Wall Street Journal Quotes Barbara Niederkofler on the Fifth Circuit’s Decision to Vacate Private Funds Advisor Rule

For its article “Court Leaves SEC With Tough Choices in Private-Equity Reform Push,” the Wall Street Journal Pro Private Equity quoted Akin investment management co-leader Barbara Niederkofler. The article discusses the Fifth Circuit’s ruling on June 5, 2024, to fully vacate the Private Fund Advisor Rule (PFAR) in an attempt to halt the Securities and Exchange Commission’s (SEC) authority to regulate private funds. This decision may force the SEC to change its approach to the buyout industry.

The SEC released the final version of PFAR in August 2023, and soon after six trade associations filed with the Fifth Circuit a Petition for Review.

“The decision is very blunt. The court thinks the SEC has overstepped its authority,” said Barbara.

Barbara also believes a successful appeal is unlikely but mentioned that it is “not the end of the conversation” about private equity conduct and the agency is likely to try to continue its efforts by other means.

Additionally, Barbara is quoted by Private Equity International saying, “I don't see this as a waste, because there are a lot of parts of the rule that have been in discussion even before the rule came out.” 

She highlights that the conversations about fiduciary duty and conflicts of interest in the private funds industry are going to continue, adding that there is a “definite expansion” in interest and capabilities by the regulator when it comes to private equity.