• |

    Oct. 15, 2026

SEC Continues Deregulatory Agenda With Proposed Pay to Play Rule Rescission

On September 3, 2026, the SEC issued a proposal (Proposal) to rescind Rule 206(4)‑5 under the Investment Advisers Act of 1940 (Advisers Act), commonly known as the Pay to Play Rule (Rule), in its entirety and to amend related recordkeeping requirements. In its proposing release, the Commission acknowledged that the Rule has had unintended effects – e.g., penalizing of investment advisers for “foot faults” in the form of tiny political donations at the state and local levels – and that compliance with a strict liability standard has been highly burdensome for investment advisers. Comments on the Proposal are open until November 3, 2026. Many in the private funds industry welcome the move as the latest coup in the current SEC leadership’s deregulation campaign, and as a step back from de facto election oversight. It is important not to overreact, however, given that the Proposal would not change anti-fraud provisions under other sections of the Advisers Act or pay to play restrictions under various other regulatory frameworks, some of which closely follow the SEC’s version. This article summarizes the Rule, explains the Proposal, outlines the agency’s rationale for rescinding the Rule, considers the likely consequences of the Rule’s rescission and offers practical takeaways for fund managers. For analysis of other SEC rulemaking, see “Proposed Form PF Amendments Significantly Reduce Reporting Requirements on Fund Managers (Part One of Two)” (Jun. 11, 2026); and “SEC Proposes Amendments to Small Entity Definitions for Investment Advisers” (Feb. 19, 2026).

Anticipating and Mitigating Threats Posed by the Latest Surge in Private Credit Litigation

The first quarter of 2026 saw a stark increase in litigation involving private credit funds, coinciding with a wave of investor redemption requests that directly conflicted with funds’ redemption caps. The gathering storm of litigation has happened in parallel with – and arguably as a result of – explosive growth in the number and complexity of private credit funds in the last several years. To help sponsors assess pressure points in their own private credit funds based on issues raised in litigation, the Private Equity Law Report interviewed O’Melveny & Myers partners Meaghan VerGow and Lauren M. Wagner. This article captures their insights on the factors driving the rise in private credit litigation; alleged violations involving fund strategies, valuations and disclosures; differences and similarities between allegations in litigation and the SEC’s concerns about private credit; risk mitigation tactics that sponsors can adopt; and threats that could emerge in future private credit lawsuits. See “Stale Marks, Redemption Pressure and Valuation Process Disclosures:  The Emerging Shape of Private Credit Litigation” (Oct. 1, 2026).

Initiatives Expanding Access to Private Markets in Defined Contribution Plans

There is nothing in the Employee Retirement Income Security Act of 1974 (ERISA) that prohibits an ERISA plan from investing in private funds or other alternative assets. Defined benefit plans have done so for decades. On the other hand, few defined contribution plans incorporate alternative investment options – often due to concerns over litigation risk. Two developments may make it more palatable, however, for ERISA fiduciaries to invest in private market assets. One is the U.S. Department of Labor’s proposed regulation (Proposal) that would provide a safe harbor for plan fiduciaries when considering investment choices. The other is the Anderson v. Intel case pending before the U.S. Supreme Court, which could tighten pleading standards for plaintiffs in breach of duty actions against plan trustees. A Practising Law Institute program on ERISA plan access to private markets detailed the potential impact of the Proposal and the pending Supreme Court case; how sponsors are using collective investment trusts to hold ERISA assets; the evolving array of private market retirement products; and sponsors’ incentives to have their funds qualify as default investment options. This article discusses the key takeaways from the program. See “SEC Committee Wary of Retail Investor Confusion and Incompatible Features of Alternative Assets” (Jul. 23, 2026).

Understanding the Initial Reforms to the U.K. Senior Managers Regime

The U.K. Financial Conduct Authority (FCA) and His Majesty’s Treasury have been working on initiatives to make the U.K. regulatory regime more flexible and proportional. In April 2026, the FCA issued Policy Statement 26/6 (PS26/6), which sets forth the FCA’s first set of reforms to the U.K. Senior Managers and Certification Regime (SMCR). PS26/6 recalibrates the SMCR to prioritize efficiency and proportionality, but without altering the regulations’ fundamental principles or reducing the regulatory or personal liability risks associated with senior management roles. At a program presented by the Alternative Investment Management Association, Dechert partner Jason Butwick and senior counsel Richard Frase discussed the changes effected by PS26/6, which include updated size thresholds and timelines; new guidance on rules and reporting requirements under the Code of Conduct in the FCA Handbook; revised guidance on regulatory references; and changes to the so-called “12‑week rule.” This article synthesizes their remarks. See our two-part series on the SMCR: “Responsibilities of Senior Managers” (Jun. 25, 2019); and “Certification Regime and Conduct Rules” (Jul. 9, 2019).

Seed Deal Study Finds Maturing Market

In July 2026, Seward & Kissel released the 12th annual iteration of its seed transaction deal points study (Study) covering seed deal activity during 2025. “The biggest thing we noticed – and at this point have been tracking for a few years – is a flattening of the trendlines for many key provisions, such as lockup duration,” which could be a reflection of equilibrium in the market, C. Gerhard Anderson, III, partner at Seward & Kissel and lead author of the Study, told the Private Equity Law Report. As in prior years, the Study covers key seed deal terms, including working capital support; revenue share structures, sunsets and buyouts; lockups; non-compete and other key person provisions; and other terms designed to protect seeders’ economic interests. This article parses the Study, with additional commentary from Anderson. For coverage of a previous Seward & Kissel study, see “Trends and Key Drivers in PE and Private Credit Seeding Transactions” (Jul. 11, 2024).

Two Private Funds Partners Join Willkie Farr in New York

Willkie Farr & Gallagher has welcomed private funds lawyers Erica Temel and Shreyas Jhaveri as partners in the firm’s New York office. Both attorneys specialize in the formation of private investment funds across various strategies and sectors. For insights from Willkie, see “Managing Co‑Investment Conflicts of Interests When Deals Are Stressed” (Aug. 20, 2026); and “SEC Walks Back 15% Cap on Private Fund Investments by Registered Closed‑End Funds” (Sep. 18, 2025).

Most-Read Articles