Small Business Group Joins Call for Changes to SEC’s Derivatives Rule

A group representing small business investors joined larger funds in calling for changes to a proposed Securities and Exchange Commission rule that would place conditions and fund limits on using derivatives.

The SEC’s rule, first proposed in December, would place overly burdensome restrictions on business development companies that invest in small- and medium-sized firms, Small Business Investor Alliance President Brett Palmer said in a March 28 comment letter to the SEC.

Palmer said the rule doesn’t differentiate enough between funds regulated by the Investment Act of 1940, also known as ’40 Act funds. He said the failure to distinguish business development companies from other funds “goes in the opposite direction of what Congress intended, for instance, by capping their use of derivatives to that of what a ’40 Act fund should be doing, or by treating their revolving lending facilities as financial commitment transactions, thereby subjecting them to coverage requirements.”

The Small Business Investor Alliance, a Washington-based trade group representing lower middle market private equity funds, filed its comments on the last day public comments were due for the SEC proposal. A group of large funds, including AQR Capital and John Hancock, also criticized the proposal.


Finance Brief: Week in Review & What’s Ahead

California Insurance Commissioner Dave Jones said the state will investigate whether or not Wells Fargo harmed hundreds of thousands of customers by selling them car insurance they didn’t need. The probe follows subpoenas issued by New York state’s banking and insurance regulator to two Wells Fargo units last week.

Finance Brief: Labor Department Seeks 18-Month Delay on Fiduciary Rule

The Labor Department said in a court filing that it was seeking an 18-month delay on the fiduciary rule, which requires financial advisers to act in retirement savers’ best interests. The agency filed the document as part of a lawsuit in the U.S. District Court for the District of Minnesota, in which it said that it was proposing to push the compliance date to July 1, 2019, and loosening some of the rule’s restrictions.

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