Today, the Commission[1] achieved balance in adopting the amendments to Regulation 4.7 and for that reason I can support this final rule.  I would like to thank the staff in the Market Participants Division for their hard work on this rulemaking effort and for their consideration of my suggestions and comments throughout this process.

But the balance achieved in this final rule was sorely missing in the original amendment proposal, as well as in recent drafts of this final rule presented to the Commission.  As I identified in my prior dissent, the proposed amendment to Regulation 4.7 was flawed in applying a new minimum disclosure regime on sophisticated investors who had always been exempt from such disclosures.[2]

This flawed proposal led to a unanimous comment file, without a single commenter supporting the Commission’s new minimum disclosure regime.  The proposal was a textbook example of overregulation.  Thankfully, the Commission avoided the temptation to overregulate under this rule, dropping the minimum disclosure regime from the final rule adopted today.

I am pleased that I can support this final rule.  However, we should always remember that we do not regulate in a vacuum.  We must work with market participants to carefully calibrate all rulemaking efforts.  Additionally, we must harmonize our regulations, not only with the interests of our market participants, but with other regulators, including self-regulatory organizations.

While I am relieved that the final rule reflects a balanced approach and aims to achieve the overarching goal without overregulation, I remain concerned about the adopting release’s mention of possible future efforts to expand Regulation 4.7 after this amendment.[3]  I urge the Commission to avoid such future expansions, unless the Commission finds concrete evidence establishing a need for modifications and only after robust discussions with industry.

Additionally, I must caution the Commission from making the same mistake on other pending rulemaking proposals where feedback from commenters reflects a similar imbalance in the Agency’s approach.  We must seek balance and compromise in our regulations, not only because we are legally obligated to do so, but also because it is the right thing to do.