Smaller CLO Managers Could Face Rising Costs From SEC Proposal
- Rules aim to protect investors from fraudulent behavior
- Firms with fewer resources may struggle with compliance costs
The U.S. Securities and Exchange Commission is looking to make private funds safer for investors, and the steps it’s considering might be severe enough to drive smaller loan fund managers out of the business, lawyers say.
In early February, the SEC published a sweeping 341-pages of proposed rules directed at private equity firms and hedge funds, but the regulations also affect money managers that package loans into bonds known as collateralized loan obligations. The proposed reforms are designed to protect investors from money managers that don’t disclose fees, and engage in potentially fraudulent behavior that could harm investors and is contrary to public interest, an SEC official said, asking not to be identified publicly discussing pending rulemaking.