I submit this comment letter with respect to certain policy aspects of the above-referenced release (the “Proposing Release”) regarding proposed rules (the “Proposed Rules”) under the Investment Advisers Act of 1940 (the “Advisers Act”), [1] in my personal capacity. [2] I am aware of other comment letters that have been submitted or that are being prepared for submission to the Commission; my views are generally in accord with those views recommending against the adoption of the Proposed Rules, and I do not reiterate here arguments that I know or understand are being (or will be) made in those other letters. Instead, those views are incorporated here by reference.
I am also aware of, and share, significant legal questions regarding the Commission’s authority to adopt some of or all the Proposed Rules; again, I do not burden this letter by reiterating those concerns here. The Commission has excellent lawyers on its staff to advise it in that regard, and other lawyers in the private sector are lending their expertise as well. I assume all the salient considerations will be raised and appropriately considered, either by the Commission or in a subsequent challenge if the Proposed Rules are adopted in whole or part. For present purposes, I simply note that the questions surrounding the Commission’s authority to proceed with its proposals are substantial and troubling, and I adopt those comments as if set forth in this letter.
I understand from various sources that, if the Proposed Rules are adopted in something approaching the form in which they have been proposed, judicial challenges are likely. [3] As a result, I urge the Commission to be very careful in this regard. In past years, the Commission has, I believe, adopted rules without sufficient regard to the extent of its legal authority and, in so doing, has impaired its reputation in the courts, ineluctably undermining the Agency’s claim to deference in challenges to subsequent rules. [4] Having served as the Commission’s General Counsel (as well as its Chairman), I am sensitive to such concerns, and urge the Commission to exercise caution before adopting the current Proposed Rules, or anything remotely similar to them.
