Welcome to the Regulatory Roundup. Each month, Eversheds Sutherland Investment Services attorneys review significant regulatory developments (including notable rulemakings and guidance from securities regulators) from the previous month that are of interest to retail broker-dealer and investment adviser firms.
White House Issues Executive Order: “Democratizing Access for Alternative Assets for 401(k) Investors”
- On August 7, the White House issued an executive order called “Democratizing Access to Alternative Assets for 401(k) Investors” (the Order). The Order focuses on 401(k) plans and other participant-directed defined contribution retirement plans subject to the fiduciary provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
- The White House directed the Department of Labor (DOL) to facilitate the direct and indirect investment by plans and plan participants in “alternative assets.” To that end, the Order states that the DOL should coordinate its rulemaking with other regulators, including the Securities and Exchange Commission (SEC) and the Department of the Treasury. The Order also directs the SEC to look at some of its rules and guidance that may inhibit ERISA-covered plans and participants from investing in alternative assets.
- More comprehensive coverage of the Order can be found here.
FINRA Enhances Its Systems to Provide Associated Persons with Certain Information Through FinPro Gateway
- On August 15, FINRA issued Regulatory Notice 25-09, which announced enhancements to FINRA systems that will allow members to provide Form U4, Form U5, and pre-dispute arbitration information to associated persons via FinPro Gateway.
- The enhancements – which are part of FINRA’s initiative to modernize its rules, guidance, and processes – will be implemented starting on November 3, 2025, and will be optional for both members and associated persons.
SEC Names New Head of Enforcement
- On August 21, the SEC announced that Judge Margaret Ryan was named Director of the SEC’s Division of Enforcement. Judge Ryan was previously a senior judge of the United States Court of Appeals for the Armed Services. Commenting on Judge Ryan’s appointment, SEC Chair Paul Atkins noted, “Judge Ryan will lead the Division guided by Congress’ original intent: enforcing the securities laws, particularly as they relate to fraud and manipulation.”
FINRA Issues New Guidance on Discretionary Transactions in Direct Participation Programs
- FINRA recently provided guidance related to recommendations of direct participation programs (DPPs) by registered investment advisers. FINRA Rule 2310(b)(2)(C) provides that “no member shall execute any transaction in [a] direct participation program in a discretionary account without prior written approval of the transaction by the customer.”
- FINRA’s new guidance notes that “[t]he prior written approval requirement does not apply to a transaction in a direct participation program that is executed by a member in its broker-dealer capacity in a discretionary account where the transaction order is placed by a registered investment adviser that has discretionary authority over the account.”
[View source.]
