FiSolve Weekly News Digest: March 21, 2025

Here is what we're reading in the news this week...

SEC Acting Chairman Uyeda Calls for Restoring

Sensible Rulemaking Procedures

Speaking at the Investment Company Institute’s annual Investment Management Conference (#2025IMC), SEC Acting Chairman Mark Uyeda called for restoring the SEC’s rulemaking processes to the “gold standard” among regulatory agencies.  This will include (1) meaningful engagement with stakeholders, (2) a return to a thoughtful, deliberative approach to rulemaking, including proper economic analysis and due consideration of industry comments, (3) prioritizing effective and cost-efficient regulations that respect the limits of the SEC’s statutory authority, and (4) consideration of extending or delaying the compliance dates for recently-adopted rules to provide firms with additional time to implement new rules in an orderly manner.  The speech covers other SEC priority areas and is worthwhile reading.  Access it here.

SEC Division of Investment Management

Updates Marketing Rule FAQs

Staff of the SEC’s Division of Investment Management published updates to its Marketing Compliance Frequently Asked Questions.  The Staff added guidance on (1) the presentation of extracted performance of one investment or a group of investments in a private fund or other portfolio.  Among other things, the guidance addresses instances where gross performance of an extraction may be presented without corresponding net performance, and (2) whether certain portfolio or investment characteristics (such as yield or contribution to return) may be deemed to constitute “performance” under the marketing rule.  Read more here.

Generative AI Transforming Companies,

Employees Look to Adapt

A study by Accenture finds Generative AI (Gen AI) is more than a new technology; it represents a fundamentally different way of working.  97% of executives believe Gen AI will transform their company and industry. 93% say their Gen AI investments are outperforming other strategic areas.  The study finds organizations must reimagine not only how tasks are performed, but how new capabilities can be scaled to reinvent work across the enterprise.  Meanwhile, more than 4 in 5 workers said they sufficiently understand Gen AI technology, with 94% of employees expressing confidence they can develop the skills their organization needs.  Read more here.

SEC Extends Compliance Dates for Amendments to Investment Company Names Rule

The Securities and Exchange Commission announced a six-month extension of the compliance dates for amendments adopted in September 2023 to the Investment Company Act “Names Rule,” which addresses fund names that may mislead investors about a fund’s investments and risks.  The compliance date for larger fund groups is extended from December 11, 2025, to June 11, 2026, and the compliance date for smaller fund groups is extended from June 11, 2026, to December 11, 2026.  Read more here.

FINRA CEO Discusses Eliminating all PII from CAT

In a News Blog, FINRA President and CEO Robert Cook endorsed the Consolidated Audit Trail (CAT) proposal to eliminate all personally identifiable information (PII) reporting to CAT.  Last month, the SEC issued an exemptive order providing significant relief from the PII reporting requirements of CAT (the Exemptive Order).  The recent proposal would build on the Exemptive Order and mandate the end of reporting PII.  It also would require deletion of previously reported PII.  The proposal is designed to enhance customer protection and reduce costs.  Read more here.

ESMA Publishes Guidelines on the Conditions and Criteria for the Qualification of Crypto-Assets

as Financial Instruments

The European Securities Market Authority issued guidelines specifying conditions and criteria for determining whether a crypto-asset should qualify as a financial instrument.  The guidance is designed to ensure common, uniform and consistent application of the provisions in Article 2(4)(a) of the Markets in in Crypto-Assets Regulation (MiCA). Furthermore, these guidelines provide clarifications on certain features of utility tokens, non-fungible tokens (NFTs) and hybrid tokens.  Read more here.

SEC Obtains Judgment Against Investment Adviser Arising from Undisclosed Conflicts in Mutual Fund and Account Recommendations

The SEC obtained a final judgment in connection with an action brought against an investment adviser for failing to disclose material conflicts of interest and breaching its duty of care related to its recommendation to place clients in wrap accounts and its selection of mutual funds and money market sweep funds for clients.  In its action, the SEC alleged the adviser repeatedly breached its fiduciary duty to advisory clients by investing client assets in certain mutual funds and money market sweep funds that generated millions of dollars in revenue sharing payments to an affiliated broker-dealer.  The judgment includes an award of $15 million in monetary relief and equitable relief.  Read more here.

ESMA issues Compliance Table on Funds’ Names using ESG or Sustainability-Related Terms

The European Securities Market Authority compiled a table listing relevant guidelines across Europe for the use of funds’ names using ESG or sustainability-related terms.  The compilation cites guidance or rulemaking from competent authorities governing European member states, including compliance status and effective dates.  Access the table here.

New Relational Theory on Workplace Microaggressions – Resolution, Growth Possible

According to a study by MIT Sloan, negative outcomes following a microaggression aren’t absolute. Provided certain conditions, employees can repair – and even strengthen – work relationships.  Under the right conditions, the targets and perpetrators of workplace microaggressions can restore their relationship and, in some cases, grow from the incident.  This may lead to cultivating a stronger bond than before the incident.  Read more here.

Europe’s Female Founders Taking Larger Slice of VC Pie

A study by PitchBook finds female founders’ share of European VC deal value reached a decade high last year despite less than a quarter of rounds including companies set up by women.  According to the study, funding for female-founded companies surpassed €10 billion for the fourth consecutive year in 2024.  The annual total reached €10.2 billion—a 2% increase from 2023—representing 20.6% of overall deal value in Europe.  Over the same period, VC funding levels for all-male-founded companies fell by 10% to €38.3 billion.  Read more here.

Well-connected VCs See Significantly

Lower Failure Rates, Better Returns

A different PitchBook study finds companies with well-connected lead investors have failure rates ten percentage points lower than those of peers backed by peripheral investors. This phenomenon is especially pronounced at later stages. For Series D investments and beyond, well-connected investors had a 4% failure rate among their investments—peripheral investors saw failure rates upwards of 15%.  Read more here.

FiSolve to Host Compliance Anonymous Forum

FiSolve will host its next Compliance Anonymous session at 12 PM ET on Wednesday, March 26, 2025.  This is a forum where compliance professionals collaborate, commiserate, and discuss their compliance conundrums under a cloak of anonymity, during a one-hour, cameras-off Zoom session.  There is no cost to attend, but space is limited.  Register here.

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