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ARTICLE · 12 JUNE 2024

Fifth Circuit Vacates SEC Rule Regulating Private Funds Advisers

Herbert Smith Freehills Kramer LLP
Herbert Smith Freehills Kramer LLP
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Herbert Smith Freehills Kramer LLP

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In a highly anticipated opinion, the Fifth Circuit announced on June 5, 2024 its decision to vacate rules adopted by the Securities and Exchange Commission (SEC or the Commission)...

United StatesFinance and Banking
Kevin Scanlan
Kevin Scanlan
Robert B. Weiss
Robert B. Weiss
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In a highly anticipated opinion, the Fifth Circuit announced on June 5, 2024 its decision1 to vacate rules adopted by the Securities and Exchange Commission (SEC or the Commission) in 2023 (collectively, the Rule) that would have imposed substantial new regulatory obligations on investment advisers to private funds. The Commission's Rule that was at stake in the case introduced significant changes to the regulation of private funds. Among other changes, the Rule prohibited investment advisers from providing investors with preferential treatment with respect to redemption rights and portfolio information and charging private funds for costs associated with governmental investigations without the consent of the private fund's investors. The Rule also required investment advisers to provide investors with quarterly reporting statements setting forth a variety of information, including fund performance and adviser compensation. In vacating the Rule, the court concluded

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