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    Jul. 23, 2026

SEC Rescinds “No Deny” Policy As a Condition of Settled Enforcement Actions

On May 18, 2026, the SEC issued a new rule (Rule) formally rescinding its requirement that defendants settling enforcement actions agree not to publicly deny SEC allegations in the complaint or administrative order. First implemented in 1972, Rule 202.5(e) of the SEC’s informal rules and procedures – colloquially known as the SEC’s “gag rule” – has guided SEC enforcement practices for more than 50 years and has been an obstacle for fund managers facing SEC scrutiny. Although the rescission may sound like a concession to the private funds industry, a party’s violation of “no deny” after a settlement has not actually triggered the reopening of civil or administrative proceedings, noted legal experts interviewed by the Private Equity Law Report. Nor does adoption of the Rule necessarily mean that settlement negotiations with the SEC will be simplified or agreed on terms more favorable to defendants. This article summarizes the Rule; presents the contrasting views of Commissioner Hester M. Peirce and former SEC Chair Gary S. Gensler; examines whether it is possible or advisable to revisit settled enforcement actions; considers the relationship between the Rule and the Powell v. U.S. case decided by the U.S. Court of Appeals for the Ninth Circuit; and offers practical takeaways for PE sponsors, with expert legal commentary. See “SEC’s Approach to Exams, Enforcement and Retailization Under Atkins” (Jun. 11, 2026).

Sripetch v. SEC: Raising New Questions About the Nature of SEC Disgorgement

In Liu v. SEC, the U.S. Supreme Court squarely placed SEC disgorgement in the category of equitable relief, explaining that limitations on such relief under traditional equity principles also applied to disgorgement. Uncertainty about the basis for the SEC’s disgorgement authority arose, however, when Congress added an express statutory disgorgement remedy in response to Liu. The new issue that the Court confronted in Sripetch v. SEC was whether, to obtain disgorgement, the SEC had to show that the victims of the misconduct suffered pecuniary harm. In attempting to answer that question, the parties debated the impact of the new statutory disgorgement remedy. Assuming that disgorgement remained an equitable remedy, the Court concluded that traditional equity principles did not require the SEC to show pecuniary loss or harm before pursuing disgorgement. That decision has important implications for private fund managers and other firms that become targets of SEC enforcement. Perhaps the most noteworthy aspect of Sripetch is Justice Clarence Thomas’ concurring opinion, which all but demanded that the Court address whether SEC disgorgement was legal or equitable. The answer to that question could have far-reaching implications, including whether defendants are entitled to a jury trial on claims of disgorgement. In a guest article, MoloLamken partner Eric R. Nitz summarizes the Court’s decision and details some of its implications for private fund managers. For coverage of another Court ruling, see “Supreme Court Clarifies Scope of Private Rights of Action Under the Investment Company Act” (Jul. 9, 2026).

SEC Committee Wary of Retail Investor Confusion and Incompatible Features of Alternative Assets

Fundraising for semi-liquid products, including non-traded real estate investment trusts and business development companies; interval and tender offer funds; and preferred stock grew from about $100 billion in 2021 to more than $200 billion in 2025. Sponsors are expected to raise $1 trillion in such products over the next five years. As retail desire for private market products continues unabated, the SEC Investor Advisory Committee (IAC) is addressing potential issues and sources for confusion from offering semi-liquid and other alternative investment products to individual investors. At a meeting on June 4, 2026, the IAC discussed disclosure issues; redemption caps and gating; valuation methodologies; and other unique features and risks of such products. The discussion featured IAC members from a variety of backgrounds relevant to the topic. This article synthesizes the key takeaways from the discussion. See “SEC Investor Advisory Committee’s Recommendations to Facilitate Retail Access to Private Markets” (Oct. 30, 2025).

Increasing Investor Requests for Customized SPVs Create Sizable Operational Burdens

In a tight fundraising and exit environment, investors have increased leverage to negotiate bespoke terms – and special purpose vehicles (SPVs) are no exception. That finding was a throughline of the third iteration of CSC’s annual study, “SPV Global Outlook 2026” (Report), on the current state of the SPV market. Among the key findings is that there is increasing investor demand for bespoke SPV structures – particularly as to transparency and governance. In addition, the Report details how dealing with multiple stakeholders across jurisdictions has overtaken regulatory compliance as the top challenge when forming and operating SPVs. It also examines sponsors’ appetites for single-asset SPVs, continuation vehicles, favored jurisdictions, SPV administrators and outsourcing. This article discusses the key takeaways from the Report. For coverage of other CSC reports, see “How SPV Strategies and Models Are Driven by Regulatory Pressures and LP Demands” (Sep. 4, 2025); and “Current Trends and Pressure Points in Negotiations Around Distribution Waterfalls” (Jan. 23, 2025).

U.K. FCA Emphasizes Need for “Completeness and Clarity” in Applications for Authorization

Although the U.K.’s Financial Conduct Authority (FCA) and His Majesty’s Treasury have been considering ways to reduce regulatory burdens on fund managers, the prospect of a lighter regulatory touch does not mean managers should be complacent when applying for authorization from the FCA. Managers must avoid errors and oversights that could delay or derail their applications. On April 9, 2026, the FCA published an alert on its website addressing concerns with asset managers’ applications for authority. Similar to an SEC risk alert, the FCA’s publication addresses the issues it identified, as well as the good practices and areas for improvement it observed, from the applications it reviewed. Common themes running through the alert include providing clarity and completeness in applications; ensuring consistency across all application documents; and tailoring documents to the applicant’s business model. This article discusses the FCA’s findings. See “U.K. Regulators Propose Changes to AIFM Rules to Ease Compliance Burden on Fund Managers” (May 29, 2025).

Paul Hastings Welcomes Amanda Persaud in New York

Amanda N. Persaud has joined the New York office of Paul Hastings as a partner and co-chair of its investment funds and private capital practice. She focuses on fund formation across a variety of asset classes, including PE, private credit, infrastructure, real estate and hedge funds. For commentary from Persaud, see our two-part series on upper‑tier structures: “Hazards of Overlooking Internal Arrangements and Importance of Weighing Certain Governance Issues” (Aug. 17, 2021); and “Pitfalls to Avoid and the Value of Restrictive Covenants When Managing Personnel” (Aug. 24, 2021).

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