On July 22, MFA and AIMA submitted a joint comment letter to the SEC regarding the proposed incentive-based compensation rules for investment advisers and other large financial institutions. In the comment letter, MFA and AIMA expressed support for the SEC’s proposal to exclude non-proprietary assets from the calculation of an adviser’s balance sheet assets even if accounting rules would treat those client assets as assets of the adviser. In the letter we also encouraged the SEC: (1) to exclude assets held in an adviser’s funds and assets set aside for deferred compensation arrangements from the asset threshold calculation as those assets already serve to achieve the policy goals of the proposed rules; (2) exclude assets on an adviser’s balance sheet that are unrelated to the investment advisory business; (3) count the assets of foreign adviser’s based on any U.S. place of business, similar to Advisers Act rules regarding a foreign adviser’s assets under management; (4) exclude payment tied to a person’s ownership interest; and (5) coordinate the SEC rules with rules under the Tax Code to avoid creating unintended mismatches between an employee’s compensation and his or her tax obligations.
