On September 30, 2026, the SEC voted 3-0 to propose a package of rule amendments aimed at expanding retail and individual investor access to private markets, per King & Spalding.1 The proposals would broaden the definition of "qualified client," allow accredited investors to pay performance fees without a separate qualification screen, and modernize the interval fund structure to give managers more flexibility in matching portfolio liquidity to investment strategy. Comment periods close December 4 and December 7, 2026.2 The timing matters: these proposals arrive roughly 28 months after the Fifth Circuit vacated the SEC's entire 2023 private fund adviser rule package, and they signal a directional shift in how the agency now frames its mandate in private markets.
What the Court Actually Removed
The June 2024 vacatur was total. The Fifth Circuit struck down the preferential treatment rule, the restricted activities rule, the quarterly statement rule, the adviser-led secondaries rule, and the audit rule, and also vacated amendments to Rule 206(4)-7 that would have required written documentation for annual compliance reviews. The court held that the SEC exceeded its statutory authority, finding specifically that Section 211(h) of the Advisers Act applies to "retail customers" and not to private fund investors, and further that the SEC failed to establish a sufficient rational connection between potential fraud and the final rules under Section 206(4).
The vacatur was effective as of June 5, 2024, and had the legal effect of voiding the new rules, the reservation of a rule number in the Code of Federal Regulations, and the amendments to the existing books and records and compliance rules. The SEC subsequently revised the CFR text to formally reflect the removal.3
The practical result: no quarterly-statement obligation, no mandatory fund-audit rule, no restricted-activities prohibitions from this package.
What Was Never Removed
The vacatur's scope is precisely bounded, and that boundary is where compliance risk persists. While technical compliance with the vacated rules is no longer required, advisers and their dealings with private fund clients continue to be subject to the Investment Advisers Act of 1940. Advisers should remain aware that the SEC and its staff have interpreted certain activities highlighted in the private fund adviser rules as potentially prohibited under the Advisers Act and an adviser's fiduciary duty, and examination and enforcement staff are likely to continue focusing on the concerns the rules sought to address.
For private fund advisers, the enforcement shift reflects a change in emphasis rather than a meaningful relaxation of compliance expectations: fewer cases driven by technical violations alone, but continued scrutiny of conduct that directly implicates fiduciary duties, conflicts of interest, and misuse of investor assets. Enforcement staff have emphasized a "right circumstances" approach to non-fraud compliance violations, keeping such cases in scope where violations are persistent, unremediated, or result in meaningful investor harm.
The Marketing Rule, adopted separately under Section 206(4) authority, explicitly applies to disclosures sent to private fund investors and was not part of the vacated package.4 Rule 206(4)-7 itself, the foundational compliance rule requiring every registered adviser to maintain written policies and conduct annual reviews, also survives in its pre-2023 form.5 Form PF reporting obligations for advisers meeting the $150 million threshold remain in effect. On August 31, 2026, the SEC and CFTC published a joint final rule further extending the compliance date for the February 2024 Form PF amendments from October 1, 2026, to July 1, 2027.6
The Strategic Pivot and What It Changes
The September 2026 proposals represent the Atkins-era SEC doing something the Gensler-era SEC did not: framing private market regulation primarily as an access question rather than an investor protection question. The Commission voted 3-0 to advance a package consistent with the administration's broader push in this area, with proposed interval fund amendments designed to give managers more flexibility to match portfolio liquidity to investment strategy, which the SEC anticipates could encourage broader adoption of that structure by managers seeking to offer retail investors registered, liquidity-managed access to private markets.
A key change in the qualified client proposal is that accredited investors could pay performance fees without a separate qualified client screen. The SEC notes the proposed change would harmonize the regulatory framework governing access to private funds by enabling advisers to funds that already limit investors to accredited investors to enter into performance fee arrangements without needing to apply a separate qualified client screening standard.
For GPs, the near-term compliance posture is straightforward: the 2023 rules are gone and are not coming back in their current form. The SEC's own technical amendments to the CFR confirm it. A vacatur addresses the specific rules as adopted; it does not prevent the SEC from proposing similar private-fund investor-protection measures again through a new rulemaking process. The current administration's regulatory direction, however, runs toward access expansion, not toward reimposing the transparency mandates the Fifth Circuit struck down.
For LPs, the operative question shifts from "what disclosures is my manager required to give me?" to "what has my manager voluntarily retained from its pre-vacatur compliance infrastructure?" Private fund managers that began implementing the vacated rules should assess whether they plan to retain any of those changes. Those that have are signaling something about governance quality; those that quietly walked back quarterly fee transparency or the adviser-led secondaries fairness opinion requirement are signaling something different.
The unresolved variable is what the September 2026 accredited investor expansion proposals ultimately produce. The package would expand who may qualify as an accredited investor and a "qualified client," including through a new FINRA-developed accredited investor exam and additional professional credentials, potentially increasing the pool of individuals eligible to invest in private offerings and vehicles that charge performance-based compensation. If finalized, the downstream effect on cap table composition and LP due diligence standards across the private markets would be consequential. Comment periods run through early December and no final rule is imminent.
