Fifth Circuit Strikes Down Private Fund Adviser Rules

In a significant decision released Wednesday morning, a unanimous three-judge panel for the U.S. Court of Appeals for the Fifth Circuit vacated what have come to be known as the Private Fund Adviser Rules, a set of rules and amendments adopted by the Securities and Exchange Commission (SEC) in August 2023. The rules had been heavily criticized by private fund advisers and various related industry groups as being unduly burdensome and costly and were widely viewed as among the most significant and impactful regulatory requirements to be imposed on this industry in the post-Dodd-Frank era.

The vacated rules include the following:

• The Preferential Treatment Rule
• The Restricted Activities Rule