The U.S. Securities and Exchange Commission is ending a high-stakes legal fight over hedge fund and private equity fee disclosures, a setback for Chair Gary Gensler’s push to bring more transparency to the industry.
The regulator didn’t act by a deadline to ask the Supreme Court to revive new disclosure requirements for fees charged to investors, according to a person familiar with the matter, who asked not to be identified discussing the litigation.
“We decline comment beyond public filings,” the SEC said in a statement.
In June, a three-judge panel of the 5th U.S. Circuit Court of Appeals struck down the rule and determined the SEC had overstepped its authority. The regulator didn’t request a full slate of judges at that court to review the panel’s decision and the Supreme Court was the last avenue for the SEC to seek to overturn the ruling.
The end to the dispute is a victory for industry groups waging aggressive legal challenges to Gensler’s efforts to rein in hedge funds and private equity firms. The SEC chair has said those so-called private funds lack transparency and can contribute to financial stability risks. The SEC could still revisit the issue with other measures.
