In a sweeping and unexpected move, the U.S. Securities and Exchange Commission (SEC) announced on June 12, 2025, that it is formally withdrawing 14 proposed rules, many of which had far-reaching implications for investment advisers. The rescinded proposals targeted areas including predictive data analytics, custody and safeguarding, cybersecurity, ESG disclosures, and market structure reform.
The withdrawal was made official via a new final rule posted by the Commission, stating that the SEC “no longer intends to issue final rules with respect to these proposals.” Any future action in these areas, according to the Commission, will require restarting the regulatory process under the Administrative Procedure Act.
Wiped from the Agenda: Biden-Era Priorities
All 14 of the withdrawn proposals were originally introduced between March 2022 and November 2023, during the Biden administration’s push for tighter oversight across advisory practices, environmental disclosures and trading systems.
While some regulatory watchers expected minor cutbacks under the new SEC leadership, the sheer breadth and volume of simultaneous withdrawals came as a shock—even to seasoned critics of the Commission’s recent rulemaking pace.
The 14 Withdrawn Proposals
The withdrawn rules span multiple SEC divisions, but several had direct or indirect impact on registered investment advisers (RIAs):
- Conflicts of Interest Related to Predictive Data Analytics. Would have imposed strict limits and disclosure obligations on advisers and broker-dealers using AI or data modeling to influence investor behavior.
- Safeguarding Advisory Client Assets. A significant revamp of the custody rule, including new definitions of “custody,” enhanced protections for non-traditional assets, and mandatory surprise exams.
- Enhanced ESG Disclosures. Required detailed environmental, social and governance reporting by certain advisers and investment companies.
- Outsourcing Oversight Rule. Proposed extensive due diligence, monitoring and recordkeeping obligations related to third-party service providers.
- Cybersecurity Risk Management for Investment Advisers. Would have mandated written cyber policies, incident response programs and public disclosures of material breaches.
- Cybersecurity Rule for Broker-Dealers and Other Market Participants. A similar rule covering other registrants, including security-based swap dealers and transfer agents.
- Regulation Best Execution. A long-anticipated rule codifying best execution obligations across broker-dealers and advisers.
- Order Competition Rule. Aimed at boosting price competition in retail order flow by mandating new auction mechanisms.
- Regulation SCI Expansion. Broadened applicability of systems compliance and integrity requirements to more entities.
- CAT Data Security Rule. Proposed tighter security protocols and access limitations for the Consolidated Audit Trail.
- Exchange Definition Rule Update. A clarification of what constitutes an “exchange” under Rule 3b-16, with implications for DeFi platforms and trading venues.
- Shareholder Proposal Reform (14a-8). Would have allowed resubmission of certain proposals and changed thresholds for inclusion.
- Swaps & CCO Influence Prohibition. Aimed to curb manipulation and undue influence over chief compliance officers and tighten swap fraud rules.
- Volume-Based Pricing Ban. Would have restricted exchange pricing tiers based on trading volume, impacting execution quality incentives.
What This Means for Advisers
This dramatic rollback will immediately ease compliance pressure for firms that had been bracing for several significant operational overhauls. In particular:
- AI and tech-use policies may remain internally monitored, but there is now no formal conflict-of-interest disclosure requirement.
- Custody reforms—including proposed annual surprise exams—are shelved for now, though advisers should still review current practices under the existing rule.
- Cybersecurity policies still matter, but the threat of new prescriptive requirements is off the table for the moment.
A Window of Breathing Room—Not Complacency
At Adviser Compliance Consulting (ACC), we see this withdrawal as a temporary reprieve, not a permanent retreat. While the SEC is stepping back from an aggressive rulemaking slate, it has made clear that any future action will follow formal procedures—which means these issues could reemerge under new rule proposals.
We advise firms to:
- Maintain strong cybersecurity and vendor oversight protocols.
- Evaluate internal AI tools and predictive analytics for potential conflicts.
- Prepare for eventual movement on ESG, custody and outsourcing expectations—albeit on a longer horizon.
Stay Ahead With ACC
Regulatory winds are shifting. ACC can help your firm stay anchored. Whether you need a marketing compliance checkup or updates to your custody controls, we’re here to guide you through this evolving environment.
Contact us for a strategic compliance roadmap tailored to this new regulatory phase.
