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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 [www.gpo.gov]
[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vacated amendments are no longer in effect.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 [email protected]; 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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