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    Oct. 23, 2025

FinCEN Proposes Pushing Back AML Rules Compliance Date to January 2028

On September 22, 2025, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury (Treasury) hit pause on its aggressive advancement of anti-money laundering (AML) and countering the financing of terrorism efforts with the publication of a Notice of Proposed Rulemaking (NPRM), which seeks to push back the compliance date for the AML Rules (Rules) for investment advisers by two years, from January 1, 2026, to January 1, 2028. A comment period on the proposal closed on October 22, 2025. FinCEN’s rationale for the postponement is that the investment adviser sector has grown so dramatically, and the costs of the compliance programs envisioned under the Rules are so high, that more time is needed to reassess the Rules and consider changes to them. But the NPRM has fueled controversy, driving three lawmakers to send a letter (Letter) to Secretary of the Treasury Scott Bessent expressing alarm over a delay to the implementation of policies designed to protect investment advisers and the U.S. financial system. This article summarizes the NPRM and the Letter, explores the NPRM’s impact on the proposed customer identification program requirements and presents practical takeaways, with commentary from legal experts. See our two-part series on the Rules: “Parsing FinCEN’s Final AML Rules for Investment Advisers” (Nov. 7, 2024); and “Understanding the Implications for Hedge Fund Managers” (Nov. 21, 2024).

SEC Staff Discuss Regulation S‑P Amendments and Related Examination Processes

The SEC’s 2024 amendments to Regulation S‑P (Amendments) require covered firms to adopt and implement incident response programs, which must provide for notification of customers affected by breaches and oversight of service providers that hold customer information. In anticipation of the December 3, 2025, compliance date for large firms, the SEC is holding a series of outreach events to promote readiness for compliance. “The SEC has long prioritized safeguarding customer information and ensuring robust customer protection through strong compliance,” said Keith Cassidy, acting Director of the SEC Division of Examinations (Exams) and National Associate Director of its Technology Controls Program, at the first of such events. The Amendments are designed to ensure customers “have notice of [a] covered institution’s potential data breach and take steps to protect themselves if they choose,” he added. This article synthesizes the key takeaways from the September 25, 2025, event, which included staff from Exams and the Divisions of Investment Management and Trading and Markets. As is customary, the views expressed by the speakers were their personal views, not those of the SEC or any commissioner. See “Division of Investment Management Staff Discuss Staffing, Operations, Rulemaking and Other Developments” (Jul. 31, 2025); and “Gensler Discusses the SEC’s Cyber Priorities” (Mar. 3, 2022).

Sharp Divisions Within SEC Over Retail Investors’ Access to Private Markets

In connection with the September 18, 2025, meeting of the SEC Investor Advisory Committee (IAC), the IAC’s Investor as Owner and Market Structure Subcommittees submitted recommendations to the Commission on increasing retail investor access to private markets, including private funds. The IAC endorsed increasing access through the registered funds regime but reserved judgment on increasing direct access to private funds. SEC Chair Paul S. Atkins and Commissioners Caroline A. Crenshaw and Hester M. Peirce all delivered remarks at the meeting. Unsurprisingly, Atkins and Peirce are both strong proponents of increased access, while Crenshaw expressed significant reservations. Crenshaw subsequently expanded on her concerns in a September 19 speech at the Better Markets Academic Advisory Board annual conference. This article provides a brief overview of the IAC’s recommendations and distills the related observations of Chair Atkins and Commissioners Crenshaw and Peirce. As usual, all three speakers noted that their remarks reflect their personal views, not those of the SEC. See our two-part series on the retailization of private funds: “Incremental Changes Signal SEC Support” (Aug. 14, 2025); and “Practical Consequences” (Aug. 28, 2025).

GCs’ Increasingly Critical Role in Managing Risk and Ensuring Compliance

As compliance requirements evolve rapidly, the GC role becomes more critical for avoiding regulatory entanglements and operational risks. Increasingly, in-house legal personnel are grappling with risk assessments, internal investigations, liaisons with regulators, strategic advice to executive staff and other areas not traditionally within the GC’s domain. In-house lawyers can also play a prominent role in litigation on behalf of the industry, as in banking organizations’ lawsuit against the Federal Reserve over stress testing models. Those new and expanded responsibilities factor into the increased importance of in-house legal staff in their firms’ efforts going forward. Those points were expressed at the Compliance & Legal 2025 Annual Seminar hosted by the Securities Industry and Financial Markets Association in a panel moderated by Steven R. Peikin, partner at Sullivan & Cromwell and former Co-Director of the SEC’s Division of Enforcement, which featured Cynthia B. Adams, head of U.S. legal and GC, TD Bank; Roberto Braceras, GC at Fidelity Investments; Eric F. Grossman, executive vice president and chief legal officer at Morgan Stanley; and Stefan Simon, CEO of the Americas and chief legal officer at Deutsche Bank. This article presents key takeaways from the discussion. See “Senior GCs at Leading Private Fund Managers Share Practical Tips and Insights” (Dec. 8, 2022); and “How In‑House Expertise Can Help Outside Counsel” (Feb. 24, 2022).

SEC Penalizes Adviser for Short Sale Rule Violation but Does Not Require Disgorgement

Rule 105 of Regulation M under the Securities Exchange Act of 1934 prohibits a short seller of an issuer’s equity securities from purchasing, within a specified restricted period, shares in a public offering of the same securities by the issuer. It is designed to prevent short sellers from driving down the price of a security prior to the pricing of the anticipated public offering. In many recent settled enforcement actions involving alleged violations of Rule 105, the SEC has required the respondent to disgorge profits associated with the subject short sale. However, in the latest settlement under Rule 105, the SEC did not seek disgorgement from a private fund adviser. This article examines the settled enforcement order (Order) against the adviser, with commentary on the implications of the Order for SEC enforcement from Andrew B. Dean, partner at Weil, Gotshal & Manges LLP and former Co-Chief of the Asset Management Unit of the SEC Division of Enforcement. See “SEC Short Sale Settlements Reflect Strict Enforcement of Rule 105” (Aug. 3, 2023).

Michael Saarinen Joins Arnold & Porter As Co‑Lead of Investment Management Group

Arnold & Porter announced that Michael Saarinen has joined the firm as a partner and co-lead of the investment management practice group. Based in New York, he brings a wealth of experience advising U.S. and global fund sponsors and principals on the structuring and formation of funds and related advisory businesses. He also has experience working with the full spectrum of private fund investors, including family offices, endowments, foundations, sovereign wealth funds and insurance companies. For insights from Saarinen, see our two-part series on the retailization of private funds: “Incremental Changes Signal SEC Support” (Aug. 14, 2025); and “Practical Consequences” (Aug. 28, 2025).

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Women to Watch: Contributions, Achievements and Observations of Outstanding Female Professionals

To mark International Women’s Day, women editors and reporters at ION Analytics interviewed outstanding women in the industries and jurisdictions we cover. In this part, Law Report Group editors Jill Abitbol, Robin L. Barton and Megan Zwiebel profile notable women in data privacy, cybersecurity, private funds and anti-corruption law, including Anne-Gabrielle Haie, Jessica Lee, Micaela McMurrough, Laura Perkins, Amanda Raad, Madelyn Calabrese, Ranah Esmaili and Genna Garver. Enjoy reading their inspiring remarks here.