October 5, 2024, marked the 20th anniversary of the Securities and Exchange Commission’s (SEC) landmark Compliance Rules, Rule 38a-1 under the Investment Company Act of 1940 and Rule 206(4)-7 under the Investment Advisers Act of 1940, which established the role of Chief Compliance Officer and mandated compliance programs for registered funds and advisers.
In an article for The Investment Lawyer, asset management partner George Raine and counsel James McGinnis outlined the evolution of the rules from inception to current and future use, highlighting their significant impact on the asset management industry. The attorneys examined the regulatory intent, major criticisms, and the legacy of the Compliance Rules, noting "the adoption of the Compliance Rules is perhaps the clearest articulation of the [SEC]’s structural approach around facilitating and encouraging a 'culture of compliance.'”
Reflecting on the past 20 years, "the Compliance Rules command a perhaps initially unforeseen legacy over SEC rulemaking in the asset management field, as in no small part the Rules have served as a blueprint and a foundation for subsequent SEC rulemaking innovations," the attorneys observed.
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