Six private equity and hedge fund trade groups on Friday sued the U.S. Securities and Exchange Commission (SEC), arguing the agency overstepped its statutory authority when adopting sweeping new expense and disclosure rules last week, Reuters reported. SEC Chair Gary Gensler said the rules will increase transparency and competition in the private funds industry, which oversees around $20 trillion in assets and has been accused by advocacy groups of opacity and conflicts of interest. An agency spokesperson said the SEC "undertakes rulemaking consistent with its authorities and laws governing the administrative process." It added it will defend the new rules in court. The changes require private funds to issue quarterly fee and performance reports and to perform annual audits. They also require that funds disclose certain fee structures, and bar them from offering some investors preferential treatment when it comes to their portfolio exposures and ability to cash out.
