On Feb. 11, Securities and Exchange Commission (SEC) Chairman Paul Atkins said in testimony before the U.S. House Financial Services Committee that the agency is reviewing regulations adopted during the Biden administration to determine whether those rules should be revised or rescinded. Atkins identified the 2023 amendments to the Investment Company Names rule (Names rule) as one example under consideration. When asked about rules finalized under former SEC Chairman Gary Gensler, Atkins said he asked division directors and staff to review existing regulations.
Revisiting amendments to the Names rule would continue the SEC’s shift away from Biden-era environmental, social, and governance-related regulations. The SEC adopted Names rule in 2001 as Rule 35d-1, restricting materially deceptive or misleading fund names by requiring funds whose names suggest a specific investment focus to invest at least 80% of assets in line with that focus. In October 2023, the SEC amended the rule to address greenwashing — when funds use sustainability-related language that may not reflect their actual holdings — by expanding the rule's scope to explicitly include funds using ESG-related terms. The amendments took effect Dec. 11, 2023.
If the Commission rolls back or revises the Names rule, it could change how ESG-labeled funds market themselves and how strictly the SEC enforced the 80% investment requirement. Atkins did not provide a timeline for the review.
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