerthatisconsistentwithitsclassification.

?Establishinginternalcontrolsandgovernancetoensurethesefundsaremanagedinaccordancewiththefundtypeclassification.

Theproposalrecommendsacompliancedateofoneyearfollowingtheeffectivedateofafinalruleformostofthenewrequirementsandan18-monthimplementationperiodforthosedisclosuresrequiredintheannualshareholderreportandonFormN-CSR.15

Amendmentstothefund‘NamesRule’16

OnthesamedaythatitapprovedtheESGdisclosure

proposal,theCommissionalsoapprovedaproposal

toamendthefund“NamesRule.”Theproposed

amendmentstoRule35d-1undertheInvestment

CompanyActincludesthefollowingchanges:

?Expandthe80%investmentpolicyrequirementtofundnamesthatsuggestthatthefundfocusesoninvestmentsorissuerswithcertaincharacteristics,includingbyusingtheterm“ESG.”

7

?ProhibitfundsthatconsiderESGfactors“alongsidebutnotmorecentrally”thannon-ESGfactorsfromusingESGterminologyintheirname.

?Incorporatebusinessdevelopmentcompanies(BDCs)inthedefinitionof“fund”undertherule.

?Requirethefundtousethenotionalamount(ratherthanmarketvalue)ofderivativesintheportfoliofordeterminingcompliancewiththe80%rule.

?Detailthespecificcircumstancesandtimingunderwhichafundispermittedtodepartfromits80%investmentpolicy.

?Prohibitregisteredclosed-endfundsandBDCsthatarenotlistedonanationalexchangefromchanging

the80%investmentpolicywithoutashareholdervote.

?Requirefundprospectusdisclosuresthatdefinethetermsusedinafund’sname.

?Requireadditionalrecord-keepingandreportingrelatedtohowthefundcomplieswiththe80%investmentpolicy.

Theproposalrecommendsaone-yearcompliance

periodforthefinalrule.Toprepareforafinalrule,firmscanconsiderseveralactions,includingconducting:

?AgapassessmentforexistingfundsandBDCstodeterminethosethatcomplywiththeamendmentsasproposedandthosethatdonot.

?Conductbusinesscaseevaluationsforanyfundswhosecurrentinvestmentstrategiesdonotcomplywiththeruleasproposedtorecommendeitherchangestothefund’snameortotheunderlyinginvestmentstrategy.

?Conductscenarioanalysesforanyfundsthatrely(oroccasionallyrely)onthemarketvalueofderivativesintheirportfoliotocomplywiththe80%rule.

?Developdefinitionsfortermsusedinfundnamesforinclusioninfundprospectuses.

2023investmentmanagementregulatoryoutlook

Cybersecurity

InFebruary2022,theSECapprovedtwocybersecurityruleproposals:oneforpubliccompanyissuersandanothertailoredtoinvestmentadvisersandinvestmentcompanies.17Advisersthatarealsopubliccompanyissuerswillneedtocomplywiththerequirementsinbothrulesassumingeachbecomeseffective.

CybersecurityriskmanagementWhatshouldinvestmentadvisers,registeredinvestmentcompanies,andBDCsanticipate?

InFebruary2022,theSECproposednewrulesandamendmentsunderboththeAdvisersActof1940(theAdvisersAct)andtheInvestmentCompanyAct.UndertheAdvisersAct,theSECproposed:(a)newrules206(4)-9and204-6,(b)amendmentstorules204-2and204-3(b),and(c)newFormADV-CandamendmentstoFormADV.UndertheInvestmentCompanyAct,theSECproposednewrule38a-2andamendmentstoFormsN-2,N-3,N-4,N-6,N-8B-2,andS-6.

Intotality,theproposalhasfourmajorcomponents:

1.Fundsandadviserswouldberequiredtoimplementcyberriskmanagementpoliciesandprocedures.

2.AdviserswouldberequiredtoreportsignificantcyberincidentstotheCommissionwithin48hoursonnewFormADV-C.

3.Advisersandfundswouldberequiredtodisclosecybersecurityrisksandincidentstotheirinvestorsandothermarketparticipants.

4.Advisersandfundswouldberequiredtomaintaincybersecurity-relatedbooksandrecords.

8

2023investmentmanagementregulatoryoutlook

Therulewouldalsorequireregistrantstoconsider

thecybersecurityriskscausedbytheirrelianceon

third-partyserviceproviders,includinghowadvisers

andfundscurrentlyconsidercybersecurityriskswhen

choosingthird-partyserviceproviders.Therulewould

alsorequireregistrantstoconsiderthecybersecurity

riskscausedbytheirrelianceonthird-partyservice

providers,includinghowadvisersandfundscurrently

considercybersecurityriskswhenchoosingthird-party

serviceproviders.Therequirementsoftheproposal

mirrortheleadingpracticesidentifiedintheSEC’s2020

“CybersecurityandResiliencyObservations”report,and

theSECpotentiallyhasenoughlawonthebooksalready

toenforcemanyoftherequirements.18

Theproposalraisesahostofconsiderationsforadvisersandfundsregardingtheircybersecuritypractices.19Someactionsfirmscantaketoprepareforafinalruleinclude:

?Elevatethegovernanceofcyberriskmanagement:TheruleproposalwillnecessitateclosercollaborationbetweenCISOsandCCOs.Forfirmsthatdon’thaveacorporateboardsubcommitteededicatedtocybersecurity,nowmaybeagoodtimetoorganizeoneoraddtotheresponsibilitiesofanexistingsubcommittee.

?Conductagapassessmentofcyberprogramcapabilitiesagainstleadingpracticesandregulatoryexpectations:Thiscanhelpfirmsbaselinetheircybersecurityprogrammaturityandidentifyimprovementareas.Firmsthathavenotalreadydonesoshouldreviewtheareashighlightedinthe2020ExaminationsReport,whichidentifiessevenareasoffocusforfirms,allofwhichareimplicatedintheProposingRelease.ThegapassessmentshouldalsoincorporateamappingofcurrentpracticestotheexistinglegalandregulatoryframeworkasdescribedbytheSECstaffintheProposingRelease.

?Adoptandimplementwrittenpoliciesandproceduresthatarereasonablydesignedtoaddresscybersecurityrisks.

?Acceleratethetimelineforenhancingyourcybersecurityposture:Aminimumbaselineofcybersecurityprogrammaturityisessentialtomanagerisks.Thespecterofregulatoryimperativecanbeapowerfulmotivatortomakeinvestmentsthatmaturecybercapabilities.

?Determineamechanismfortheadviser’sboardofdirectorstoapprovecybersecuritypoliciesandproceduresandreviewthewrittenreportoncybersecurityincidentsandmaterialchangestotheadviser’scybersecuritypoliciesandproceduresthatwouldbepreparedatleastannually.

?Identifyateamwithprimaryresponsibilityforcybercompliance:Firmsareincreasinglyadoptingspecializedanddeeplyskilledgroupstomanagecyberrisks.Theproposalaffirmativelystatesthatadviserswillhavetheflexibilitytoself-identifythegroupresponsibleforcybersecurityoversightasitpertainstotherule,whichmaybeacombinationofcomplianceandITprofessionalsaswellasthird-partyserviceproviders.

?Conducttabletopexercises:Firmsshouldhavetheabilitytohandlecriticalincidents,quicklyreturntonormaloperations,andrepairdamagetothebusiness.Tothiseffect,firmsneedtoreviewtheirincidentresponsepreparednessbyengagingincyberwargamingandothertabletopexercisestomeasuretheefficacyoftheirincidentandcrisisresponsecapabilities.

2023investmentmanagementregulatoryoutlook

2023investmentmanagementregulatoryoutlook

9

10

2023investmentmanagementregulatoryoutlook

Reinvigoratedenforcement

Afteryearsoflightpolicing,theSECisincreasingitsenforcementheadcountandredoublingitseffortstopoliceregistrants.Recordfineshavebeenimposedandrigidcompliancewithexistingstandardshasbeenrequiredinareaswherenewrulemakingisforthcoming.20Pairedwiththeonslaughtofnewrulemakingactivity,complianceexpectationsforfirmshaveneverbeensohigh.

IAmarketingrule21

InDecember2020,theSECfinalizedanewrulegoverninginvestmentadvisermarketingthatreplacedtwoexistingrules—foradvertisingand

cashsolicitation—withmodernized,principles-basedrequirements.Thenewrule,whichbecameeffectiveonMay4,2021,standardizespracticessincetheindustryhadbecomeheavilyreliantonvariousno-actionlettersissuedbytheSECtoadaptitsoldrules,whichhadnotbeenupdatedin40years,tonewtechnologiesandpractices.

In2023,theSECwillbeexaminingforfullcompliancewiththisrule.Tominimizetheriskofenforcementaction,thereareseveralstepsthatfirmscantake,including:

?CreatinganSECpresentationdeckdiscussingenhancementsmadebecauseoftherulechange

?Conductingareadinessassessmenttoidentifyanygapsvs.leadingindustrypracticesintheenhancementsmadetocomplywiththerule

?ReviewingtheSECriskalerttoensurethatanyfocusareasareproperlyaddressedinenhancementsandpreparationsforSECinspection22

November4,2022,markedthecompliancedatefortheruleandtheendofan18-monthtransitionperiod.InSeptember2022,theSECannouncedanexamsweepfocusedontherule.23WhentheSECreleasesitsfindingsfromthesweep,firmswillbeabletocomparethefindingswiththeirpracticestodeterminewhetherfurtheralignmentwiththeruleisneeded.In2023,theSECmaybringenforcementactionsincasesofseverenoncompliance.Thus,firmsthathavenotcompletedtheirpreparationsforcompliancefacegreaturgencytodoso.

Electroniccommunications24

InSeptember2022,theSECandCommodityFuturesTradingCommission(CFTC)leviedfinesagainst11