Brian Forman Quoted in Law360 on Likelihood of SEC Appealing Private Fund Adviser Rule Decision in Fifth Circuit

Partner Brian Forman was quoted in a Law360 article entitled “SEC Unlikely to Relitigate Loss on Hedge Fund Regs.” The article discussed that the U.S. Securities and Exchange Commission appears to be standing down in the litigation that recently resulted in the SEC’s Private Fund Advisers Rule being struck down. 

“I don't think they're in the business of fighting losing battles, and I think this one is a losing battle for them, and they know it,” said Brian, who chairs Morrison Cohen’s Investment Funds & Advisers Practice.

The SEC did not request a Fifth Circuit rehearing of last month's panel decision, which vacated a rule that sought to force the sharing of more detailed information about performance, fees and conflicts of interest from hedge funds, private equity funds and venture capital funds. Although the agency could still appeal its case directly to the Supreme Court, it is unlikely that they will.

Brian said that the SEC may have decided to drop any appeals of the circuit ruling in favor of spending more time thinking about how the ruling could inform future legal challenges to other proposed SEC rules, if they are adopted. He also noted that the high court's recent decision overturning Chevron deference demonstrates the court's growing skepticism toward expanding federal rulemaking authority. The SEC is likely aware that its arguments would likely not be looked on favorably by the conservative majority, he said.

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