(Article from Registered Funds Regulatory Update, January 2026)
For more information, please visit the Registered Funds Resource Center.
In a recent speech, SEC Director of the Division of Investment Management Brian Daly discussed the Division’s upcoming priorities, identifying four substantive themes and/or categories of focus: (i) deregulation; (ii) modernization initiatives; (iii) democratization of alternative asset investments; and (iv) promotion of artificial intelligence. Daly emphasized that the Division intends to listen to and engage with both the industry and the general public in moving forward with these priorities.
Deregulation
Daly first raised the importance of innovation in the market, specifically crediting America’s dominance in finance to allowing more innovation than its competitors. As a natural complement to innovation, Daly highlighted deregulation as a way to unlock value and emphasized the Division’s receptiveness to concrete arguments about how thoughtful changes can facilitate innovation and/or eliminate unnecessary compliance costs. “[The Division is] asking ‘Why is this still on the books?’ in a number of contexts,” Daly noted, “and you should too.” He added that the Division is eager to learn about why certain rules or reporting forms are not working as intended, raising, for example, Form PF and related pain points (e.g., Form PF calls for certain information that asset managers believe is not relevant to the form’s purpose or calls for information to be presented in a way that is inconsistent with industry practice).
Modernization
Daly discussed the Division’s focus on modernizing outdated rules, noting in particular the problems stemming from the tension between past rulemakings and ongoing technological development—the former lagging behind the rapid acceleration of the latter—and the Division’s goal to modernize rules “in a way that is platform-independent, technology-neutral, and future-ready.” As examples, he highlighted the custody and recordkeeping rules as primed for modernization—the former to accommodate digital assets, and the latter to transition to the digital age, in each case in a platform- and technology-neutral and future-ready capacity. Daly noted that the Division’s hope is to create rules that are flexible to adapt to future modernizations, without the need for drastic changes on an ongoing basis.
Democratization
Daly stated that the trend to democratize private markets has become more pronounced with President Trump’s Executive Order directing the DOL to expand access to alternative investments within retirement accounts. He added that the Division is working closely with the DOL to support this effort, but not to expect changes overnight or all at once. Rather than taking a “big bang” approach to democratization, with a “‘Retailization Rule’ that suddenly transforms everything about how private funds are structured, marketed and operated,” Daly lauded “a thoughtful and incremental reconsideration” of the existing regulatory framework as the best path forward. Reinforcing one of the other themes raised, he noted the intention to allow the industry to innovate, with the Division’s role being to listen, learn, and react thereto.
Artificial Intelligence
Daly reemphasized the Division’s goals in the context of AI—to enable, support, and regulate thoughtfully in the space in a manner that accommodates AI development. He briefly described the SEC’s three-pillar AI Action Plan in support thereof, seeking to: (i) accelerate AI innovation; (ii) build AI infrastructure; and (iii) lead in international AI diplomacy and security. Daly added that the Division is and intends to continue engaging directly with asset managers where they see an innovative use of AI in an effort to gather more information—emphasizing his view of AI use as a beneficial tool, while recognizing the important regulatory concerns raised by its use. Overall, Daly’s tone suggests the Division is looking to help and seeking to engage with managers on the topic of AI usage.
Brian Daly, SEC Division of Investment Management Director, Remarks to the American Bar Association’s Federal Regulation of Securities Committee’s Private Funds Subcommittee and Investment Advisers and Investment Companies Subcommittee (Dec. 2, 2025), available at:
https://www.sec.gov/newsroom/speeches-statements/daly-remarks-aba-fed-reg-ia-ic-subcommittees-120225