December 18, 2023 - As we’ve previously reported, in early September the LSTA joined five other trade associations, NAPFM, NVCA, MFA, AIMA, and AIC, in commencing a lawsuit against the Securities and Exchange Commission (the “SEC”) in connection with its recent adoption of the Private Fund Advisers Rule (the “PFA Rule”).  The litigation is based on the belief that the SEC exceeded its statutory authority and acted arbitrarily and capriciously in adopting the PFA Rule. 

In early November, counsel for the trade associations submitted their opening brief which we summarized here.  Last week, the SEC submitted its responsive brief which is available here.  Not surprisingly, the brief takes issue with the various claims of the trade associations, arguing that the SEC does have statutory authority to impose the PFA rule, that they did not violate the Administrative Procedure Act in promulgating the rule and that the SEC’s cost benefit analysis was sufficient.  It also argued that the trades did not have standing to litigate the case in the 5^th Circuit and the case should be moved to the DC District. 

We are currently assessing the SEC’s brief and will respond with a reply brief by January 22^nd after which the 5^th Circuit will hold oral argument.