July 20, 2024

SEC’s Private Fund Advisers Rule Helps Protect the Retirement Savings of Everyday Americans and Should Be Upheld Against Baseless Legal Challenges

WASHINGTON, D.C.—Stephen Hall, Better Markets’ Legal Director and Securities Specialist, issued the following statement in connection with the filing of an amicus curiae brief with the U.S. Court of Appeals for the Fifth Circuit in National Association of Private Fund Managers v. SEC:

“We’re standing up for important reforms in the private funds market against the industry’s relentless effort to preserve its shadowy, unfair, and often predatory practices.  While many Americans understandably tune out when they hear ‘private fund regulation,’ these reforms will benefit millions of everyday investors through their retirement funds.  Public and private pension funds have poured trillions of dollars into private funds, enticed by the promise of outsized returns that could benefit retirees, including the teachers, firefighters, and policemen who serve our communities. Yet the private funds industry is like the Wild West, where supposedly sophisticated investors are expected to fend for themselves. In reality, of course, many private fund investors—including pension fund managers—lack the necessary sophistication. But the key point is that all investors, regardless of wealth or expertise, need the common-sense disclosures and the basic protections from abusive practices that these reforms will provide.

“The SEC adopted a well-crafted rule.  It requires that private fund advisers disclose more information about the funds they manage, including quarterly statements regarding fund performance, fees, and expenses.  It also curbs certain advisor activity that is contrary to the public interest, such as giving preferential treatment to some investors in the fund.  Yet despite the benefits of the rule for all private fund investors, including retirement savers, the industry challenged it in court, predictably turning to the Fifth Circuit for relief.

“In our brief, we show very clearly that even supposedly sophisticated investors need disclosure to make sound investment decisions and that they are vulnerable to abusive practices like all investors.  We also refute the hyperbolic claim that the rule will cause a dramatic upheaval in the markets that the SEC lacks authority to implement.  And as we often do, we show that the SEC’s assessment of the economic impact of the rule fully complied with its obligations under the law and the requirements governing the rulemaking process. The court should uphold this important collection of reforms for the benefit of all investors, including retirement savers.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.

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