New SEC Regime Signals a Shift in Regulatory Focus

Prior to the confirmation of Paul Atkins as the Securities and Exchange Commission (SEC)’s new chairman, then Acting SEC Chairman Mark T. Uyeda invoked the mantra, “Slow is smooth and smooth is fast.” According to Commissioner Uyeda, the mantra serves as “a reminder to take the time to do things carefully and methodically, rather than rush and risk actions that are not fully thought through.”

While it remains to be seen what direction Chairman Atkins will take the SEC, many predict that he will stay the course initiated by Commissioner Uyeda by adopting a more deliberate regulatory approach, including enacting longer rulemaking timelines and potentially rolling back existing regulations. For example, at his confirmation hearing, Chairman Atkins signaled his priorities by stating, “The current regulatory environment for our financial system inhibits and too often punishes success. Unclear, overly politicized, complicated, and burdensome regulations are stifling capital formation, while American investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment. It is time to reset priorities and return common sense to the SEC.”

In addition to its shift in priorities, the SEC has experienced a 15% reduction in headcount during the current fiscal year, with the potential for more reductions in the future. So, while asset managers may be tempted to reduce their compliance functions in anticipation of these changes, the outcome of any rules review is still uncertain, and a new rulemaking agenda under Chairman Atkins will take time to implement. Shaking up compliance efforts based on uncertain expectations can introduce new compliance risks if the changes fail to materialize or take shape in a different way. 

For now, asset managers should stay the course, knowing that a friendlier regulatory regime ahead may hold benefits, such as more time to comment on any proposed rules in the future, and potentially longer runways to come into compliance with related final rules.

A More Deliberate Rulemaking Approach

During the previous SEC administration, rulemaking timelines and rollouts were significantly shorter. For many asset managers, this sometimes increased the pressure they felt to keep pace with fast-changing regulations or risk hefty compliance penalties. But if Chairman Atkins follows through with a “Slow is smooth and smooth is fast” approach, asset managers can expect to see some key changes in favor of a more deliberate, less punitive posture. That posture may include changes to the following rulemaking activities:

• Existing Proposed Rules: The SEC may consider withdrawing or repurposing outstanding rule proposals depending on whether the SEC believes they strike the right balance of oversight and opportunity. Previous statements by former Acting Chair Uyeda indicate the SEC may opt to reassess proposed rules addressing the safeguarding of advisory client assets, outsourcing by investment advisors, and environmental, social, and governance (ESG) disclosures, for example.
• Final Rules Not Yet Effective: Recently adopted rules that are not yet effective could be frozen or be given extended effective and compliance timelines. The SEC may opt to use these pauses to solicit additional input from industry stakeholders or allow more time for asset managers to implement compliance procedures and report any challenges before the rules become effective. For example, the SEC recently extended the effective and compliance dates for its amended Form N-Port reporting requirements by two years, from November 2025 to November 2027 for larger entities and from May 2026 to May 2028 for smaller entities. The delayed effective and compliance dates will provide time for the SEC to complete its review in accordance with the Presidential Memorandum and take any further appropriate actions, which may include proposed amendments to Form N-PORT.
  
  

Beyond these potential changes, the SEC also plans to spearhead an executive-mandated review of all SEC regulations. The Presidential Memorandum, the April 9 executive order, directs agencies to review and remove any “anti-competitive” regulations, including those that create unnecessary barriers to market entry, limit competition, create licensure or accreditation requirements that limit competition, and unnecessarily burden the agency’s procurement processes.

While the SEC is just beginning this process, it could result in fundamental regulatory changes, which may ease compliance burdens for asset managers. If asset managers ultimately spend fewer resources on compliance, they may have the flexibility to repurpose available funds — whether that means investing in new areas, like digital assets, or leveraging artificial intelligence (AI) and other technologies to enhance decision making or improve capital efficiency.

Asset Managers, Stay the Course

Asset managers must keep a close eye on changes coming out of the SEC over the next several months — but they should also keep their current compliance practices and functions in place until they receive clear guidance to do otherwise. While the SEC's enforcement posture may soften under Chairman Atkins, it remains unclear if and how the agency's actual enforcement priorities will change.

Making premature changes to compliance efforts can open asset managers up to regulatory risks and penalties if future circumstances diverge from expectations. Statements from Chairman Atkins and other members of the agency can provide useful hints around how rules might evolve — and asset managers can strategically align themselves to capitalize on potential tailwinds — but managers do not yet know which regulations will ultimately be affected, so functional changes should be executed meticulously, if at all.