In 2024, private funds continued to be a major focus for the US Securities and Exchange Commission (SEC), with an active docket of enforcement cases and rulemaking efforts. Although we expect 2025 to include a continued emphasis on fraudulent practices by private fund managers, we anticipate that the Division of Enforcement staff will be less inclined to pursue technical violations by private fund managers or aggressively pursue novel cases that could appear to be “rulemaking by enforcement.” This is because of significant court decisions in 2024 that curbed much of the SEC’s private fund rulemaking agenda under Chairman Gary Gensler, and the change in presidential administration, bringing with it a shift in priorities and a change in enforcement approach. In terms of enforcement, the expectation is that the SEC staff under SEC Chairnominee Paul Atkins will be less aggressive compared to the staff under his predecessor and instead focused on instances of more egregious misconduct, particularly those involving retail investor harm.
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