# kaal:claim:2998097-002

**Claim.** The 2004 registration rule failed in court because the term client was not defined in the Investment Advisers Act, leaving the SEC without authority to fix its meaning, and the D.C. Circuit vacated the rule in Goldstein as arbitrary rulemaking.

**Type.** failure  **Support.** argued

**Holds when.**

- United States
- Goldstein v. SEC, July 2006

**Source quote.**

> Because the term "client" had not otherwise been defined in the Investment Advisers Act, the SEC had no authority to determine the meaning of the term.

**From.** Wulf A. Kaal, *Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016* (2017), II.2 Evolution of the Investment Advisers Act Exemption, page 10

**Cite as.** Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097

**Verify.** sha256 of source PDF `0955054f49c7011d33c285579bb046e6b284e42755b10fd2546a728c202669d5` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202017%20-%20Private%20Investment%20Fund%20Regulation%20-%20Theory%20and%20Empirical%20Evidence%20from%201998%20to%202016.pdf

**Failure mode.** Undefined statutory term defeats agency rulemaking  (family: definitional-ambiguity)

**Topics.** securities-law, private-funds, dynamic-regulation

**Keywords.** goldstein, hedge-fund-registration, arbitrary-rulemaking, statutory-authority

**Related claims.**

- restates: https://wulfkaal.github.io/claims/2714974-006
- restates: https://wulfkaal.github.io/claims/2150377-006
- extends: https://wulfkaal.github.io/claims/2739479-002
- extends: https://wulfkaal.github.io/claims/2732915-008

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