A private fund disclosure rule was adopted, then vacated

The record

On 23 August 2023, by a 3-2 vote, the Securities and Exchange Commission adopted rules for private fund advisers. The adopting release, Release No. IA-6383, is dated that day and set an effective date of 13 November 2023, with staggered compliance dates by adviser size. The rules would have required quarterly fee-and-expense statements, an annual audit for each private fund, and written notice of preferential treatment given to some investors over others, among other provisions. On 5 June 2024 the United States Court of Appeals for the Fifth Circuit, in National Association of Private Fund Managers v. SEC, No. 23-60471, vacated the rule in full. The adopting release, as currently posted, carries a disclaimer stating the vacated rules and related amendments are no longer in effect.

What the sources establish

The opinion states the court's reasoning precisely: the Commission relied on Advisers Act section 211(h), added by Dodd-Frank Act section 913, and on section 206(4), and the panel held neither provision authorized rules governing the relationship between a private fund adviser and sophisticated fund investors, because section 913's text and surrounding provisions concern retail customers, not private fund investors, and section 206(4) reaches only fraudulent or deceptive conduct rather than authorizing broad prophylactic disclosure rules. Because the rule was found unauthorized in its entirety, the court applied Administrative Procedure Act section 706, which the opinion quotes as directing a court to hold unlawful and set aside such a rule, and vacated all of it rather than severing individual provisions.

Scope and revision

What survives is narrower than what was adopted. The Final Rule's specific quarterly statement, audit, and preferential-treatment-notice requirements do not currently bind private fund advisers, per the vacatur; general fiduciary duties and existing Advisers Act antifraud rules, which the rule did not replace, continue to apply on their own separate terms. A reader encountering a reference to these 2023 rules in older commentary should treat any description of them as historical, not current law, and should note the adopting release itself was left online specifically flagged as vacated rather than withdrawn or amended.

The decision in front of you

For an LP evaluating what standardized reporting it can expect from a fund adviser, the practical position, as an editorial reading beyond the two documents, is that no rule currently compels the quarterly statements or mandatory audits the 2023 release described; any such practice an adviser follows is now voluntary or driven by contract rather than by this rule. Reporting on private fund adviser obligations should distinguish clearly between what Release IA-6383 proposed and what remains enforceable after the Fifth Circuit's judgment.

• Is a described private fund reporting practice grounded in the vacated 2023 rule or in a separate, still-active requirement?
• Does the source describing an adviser's disclosure predate or postdate 5 June 2024?
• Has the Commission proposed a narrower replacement rule since the vacatur, and under which statutory authority?

An adopting release and a vacating opinion are both primary records of the same rule's life span, and citing only the first without the second misstates current law.