New Private-Funds Rules Hit With Court Action: 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.

Several private funds industry groups filed an action Friday in federal appellate court challenging the SEC’s recent private funds rules, which fundamentally interfere with the relationship between fund managers and the sophisticated limited partners in private equity, venture capitaland hedge funds.

Morgan speaks with Drew Maloney, president and CEO of the American Investment Council,  about the industry’s concerns — including the lack of congressional authority for the rules, potential billions of dollars in compliance costs, and the negative impact on the private equity sector and its investors.

Maloney highlights the unprecedented nature of the legal action involving all major private equity industry groups joining to challenge the rules and the importance of allowing sophisticated parties to negotiate bespoke terms that work for them.

The late Harvey Pitt said the private fund rules go too far.

See the video above for the discussion with Maloney.