Schulte Roth & Zabel co-managing partner Marc Elovitz reacted to the latest decision by the SEC to not appeal a federal court’s decision that struck down an agency rule that required increased disclosure from private fund advisers and prohibited certain fee arrangements. In the Pensions & Investments article, “SEC doesn’t appeal court’s decision tossing private fund rule,” Marc noted that the SEC’s lack of action in seeking a rehearing was an expected outcome. 

“This was obviously a negative result for them, but if they did get it reheard, another decision could be even worse for them in terms of the language that’s used, the precedent that’s set. It’s not surprising, given the low odds of them getting a favorable result, and the risks that would be associated with getting another opinion on the subject, that the SEC seems to have cut its losses and walked away.” 

Marc looked forward and described how the court’s decision could impact future rulemaking by the SEC, stating, “The SEC will have to think very carefully about how it supports any final rulemaking that it does in the tail end of this administration,” he said. “If they do in fact adopt final rules on some of the authorities that were found unsound by the 5th Circuit, that will be quite controversial.” 

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Schulte Roth & Zabel co-managing partner Marc Elovitz recently shared his perspective with the Financial Times for the article, “Transparency rules for US private funds lapse after SEC allows deadline to pass.” 

The US Securities and Exchange Commission (SEC) will no longer enforce transparency rules for private equity and hedge funds after choosing not to challenge a court decision that struck them down. The SEC missed Monday’s deadline to request a rehearing and although they could still appeal to the US Supreme Court, the court’s conservative majority is generally skeptical of administrative power, making a successful appeal unlikely. 

Marc commented on the impact of this development, stating, “It’s a huge defeat. It was a signature rulemaking. This decision and the implications of it are a major setback.”  

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