New SEC Dealer Rule Will Hit Private Funds: SEC Roundup

Welcome to SEC Roundup, a bimonthly video series by former Securities and Exchange Commission senior trial counsels Nick Morgan and Tom Zaccaro, founders of the nonprofit advocacy group Investor Choice Advocates Network.

In this episode, Morgan talks with the Alternative Investment Management Association’s Suzan Rose about the recently finalized SEC rules regarding securities dealers, which Rose says expand the scope of broker-dealer registration to entities not traditionally considered as such, marking a substantial departure from longstanding practices.

Rose underscores the potential ramifications for businesses, particularly fund managers and private funds, whose operations may not align well with broker-dealer requirements.

A key concern raised is the open-ended nature of certain provisions within the rules, leaving room for interpretation and granting the SEC considerable discretion in their application. While some problematic standards were dropped from the final rule, the remaining provisions still pose challenges, especially regarding the potential classification of fund managers as dealers.

See the video above for the discussion with Rose.