On September 20, 2023, during its first in-person open meeting since the COVID-19 pandemic, the U.S. Securities and Exchange Commission (SEC) adopted amendments to the Names Rule under Section 35(d) of the Investment Company Act of 1940, in a four-to-one vote. The details of the amendments show the SEC also adopted related disclosure and record keeping requirements, updating regulations that attorneys, legal professionals and investment companies will need to follow.
One dissenting voice, Commissioner Mark Uyeda, raised concerns about the compliance burden, especially on smaller fund managers. His comments highlight questions about how the SEC would handle enforcement and compliance, particularly as these changes could disproportionately impact smaller entities. Fund managers, in-house legal teams, and law firm attorneys with clients in the financial space should be prepared to reassess their compliance procedures and strategies in light of these amendments.
The revamped Names Rule under Section 35(d) of the Investment Company Act of 1940, will likely give rise to a multitude of legal inquiries and potential changes to operational and compliance strategies within the investment infrastructure. As always, adapting to such regulatory shifts will require both awareness and agile strategy adjustments.