WASHINGTON, April 20 (Reuters) – The U.S. Securities and Exchange Commission and Commodity Futures Trading Commission on Monday jointly proposed reforms to Biden-era regulations on enhanced disclosures by the $26 trillion private fund industry, the agencies announced.
The SEC said the changes, if adopted, would reduce burdens on the private funds and investment advisers while still requiring the collection of “necessary and appropriate” information.
Despite Republican objections under former President Joe Biden, the SEC and CFTC in 2024 jointly required hedge funds, private equity and others to report exposures to investments, counterparties and currencies, as well as exposures to countries and industries, the performance of investments by strategy and the liquidity of portfolios, among other things. They said these rules were necessary to detect risk in the financial system.
Republican SEC and CFTC members said at the time that the rules were excessive and could jeopardize sensitive confidential data. There are currently no Democrats appointed to either commission. And, since taking control last year, the Trump administration has repeatedly pushed back the effective date for the rules to allow officials time to adopt modifications.
The changes proposed on Monday would reduce the number of firms required to make such disclosures by lifting a qualifying threshold for smaller advisers from $150 million in assets under management to $1 billion and, for “large” hedge fund advisers, from $1.5 billion to $10 billion.
These changes would still capture 90% of assets under management, according to the SEC.
The organization Better Markets, which calls for tighter regulation of Wall Street, pointed to the current turmoil in the private funds industry, saying it produced pronounced strain on private equity and private credit markets even as officials consider allowing retirement savings accounts to hold private funds.
“This is exactly the wrong time to increase the opacity that permeates the private funds industry,” Benjamin Schiffrin, the organization’s head of securities policy, said in a statement.
The Alternative Investment Management Association, a lobby group representing the private fund sector, said the proposal appeared to strike “the right balance” between managing risk and reducing the burden of regulation.
The proposal will be subject to a 60-day public comment period before any decision on a final version by the agencies.
(Reporting by Douglas Gillison in Washington; Editing by Chizu Nomiyama, Paul Simao and Aurora Ellis)
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