One Year In, SEC's Gensler Has Delivered a Rulemaking Storm

Kelley Howes spoke to Law360 about U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler proposing an ambitious rulemaking agenda that has accelerated briskly in recent months, imposing lofty disclosure requirements as the agency looks to tighten a grip on a range of players across the financial markets.

According to Kelley, the proposals appear to be an attempt from the commission to align the disclosures of private funds with those of registered products such as mutual funds, but she argued that bogging private funds down in the minutia of detailed paperwork with tight time frames — in some cases just one business day — isn't the right approach.

"I don't understand why this is necessary," Kelley said. "Whether you're managing a large retail business or a private fund business, you've got to be looking at the forest, you've got to be sort of looking at the broad picture. When you lose the broad picture because you're so focused on the tiny little bits, I think that could be kind of dangerous."

In addition, investors in private funds already enjoy significant transparency because they typically have a closer relationship with fund managers than investors in mutual funds do, and the efforts could divert the staff of both the SEC and private funds away from more important things, Kelley added.

"SEC staff is going to have to look at the data...and that will divert attention away from other things, because they have a limited bandwidth. So I don't know that that's necessarily a good thing for the retail market."

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