Federal Court Overturns SEC Rules Concerning Private Fund Fee Disclosures
In a decision, the U.S. Court of Appeals for the Fifth Circuit in New Orleans invalidated SEC regulations requiring hedge funds and private equity firms to disclose quarterly fees and expenses. The decision marks a significant defeat for the Securities and Exchange Commission, which has been pushing for increased transparency in the private fund industry.
Court Rejects SEC’s Rules on Private Funds
The court agreed with the argument presented by industry groups: SEC had exceeded its regulatory authority. Industry representatives, including the American Investment Council and the Managed Funds Association, filed a lawsuit shortly after the rules went into effect in August, arguing that the regulations would drastically change the oversight of private funds in the United States. They argued that the sophisticated nature of private equity investors made imposed rules unnecessary. Moreover, these groups argued that such investors would not commit capital to an industry they believed needed to be overhauled by the government.
Additionally, the decision highlighted the ongoing tension between regulatory efforts and industry practices. Two of the justices are appointed by the former president Donald Trump and one from George W. Bush supported the idea that the 2010 Dodd-Frank Act did not justify the SEC’s comprehensive approach. Eugene Scalia, the Trump administration’s former Labor Secretary and son of the late Supreme Court Justice Antonin Scalia, represented industry groups and emphasized the need for regulatory crackdowns on markets driven by savvy investors.
ripple and Debt Box Cases Impact Regulation
This court decision adds to a host of legal challenges facing the SEC. The agency faced a setback recently. debit box caseThe US district court sanctioned the SEC for what it called gross abuse of power. This comes after another ongoing loss Ripple and the SEC The case in which Judge Analisa Torres ruled: XRPThe cryptocurrency in question is not classified as a security because it does not meet the criteria of an investment contract.
These legal defeats reflect a broader scrutiny of the SEC’s strategies under the President Gary Genslerwhose tenure was marked by a proactive regulatory stance towards private funds and other sectors. The agency had not responded to requests for comment on the latest court decision at the time of this writing. But it has previously argued its rules are a balanced and necessary step towards protecting investors and ensuring fair market practices.
So read: SEC Chairman Gensler Hints S-1 Approval for Ethereum ETFs Will Slow
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Maxwell is a crypto-economic analyst and Blockchain enthusiast who is passionate about helping people understand the potential of decentralized technology. I write extensively on topics like blockchain, cryptocurrency, tokens, and more for many publications. My goal is to spread knowledge about this revolutionary technology and its effects on economic freedom and social well-being.
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