The SEC filed a joint stipulation with defendants Pinnacle Advisors, LLC and four individuals to dismiss with prejudice an ongoing civil enforcement action against them for failures under Rule 22e-4 of the Investment Company Act (the "Liquidity Rule"). The rule requires mutual funds to adopt liquidity risk management programs to assess their liquidity risk, prohibits funds from investing more than 15% of their net assets in illiquid investments, and requires funds to take certain prompt remedial steps if they hold illiquid investments above this percentage limit. The enforcement action, the SEC's first under the Liquidity Rule, alleged that a Pinnacle mutual fund held approximately 21-26% of its net assets in illiquid investments over a one-year period and noted that the defendants classified the fund's largest illiquid investment as a "less liquid" investment, ignoring restrictions, transfer limitations, and the absence of any market for the shares, and disregarding the advice of fund counsel and auditors. The SEC's complaint stated that defendants misled the SEC's Division of Investment Management about the basis for the fund's liquidity classifications. The SEC also charged both of the Pinnacle fund’s independent trustees with aiding and abetting violations of the Liquidity Rule.

In 2023, the defendants moved to dismiss the case, arguing that the Liquidity Rule exceeds the scope of the SEC's rulemaking authority under the Investment Company Act and is unenforceable. After the Supreme Court’s 2024 landmark decision in Loper Bright that overruled the broad deference courts previously afforded to federal agencies' interpretations of their own rulemaking powers (i.e., the "Chevron doctrine"), the court in Pinnacle asked defendants to resubmit their motions to dismiss to address the Loper Bright decision. The defendants’ renewed motions to dismiss filed in April 2025 included strengthened arguments that the SEC lacked authority to promulgate the Liquidity Rule, pointing to Loper Bright as the basis upon which the court should find the rule invalid. Shortly thereafter, in May 2025, the parties informed the court that they had agreed to a resolution in principle. In finalizing the dismissal, the SEC noted in the joint stipulation that the “Commission’s decision to seek dismissal of this Litigation with prejudice does not necessarily reflect the Commission’s position on any other case." It remains to be seen if the SEC will choose to seek enforcement of other potential alleged violations of the Liquidity Rule or if it will avoid doing so, potentially to avoid the risk that a court could vacate the Liquidity Rule on the grounds that the SEC lacked statutory authority to adopt the Liquidity Rule.