August 23, 2023 - The SEC today narrowly adopted a final Private Fund Advisers Rule that will apply to advisers of private funds including managers of loan funds. We are concerned that this rule, like many other recent SEC rulemakings, may have been adopted without appropriate regard for the substantive and procedural requirements imposed by Congress on SEC rulemakings and may exceed the SEC’s statutory authority. While we oppose multiple sections of the final rule, we are gratified that that the Commission has determined that securitized assets funds, including Collateralized Loans Obligations (“CLOs”), are exempt. The rule as proposed would have been especially inappropriate and burdensome for CLOs, which are structured finance vehicles that currently provide $1 trillion in capital to over 1000 U.S. companies. They are governed by indentures that are highly negotiated among sophisticated parties and already provide for the monthly disclosure of extensive asset-level information to their investors. The proposed rule would have imposed significant additional disclosure obligations that are of no value to CLO investors and would have prohibited or limited many important practices that are standard in the CLO market. We will continue to review the final rule and assess the appropriate next steps to protect the interests of loan fund managers and their investors.”
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