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    Feb. 26, 2026

FINRA Proposes Streamlined Outside Activities Reporting Rules for Broker‑Dealers

On January 22, 2026, FINRA filed a proposed rule (January 2026 Proposal) with the SEC that would create new FINRA Rule 3290 on outside business activities (OBAs) to replace Rules 3270 and 3280, which set OBA and private securities transactions (PSTs) reporting requirements for FINRA members. FINRA argued that Rule 3290 will streamline the reporting of OBAs and PSTs that persons must make to member firms to obtain approval and avoid conflicts of interest. In FINRA’s view, the two existing rules are misaligned with a market in which hundreds of  and thousands of individuals engage in low-level OBAs, such as tending bar, which are functionally irrelevant to the investment-related activities they may perform on behalf of members. Hence, adopting more focused requirements will exclude such “white noise” from reporting channels and lessen recordkeeping and compliance burdens. But some question the potential effectiveness of Rule 3290 while Form U4 – which is used to report, among other things, OBAs – is still in effect. This article charts the evolution of the January 2026 Proposal from the original proposal made on March 14, 2025, when FINRA issued Regulatory Notice 25-05 (March 2025 Proposal); breaks down what it retains from current rules and how it departs from them; compares it to Form U4; and weighs the likelihood and timeline of potential approval by the SEC and adoption in its current form, with commentary from legal experts. For a look at the March 2025 Proposal, see “FINRA Requests Comment on Revised Rules for Outside Business Activities and Securities Transactions” (Jun. 5, 2025).

SEC Investment Management Director Stresses Listening, Deregulation, Democratization and Innovation

In December 2, 2025, remarks to the Private Funds Subcommittee and Investment Advisers and Investment Companies Subcommittee of the ABA’s Federal Regulation of Securities Committee, Brian Daly, director of the SEC Division of Investment Management (Division), discussed his desire to support innovation in the financial markets and ensure the Division listens to the needs of market participants. He also explained that the Division’s efforts during his tenure will be informed by the need for deregulation; modernization of the regulatory regime; democratization of access to alternative investments; and promotion of artificial intelligence. He gave the remarks in his official capacity as director of the Division but noted that they did not necessarily reflect the views of the SEC, its individual commissioners or its staff. This article parses his remarks. See “Division of Investment Management Staff Discuss Staffing, Operations, Rulemaking and Other Developments” (Jul. 31, 2025).

Update on Appetite for Separately Managed Accounts and Key Terms

Since 2021, Seward & Kissel has surveyed the market for separately managed accounts (SMAs) within the hedge fund industry, gauging investor appetite for SMAs and key SMA terms. Seward & Kissel released the fifth iteration of its survey, SMA Snapshot Report – Fall 2025 (Report), which covers SMA managers’ years in business; account sizes; types of SMA investors; strategy preferences; termination rights; management and incentive fees; standards of care; and most favored nations provisions. This article discusses the key findings and compares them to prior Seward & Kissel SMA studies, with commentary from Seward & Kissel partner David R. Mulle, one of the authors of the Report. See “Report Examines Appetite for Separately Managed Accounts and Key Terms” (Oct. 27, 2022).

AlixPartners Survey Demonstrates the Need for Proactive and Integrated Compliance

In an AlixPartners survey (Survey) of 1,000 legal and compliance leaders around the world, more than 60% of respondents said their organizations are inadequately prepared to manage a range of risks – from a surge in financial crime and corporate litigation to artificial intelligence (AI) vulnerabilities to emerging geopolitical and regulatory hurdles. Concerningly, the technology tools many organizations are now deploying to address these risks, such as AI, can themselves generate new liabilities. The bottom line is that compliance costs are rising as digital transformation accelerates and regulatory complexity grows. To keep pace, organizations must embed compliance within their core business strategy, shifting into a proactive mode and away from a reactive, siloed, back-office approach. This guest article by Susan Markel and Lisa Osofsky of AlixPartners draws on the findings in the Survey and takes a closer look at the critical risk areas facing global businesses, as well as high-level best practices for managing them effectively. See “Benchmarking Fund Managers’ Adoption and Governance of Generative AI” (Nov. 6, 2025).

G7 Cyber Expert Group Issues Principles for Collective Cyber Incident Response and Recovery

In an increasingly interconnected world, cybersecurity incidents may affect multiple financial institutions, jurisdictions and economies. “Since major cyber incidents increasingly have a global character, effective cyber incident response and recovery are ever-more dependent on collective efforts,” posited the G7 Cyber Expert Group in a paper (G7 Report) discussing fundamental elements of collective cyber incident response and recovery (CCIRR). Aligning CCIRR approaches globally will enable more effective responses to widespread cyber incidents. The G7 Report is organized around the three fundamental pillars of establishing, using and maintaining/testing a CCIRR arrangement. Each pillar, in turn, includes several elements. This article parses the G7 Report, which contains valuable information for fund managers interested in establishing CCIRR arrangements. See “CFTC Commissioner Urges Tougher Diligence and Closer Cooperation to Thwart Cyber Threats” (Sep. 11, 2025).

Former SEC Official Joins K&L Gates in D.C.

K&L Gates welcomed Thoreau Bartmann as a partner in its Washington, D.C., office. He joins the firm’s asset management and investment funds practice from the SEC, where he formerly served as co‑chief counsel of the Division of Investment Management, senior policy adviser to the head of the Asset Management Unit of the Division of Enforcement and a branch chief for the Rulemaking Office. For insights from other K&L Gates partners, see “Drafting Effective Key Person Provisions for Hedge Funds (Part One of Two)” (May 8, 2025); “SEC FAQs Clarify Marketing Rule Treatment of Extracted Performance and Portfolio Characteristics” (Apr. 24, 2025); and “Ireland’s New Dividend Participation Exemption: An Opportunity for Asset Managers” (Jan. 30, 2025).

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