SEC Commissioner Advocates for Substantive Review of New Advisers
In a recent speech, SEC Commissioner Elisse Walter asked the SEC to
consider implementing substantive review of investment advisers before allowing
registration. She said that the SEC
should implement a “vetting process” to review a registrant’s legal,
operational, and financial capacity to conduct its business. As an example, she suggested a process
similar to the one required of new broker-dealers. She also indicated that the SEC should
consider imposing financial requirements on advisers. Commissioner Walter also expressed support
for a more detailed fiduciary standard that prohibits certain conflicts rather
than merely requires disclosure. She
also reiterated her support for an SRO to regulate advisers.
OUR TAKE: Hedge
and private equity managers might want to consider expediting the registration
process and finish the process before the SEC makes registration more difficult.