Industry Groups Urge SEC To Amend Reproposed Rule On Incentive-Based Compensation

The Managed Funds Association ("MFA"), the Alternative Investment Management Association ("AIMA") and SIFMA told the SEC that its proposal concerning incentive-based compensation arrangements imposed restraints that exceeded the intent of Section 956 of the Dodd-Frank Act. Section 956 requires U.S. financial regulators to issue rules prohibiting excessive compensation arrangements that encourage inappropriate risk taking at Covered Financial institutions.

In their comments, MFA and AIMA recommended that the proposal should:

• explicitly exclude non-proprietary assets in the final rule;
• exclude (i) certain assets that may appear on an adviser's balance sheet from the calculation of that adviser's assets for purposes of the asset thresholds, (ii) assets that are invested or otherwise remain in a fund managed by an adviser, and (iii) assets that are held in or set aside for deferred compensation arrangements from the adviser's assets, in order to determine whether