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MFA's letter specifies the business impact and compliance costs for 13 SEC proposals. In the letter, MFA analysis shows how they would dramatically alter the regulatory, business, and investment landscape for investment advisers and the investors they serve by requiring them to:

• Reassess the economics of their businesses and potentially restrict or cease trading in certain markets;

• Renegotiate contractual arrangements with investors, counterparties, and vendors;

• Build new infrastructure or modify existing infrastructure;

• Hire programmers, new vendors, and other professionals to assist with implementation; and

• Develop new policies, procedures, controls, recordkeeping and reporting practices.

"The SEC's cost-benefit analysis on the aggregate impact of its rulemaking on alternative asset managers is nonexistent. The failure to consider the true cost means the SEC does not know how its proposals will affect markets or investors," said Bryan Corbett, MFA President and CEO. "The rules are interconnected in ways that the SEC hasn't considered. This creates blind spots that could lead to negative unintended consequences that harm advisers, markets, and investors, including pensions, foundations, and endowments. For the health of the U.S. Capital markets, the SEC should reevaluate the overall effect of its rulemaking before finalizing its proposed rules."

Additionally, the letter emphasizes how the breadth and speed of rulemaking prevents commenters from being able to fully assess the effects of the proposals. From the letter:

"Not only does the sheer number of Proposals make it challenging for the Commission to conduct a cost-benefit analysis that truly reflects the aggregate costs of the Proposals (e.g., because the baseline is constantly going to change), it also makes it challenging for interested parties to meaningfully comment on the Proposals. In order to comment on one Proposal, it is often necessary to consider how other Proposals, if adopted, would impact the analysis. This is particularly difficult when one considers that most Proposals contain hundreds of questions and solicit comments on numerous alternatives, some of which the Commission may adopt but many others it will not. It is not possible for interested parties to comment on every alternative raised, sometimes in passing, by the Commission within one Proposal, let alone consider the myriad of possible combinations of proposed rules and alternative approaches across multiple Proposals."

MFA argues that taken together the proposed rules will harm investors by reducing competition, increasing costs, and stifling innovation. From the letter:

"[T]he sheer number and complexity of the Proposals, when considered in their totality, if adopted, would impose staggering aggregate costs, as well as unprecedented operational and other practical challenges, neither of which have been considered by the Commission in its Proposals to date and neither of which are warranted by such Proposals' limited benefits… [T]he aggregate effect of the Proposals would be to decrease the efficiency of the markets and, ultimately, to negatively impact the very investors that the Commission is attempting to protect."

MFA emphasizes that the SEC's rulemaking agenda would make it cost-prohibitive for smaller and emerging managers to operate and would increase industry consolidation. From the letter:

"We are particularly concerned that the costs and burdens of the Proposals, if adopted, would disproportionately affect new and smaller investment advisers, many of which are women- or minority-owned (ownership that is already under-represented in the industry). New entrants are pipelines for talent and contribute to innovation and competition in the industry. The result of the Proposals, if adopted in their current form, would be to harm investors by increasing costs, making private funds less accessible, and decreasing competition by making it cost-prohibitive for many private fund advisers to remain in business and for new advisers to enter the market."