July 23, 2024 - As Reuters recently reported, the deadline for the SEC to file a request for a “rehearing en banc” in connection with the Fifth Circuit Court of Appeals’ decision in the Private Fund Advisers Rule (“PFAR”) litigation passed on Monday evening.  In its unanimous ruling a panel of the Fifth Circuit vacated the PFAR in its entirety, holding that the SEC lacked the statutory authority to impose it. It is very unusual for courts to grant en banc review (i.e., review by the entire court), especially on unanimous decisions, so this result was not unexpected. While the Commission can still submit a petition for certiorari to the United States Supreme Court by September 3rd, most observers view that as unlikely.

As Reuters notes, consistent with a letter the LSTA jointly submitted to the SEC following the PFAR decision, several other proposed rules are implicated by the Fifth Circuit’s decision, including the Outsourcing Rule, the Conflicts of Interest Associated with the Use of Predictive Data Analytics Rule and Cybersecurity Risk Rule for Investment Advisers.  The LSTA and the other trade associations urged the SEC to withdraw the proposed rules.

Assuming the SEC does not request review by the Supreme Court, it will be interesting to see the posture the Commission takes with respect to those proposed rules as well as others that could be affected by the Fifth Circuit’s ruling.  We will continue to closely follow developments.