Managed Funds Association (MFA) reiterated that the Securities and Exchange Commission (SEC) should withdraw its proposed safeguarding rule in a supplemental comment letter in response to the SEC’s narrow reopening of the proposal’s comment period.
MFA’s letter reemphasizes that the proposed safeguarding rule would harm investors and other market participants, including advisers, qualified custodians, and independent accountants. Further, MFA notes that the SEC has failed to demonstrate any market failure from existing safeguarding practices or how applying equity-like safekeeping requirements to all asset classes will solve a market need.
In the letter, MFA expresses disappointment that the SEC’s reopening only considers the impact of the final Private Fund Adviser Rule’s audit requirement on the modifications to the audit requirement in the proposed safeguarding rule. The letter highlights that this approach of evaluating the incremental cost of one additional rulemaking is inadequate. Instead, the letter proposes that the SEC solicit comment on a cost-benefit analysis of its proposed rules in aggregate.