New Orleans-Based Fifth Circuit Strikes Down SEC Rule on Hedge Fund Fee Disclosure

Jun 5, 2024, 02:07 PM

A federal appeals court has struck down the U.S. Securities and Exchange Commission's (SEC) rule requiring hedge funds and private equity firms to disclose quarterly fees and expenses to investors. The New Orleans-based Fifth Circuit Court of Appeals ruled that the SEC overstepped its authority with the 2023 rule. The decision marks a significant setback for the SEC and its chairman, Gary Gensler, as it aimed to increase transparency in the nearly $27 trillion private fund industry. The Managed Funds Association, which represents hedge funds and private equity firms, successfully challenged the rule, arguing that it would fundamentally change how the industry operates. The entire Private Funds Rule has been vacated.