TLDR:
US appeals court rejects SEC’s new disclosure rules for private equity and hedge funds, blocking the SEC from requiring funds to provide detailed quarterly results, expense reports, and limit secret side deals.
In a significant victory for markets, the New Orleans-based 5th US Circuit Court of Appeals determined that the SEC had overstepped its authority with the proposed rules in August 2023. A group of six US trade bodies representing hedge funds and private markets firms filed a lawsuit against the SEC over the “unlawful and harmful” rules.
The court’s decision marks a setback for the SEC’s efforts to increase transparency and change the way private equity and hedge funds conduct business with clients. The ruling has implications for the regulation of the private fund industry and highlights ongoing debates around disclosure requirements.
