In the Risk.net article, “Hedge funds find plenty to dislike in SEC’s dealer-rule rewrite,” Schulte Roth & Zabel partner William Barbera discussed the nuances and implications of the rule in practice.    

When the Securities and Exchange Commission announced the final dealer-rule it appeared, at first read, that the lobbying efforts of the hedge fund industry made an impact. However, upon further review, the ambiguous language and broad definitions that frame the rule make it unclear on who will be designated as a broker-dealer.  

William shared a note of caution when analyzing the rule, “My initial reaction when I watched the open meeting was that the SEC had scaled back [the rule] in a way that might be workable for the industry. After going through the adopting release, my view is that some things have been expanded,” Barbera says.  

A further issue has been raised as the rule may impact wider markets, hampering the investment strategies of managers for fear of being targeted by the new provisions.   

“If firms see one enforcement matter regarding conduct at the margins, it may have a chilling effect on others who are close to the line on these tests.” William added. 

Read the Risk.net article.  

While a federal appellate court considers a historic case that challenges the validity of SEC reforms which target private funds, Schulte Roth & Zabel partner Kelly Koscuiszka provided commentary on the matter to Hedge Fund Alert for their Regulatory Roundup.  

The final iteration of the rules is yet to be determined, but the deadline for compliance looms this fall, forcing capital allocators to prepare for their most restrictive versions.    

Kelly described the SEC’s regulatory moves as creating, “a pretty dramatic shift for the industry.”  

She added that the unprecedented showdown has caught the attention of the financial world at large, “I’ve never seen my clients so interested in litigation in an appellate case.”  

Schulte Roth & Zabel co-managing partner Marc Elovitz spoke with the Financial Times about US Securities and Exchange Commission Chair Gary Gensler and the significant impact of his ambitious agenda on private capital markets.

In the article, “Has Gensler’s SEC pushed Wall Street too far?” Marc discussed the unprecedented breadth of reforms Gensler has put forth during his tenure, “If you just look at the sheer number of rules proposed . . . since he started, it’s extraordinary.”

Marc noted the Chair’s unwavering stance even when the industry opposes his heavy-handed regulatory approach, “He doesn’t back down, he almost doubles down.”

While Gensler’s full slate of reforms may not be enforced, the power of their public presentation and debate matters. Marc continued, “Even if the proposals never go into effect, he’s accomplished something. Just the fact of having proposed [these rules] has already chilled a lot of the industry.”

Read more here.