The SEC is facing the possibility of legal action by hedge funds and finance industry groups over its plans to change certain market rules following the collapse of Archegos Capital Management (Archegos), according to a report by The Financial Times.

The SEC is facing the possibility of legal action by hedge funds and finance industry groups over its plans to change certain market rules following the collapse of Archegos Capital Management (Archegos), according to a report by The Financial Times.

SEC chair Gary Gensler believes that greater transparency is needed in swaps markets, and reforms could help prevent another Archegos-type scenario. The family office, bet on share price moves using total return swaps, but collapsed early last year when the strategy backfired.

Hedge fund Elliott Management, the Futures Industry Association and partners at the law firm Ropes & Gray are among this to have submitted public responses to the SEC's proposals claiming that the Commission is breaking both its own rules and US law.