Skip to Content

McIntyre & Lemon Comments on the SEC’s Proposed Outsourcing Rule

Wed 28 Dec, 2022  /  by C. Dirk Peterson   /   Client Alerts


M&L submitted a comment letter responding to a proposed outsourcing rule aimed at certain operational aspects of the asset management sector. The letter requested that the SEC reconsider the necessity of the proposed outsourcing rule in light of the broad fiduciary duty and regulations that already apply to all aspects of an advisory business, including an adviser’s use of service vendors. The letter advocated for published guidelines or highlighting outsourcing as an examination priority as a more cost-effective and less-burdensome alternative to rulemaking. Absent withdrawing the proposed rule (or simply not acting on it), we requested that the rule expressly exclude institutional advisers in consideration of their negotiated and heavily vetted vendor arrangements and client relationships. As the least optimal option should the SEC adopt the rule, the letter recommended modifications to rule text to narrow the meaning of an outsourced arrangement subject to the rule.

The letter is available here.