IM Director Birdthistle Delivers Remarks on Private Funds, Balancing Financial Regulation

On November 16, the Securities and Exchange Commission’s Director of Investment Management, William Birdthistle, delivered remarks titled, “Private Equity: Past & Present, Charters & Code.” In his remarks, Director Birdthistle notes the challenge of regulation is to fall somewhere along the spectrum of “command-and-control fiat versus unfettered laissez-faire.” He noted that as a regulator he is “confined by at least two critical constraints of expertise: the plumbing of our financial system and the legal authorities granted by Congress.” He added “few academic papers attempt to disentangle the gordian jumble of back-office systems that define the functional anatomy of American finance… and certainly no professor I’ve encountered, takes more seriously their analysis of legal authority.” He spoke to the depth of legal and industry knowledge the IM staff hold, while also briefly touching on the importance of stakeholder engagement. He commented that prior to stepping into the Director role, he asked for advice and the most poignant piece was “listen to everybody.” He noted the staff remains willing to engage with industry stakeholders, and that the staff “earnestly grapples with challenges and solutions submitted through the notice-and-comment policymaking process.”

He then addressed the rise of assets in private funds, noting “the total universe is approaching par with the $30 trillion of assets in America’s registered investment companies: mutual funds, closed-end funds, money market funds, and exchange-traded funds.” He commented on the importance of Form PF as a tool for “regulators to understand the dynamics and trends of the private fund market, and how these phenomena are evolving over time.”

Click here to read Director Birdthistle’s comments on financial regulation and private funds.