Rule2024-26524
Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews
Primary source
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Published
November 19, 2024
Effective
November 19, 2024
Issuing agencies
Securities and Exchange Commission
Abstract
The Securities and Exchange Commission ("Commission") is adopting technical amendments to various rules under the Investment Advisers Act of 1940 ("Advisers Act") to reflect a Federal court's vacatur of new rules and rule amendments that the Commission adopted on August 23, 2023. The Commission adopted new rules designed to protect investors who directly or indirectly invest in private funds, corresponding amendments to the Advisers Act books and records rule to facilitate compliance with the new rules and assist examination staff, and additional amendments to the Advisers Act compliance rule to better enable staff to conduct examinations (together, the "Private Fund Adviser Rules"). The court's vacatur of the Private Fund Adviser Rules was effective as of June 5, 2024, and had the legal effect of: vacating the new rules and the reservation of a rule number in the Code of Federal Regulations ("CFR"); as well as vacating the amendments to the existing books and records and compliance rules such that those vacated amendments are no longer in effect. These technical amendments revise the CFR to reflect the court's vacatur of the Private Fund Adviser Rules.
Full Text
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<title>Federal Register, Volume 89 Issue 223 (Tuesday, November 19, 2024)</title>
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[Federal Register Volume 89, Number 223 (Tuesday, November 19, 2024)]
[Rules and Regulations]
[Pages 91252-91253]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-26524]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 275
[Release No. IA-6773; File No. S7-03-22]
Private Fund Advisers; Documentation of Registered Investment
Adviser Compliance Reviews
AGENCY: Securities and Exchange Commission.
ACTION: Final rule; technical amendments.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
adopting technical amendments to various rules under the Investment
Advisers Act of 1940 (``Advisers Act'') to reflect a Federal court's
vacatur of new rules and rule amendments that the Commission adopted on
August 23, 2023. The Commission adopted new rules designed to protect
investors who directly or indirectly invest in private funds,
corresponding amendments to the Advisers Act books and records rule to
facilitate compliance with the new rules and assist examination staff,
and additional amendments to the Advisers Act compliance rule to better
enable staff to conduct examinations (together, the ``Private Fund
Adviser Rules''). The court's vacatur of the Private Fund Adviser Rules
was effective as of June 5, 2024, and had the legal effect of: vacating
the new rules and the reservation of a rule number in the Code of
Federal Regulations (``CFR''); as well as vacating the amendments to
the existing books and records and compliance rules such that those
vacated amendments are no longer in effect. These technical amendments
revise the CFR to reflect the court's vacatur of the Private Fund
Adviser Rules.
DATES: Effective November 19, 2024; however, the Federal court issued
its vacatur of the rule amendments June 5, 2024.
FOR FURTHER INFORMATION CONTACT: John Cavanagh, Senior Counsel; Robert
Holowka, Branch Chief; Jennifer Porter, Assistant Director, Investment
Adviser Regulation Office, Division of Investment Management at (202)
551-6787 or <a href="/cdn-cgi/l/email-protection#8cc5c1c3cfcfccffe9efa2ebe3fa"><span class="__cf_email__" data-cfemail="a6efebe9e5e5e6d5c3c588c1c9d0">[email protected]</span></a>; U.S. Securities and Exchange Commission, 100
F Street NE, Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The Commission is adopting technical
amendments to the following rules: 17 CFR 275.206(4)-9, 17 CFR
275.206(4)-10, 17 CFR 275.211(h)(1)-1, 17 CFR 275.211(h)(1)-2, 17 CFR
275.211(h)(2)-1, 17 CFR 275.211(h)(2)-2, 17 CFR 275.211(h)(2)-3, 17 CFR
275.204-2, and 17 CFR 275.206(4)-7 under the Advisers Act.
I. Background
On August 23, 2023, the Commission adopted the Private Fund Adviser
Rules, which, through its constituent parts, would have protected
investors who directly or indirectly invest in private funds and better
enabled staff to conduct examinations. The Private Fund Adviser Rules
became effective on November 13, 2023.\1\ On June 5, 2024, the U.S.
Court of Appeals for the Fifth Circuit vacated the Private Fund Adviser
Rules.\2\ The court's vacatur of the Private Fund Adviser Rules was
effective as of June 5, 2024, and had the legal effect of (i) vacating
the new rules and the reservation of rule 206(4)-9 and (ii) vacating
the amendments to the existing books and records rule 204-2 and
compliance rule 206(4)-7 such that those vacated amendments are no
longer in effect. These technical amendments reflect the vacatur in the
CFR by rescinding the Private Fund Adviser Rules.
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\1\ Private Fund Advisers; Documentation of Registered
Investment Adviser Compliance Reviews, Release No. IA-6383 (Aug. 23,
2023) [88 FR 63206 (Sept. 14, 2023)].
\2\ National Association of Private Fund Managers v. SEC, No.
23-60471 (5th Cir. 2024).
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II. Procedural and Other Matters
The Administrative Procedure Act (``APA'') generally requires an
agency to publish notice of a rulemaking in the Federal Register and
provide an opportunity for public comment. This requirement does not
apply, however, if the agency ``for good cause finds . . . that notice
and public procedure are impracticable, unnecessary, or contrary to the
public interest.'' \3\
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\3\ 5 U.S.C. 553(b)(B).
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[[Page 91253]]
The technical amendments do not impose any new substantive
regulatory requirements on any person and merely reflect the vacatur of
the Private Fund Adviser Rules. For these reasons, for good cause, the
Commission finds that notice and public comment are unnecessary.\4\
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\4\ This finding also satisfies the requirements of 5 U.S.C.
808(2), allowing the amendments to become effective notwithstanding
the requirement of 5 U.S.C. 801 (if a Federal agency finds that
notice and public comment are impractical, unnecessary or contrary
to the public interest, a rule shall take effect at such time as the
Federal agency promulgating the rule determines). The amendments
also do not require analysis under the Regulatory Flexibility Act.
See 5 U.S.C. 604(a) (requiring a final regulatory flexibility
analysis only for rules required by the APA or other law to undergo
notice and comment).
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For similar reasons, although the APA generally requires
publication of a rule at least 30 days before its effective date, the
Commission finds there is good cause for the amendments to take effect
on [INSERT DATE OF PUBLICATION IN THE FEDERAL REGISTER].\5\
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\5\ See 5 U.S.C. 553(d)(3).
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Pursuant to the Congressional Review Act, the Office of Information
and Regulatory Affairs has designated these amendments as not a ``major
rule,'' as defined by 5 U.S.C. 804(2).
List of Subjects in 17 CFR Part 275
Administrative practice and procedure, Reporting and recordkeeping
requirements, Securities.
Text of Amendments
For the reasons set forth in the preamble, title 17, chapter II of
the Code of Federal Regulations is amended as follows:
PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
0
1. The authority citation for part 275 continues to read in part as
follows:
Authority: 15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(11)(H), 80b-
2(a)(17), 80b-3, 80b-4, 80b-4a, 80b-6(4), 80b-6a, 80b-11,
1681w(a)(1), 6801-6809, and 6825, unless otherwise noted.
* * * * *
Section 275.204-2 is also issued under 15 U.S.C. 80b-6.
* * * * *
Sec. 275.204-2 [Amended]
0
2. Amend Sec. 275.204-2 by:
0
a. Removing the ``; and'' at the end of paragraph (a)(7)(iv)(B) and
adding a period in its place;
0
b. Removing paragraph (a)(7)(v); and
0
c. Removing and reserving paragraphs (a)(20) through (24).
* * * * *
Sec. 275.206(4)-9, Sec. 275.206(4)-10 [Removed]
0
3. Remove Sec. Sec. 275.206(4)-9 and 275.206(4)-10.
* * * * *
Sec. 275.206(4)-7 [Amended]
0
4. Amend Sec. 275.206(4)-7 by revising paragraph (b) to read as
follows:
* * * * *
(b) Annual review. Review, no less frequently than annually, the
adequacy of the policies and procedures established pursuant to this
section and the effectiveness of their implementation; and
* * * * *
Sec. 275.211(h)(1)-1 through Sec. 275.211(h)(2)-3 [Removed]
0
5. Remove Sec. Sec. 275.211(h)(1)-1, 275.211(h)(1)-2, 275.211(h)(2)-1,
275.211(h)(2)-2, and 275.211(h)(2)-3.
Dated: November 8, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-26524 Filed 11-18-24; 8:45 am]
BILLING CODE 8011-01-P
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