Form D is used by private funds to file a notice of a sale of securities. The SEC could also request that each hedge fund adviser certify compliance with, for example, the custody or code of ethics rule, he said. But both measures would stop short of allowing the SEC the power to examine funds, Meisner said. "Given the prevalence and influence of hedge funds, I suspect that the SEC will seek to regulate them in some fashion," he said. "I've been telling the majority of clients to continue with the status quo until we see a more definitive statement of intention from the SEC," Meisner said. The court has specified the SEC rule will remain effective until at least Aug. 7, unless the SEC announces it will not seek a rehearing before that date.
The full implications of the court decision have yet to be understood, lawyers said. One lawyer in Washington, D.C. cautioned against reading too much into a statement in the decision suggesting that hedge fund advisers owe a fiduciary duty to their funds and not to their funds and investors, as the SEC has maintained. The meaning of the decision remains to be sorted out, the lawyer said. Advisers owe duties to their investors in accordance with state law, he said. But a lawyer in New York warned that the wording of the decision could raise questions about advisers' obligations to investors, such as whether the hedge fund adviser still needs to provide investors its Form ADV Part II.