SEC Abandons Numerous Gensler-Era Proposed Rules

In just eight pages, the Securities and Exchange Commission (SEC) scrapped 14 proposed rules introduced between October 2020 and November 2023.¹ Since taking office in April 2025, Chair Paul Atkins has struck a tone diametrically opposed to that of his predecessor, Chair Gary Gensler. The formal withdrawal of these proposed rules unmistakably marks the agency’s pivot in its regulatory agenda.

Impact to fund managers

A number of rules the SEC withdrew were proposed under the Investment Advisers Act of 1940. While exempt reporting advisers would have been spared much of the additional compliance obligations, registered investment advisers, on the other hand, would have faced substantial new burdens.

• Safeguarding client assets: The SEC had proposed new requirements for registered investment advisers regarding the custody and safeguarding of client assets, including updates to requirements under the existing custody rule.
• Cybersecurity risk management: The SEC had proposed a rule that would have required registered investment advisers to adopt cybersecurity policies and procedures, report incidents and maintain related records.
• ESG disclosures: The SEC had proposed disclosure requirements for investment advisers regarding their environmental, social and governance (ESG) investment practices.
• Outsourcing by investment advisers: The SEC had proposed a rule that prohibited registered investment advisers from outsourcing certain services or functions without meeting certain requirements related to diligence, monitoring and record retention.
• Conflicts of interest and predictive data analytics: The SEC had proposed a rule aimed at addressing how investment advisers use certain technologies (such as artificial intelligence, machine learning and data algorithms) in their interactions with investors.

What happens next?

The SEC did not provide detailed reasoning for the withdrawal. Instead, the SEC stated in its notice that the agency is withdrawing the rules because it no longer intends to issue final rules with respect to these proposals. Any future regulatory action in these areas will require a fresh start and a new round of notice-and-comment process. The notice of withdrawal was published on the SEC’s website on June 12, 2025, and will become effective once it is published in the Federal Register. The notice comes one day after the SEC extended the compliance date for the amended Form PF, which Atkins has directed the SEC staff to review, citing “serious concerns whether the government’s use of this data justifies the massive burdens it imposes.”

We note that while the withdrawal affords fund managers and other market participants a degree of short-term certainty under the current SEC, it also illustrates how swiftly the agency’s regulatory agenda can shift.

1. All but one of the rules were proposed under Gensler. ↩︎