A federal appeals court struck down the Securities and Exchange Commission’s (SEC) private fund adviser rule, agreeing with industry advocates that the agency overstepped its authority.

The unanimous decision to vacate the rule by the U.S. Court of Appeals for the Fifth Circuit, released Wednesday, hinged on the court’s interpretation of provisions to protect “retail” investors contained in the Investment Advisers Act and the Dodd-Frank Act.

The SEC argued the provisions covered all investors, giving them the authority to regulate private funds. Private funds, owned by more sophisticated investors, have long been exempted from the same regulations that apply to funds owned by retail investors. The court ruled Congress must explicitly give the SEC the authority to regulate private funds.