View or download a PDF of the brief here

The Americans for Financial Reform Education Fund filed an amicus brief in the 5th Circuit supporting the Securities and Exchange Commission’s (SEC) private fund advisers rulemaking that would have provided investors with critical and detailed information about the fees, expenses, returns, and other investor arrangements (“side letters”).

AFREF in particular reiterates how the Investment Advisers Act of 1940 gives the SEC broad antifraud authority, and as such requires investment advisers such as private equity firms and hedge funds to provide important disclosures to their investors and face consequences for materially false or misleading information.

AFREF also points to its own comments and from investors in private funds that show how investing in private funds is not a transparent process, but rather one that forces investors to accept “one-sided contractual provisions” and limiting information so that investors have “disparate bargaining power”.

Finally, AFREF questions the standing of the lead plaintiff the National Association of Private Fund Managers (NAPFM) who is the only entity that is within the 5th Circuit’s jurisdiction in Texas but sudden origin in April 2022, membership, and staff are unclear. AFREF therefore asks the court to carefully consider whether the NAPFM is simply trying to “forum shop” and have this case heard in a court where it believes it is more likely to get a more favorable ruling.