Court Tackles SEC Authority to Regulate Private Funds: SEC Roundup

Welcome to SEC Roundup, a bimonthly video series by former Securities and Exchange Commission senior trial counsels Nick Morgan and Tom Zaccaro, founders of the nonprofit advocacy group Investor Choice Advocates Network.

At a February court hearing on the SEC’s new private fund adviser rules, the 5th Circuit federal appellate court grilled lawyers for the SEC and challengers from the Alternative Investment Management Association and Managed Funds Association.

In this episode, Morgan talks with Gail Bernstein, general counsel for the Investment Adviser Association, and Art Zwickel of Paul Hastings and CalALTs regarding what’s at stake and how the court’s rulings could affect investors and investment advisors.

Listen in as Bernstein and Zwickel provide a comprehensive analysis of the ongoing litigation over SEC’s private fund advisor rules, shedding light on the legal intricacies, potential outcomes, and implications for industry stakeholders.

“The argument went in a somewhat surprising direction in that the panel [of judges] seemed very interested in potentially saving a couple of the rules even if it would decide to vacate others,” Bernstein relays.

Bernstein provides insights into the recent hearing, emphasizing discussions around the SEC’s authority under Section 211(h) of the Dodd-Frank Act and the potential severability of challenged rules, as well as the court’s skepticism towards the SEC’s position.