January 16, 2024 - As reported previously, in September 2023, the LSTA joined five financial services trade associations (the “Joint Trades”) in commencing a lawsuit in the 5th Circuit Court of Appeals (5th Circuit) against the Securities and Exchange Commission (the “SEC”) in connection with its adoption of the Private Fund Advisers Rule (the “PFA Rule”). The Joint Trades believe that the SEC exceeded its statutory authority and acted arbitrarily and capriciously in adopting the PFA Rule. The 5th Circuit agreed to consider the case on an expedited schedule and last week scheduled oral arguments for February 5th in New Orleans. Consistent with the Courts’ agreement to work quickly, the oral arguments will be heard only two weeks after the Joint Trades’ reply brief is due. Under the expedited schedule, the Joint Trades’ opening brief was submitted on November 11, 2023, the SEC’s response was submitted on December 15, 2023, and the Joint Trades’ reply brief is due on January 22nd. The stakes are high. The Joint Trades are asking the 5th Circuit to vacate the rule based on the SEC’s lack of authority and failure to comply with the Administrative Procedure Act and a decision could come soon. When requesting expedited treatment, the Joint Trades urged the 5th Circuit to render an opinion by the end of May 2024. Given the timing of the oral arguments, there is a good chance the Court will meet that goal.
