US private fund industry bodies sue SEC over new disclosure rules

investmentweek.co.uk:

'The SEC has overstepped its statutory authority and core legislative mandate, leaving us no choice but to litigate,' argued MFA president and CEO Bryan Corbett.

The lawsuit, filed on 1 September, argues that the new disclosure rules, which also prohibit groups from providing investors with preferential treatment, will «hamper the jobs, innovation, and other benefits private funds bring to the economy».

Passing in a 3-2 vote in August, the rules require groups to provide investors with quarterly statements detailing certain information regarding fund fees, expenses, and performance.

Furthermore, private fund advisers must obtain and distribute to investors an annual financial statement audit of each private fund they advise, as well as a fairness or valuation opinion.

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Speaking when the rules were passed on 24 August, SEC chair Gary Gensler said: «By enhancing advisers' transparency and integrity, we will help promote greater competition and thereby efficiency.

»Consistent with our mission and Congressional mandate, we advance today's rules on behalf of all investors — big or small, institutional or retail, sophisticated or not."

However, private fund groups still argue that the regulations impose «onerous, costly disclosure requirements and administrative obligations upon private fund advisers».

The claim was filed by the Managed Funds Association, National Association of Private Fund Managers, National Venture Capital Association, American Investment Council, Alternative Investment Management Association and the Loan Syndications & Trading Association.

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