United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit ____________ FILED June 5, 2024 No. 23-60471 Lyle W. Cayce ____________ Clerk National Association of Private Fund Managers; Alternative Investment Management Association, Limited; American Investment Council; Loan Syndications and Trading Association; Managed Funds Association; National Venture Capital Association,

Petitioners,

versus Securities and Exchange Commission,

Respondent. ______________________________

Petition for Review of an Order of the Securities & Exchange Commission Agency No. 17 CFR Part 275 No. IA-6383 ______________________________ Before Southwick, Engelhardt, and Wilson, Circuit Judges. Kurt D. Engelhardt, Circuit Judge: The Securities and Exchange Commission (“Commission”) adopted a rule to enhance the regulation of private fund advisers, designed to protect investors who invest in private funds and to prevent fraud, deception, or ma- nipulation by the investment advisers to those funds. Private Fund Advisors; Documentation of Registered Investment Adviser Compliance Reviews, 88 Fed. Reg. 63206 (Aug. 23, 2023) (to be codified at 17 C.F.R. pt. 275) [hereinafter Case: 23-60471 Document: 123-1 Page: 2 Date Filed: 06/05/2024

No. 23-60471

“Final Rule”]. We consider a challenge to the Final Rule by petitioners Na- tional Association of Private Fund Managers, Alternative Investment Man- agement Association, Ltd., American Investment Council, Loan Syndica- tions and Trading Association, Managed Funds Association, and the Na- tional Venture Capital Association (collectively “Private Fund Managers”). For the following reasons, we VACATE the Final Rule. I. A. 1 Private funds are pooled investment vehicles that are (as implied) pri- vate, not part of the public securities market. See Final Rule at 63207–08. Unlike familiar public pooled investment vehicles, like mutual funds, private funds are generally not accessible to non-professional investors, known as re- tail customers. Instead, they are generally open to some of the most sophisti- cated and wealthiest investors—e.g., Abu Dhabi Investment Authority, Yale University endowment, Hong Kong Monetary Authority, Stanford Manage- ment Company, and Harvard Management Company. Smaller investors, in- cluding state and local pension funds, have also helped the growth of the pri- vate fund sector. Id. Individuals—such as firefighters, public school educa- tors, and law enforcement officers—have indirect exposure to private funds through their participation in public and private pension plans, which invest directly in private funds. Id. at 63208.There are many types of private funds, including private-equity funds, hedge funds, private credit funds, real estate funds, venture-capital funds, and collateralized loan obligations. Each private fund is managed by an adviser—typically a firm—that often serves as a general partner, or managing partner, and receives a fixed _____________________ 1 Background information on private funds is taken from the parties’ briefs, the Administrative Record, and the Final Rule.