Court Strikes Down S.E.C.’s Fee Disclosure Rule for Funds

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A federal appellate court on Wednesday struck down a Securities and Exchange Commission rule intended to provide investors in hedge funds, private equity funds and venture capital firms with more information about fees and expenses. The unanimous decision from the U.S. Court of Appeals for the Fifth Circuit in New Orleans sided with a group of associations representing the private fund industry in ruling that the S.E.C. exceeded its authority with the rule, which was enacted in August. In its decision, the appeals court agreed with their argument, saying that the regulator had overstepped with its rule, which was based on a law meant to protect everyday investors, who typically invest in mutual funds and other public securities, rather than investors in hedge fund and private equity firms. The S.E.C. said in a statement that it was reviewing the decision and would “ determine next steps as appropriate.”