Republican Members of House Financial Services Committee Outline Biden-Harris Era SEC Rules that Should be Withdrawn

April 3, 2025

What happened?

On March 31, 2025, Chairman French Hill and all of the Republican members of the House Financial Services Committee sent interagency letters requesting the rescission, modification, or re-proposal of specific Biden-Harris administration actions to the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Reserve, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission (SEC).

The interagency letter to the SEC, addressed to Acting Chairman Mark Uyeda and referencing the new executive administration and nomination of Paul Atkins, states that the new leadership should revisit several final and proposed rules from the previous administration. Specifically, the committee said the SEC should withdraw the following final and proposed rules, among others:

• Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure Rule (Cyber Rule), adopted on July 26, 2023.
• Short Position and Short Activity Reporting by Institutional Investment Managers Rule (which introduced Form SHO reporting requirements), adopted on October 12, 2023.
• Investment Company Names Rule (Names Rule), adopted on September 20, 2023.
• Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers Rule (AI Rule), proposed on July 26, 2023.
• Outsourcing by Investment Advisers (which would require investment adviser due diligence prior to engaging service providers to perform certain key functions), proposed on October 26, 2022
• Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices (ESG RULE), proposed on May 25, 2022.

The interagency letter closed, stating the committee members are prepared to work alongside the SEC to “undo the damage from former Chairman Gary Gensler’s tenure and uphold our capital markets’ status as the envy of the world.”

What does this mean for me?

Interagency letters are non-binding and are meant to express policy opinions. These interagency letters cannot create nor destroy enforceable laws. However, they do say publicly what many have been predicting – Republican control of Congress and the executive branch will lead to regulatory changes.

So far this year, we have seen the Trump administration initiate a regulatory freeze on pending rules.  The compliance deadlines were delayed for the  reporting of short positions on Form SHO by a year and the Investment Company Names Rule by six months. With Paul Atkins’ likely confirmation in the near future, change is on the horizon.

It is unclear whether the aim is to repropose any of these rules. Both rules received compliance date extensions. Similarly, it is unclear if the suggestion on the Cyber Rule is driven by the public company reporting requirements of breaches or the written policy and procedure requirements for broker-dealers and investment advisers to have incident response plans.

All the final rules remain binding law until they are withdrawn. Maintain your compliance posture until that ever occurs. The proposals may be withdrawn, but until then, you should still prepare and budget for adequate resources should the proposed rules become final.

We will continue to monitor the latest developments that impact investment advisers and their ongoing compliance requirements. If you would like to speak with a regulatory expert, please let us know.