Published

MFA and AIMA Submit Comments on SEC Business Continuity and Transition Plan Proposed Rule

On September 6, MFA and AIMA submitted a joint letter in response to the SEC’s proposed rule on business continuity and transition plans for investment advisers. In the letter, MFA and AIMA explain that a new rule is unnecessary, since existing SEC guidance has already caused most investment advisers to implement business continuity plans pursuant to Rule 206(4)-7, and there is uncertainty whether the proposed rule is consistent with the goal of Section 206(4) of the Investment Advisers Act. We also note that for many years, investment advisers have implemented transition plans that have effectively met the needs of clients, and a transition plan rule is not necessary due to concerns of investor protection or systemic risk. Accordingly, we recommend that the SEC instead continue to issue timely, useful guidance to investment advisers as needed in response to changing market conditions and events.

In the letter, MFA and AIMA also recommend that if the SEC nevertheless adopts the proposed rule, it should modify the rule to provide investment advisers with greater flexibility to tailor BCPs to their unique businesses, and include a safe harbor provision protecting an investment adviser from liability where a BCP is reasonable and developed in good faith. We also make additional suggested changes to the proposed components of BCPs and transition plans that we believe would better serve investment advisers and their clients.