SEC Formally Withdraws 14 Gensler-Era Proposals

June 16, 2025

What happened?

On June 12, 2025, the SEC announced a new final rule “formally withdrawing certain notices of proposed rulemaking issued between March 2022 and November 2023.” These withdrawn proposals make up every remaining proposal under Gensler’s leadership of the SEC during the Biden administration. The withdrawn proposals include the AI Rule, the ESG Rule, the proposed custody guidance for advisers and broker-dealers, the Outsourced Service Provider Rule, and the Safeguarding Rule that would have overhauled the current Custody Rule (see the end of this report for the full list).

No reason for the withdrawals were given in the SEC notice, which stated simply, “the Commission does not intend to issue final rules with respect to these proposals.”  According to the SEC, any future regulatory action on the areas covered by these proposals will be addressed by issuing new proposals.

What does this mean for me?

Chairman Atkins and the Trump administration have now cleared the decks to make their own rulemakings in line with their policy objectives.  At the start of the new administration, we saw the White House issue a regulatory freeze for all agencies to cease proposals and the issuance of new rules.  This Spring, we saw an interagency letter from Republican members of the House Financial Services Committee that outlined SEC rules and proposals from the prior administration that the committee members felt should be revisited.  Every proposed rule they named was included among the 14 that were just withdrawn.

Regulatory changes are coming. We will have to wait and see which area receives attention first as the Atkins era begins.

The following proposed rules were withdrawn:

• Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers (the AI Rule).

• Safeguarding Advisory Client Assets (the proposed overhaul of the Custody Rule).
• Cybersecurity Risk Management for Investment Advisers, Registered Investment Companies, and Business Development Companies (the proposed cybersecurity guidance covering advisers).
• Cybersecurity Risk Management Rule for Broker-Dealers, Clearing Agencies, Major Security-Based Swap Participants, the Municipal Securities Rulemaking Board, National Securities Associations, National Securities Exchanges, Security-Based Swap Data Repositories, Security-Based Swap Dealers, and Transfer Agents (the proposed cybersecurity guidance covering broker-dealers).
• Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices (the ESG Rule).

• Outsourcing by Investment Advisers (the Outsourced Service Provider Rule).

• Prohibition Against Fraud, Manipulation, and Deception in Connection With Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers (proposal to require public disclosure of large swap positions).

• Regulation Best Execution (proposal for best execution regime for broker-dealers).

• Order Competition Rule (proposal for broker-dealers to use open auctions to expose orders to competition before internal execution).

• Regulation Systems Compliance and Integrity (Regulation SCI).
• Amendments Regarding the Definition of “Exchange” and Alternate Trading Systems that Trade U.S. Treasury and Agency Securities, National Market System Stocks, and Other Securities (proposal to bring additional systems under the Exchange Act definition of “exchange”).
• Amendments to the National Market System Plan Governing the Consolidated Audit Trail to Enhance Data Security.