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Orical Weekly Regulatory Digest – Key Insights for Investment Managers
Week of September 22, 2025
Note on new format: As the pace of regulatory change accelerates, Orical is launching a weekly digest to keep investment managers informed of the most significant developments. Each edition delivers concise, practical, and easy-to-navigate insights to help you stay ahead of breaking developments. Our more detailed, in-depth regulatory updates will continue to be provided periodically.
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RULE MAKING
SEC extends Form PF Compliance Date Yet Again, This time to October 1, 2026
Summary: On September 17, 2025, the SEC (together with the CFTC) voted to extend the compliance date for the amended Form PF to October 1, 2026, and also plans to issue a policy statement on arbitration provisions and amend the Rules of Practice.
Why It Matters: This extension reflects the agencies’ intent to reassess the amendments considering stakeholder feedback and implementation challenges, signaling that regulatory flexibility is still in play.
Action Items to Consider: Monitor SEC/CFTC timing and notices, align internal systems and workflows for revised Form PF data collection, and devise contingency plans for phased compliance as the effective date shifts.
Petition to Expand “Knowledgeable Employee” Definition (Rule 3c-5)
Summary: The Alternative Investment Management Association (AIMA) has petitioned the SEC to amend Rule 3c-5 of the Investment Company Act to broaden who qualifies as a “Knowledgeable Employee.” Currently, eligibility is limited to executives, directors, and certain staff with at least 12 months of investment activity. AIMA proposes two new alternative paths: (1) employees earning at least $200,000 annually (or reasonably expecting to), and (2) employees holding a Series 65 license. Purely clerical or administrative staff would remain excluded.
Why It Matters: Expanding eligibility would modernize the rule, align it with the accredited investor framework, and give more employees the ability to co-invest in their firm’s funds. This could improve retention, strengthen alignment of interests, and simplify compliance. The SEC will still weigh these benefits against investor protection concerns.
Action items to consider: Firms should review current policies to see which employees might qualify, consider supporting Series 65 licensing, and assess compensation structures that could trigger eligibility. They should also prepare for expanded disclosure and conflict-management needs, run scenarios on employee participation, and consider engaging in the SEC comment process.
ENFORCEMENT ACTIONS
Insider Trading Enforcement — SEC Ramps Up Cases
Summary: The SEC announced new insider-trading charges, including a case related to insider trading in a cannabis company and cases like SEC v. Squillante, where an investment professional misused confidential firm information to trade across multiple issuers, profiting over $200,000
Why it matters: Insider-trading enforcement remains one of the SEC’s most visible priorities, even in smaller cases.
Action items to consider: Firms should enhance training on handling material nonpublic information (MNPI), review and update insider-trading policies, strengthen surveillance systems to detect unusual trading, and establish clear escalation protocols to ensure suspicious activity is reported and documented.
Read More Here(Squillante) Read More Here(Cannabis)
Regulation S-P Violation — Misuse of Client Data
Summary: In SEC v. Austin/Embarcadero Capital Advisors, the Commission charged a former adviser for misappropriating clients’ nonpublic personal information (names, account balances, contact data) in violation of Regulation S-P
Why it matters: The case underscores that client data protection failures can be treated as fraud, not just technical compliance lapses.
Action items to consider: Firms should audit data-handling protocols, implement strict access controls, and test privacy and cybersecurity policies against Reg S-P standards. Oversight of third-party vendors handling client information should also be reinforced to ensure compliance.
Marketing, Books & Records, Compliance—One Case, Big Lessons
Summary: On Sept. 4, the SEC sanctioned an RIA for violating the Marketing Rule by claiming on its website that it “refuse[d] all conflicts of interest.” In reality, its Form ADV disclosed that reps were affiliated with an insurance firm earning commissions.
Why it matters: The case highlights the SEC’s zero-tolerance stance on inconsistencies between marketing statements and regulatory filings, and it underscores the need for precise, verifiable language in all investor-facing materials.
Action items to consider: Audit marketing materials against Form ADV and disclosures, train staff on precision in investor-facing language, and implement periodic cross-checks.
Secret Loans, False Promises, and a $9.7M Reckoning
Summary: The SEC settled with a former adviser and affiliated firms over prohibited loans and misleading statements to investors. The settlement included nearly $10 million in penalties, disgorgement, and interest.
Why it matters: Loans, undisclosed conflicts, and misrepresentations remain priority enforcement areas. The case serves as a warning that even seemingly minor disclosures or side arrangements can have serious compliance implications.
Action items to consider: Map and monitor all affiliate arrangements, strengthen conflict disclosure procedures, and test compliance reporting for accuracy.
SEC Targets Summit for Risky VXX Gamble That Burned Clients
Summary: The SEC approved a plan to distribute a Fair Fund to compensate clients harmed by Summit Planning Group, Inc. for breaching fiduciary duties and failing to maintain adequate compliance policies. Summit and its owner invested client assets in the VXX volatility-linked ETN for extended periods despite warnings in the product’s prospectus that it was intended only for short-term holding, resulting in client losses.
Why It Matters: The case highlights the SEC’s focus on advisers’ duty of care and on holding firms accountable for investing in complex products without a sound basis. It underscores that inadequate product due-diligence and weak policies can expose advisers to enforcement actions, client restitution, and reputational harm.
Action items to consider: Advisers should review investment-selection and monitoring processes for complex or leveraged ETPs to ensure alignment with product disclosures and client objectives. Compliance teams should strengthen written procedures, bolster supervisory oversight of risk-sensitive positions, and track Fair Fund notices to inform eligible clients.
WHAT REGULATORS ARE SAYING
SEC Investor Advisory Committee (IAC) met on retail access to private markets; draft recommendation discussed
Summary: On Sept. 18, SEC’s Investor Advisory Committee discussed draft recommendations to expand retail access to private assets, including interval and closed-end fund structures, while also reviewing foreign private issuer practices. The discussion included governance, valuation, and liquidity guardrails.
Why it matters: If regulators adopt these recommendations, retail distribution of private-market products could become mainstream, forcing managers to meet higher disclosure, oversight, and compliance standards.
Action items to consider: Track the IAC’s recommendations, evaluate whether current fund structures could be adapted for retail channels, and build frameworks for enhanced liquidity, valuation, and disclosure obligations.
IN THE NEWS
Market Signals – Pension Funds Boosting Private Market Allocations
Summary: Both firms announced plans to launch alternative investment products tailored for retirement accounts.
Why it matters: Expands alternatives into the retirement market, creating new distribution opportunities but also subjecting products to heightened fiduciary and regulatory scrutiny.
Action items to consider: Evaluate retirement distribution channels, model ERISA compliance costs, and prepare plan-sponsor engagement strategies.
Read More Here (Dakota)
Goldman Sachs & T. Rowe Price to Introduce Alternative Investments in Retirement Plans
Summary: Goldman Sachs and T. Rowe Price plan to launch alternative investment products, private credit, and hybrid strategies—for wealthy clients in 2025, with a broader rollout to 401(k) retirement accounts in 2026. This follows policy changes allowing alternatives in retirement plans.
Why it matters: The move opens a massive new distribution channel but also subjects managers to ERISA’s stricter rules on liquidity, valuation, transparency, and fees. Firms that adapt quickly will be best positioned to capture opportunities and build plan-sponsor relationships.
Action items to consider: Develop valuation protocols suitable for retirement accounts, update fee disclosure models, and build distribution strategies for 401(k) channels.
Read More Here (Reuters)
SEC Enforcement Outlook: Private Fund Non‑Scienter Disclosure & Insider Trading Remain Priorities
Summary: SEC’s Investor Advisory Committee has approved recommendations to strengthen protections for retail investors accessing private funds. Proposals include shifting eligibility from wealth-based to knowledge-based standards, enhancing disclosures on illiquidity, valuation, and complexity, and encouraging the use of regulated vehicles such as mutual funds, interval funds, or ETFs for broader access.
Why it matters: These recommendations could shape future rulemaking and enforcement priorities, tightening expectations around disclosure, transparency, and suitability. They may also influence which fund structures are viable for retail and retirement channels.
Action items to consider: Map product line-up against potential disclosure mandates, design training on illiquidity/valuation risks, and prepare for heightened suitability reviews.
Read More Here (The National Law Review)
EVENTS:
Privacy vs. Control: The SEC’s Secret Plan to Track Your Crypto Moves
Summary: The SEC announced a public roundtable on Oct. 17 to discuss financial surveillance and privacy in digital assets, with participation from regulators, technologists, and industry stakeholders.
Why it matters: This signals a regulatory push to balance surveillance with privacy, a critical issue for managers in crypto and fintech.
Action items to consider: Monitor SEC developments on digital asset surveillance, review data-sharing practices with third parties, and prepare advocacy positions on privacy safeguards.
About Orical:
Orical is a trusted leader in investment management compliance consulting and compliance technology solutions. Founded by experienced investment management attorneys and former C-Suite executives, Orical has spent over 15 years helping investment advisers, private funds, and asset managers meet regulatory requirements with confidence. Our team delivers practical, business-focused compliance solutions designed to reduce risk, streamline operations, and navigate complex SEC and regulatory challenges.