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Ms Janelle Ibeling
Partner
Janelle Ibeling advises investment managers and institutional investors on structuring, forming, and managing alternative investment products, including hedge funds, private equity funds, and funds of funds. Her expertise spans leveraged products, credit facilities, side pocket issues, single-investor funds, managed accounts, investor negotiations, and co-investments. She also provides guidance on SEC registration, compliance, and best practices.
Janelle assists institutional investors with hedge and private equity fund investments and advises family offices on regulatory matters, including formation, SEC/CFTC registration, and exemptions. She supports asset managers through fund formation, spin-outs, seeding capital, and equity transactions.
Recognized for her exceptional legal acumen, Janelle has received numerous accolades, including the Chicago Daily Law Bulletin’s 2022 Salute! Top Women in Law and The Hedge Fund Journal’s 2023 50 Leading Women in Hedge Funds. She is ranked in Chambers Global and Chambers USA for Investment Funds and praised for her “outstanding legal skills” and ability to navigate sensitive negotiations.
A key member of Sidley’s acclaimed Investment Funds group, Janelle has been recognized in Who’s Who Legal: Private Funds and The Legal 500 USA for her extraordinary talent. The group has earned top rankings in Chambers USA since 2008 and was named “Law Firm of the Year” in 2022 by U.S. News – Best Lawyers.
Key Developments and the Latest Trends in the United States From a Legal Perspective 2025
The year 2025 marked a dramatic shift in the regulation of the United States asset management industry from 2024’s focus on active rulemaking, examinations and enforcement activities. Throughout 2025, rhetoric from regulatory agency officials has indicated an intent to de-emphasize regulation by enforcement, decrease “excessive and unnecessary costs,” and prioritize regulations aimed at creating certainty for investors and fostering innovation amid rapidly changing financial technologies. In this article, we examine 2025’s key developments and trends from the United States legal perspective in the asset management industry.
1.Divergence From Previous Administration
This past year has seen significant efforts from top officials such as Paul Atkins, Chairman of the Securities and Exchange Commission (SEC), and Caroline Pham, former Acting Chair of the Commodity Futures Trading Commission (CFTC), whose replacement, Michael Selig, was sworn in as the Chairman at the end of December, to diverge from the practices of their predecessors. Chairman Atkins has publicly framed the SEC’s agenda as a “new day” focused on the “minimum effective dose” of regulation needed to protect investors while supporting capital formation, while former Acting Chair Pham promoted a “back to basics” agenda focused on withdrawing regulations that “pile on excessive and unnecessary costs.” These statements demonstrate a clear shift from former President Joe Biden/Chairman Gary Gensler–era priorities and show that the agencies are seeking to return to a common-sense approach to regulation.
What changed at the SEC.
This shift was directly observed in June, when the SEC formally withdrew 14 pending Gensler-era proposed rules, signaling a reset of the rulemaking agenda and an intention to restart with narrower, disclosure-driven proposals. Withdrawn items included several rules that would have imposed new requirements on registered investment advisers, including the predictive data analytics conflicts proposal, the safeguarding (custody rule) proposal, the outsourcing rule and several market-structure initiatives. In addition to pulling back rulemakings, the SEC has strongly signaled that it will not seek to defend Gensler-era rules and proposals embroiled in litigation. In August, a three-judge panel of the Fifth Circuit remanded, without vacatur, Securities Exchange Act of 1934 (Exchange Act) Rules 10c-1a and 13f-2, concerning securities lending and short-sale disclosure, for further cumulative-impact analysis, and in June, the Trump administration moved to end its defense of the Employee Retirement Income Security Act of 1974 (ERISA) environmental, social, and governance rule at the Fifth Circuit. On the enforcement side, the SEC has closed some enforcement sweep investigations, for example concerning investment adviser “off-channel” communications, and voluntarily dismissed nearly all ongoing crypto litigation as part of a reaction against what Chairman Atkins has described as “regulation by enforcement.” Chairman Atkins is also seeking to “future-proof” the SEC’s agenda, seeking to implement new rules with longer comment periods and enough notice for the industry to implement required changes, thus making rules harder to repeal or change under future administrations.
What changed at the CFTC.
The shift at the CFTC became evident in February, when former Acting Chair Pham announced that the CFTC would undergo a substantial restructuring of its Division of Enforcement, consolidating its task forces into broader units focused on complex fraud and retail fraud. Echoing similar sentiments observed from the SEC, former Acting Chair Pham expressly framed this reorganization as a move away from “regulation by enforcement” and toward an enforcement program centered on clear fraud-prevention and victim-protection priorities. Like the SEC, the CFTC also signaled a reset in its rulemaking agenda, pulling back rulemaking initiatives from the prior administration. In a statement on the Spring 2025 Unified Agenda, former Acting Chair Pham announced that “regulations proposed over the last several years that do not serve our mission and instead pile on excessive and unnecessary costs are being withdrawn.” That shift was also reflected in Letter 25-50, no-action relief restoring, in substance, the former “QEP exemption” from registration as a commodity pool operator with the CFTC (which was repealed in 2012).
II.Crypto Assets
Stated Policy Goals. Fostering digital asset innovation and providing regulatory clarity on blockchain-based financial technologies was a primary concern for regulatory agencies throughout 2025. Upon taking office in January, President Trump established the President’s Working Group on Digital Asset Markets (PWG) with the goal of making the United States the “crypto capital of the world.” In July, the PWG released a report recommending several legislative and regulatory actions addressing crypto market structure and stablecoins (among other areas), reflecting a “pro-innovation mindset toward digital assets and blockchain technologies.” Both Chairman Atkins and former Acting Chair Pham have cited the PWG’s recommendations in launching new initiatives at their respective agencies. Chairman Atkins even referred to crypto as “job one” during a joint roundtable with the CFTC.
Chairman Atkins announced the launch of “Project Crypto,” an SEC initiative to modernize agency rules to allow U.S. financial markets to move “on-chain.” Along those lines, the SEC’s 2025 rulemaking agenda includes several proposals referencing crypto assets. In a November 12 speech, Chairman Atkins suggested that the SEC will consider a proposal to establish tailored disclosures, exemptions and safe harbors for digital asset distributions in the coming months. At the CFTC, former Acting Chair Pham initiated a “CFTC Crypto Sprint,” ultimately permitting certain trading of spot crypto assets on CFTC-registered exchanges and launching a pilot for the use of tokenized collateral.
The PWG also directed the SEC and CFTC to coordinate their efforts in regulating digital asset markets, and both agency heads have signaled an intent to harmonize rules and avoid duplication or conflict. An early example of such coordination was a September 2 joint statement by SEC and CFTC staff expressing the view that current law does not prohibit SEC- or CFTC-registered exchanges from facilitating trading in leveraged, margined, or financed spot “retail commodity transactions” involving digital assets.
Recent Legal Developments
Security status. Even before the PWG report’s release, SEC staff issued several statements in 2025 addressing when certain crypto asset activities, such as staking, do not implicate the federal securities laws.
Custody. One of the SEC’s first actions under the new administration was rescinding Staff Accounting Bulletin 121, controversial guidance requiring public companies and banks to recognize digital assets held for customers as balance-sheet liabilities. Firms may now follow generally accepted accounting principles or International Financial Reporting Standards in determining whether to recognize a liability in such cases. On May 15, the SEC staff withdrew prior restrictive guidance and issued new guidance clarifying the ability of a broker-dealer to carry crypto assets for the account of any customer, with additional guidance issued on December 17. On September 30, SEC staff issued a no-action letter confirming that registered investment advisers and registered investment companies may treat certain state-chartered trust companies as “banks” for purposes of maintaining custody of crypto assets and related cash or cash equivalents.
Exchange-Traded Products (ETPs). On July 29, the SEC approved orders permitting in-kind creations and redemptions by authorized participants for crypto asset ETP shares—a departure from prior treatment of spot bitcoin and ether ETPs under Gensler’s purview, which had limited creations and redemptions to an in-cash basis. The new approach aligns with other commodity-based ETPs and provides flexibility and cost savings to ETP issuers, authorized participants, and investors. On September 17, the SEC approved rule changes by national securities exchanges adopting generic listing standards for commodity-based ETPs, including those holding digital assets. As a result, the exchanges may list qualifying ETPs without submitting separate proposed rule changes under Section 19(b) of the Exchange Act, reducing the time and administrative burdens in bringing new crypto-commodity ETPs to market.
Stablecoins. On July 18, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) became law—the first major U.S. crypto legislation. The GENIUS Act creates licensing and regulatory requirements for payment stablecoin issuers and related service providers. In addition to encouraging broader stablecoin and digital asset adoption, the GENIUS Act may create opportunities for asset managers that manage permitted stablecoin reserves or design compliant fund vehicles.
Market Structure Regulation. It is anticipated that the U.S. Congress will enact some form of digital commodity legislation in the near future; however, regulatory actions at the CFTC and SEC, such as permitting spot trading of digital commodities on CFTC-registered futures exchanges and allowing The Depository Trust Company (DTC) to pilot a tokenized securities program, suggest a path toward regulated digital asset trading that may be independent of any legislative reforms.
III. Use of Artificial Intelligence (AI)
On January 23, the Trump administration issued Executive Order 14179, directing heads of regulatory agencies to “suspend, revise, or rescind” actions or policies that are inconsistent with the Executive Order’s stated goal of the United States’ AI global dominance. Following this order, the White House released the Trump administration’s “AI Action Plan,” outlining policy positions around three main pillars: (1) accelerating innovation, (2) building American AI infrastructure, and (3) leading in international diplomacy and security. The Trump administration also issued three additional Executive Orders, with the first promoting the development and export of “American AI Technology Stack,” the second directing a streamlined federal permitting process to facilitate building data centers and the third calling for the federal adoption of “Unbiased AI Principles.”
Regulatory bodies such as the SEC, CFTC and the Financial Industry Regulatory Authority, Inc. (FINRA), meanwhile, have not yet issued regulations addressing the use of AI. Under the Biden administration, these regulatory bodies emphasized responsible use of AI within existing regulatory frameworks and urged diligence in navigating compliance risks associated with AI. As discussed above, under Chairman Atkins, the SEC has withdrawn its predictive data analytics rule proposal, which would have significantly restricted investment advisers’ and broker-dealers’ use of AI.
For asset managers, the SEC has previously stressed risk management and the monitoring and supervision of AI tools in areas such as trading, safekeeping of client records, fraud prevention and detection, back-office operations and anti-money laundering. The SEC’s Division of Corporate Finance has highlighted that additional disclosures, such as risk factors, may be required and must be accurate. The SEC has urged companies against exaggerating or misrepresenting their use of AI, a practice referred to as “AI-washing,” such as overstating the use of AI in a prospectus or marketing materials. Under the leadership of both Gensler and Atkins, the SEC has brought enforcement cases against investment advisers as well as operating companies for fraudulent AI-washing. The SEC has also established an AI Task Force to centralize and govern AI adoption across the SEC and aims to use AI for surveillance, analytics and enforcement to become more innovative and efficient in its goal to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”
In its 2025 Annual Regulatory Oversight Report, FINRA highlights the risks that AI poses in financial crimes, cybersecurity and vendor risk, while urging member firms to supervise AI use at both an enterprise and an individual level, monitor AI systems for bias and data provenance and strengthen their cybersecurity against AI-driven threats. FINRA also indicates that its existing rules and guidance, including those relating to communications with the public, supervision, business continuity, data privacy and integrity, cybersecurity, and record-retention, all apply equally to firms’ use of AI as to other types of records and communications. Both FINRA and SEC examination teams appear to expect that regulated firms will have some kind of centralized inventory of, and governance process over, their associated persons’ use of AI tools and applications.
IV.Retailization
The Trump administration is seeking to remove obstacles to retail investors’ access to private market investments. The expansion of retail access to private funds forecasts a future in which individual investors can indirectly access private fund offerings previously unavailable to them.
Alternative Assets for 401(k) Investors. Over the years, employers have shifted away from defined benefit plans to 401(k) plans, shifting investing responsibility to the individual retail investor. While retail investors are unable to allocate investments to alternative assets through their 401(k) plans, pension plans are not similarly prohibited and therefore began to outperform self-directed retirement accounts of retail investors. This mismatch in performance, and the resulting pressure for 401(k) plan sponsors to seek higher returns, have built pressure to democratize access to these private markets.
Perhaps most demonstrative of this growing shift toward broader access and the retailization of the asset management industry stems from the Trump administration’s August 7, 2025 Executive Order, “Democratizing Access to Alternative Assets for 401(k) Investors.” This Executive Order announced the administration’s goal to expand retirement plan investment options by allowing participants in defined contribution plans to choose an asset allocation fund that includes investments in “alternative investments.” Among other things, the Executive Order would relieve regulatory burdens and litigation risks that have thus far acted as barriers for fiduciaries from including alternative assets in their portfolios. The Executive Order directs the Department of Labor (DOL) to clarify how defined-contribution plan fiduciaries can prudently include alternative assets in compliance with ERISA and their fiduciary duties, consider potential safe harbor rules to protect fiduciaries from litigation and coordinate with other regulatory agencies to achieve regulatory harmonization in accomplishing the purposes of the Executive Order.
Promptly following this Executive Order, the DOL rescinded its December 21, 2021 Supplemental Statement, which had stated that ERISA plan fiduciaries of 401(k) plans or other individual account plans are “not likely suited to evaluate the use of private equity investments in designated alternatives in individual account plans.”
While President Trump’s Executive Order had given the DOL 180 days to craft rule proposals or guidance on its directive to broaden retirement savers’ access to private markets, the government shutdown beginning October 1 has delayed the agency’s progress in issuing this much-anticipated guidance. Members of the asset management industry should nonetheless expect further clarity in 2026 from the DOL and corresponding regulatory updates from the SEC and Treasury Department, as instructed in the Executive Order.
Shifts Toward Retailization Within the Asset Management Industry Generally. Additional developments provide potential movement to broader access to private funds for the general public. In May, Chairman Atkins and (now former) Director of Investment Management Director Natasha Greiner announced that the SEC’s intent is to no longer enforce its longstanding informal position prohibiting Investment Company Act of 1940 registered closed-end funds from investing more than 15% of their assets in private funds unless the closed-end fund itself restricts access to accredited investors who meet a required minimum investment. If the SEC revises this policy, closed-end fund investors, including retail investors, would have greater access to private fund assets, albeit indirectly.
In addition, in a no-action letter dated March 2025, the staff of the SEC’s Division of Corporate Finance signaled some flexibility on how an issuer of a privately placed security can take reasonable steps to verify that a purchaser is an “accredited investor” under Rule 506(c) of Regulation D under the Securities Act of 1933. Sponsors may now verify “accredited investor” standards through minimum investment thresholds and written investor representations. While this eases the burden of compliance with 506(c) offerings, it does not fundamentally expand access.
In another example of this shift, the United States House of Representatives passed the Equal Opportunity for All Investors Act of 2025, a bill that would amend the definition of an “accredited investor” to allow individuals to qualify as such via a certification examination rather than purely based on income or net-worth thresholds. This bill now remains pending in the United States Senate. Even with these, we expect that expanded access of private market investments to retail investors will most likely occur indirectly through investments in registered retail investments or retirement plans.
The year 2025 marked a dramatic shift in the regulation of the United States asset management industry from 2024’s focus on active rulemaking, examinations and enforcement activities. Throughout 2025, rhetoric from regulatory agency officials has indicated an intent to de-emphasize regulation by enforcement, decrease “excessive and unnecessary costs,” and prioritize regulations aimed at creating certainty for investors and fostering innovation amid rapidly changing financial technologies. In this article, we examine 2025’s key developments and trends from the United States legal perspective in the asset management industry.
- Divergence From Previous Administration
This past year has seen significant efforts from top officials such as Paul Atkins, Chairman of the Securities and Exchange Commission (SEC), and Caroline Pham, former Acting Chair of the Commodity Futures Trading Commission (CFTC), whose replacement, Michael Selig, was sworn in as the Chairman at the end of December, to diverge from the practices of their predecessors. Chairman Atkins has publicly framed the SEC’s agenda as a “new day” focused on the “minimum effective dose” of regulation needed to protect investors while supporting capital formation, while former Acting Chair Pham promoted a “back to basics” agenda focused on withdrawing regulations that “pile on excessive and unnecessary costs.” These statements demonstrate a clear shift from former President Joe Biden/Chairman Gary Gensler–era priorities and show that the agencies are seeking to return to a common-sense approach to regulation.
What changed at the SEC.
This shift was directly observed in June, when the SEC formally withdrew 14 pending Gensler-era proposed rules, signaling a reset of the rulemaking agenda and an intention to restart with narrower, disclosure-driven proposals. Withdrawn items included several rules that would have imposed new requirements on registered investment advisers, including the predictive data analytics conflicts proposal, the safeguarding (custody rule) proposal, the outsourcing rule and several market-structure initiatives. In addition to pulling back rulemakings, the SEC has strongly signaled that it will not seek to defend Gensler-era rules and proposals embroiled in litigation. In August, a three-judge panel of the Fifth Circuit remanded, without vacatur, Securities Exchange Act of 1934 (Exchange Act) Rules 10c-1a and 13f-2, concerning securities lending and short-sale disclosure, for further cumulative-impact analysis, and in June, the Trump administration moved to end its defense of the Employee Retirement Income Security Act of 1974 (ERISA) environmental, social, and governance rule at the Fifth Circuit. On the enforcement side, the SEC has closed some enforcement sweep investigations, for example concerning investment adviser “off-channel” communications, and voluntarily dismissed nearly all ongoing crypto litigation as part of a reaction against what Chairman Atkins has described as “regulation by enforcement.” Chairman Atkins is also seeking to “future-proof” the SEC’s agenda, seeking to implement new rules with longer comment periods and enough notice for the industry to implement required changes, thus making rules harder to repeal or change under future administrations.
What changed at the CFTC.
The shift at the CFTC became evident in February, when former Acting Chair Pham announced that the CFTC would undergo a substantial restructuring of its Division of Enforcement, consolidating its task forces into broader units focused on complex fraud and retail fraud. Echoing similar sentiments observed from the SEC, former Acting Chair Pham expressly framed this reorganization as a move away from “regulation by enforcement” and toward an enforcement program centered on clear fraud-prevention and victim-protection priorities. Like the SEC, the CFTC also signaled a reset in its rulemaking agenda, pulling back rulemaking initiatives from the prior administration. In a statement on the Spring 2025 Unified Agenda, former Acting Chair Pham announced that “regulations proposed over the last several years that do not serve our mission and instead pile on excessive and unnecessary costs are being withdrawn.” That shift was also reflected in Letter 25-50, no-action relief restoring, in substance, the former “QEP exemption” from registration as a commodity pool operator with the CFTC (which was repealed in 2012).
- Crypto Assets
Stated Policy Goals.
Fostering digital asset innovation and providing regulatory clarity on blockchain-based financial technologies was a primary concern for regulatory agencies throughout 2025. Upon taking office in January, President Trump established the President’s Working Group on Digital Asset Markets (PWG) with the goal of making the United States the “crypto capital of the world.” In July, the PWG released a report recommending several legislative and regulatory actions addressing crypto market structure and stablecoins (among other areas), reflecting a “pro-innovation mindset toward digital assets and blockchain technologies.” Both Chairman Atkins and former Acting Chair Pham have cited the PWG’s recommendations in launching new initiatives at their respective agencies. Chairman Atkins even referred to crypto as “job one” during a joint roundtable with the CFTC.
Chairman Atkins announced the launch of “Project Crypto,” an SEC initiative to modernize agency rules to allow U.S. financial markets to move “on-chain.” Along those lines, the SEC’s 2025 rulemaking agenda includes several proposals referencing crypto assets. In a November 12 speech, Chairman Atkins suggested that the SEC will consider a proposal to establish tailored disclosures, exemptions and safe harbors for digital asset distributions in the coming months. At the CFTC, former Acting Chair Pham initiated a “CFTC Crypto Sprint,” ultimately permitting certain trading of spot crypto assets on CFTC-registered exchanges and launching a pilot for the use of tokenized collateral.
The PWG also directed the SEC and CFTC to coordinate their efforts in regulating digital asset markets, and both agency heads have signaled an intent to harmonize rules and avoid duplication or conflict. An early example of such coordination was a September 2 joint statement by SEC and CFTC staff expressing the view that current law does not prohibit SEC- or CFTC-registered exchanges from facilitating trading in leveraged, margined, or financed spot “retail commodity transactions” involving digital assets.
Recent Legal Developments
Security status.
Even before the PWG report’s release, SEC staff issued several statements in 2025 addressing when certain crypto asset activities, such as staking, do not implicate the federal securities laws.
Custody.
One of the SEC’s first actions under the new administration was rescinding Staff Accounting Bulletin 121, controversial guidance requiring public companies and banks to recognize digital assets held for customers as balance-sheet liabilities. Firms may now follow generally accepted accounting principles or International Financial Reporting Standards in determining whether to recognize a liability in such cases. On May 15, the SEC staff withdrew prior restrictive guidance and issued new guidance clarifying the ability of a broker-dealer to carry crypto assets for the account of any customer, with additional guidance issued on December 17. On September 30, SEC staff issued a no-action letter confirming that registered investment advisers and registered investment companies may treat certain state-chartered trust companies as “banks” for purposes of maintaining custody of crypto assets and related cash or cash equivalents.
Exchange-Traded Products (ETPs).
On July 29, the SEC approved orders permitting in-kind creations and redemptions by authorized participants for crypto asset ETP shares—a departure from prior treatment of spot bitcoin and ether ETPs under Gensler’s purview, which had limited creations and redemptions to an in-cash basis. The new approach aligns with other commodity-based ETPs and provides flexibility and cost savings to ETP issuers, authorized participants, and investors. On September 17, the SEC approved rule changes by national securities exchanges adopting generic listing standards for commodity-based ETPs, including those holding digital assets. As a result, the exchanges may list qualifying ETPs without submitting separate proposed rule changes under Section 19(b) of the Exchange Act, reducing the time and administrative burdens in bringing new crypto-commodity ETPs to market.
Stablecoins.
On July 18, the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) became law—the first major U.S. crypto legislation. The GENIUS Act creates licensing and regulatory requirements for payment stablecoin issuers and related service providers. In addition to encouraging broader stablecoin and digital asset adoption, the GENIUS Act may create opportunities for asset managers that manage permitted stablecoin reserves or design compliant fund vehicles.
Market Structure Regulation.
It is anticipated that the U.S. Congress will enact some form of digital commodity legislation in the near future; however, regulatory actions at the CFTC and SEC, such as permitting spot trading of digital commodities on CFTC-registered futures exchanges and allowing The Depository Trust Company (DTC) to pilot a tokenized securities program, suggest a path toward regulated digital asset trading that may be independent of any legislative reforms.
III. Use of Artificial Intelligence (AI)
On January 23, the Trump administration issued Executive Order 14179, directing heads of regulatory agencies to “suspend, revise, or rescind” actions or policies that are inconsistent with the Executive Order’s stated goal of the United States’ AI global dominance. Following this order, the White House released the Trump administration’s “AI Action Plan,” outlining policy positions around three main pillars: (1) accelerating innovation, (2) building American AI infrastructure, and (3) leading in international diplomacy and security. The Trump administration also issued three additional Executive Orders, with the first promoting the development and export of “American AI Technology Stack,” the second directing a streamlined federal permitting process to facilitate building data centers and the third calling for the federal adoption of “Unbiased AI Principles.”
Regulatory bodies such as the SEC, CFTC and the Financial Industry Regulatory Authority, Inc. (FINRA), meanwhile, have not yet issued regulations addressing the use of AI. Under the Biden administration, these regulatory bodies emphasized responsible use of AI within existing regulatory frameworks and urged diligence in navigating compliance risks associated with AI. As discussed above, under Chairman Atkins, the SEC has withdrawn its predictive data analytics rule proposal, which would have significantly restricted investment advisers’ and broker-dealers’ use of AI.
For asset managers, the SEC has previously stressed risk management and the monitoring and supervision of AI tools in areas such as trading, safekeeping of client records, fraud prevention and detection, back-office operations and anti-money laundering. The SEC’s Division of Corporate Finance has highlighted that additional disclosures, such as risk factors, may be required and must be accurate. The SEC has urged companies against exaggerating or misrepresenting their use of AI, a practice referred to as “AI-washing,” such as overstating the use of AI in a prospectus or marketing materials. Under the leadership of both Gensler and Atkins, the SEC has brought enforcement cases against investment advisers as well as operating companies for fraudulent AI-washing. The SEC has also established an AI Task Force to centralize and govern AI adoption across the SEC and aims to use AI for surveillance, analytics and enforcement to become more innovative and efficient in its goal to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”
In its 2025 Annual Regulatory Oversight Report, FINRA highlights the risks that AI poses in financial crimes, cybersecurity and vendor risk, while urging member firms to supervise AI use at both an enterprise and an individual level, monitor AI systems for bias and data provenance and strengthen their cybersecurity against AI-driven threats. FINRA also indicates that its existing rules and guidance, including those relating to communications with the public, supervision, business continuity, data privacy and integrity, cybersecurity, and record-retention, all apply equally to firms’ use of AI as to other types of records and communications. Both FINRA and SEC examination teams appear to expect that regulated firms will have some kind of centralized inventory of, and governance process over, their associated persons’ use of AI tools and applications.
- Retailization
The Trump administration is seeking to remove obstacles to retail investors’ access to private market investments. The expansion of retail access to private funds forecasts a future in which individual investors can indirectly access private fund offerings previously unavailable to them.
Alternative Assets for 401(k) Investors.
Over the years, employers have shifted away from defined benefit plans to 401(k) plans, shifting investing responsibility to the individual retail investor. While retail investors are unable to allocate investments to alternative assets through their 401(k) plans, pension plans are not similarly prohibited and therefore began to outperform self-directed retirement accounts of retail investors. This mismatch in performance, and the resulting pressure for 401(k) plan sponsors to seek higher returns, have built pressure to democratize access to these private markets.
Perhaps most demonstrative of this growing shift toward broader access and the retailization of the asset management industry stems from the Trump administration’s August 7, 2025 Executive Order, “Democratizing Access to Alternative Assets for 401(k) Investors.” This Executive Order announced the administration’s goal to expand retirement plan investment options by allowing participants in defined contribution plans to choose an asset allocation fund that includes investments in “alternative investments.” Among other things, the Executive Order would relieve regulatory burdens and litigation risks that have thus far acted as barriers for fiduciaries from including alternative assets in their portfolios. The Executive Order directs the Department of Labor (DOL) to clarify how defined-contribution plan fiduciaries can prudently include alternative assets in compliance with ERISA and their fiduciary duties, consider potential safe harbor rules to protect fiduciaries from litigation and coordinate with other regulatory agencies to achieve regulatory harmonization in accomplishing the purposes of the Executive Order.
Promptly following this Executive Order, the DOL rescinded its December 21, 2021 Supplemental Statement, which had stated that ERISA plan fiduciaries of 401(k) plans or other individual account plans are “not likely suited to evaluate the use of private equity investments in designated alternatives in individual account plans.”
While President Trump’s Executive Order had given the DOL 180 days to craft rule proposals or guidance on its directive to broaden retirement savers’ access to private markets, the government shutdown beginning October 1 has delayed the agency’s progress in issuing this much-anticipated guidance. Members of the asset management industry should nonetheless expect further clarity in 2026 from the DOL and corresponding regulatory updates from the SEC and Treasury Department, as instructed in the Executive Order.
Shifts Toward Retailization Within the Asset Management Industry Generally.
Additional developments provide potential movement to broader access to private funds for the general public. In May, Chairman Atkins and (now former) Director of Investment Management Director Natasha Greiner announced that the SEC’s intent is to no longer enforce its longstanding informal position prohibiting Investment Company Act of 1940 registered closed-end funds from investing more than 15% of their assets in private funds unless the closed-end fund itself restricts access to accredited investors who meet a required minimum investment. If the SEC revises this policy, closed-end fund investors, including retail investors, would have greater access to private fund assets, albeit indirectly.
In addition, in a no-action letter dated March 2025, the staff of the SEC’s Division of Corporate Finance signaled some flexibility on how an issuer of a privately placed security can take reasonable steps to verify that a purchaser is an “accredited investor” under Rule 506(c) of Regulation D under the Securities Act of 1933. Sponsors may now verify “accredited investor” standards through minimum investment thresholds and written investor representations. While this eases the burden of compliance with 506(c) offerings, it does not fundamentally expand access.
In another example of this shift, the United States House of Representatives passed the Equal Opportunity for All Investors Act of 2025, a bill that would amend the definition of an “accredited investor” to allow individuals to qualify as such via a certification examination rather than purely based on income or net-worth thresholds. This bill now remains pending in the United States Senate. Even with these, we expect that expanded access of private market investments to retail investors will most likely occur indirectly through investments in registered retail investments or retirement plans.
V.Enforcement
Even under a deregulatory agenda, regulatory agencies continue their enforcement programs, but the subject matter focus under the Trump administration for both the SEC and the CFTC will likely shift to fraud and investor harm rather than technical violations. FINRA has also announced its “FINRA Forward” initiative seeking comment on areas where it should provide regulatory clarity through guidance rather than enforcement.
With respect to the SEC’s enforcement approach, Chair Atkins and the staff have emphasized due-process norms (including Wells-process clarity), predictability for market participants, and prevention of investor harm. It has been reported that the SEC intends to notify businesses about certain technical violations before taking action, a departure from the Gensler SEC’s more aggressive enforcement approach. While the SEC does not currently appear to be actively pursuing certain categories of cases involving technical violations (e.g., standalone compliance rule failure cases), it has continued to bring enforcement proceedings in most other major program areas, including the marketing rule, conflicts of interest disclosures, custody rule violations, short selling violations, fees and expenses (private fund advisers), revenue sharing, cherry-picking, misrepresentations, and cases involving chief compliance officer liability.
In September, the CFTC entered into six settlements with 10 firms for compliance-related matters that did not involve known harm to customers following an announced CFTC agency-wide 30-day “sprint” in March to resolve open matters. These settlements presumably permit the CFTC to refocus its efforts on combating fraud.
These recent CFTC settlements acknowledged respondents’ cooperation. This seems to be in line with the February announcement by the CFTC’s Division of Enforcement’s Enforcement Advisory that clarified how the agency will evaluate self-reporting of wrongdoing, cooperation in investigations and remediation efforts when recommending enforcement actions. In its guidance, the CFTC discusses several “tiers” of self-reporting and cooperation in its attempt to create incentives for firms to “proactively take ownership, ensure accountability, and prevent future violations.” The CFTC introduced a “mitigation credit,” which acts as a formal penalty reduction formula tied to the “tiers” of self-reporting and cooperation evaluated. By creating a formalized structured incentive system in self-reporting, participants are encouraged to develop strong compliance programs and ensure that detection and investigation procedures are aligned with the CFTC’s updated guidance.
In conclusion, 2025 marked the beginning of a significant shift in United States regulation of the asset management industry. Following the results of the 2024 election, the Trump administration and the primary regulatory agencies have emphasized a departure from the practices of the prior administration and instead have repeatedly aimed to embrace innovation, regulatory clarity and investor protection. The government has highlighted the direction of significant changes in the regulatory landscape, but the actual implementation and full realization of such rhetoric has not yet come to fruition.
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