New Open Call Now Available!

Outsourcing by Investment Advisers

SEC Proposed New Rule 206(4)-11, and Amendments to Rule 204-2 and Form ADV 

On October 26, 2022, the Securities and Exchange Commission (SEC) proposed new rule 206(4)-11 and rule amendments under the Advisers Act that prohibit SEC-registered investment advisers from outsourcing certain services or functions to service providers and third-party recordkeepers without meeting minimum due diligence and monitoring requirements.

If adopted in its current form, the requirements would have a significant impact on the due diligence and monitoring obligations of SEC-registered advisers on a broad range of functions including outsourced or supplementary trading arrangements.

Presenters:

Jeff Estella

Founder

Estella LLC

David Lourie

Vice President & Senior Counsel

Regulatory Affairs

Managed Funds Association

Open Call Index

Opening Remarks: 00:00

Q#1: Current State of Outsourcing and Why Now: 04:20

Q#2: How the Proposal is different than current regime: 10:05

Q#3: Top Compliance Challenges: 16:50

Q#4: Next Steps: 23:00

Helpful Links

Press Release

Fact Sheet

Rule Filing

About Jeff Estella

Jeff Estella is founder of Estella LLC, an independent consulting and advisory firm to the financial services and legal community. Jeff has extensive experience in global equity trading, compliance, investment operations, risk management, securities market structure, public policy, global regulation and the implementation of technology efficiencies. Before founding Estella LLC, Jeff spent twenty years at MFS Investment Management and held the roles of Director of Global Equity Trading, Director of Trading Analytics and Director of Investment Operations.

About David Lourie

David Lourie serves as Vice President and Senior Counsel, Regulatory Affairs, for the Managed Funds Association (MFA). David has extensive experience working in the alternative investment industry. Notably, David served as Chief Compliance Officer at private equity firm Cressey & Company, where he was responsible for all regulatory matters. David also worked at Ascendant Compliance Management, where he consulted on regulatory issues for more than 100 clients that included hedge funds, private equity firms and investment advisers across the country.