Update on rule for private fund advisers

This month, the U.S. Court of Appeals for the Fifth Circuit (the “Court”) struck down the new rules for Private Fund Advisers adopted by the U.S. Securities and Exchange Commission (the “SEC”) in 2023. We previously summarized the impact of these rules on illiquid funds. This was a significant victory in a case brought by the National Venture Capital Association and other groups representing private fund advisers.

Although the rules, which were expected to create significant disclosure and regulatory compliance burdens on private fund advisers, have been lifted due to the Court’s ruling, the SEC may challenge the ruling by appeal to the U.S. Supreme Court or attempt to enact similar rules excluding areas identified by the Court as being of particular concern.

We at PAG Law continue to monitor developments. For specific questions, please do not hesitate to to contact one of our attorneys.