Industry groups launch court battle to stop SEC rules that would give investors more information about private fund performance

Commission votes 3-2 to approve sweeping new rules aimed at increasing transparency, driving down fees

The Securities and Exchange Commission set off an intense lobbying effort when it floated its rules. Photo: Farrah Skeiky for The Wall Street Journal WASHINGTON—Private-equity and hedge funds are bracing for what could be the biggest regulatory challenge in years to their business of managing money for deep-pocketed investors.

While individual investors tend not to benefit from frequent trading, such behavior can be lucrative for market intermediaries. Photo: Alyssa Schukar for The Wall Street Journal WASHINGTON—Federal regulators want to impose new guardrails on the way retail investment firms such as Robinhood Markets use advanced analytics to encourage customers to trade, the latest in a series of policy efforts prompted by the 2021 meme-stock craze.

The Securities and Exchange Commission scrapped plans to vote Wednesday on a rule that would have increased regulators’ visibility into financial risks at some hedge funds and private equity funds. After scheduling the vote last week, the five-member commission “decided to take a little more time” on the rule, an SEC spokeswoman said. She declined to comment on whether the cancellation owed to a lack of majority support from the commission, which is composed of three Democrats and two...