U.S. appeals court: SEC exceeded authority in fund rules

US appeals court overturned a SEC regulation that forced hedge funds and private equity companies to be more transparent about their expenses and expenditures, stating that the SEC's actions exceeded Congress's authority. On June 5th, three judges from the US Fifth Circuit Court of Appeals unanimously ruled against the SEC. Six industry groups questioned the regulation passed in August, stating that it would increase compliance costs and completely change the industry's operating methods. Judge Kurt Engelhardt, on behalf of the three judges, wrote that the SEC "exceeded its statutory authority." "The issuance of the final rule was unauthorized, and no part of it stands."

In a series of lawsuits against cryptocurrency companies, the SEC argued that many cryptocurrencies are securities within its jurisdiction and defined them using a legal framework called the Howey Test. Cryptocurrency companies countered that the SEC has no authority to regulate cryptocurrencies without explicit approval from Congress.

Currently, the SEC may face action from Congress, which could change its claimed authority over the US cryptocurrency industry.