SIFMA AMG Submits Comments to the SEC on the BCP Recordkeeping Proposal

SIFMA.org  – Washington, D.C. – SIFMA’s Asset Management Group (“SIFMA AMG”) today announced it has submitted a comment letter to the Securities and Exchange Commission (“SEC”) regarding the SEC’s proposal to require registered investment advisers to engage in and maintain records regarding business continuity and transition planning (“the Proposed Rule”).

SIFMA AMG members support the SEC’s goal to mitigate the risks of business disruptions for investors and have historically prioritized the implementation of comprehensive and robust principles-based business continuity programs. Given this history and the shared goals of SIFMA AMG members and the SEC, SIFMA AMG respectfully asks that the SEC reevaluate key elements of the Proposed Rule before any new rule is adopted or guidance is issued.

“The SEC has developed a very helpful discipline of providing investment advisers with timely guidance around best practices for successful business continuity planning,” said Timothy Cameron, managing director and head of SIFMA AMG. “We are concerned that the Proposed Rule would depart from this practice and establish cumbersome and ill-fitting expectations for advisers that could raise the possibility of fraud charges for firms that encounter even temporary interruptions in business operations. We are committed to working with the SEC to ensure robust business continuity practices that promote resilient and efficient operations.”

Specifically, SIFMA AMG suggests that the SEC build upon its successful approach to business continuity planning under Rule 206(4)-7 (the “Compliance Program Rule”) under the Investment Advisers Act of 1940 (“Advisers Act”) by issuing additional guidance rather than a new rule. Should the SEC determine that a new rule is necessary, SIFMA AMG strongly urges the SEC to avoid imposing “fraudulent” liability for business continuity practices and establishing a new, unprecedented level of accountability for functions carried out by third-party service providers.

Additionally, SIFMA AMG believes separate transition planning requirements for advisers are unnecessary since current operational management practices and the existing regulatory framework already address any transition-related concerns cited by the SEC that may impact investors.

Revising these aspects of the Proposed Rule would better reflect the nature and characteristics of the asset management community and help protect investors against the risks associated with service disruptions. SIFMA AMG’s comment letter is available here: http://www.sifma.org/issues/item.aspx?id=8589962057.

SIFMA AMG members represent U.S. asset management firms whose combined assets under management exceed $30 trillion.  The clients of AMG member firms include, among others, registered investment companies, endowments, state and local government pension funds, private sector Employee Retirement Income Security Act of 1974 (“ERISA”) pension funds, and private funds such as hedge funds and private equity funds.

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