By Alyssa Barcheers, Managing Director, U.S.
On June 12, 2025, the U.S. Securities and Exchange Commission (SEC) under new Chairman Paul Atkins officially hit “undo” on numerous rule proposals that were released under former Chairman Gary Gensler, including many that were expected to significantly impact investment advisers and private funds.
The SEC noted that it does not intend to issue any final rules with respect to these proposals, and any future regulatory action in any of these areas would start from scratch.
Why did this happen?
Former SEC Chairman Gary Gensler gained a reputation for being a tough, reform-minded regulator, proposing an historic 50 new rules in under three years. He frequently stated that as technology evolved, regulations should too. Authors of the Advisers Act could not have fathomed what the likes of AI, predictive analytics, digital assets and cybersecurity threats would all mean for the financial industry. Gensler sought to bridge that gap through rule-making.
When political tides shifted, though, the new SEC leadership reversed course. From the outset, Atkins made clear that he would be focused on streamlining regulations, trying to reduce complexity, avoid duplicative rules, and ensure appropriate cost-benefit analyses are conducted. This led to an unsurprising usurp of 14 of Gensler’s proposed rules.
What does this mean for your firm?
If you are an investment advisory firm, you can breathe a sigh of relief. Here’s a breakdown of withdrawn proposals with the largest impact on investment advisers:
- Use of Predictive Data Analytics: Advisers can continue to use these tools without restrictions but should remain mindful of the implications of existing regulations, such as those regarding privacy and confidentiality as well as recordkeeping
- Safeguarding Advisory Client Assets: The scope of client assets covered under the existing Custody Rule remains unchanged. Advisers will not need to revise their custody arrangements with respect to nontraditional assets such as cryptocurrency
- Cybersecurity Risk Management: There is no prescribed requirement for investment advisers to implement cybersecurity programs. However, strong cybersecurity practices remain essential and are still subject to enforcement under general fiduciary duties
- ESG Practices: There are no new ESG-specific disclosure requirements, but advisers should continue to ensure any ESG claims are accurate and not misleading. Additionally, advisers should ensure they follow any policies and procedures they have adopted with respect to ESG
- Investment Adviser Outsourcing: There is no mandated framework for oversight of service providers. However, advisers remain responsible for the performance and management of any providers they have engaged to perform services for clients
While this withdrawal certainly reduces near-term compliance burdens, the SEC indicated that some of these topics could be revisited in future rulemakings. The pause allows your firm the chance to reassess your internal controls and policies without a strict time constraint.
As always, IQ-EQ is here to help!
We’re actively monitoring regulatory developments and ready to assist your team with:
- Determining which aspects of your compliance program may still benefit from enhancements
- Adjusting ongoing projects in light of the rule withdrawals
- Developing a forward-looking strategy in case the rules resurface
Click here to find out more about our U.S. compliance consulting services and get in touch with our expert team.
