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June 5, 2024

Fifth Circuit Again Shows Its Bias Against the SEC by Striking Down a Rule Offering Important Protections for Investors

WASHINGTON, D.C.—Stephen Hall, Better Markets’ Legal Director and Securities Specialist, issued the following statement after the Fifth Circuit’s decision in National Association of Private Fund Managers v. SEC, vacating the SEC’s Private Fund Advisers rule:

“The Fifth Circuit’s decision is a terrible setback on many levels.  First and foremost, it will deprive investors in private funds—including everyday Americans with pension funds—of the protections the rule would have provided against unfair and opaque practices.  More generally it also will continue to weaken the SEC’s authority and ability to protect investors, financial stability, and the integrity of our markets through its rules.  And it stands as yet another in a long series of decisions from the Fifth Circuit that spring not from a fair reading of the law but from the court’s hostility to government regulation and the SEC.

“Despite industry’s arguments that private fund investors are sophisticated entities who do not need the protection of the federal securities laws, we showed in our amicus brief that most private fund investors represent vulnerable beneficiaries such as the public pension funds that hold the retirement savings of ordinary Americans. Regulations that arm investors such as pension funds with the information they need to invest in private funds are essential to protect the retirement savings of teachers, firefighters, and policemen. The Fifth Circuit’s decision vacating the SEC’s Private Fund Advisers rule leaves those investors unprotected.”

“And like other decisions before, it confirms the court’s hostility to regulatory reforms.  As we noted in a recent fact sheet, the Fifth Circuit’s track record in cases involving the SEC shows that the court is unduly sympathetic to industry’s claims. Here, despite the Dodd-Frank Act delegating authority to the SEC to adopt new rules regulating investment advisers, the Fifth Circuit held that the SEC lacked the authority to do just that. As a result, everyday Americans, who invest in private funds through their participation in their pension plans, will continue to be exposed to the array of unfair, predatory, and opaque practices in the private funds industry that the SEC’s rule was designed to address.

“The Fifth Circuit’s ruling is especially troubling because it will only encourage industry to continue its practice of forum shopping, whereby it does everything possible to have the Fifth Circuit hear its challenges to SEC rules. As we also noted in our recent fact sheet, industry formed the National Association of Private Fund Managers in Texas for the express purpose of being able to bring a challenge to the Private Fund Advisers rule in the Fifth Circuit. The Fifth Circuit has now rewarded that blatant act of forum shopping.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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