Lawsuit Challenges Private Fund Adviser Rules

On Friday, September 1, 2023, a lawsuit was filed with the federal Court of Appeals in the Fifth Circuit challenging the validity and enforceability of the recently adopted Private Fund Adviser Rules under the Investment Advisers Act of 1940 (the "Advisers Act"). (Please see our prior alerts for a description of the Rules' provisions and their applicability to non-U.S. investment advisers.) The lawsuit was filed in the form of a Petition for Review pursuant to Section 213(a) of the Advisers Act, which authorizes such a petition for persons "aggrieved" by the actions of the Securities and Exchange Commission (the "Commission" or the "SEC").

The Petition asserts that the new Rules "exceed the Commission's statutory authority, were adopted without compliance with notice-and-comment requirements, and are otherwise arbitrary, capricious, an abuse of discretion, and contrary to law, all in violation of the Administrative Procedure Act.and of the Commission's heightened