When the SEC proposed new rules (Proposal) to mandate certain diligence, monitoring and recordkeeping practices as to specified service providers, it purported to be operating under the auspices of protecting investors and mitigating systemic risk. Existing private fund industry practices in those areas are already quite robust, however, particularly due to historic attention from the SEC. As a result, the Proposal raises questions not only about how fund managers will shoulder the practical burden of the rules’ requirements if they are adopted as written, but also why the Proposal was even issued in the first place. To get at the root of the issues and forecast the Proposal’s impact on the private funds industry, the Private Equity Law Report interviewed several industry experts on the Proposal’s parameters and its potential impact. This second article in a two-part series describes the response of SEC commissioners and the private funds industry to the Proposal, including concerns about its purpose, overbreadth and unintended consequences. The first article outlined how key defined terms dictate the scope of the Proposal; the diligence, monitoring and recordkeeping requirements imposed on fund managers; and the anticipated compliance period. See “Fund Managers Must Supervise Third-Party Service Providers or Risk Regulatory Action” (Nov. 16, 2017); and “How Fund Managers Can Develop an Effective Third-Party Management Program” (Sep. 21, 2017).