- AIMA CEO had described the proposed change as part of “existential threat” to hedge fund industry
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Industry trade group AIMA has welcomed a Texan court’s decision to overturn an SEC rule change on the status of broker-dealers.
The US District Court for the Northern District of Texas’ vacated the SEC Dealer Rule on the grounds that it exceeds the regulator’s statutory authority, making it unauthorised.
The court has therefore fully vacated the final rule, which AIMA had challenged in court. Speaking on the AFI podcast last year, AIMA CEO Jack Inglis had described the change, which would have forced hedge fund firms to comply with dealer registration, as part of a regulatory agenda causing an existential threat to the industry.
AIMA and the Managed Funds Association teamed up with the National Association of Private Fund Managers to challenge the Dealer Rule in March 2024.
“We are very pleased by the court’s ruling, a result that rightfully sets aside the SEC’s attempt to dramatically expand its authority by adopting a sweeping, unprecedented new interpretation of a 90-year-old statutory definition,” said Inglis this week.
“This outcome spares many hedge fund managers from facing the unenviable task of either attempting to comply with dealer registration in whatever form or curtailing their trading strategies that may have triggered one of the Dealer Rule’s arbitrary tests.”
The panel of judges presiding over the case ruled in favour of AIMA and other industry trade bodies. The SEC says it is reviewing its approach and may appeal.