Wake Me Up When September Compliance Ends: Five Updates

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A White House teleprompter operator spent last winter with a pretty unusual trading edge: he knew what the president was about to say because the speech was sitting right in front of him. But instead of limiting that advantage to, say, operating the teleprompter, he opened a prediction market app and started betting on the words. He made $107,539 before the CFTC caught up with him on August 28, took every dollar back, and added a $65,000 penalty for the trouble. As bizarre as that story is, though, the part fund managers should care about is buried in the CFTC’s reasoning. And it could matter even if nobody at your firm has ever touched Kalshi or Polymarket. September is barely even halfway finished, and there’s already plenty to deal with. Form PF bought you nine more months, the SEC put its pay-to-play rule on the chopping block, custody and private-market access are lining up for October, and FASB changed how investment companies will eventually value shares they’re contractually stuck holding.

Do Your Personal Trading Policies Cover Event Contracts?

Probably not. Most codes of ethics were written for securities and futures, back when prediction markets were still something compliance teams could safely ignore. That got harder on August 28, when the CFTC called event contracts swaps in an enforcement order. If your policy never mentions them, you may now have a very modern product sitting outside a very old preclearance list.

The Teleprompter Trade

Gabriel Perez had a job that gave him an unusually good look at what the president was about to say. He also had a Kalshi account. You can see where this went. Perez traded contracts tied to words in presidential speeches before those speeches were delivered and made $107,539.02. The August 28 order made him give it back, added a $65,000 penalty, and banned him from trading for three years. The consent order is worth reading because the problem isn’t unique to teleprompters. Anyone at your firm who gets information early and trades on it can create the same headache, regardless of whether your manual remembered to name the contract.

The Ground Under the Venue Is Moving

The legal backdrop is messy too. The 9th Circuit said sports event contracts aren’t swaps, while the 3rd Circuit went the other way. Cantor Fitzgerald started brokering institutional Kalshi trades in August, so this isn’t staying in the retail sandbox. Check the preclearance list now, before someone on the desk finds the omission first. We’ve also covered prediction market audits and where customer funds sit.

When Do the Form PF Amendments Take Effect?

July 1, 2027. If October 1, 2026, is still circled on your calendar from our August update, you can cross it out. The SEC and CFTC pushed the deadline back nine months on August 31 and gave large hedge fund advisers something regulators don’t hand out very often: more time and less work. Better yet, the delay makes sense, because the agencies are already proposing to rewrite parts of the form everyone was supposed to start using this fall.

Why They Blinked

The agencies put themselves in a pretty awkward spot. In April, they proposed removing much of what the 2024 amendments added, which left firms preparing for an October deadline on a form that could soon look different anyway. Rather than make everyone spend money building around rules already headed back to the shop, the joint final rule moved compliance to July 1, 2027. The Federal Register notice followed September 3. If consultants are still billing against the old October deadline, now’s a good time to have that conversation.

The Catch We Flagged Before

The delay clears up the calendar, but not everything under it. CFTC Letter 25-50 ties certain CPO registration relief to filing Form PF, while the April proposal would raise the filing threshold from $150 million to $1 billion. That leaves open a pretty awkward possibility: a manager could stop being required to file the very form its relief depends on. We flagged that last month, and nothing since has cleared it up. With comments open now, this is the time to force the issue, not wait until an examiner is sitting across the table asking how you read the rule.

Is the SEC’s Pay-to-Play Rule Going Away?

Maybe eventually, but it’s not gone yet. Rule 206(4)-5 still applies exactly as it did before the SEC proposed killing it, and it’ll stay that way while the proposal works through the comment period.

What’s on the Chopping Block

The short answer is all of it. The September 3 proposal would repeal Rule 206(4)-5 entirely, along with the related placement-agent and recordkeeping requirements. The reasoning in Release IA-6994 sounds familiar if you’ve ever had to administer it. The SEC itself says small contributions and “foot faults” can produce outsized consequences, including a two-year compensation ban. After 15 years of trying to make that machinery behave, the commission is proposing to take it apart instead. The proposal hit the Federal Register September 10, and comments close November 9.

Why Your Preclearance Form Isn’t Going Anywhere

Because the proposal changes nothing today. Rule 206(4)-5 still applies, and the rest of the pay-to-play world isn’t disappearing with it anyway. MSRB rules, state and local restrictions, and whatever political-contribution language is buried in your LP documents all keep doing their own thing. So keep the preclearance form in place. There’s no prize for retiring it early. If you raise from public plans and think the SEC rule has outlived its usefulness, use the comment period to make that case while the rule is still on the table.

What Is the SEC About to Propose on Custody?

A rewrite of the adviser custody framework, with crypto included and some older requirements potentially headed for retirement. The proposal is supposed to arrive in October, but right now that’s about as far as anyone can responsibly go. Nothing has changed for 2026.

Two Packages at OMB, Neither of Them Yours Yet

The custody package reached the White House in late August under RIN 3235-AN46. The SEC says it wants to modernize custody, deal with crypto more directly, and get rid of provisions it considers outdated. Beyond that, Washington has given everyone just enough information to speculate professionally, and CoinDesk has the best rundown so far. Another package followed August 31, covering private-market access and performance fees. Both are aimed at October. Until the actual text shows up, though, your calendar is more useful than your red pen.

The Deadlines That Didn’t Move

While everyone waits, Rule 206(4)-2 is still doing exactly what it did before: audited GAAP financials within 120 days of year-end, or 180 for funds of funds. The PCAOB did amend QC 1000 on September 9, which could pull acceptance and independence work forward. That makes October a good month to book the audit, because February is a lousy time to learn your auditor needed something before Thanksgiving.

How Should a Fund Value Equity It Can’t Sell Yet?

Price the lockup into fair value and disclose the discount. Unlike the custody proposal we’re still waiting to see, FASB actually gave you something concrete on September 10 with ASU 2026-03. The effective date is still a ways off, but if your fund holds restricted IPO shares, PIPEs, or SPAC stock, the valuation work starts well before 2028.

What the Standard Says

The update is mercifully short. For investment companies under Topic 946, a contractual restriction on selling an equity security now has to show up in that security’s fair value, and the discount has to be disclosed. That reverses the 2022 treatment that let funds value restricted shares without pricing in the lockup. FASB’s plain-English explanation makes clear why it changed course: NAV could look better than the economics really were.

Where It Reaches Your Fee

That’s where this stops being an accounting footnote. A lower NAV can mean a lower management-fee base and a different incentive allocation. Pull the offering documents and side letters now and see which valuation basis controls those calculations. Then start building discount support your auditor can actually test. The entry itself is easy; defending the number is where the work lives. Our GAAP versus tax basis guide covers the reporting choices underneath it.

What September Leaves on Your Desk

September has already managed to free up some time and find new ways to spend it. Form PF moved nine months, pay-to-play may be on its way out, and event contracts, custody, and FASB all found fresh ways to keep fund managers busy. Still to come, comments on Regulation Crypto Assets are due October 20. By the time all of this filters down into audits, compliance calendars, valuation work, and investor questions, somebody has to sort out what matters and what can wait. That’s where we come in at Michael Coglianese CPA, P.C.:

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