Introduction
The hedge fund and private equity industries are not going down without a fight. They have officially lodged a challenge against the new regulations imposed on them by the Securities and Exchange Commission (SEC). Trade groups representing private fund advisers submitted a petition on Friday to the U.S. Court of Appeals for the Fifth Circuit in Texas.
The New Rules
On August 23, the SEC announced the adoption of rules that require hedge fund, venture capital, and private-equity fund advisers to provide expanded reports. Additionally, fund managers must obtain investors’ consent before implementing certain charges and ensure equitable treatment of all investors. It is worth noting that these final rules are less stringent than the ones initially proposed in 2022, as the SEC took industry feedback into account.
Potential Legal Challenge
Despite the milder regulations, fund management associations have expressed their intent to challenge the final rule after conducting a thorough review. As promised, they followed through with their petition on Friday.
