In October 2022, the U.S. Securities and Exchange Commission published a proposed rule that, if adopted as proposed, will have significant impacts for registered investment advisers who engage in outsourcing.  

The proposal would require registered investment advisers that want to outsource to:

• conduct due diligence prior to engaging a service provider to perform certain services or functions; and

• periodically monitor the performance and reassess the retention of the service provider in accordance with due diligence requirements to reasonably determine that it is appropriate to continue to outsource those services or functions to that service provider.

If you would like to read more about the requirements under this proposal, you can access our November 21, 2022 summary of the proposal.

This rule proposal was formally withdrawn by the SEC on June 12, 2025.  If the SEC wants to proceed with a rule in this area in the future, it will publish a new proposing release.

Please contact James Delaney with any questions regarding this proposal.