The long-awaited SEC private fund rules were put on ice by the Fifth Circuit U.S.
Court of Appeals today when the appellate court struck down the
rules and the significant compliance, disclosure, and reporting
changes that were to come along with those rules. The Fifth Circuit
found in favor of a group of six private fund trade groups in
rejecting the SEC's rules, amendments that the Commission
argued enhanced transparency for investors. The court held that the
rules exceeded the Commission's authority, an outcome many
who have closely watched the Fifth Circuit's decisions on
administrative rule-making efforts in recent years expected, at
least in some part.
So, what's next? It seems likely that the SEC will appeal
the decision to the Supreme Court in short order. Regardless of the
outcome for these specific private fund rules, however, the Exams
and Enforcement Staff will continue to focus on many key aspects of
how private fund advisers manage their funds, conduct
