The Securities and Exchange Commission (SEC) recently enacted amendments to the Repurchase Rules, sparking both regulatory changes and legal scrutiny.

Overview and Developments for Registered Investment Advisers

Here’s a concise overview for RIA’s of the developments surrounding the Repurchase Rule:

Adoption of Amendments

• On May 3, 2023, the SEC adopted amendments to the Repurchase Rules concerning disclosures about issuer buybacks.
• These amendments became effective on July 31, 2023.

Legal Challenge

• On October 31, 2023, the U.S. Court of Appeals for the Fifth Circuit heard a case challenging the Repurchase Rule in Chamber of Com. of the USA v. SEC.
• The court granted the petition for review and asked the SEC to address identified defects in the rule by November 30, 2023.

SEC’s Response

• On November 22, 2023, the SEC issued an order postponing the effective date of the Repurchase Rule under Section 705 of the Administrative Procedure Act.
• This action makes the Repurchase Rule subject to further SEC consideration and potential revisions.

In summary, while the adoption of amendments to the Repurchase Rule aimed to bolster transparency in issuer buybacks, legal challenges prompted the SEC to reevaluate and postpone the rule’s effective date. As the SEC navigates this process, market participants should stay informed about potential revisions and their implications for disclosure requirements in the securities market.