October 31, 2025

Via Electronic Mail
The Hon. Paul Atkins
Chairman
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

Re: Improving the Waiver Process and Rules Governing Certain Disqualifications Under the Federal Securities Laws

Dear Chairman Atkins:

The Securities Industry and Financial Markets Association (“SIFMA”)¹ respectfully requests that the Securities and Exchange Commission (“SEC” or “Commission”) take necessary steps to improve the waiver process and the rules governing certain disqualifications under the federal securities laws. SIFMA urges the Commission to adopt a new proposed regulation to govern the waiver process (“Regulation CC”), amend the definition of “ineligible issuer” in Rule 405 of the Securities Act of 1933 (“Securities Act”), and amend the definition of “disqualifying event” and provisions in the broker-dealer exception in Rule 206(4)-1 under the Investment Advisers Act of 1940 (“Advisers Act”).

This request is submitted by SIFMA on behalf of its members to improve the efficiency, transparency, predictability, and fairness of the waiver process related to disqualifications arising under the federal securities laws (“Collateral Consequences”), and to restore the intended application of certain disqualification exemptions. These proposals are consistent with Chairman Atkins’s opening remarks in May 2025:²

Congress calls on us to ensure that our regulations balance costs and benefits, that they do not become too burdensome that they addneedless friction to the marketplace, undermining the capital formation that yields so much benefit. . . . Regulation ideally should be smart, effective, and appropriately tailored within the confines of our statutory authority. It takes market experience and focused application to ensure that customers and investors of financial services firms benefit from efficient, effective, and well-designed regulation. . . . In short, clear rules of the road benefit all market participants.³

We applaud the Commission’s recent announcement that it will resume its former policy of permitting settling parties in an SEC enforcement action to request that the Commission simultaneously consider offers of settlement and requests for waivers from resulting Collateral Consequences.⁴ While SIFMA supports this initial step by the Commission to make the Collateral Consequences waiver process more equitable and predictable, SIFMA believes its additional proposals set forth below are needed to achieve lasting reform that improves the waiver process and appropriately tailors the scope of certain disqualifications.

I. Executive Summary

SIFMA is proposing that the Commission make the following changes to address the waiver process for Collateral Consequences and the scope of certain Collateral Consequences:

• Proposed Regulation CC: Adopt new Regulation CC to make the waiver process for Collateral Consequences more efficient and less of a drain on resources.
• WKSI Disqualification: Amend the definition of “ineligible issuer” in Rule 405 of the Securities Act to refocus the scope of the Well-Known Seasoned Issuer (“WKSI”) disqualification to include only the named party to a disqualifying action, and not subsidiaries, and to limit disqualifying criminal events to those within the United States.
• “Disqualifying Event” Definition: Amend the definition of “disqualifying event” in Rule 206(4)-1 of the Advisers Act to eliminate state, Commodity Futures Trading Commission (“CFTC”), and self-regulatory organization (“SRO”) orders from the scope of the rule.
• Broker-Dealer Exception: Amend the broker-dealer exception in Rule 206(4)-1 under the Advisers Act to clarify when broker-dealers may utilize the exception.

II. Rationale for Request

Under the federal securities laws, Collateral Consequences automatically attach to certain resolutions of matters, and such disqualifications often can be more consequential to a company than the enforcement remedies imposed in a matter. Currently, when a company needs to seek a waiver of the Collateral Consequences that attach to a matter, it must do so through a lengthy and cumbersome process. The vast majority of waiver requests arise from actions that clearly should not subject the relevant firm to Collateral Consequences, yet they require the expenditure of substantial firm and staff resources. Reform of the process to require scrutiny of the small number of cases that may justify Collateral Consequences would promote “the fairness and economy of Commission resources” while also benefitting firms.⁵

In addition to being lengthy, the Collateral Consequences waiver process is opaque. Over 10 years ago, the staff of the Division of Corporation Finance issued guidance (“Guidance”) regarding factors the Division would consider in connection with requests for waivers of certain Collateral Consequences; however, over time, the Division of Corporation Finance has required firms to address additional factors that are not included in the Guidance.⁶ Furthermore, for Collateral Consequences handled by other Commission divisions, no guidance has been issued regarding the standards a company must meet to obtain a waiver.

SIFMA posits that the Collateral Consequences waiver process should be formalized, such that the process transparently and efficiently results in the grant of a waiver where a company meets certain enumerated factors. Further, Rules 405 under the Securities Act and 206(4)-1 under the Advisers Act should be narrowed to reduce the number of unrelated matters that trigger the disqualifications under the provisions. Similarly, the broker-dealer exception in Rule 206(4)-1 under the Advisers Act should be clarified to allow more broker-dealers to rely upon it.

1. SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets, and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (“GFMA”). For more information, visit http://www.sifma.org. [↩]
2. See also Exec. Order No. 14,192, 24 Fed. Reg. 9065 (Jan. 31, 2025) (Executive Order declaring Administration’s policy to “significantly reduce the private expenditures required to comply with Federal regulations to secure
   America’s economic prosperity”). [↩]
3. See Chairman Paul S. Atkins, Opening Remarks at the SEC Town Hall (May 6, 2025) (“May Town Hall Remarks”). [↩]
4. Chairman Paul S. Atkins, Statement on Simultaneous Commission Consideration of Settlement Offers and Related Waiver Requests (Sept. 26, 2025). [↩]
5. See id. [↩]
6. Waivers of Disqualification under Regulation A and Rules 505 and 506 of Regulation D (Mar. 13, 2015). [↩]