Six private equity and hedge fund trade groups Friday sued the U.S. Securities and Exchange Commission (SEC), arguing the agency overstepped its statutory authority when adopting sweeping new expense and disclosure rules last week.

SEC Chair Gary Gensler said the rules will increase transparency and competition in the private funds industry, which oversees around $20 trillion in assets and has been accused by advocacy groups of opacity and conflicts of interest.

An agency spokesperson said the SEC "undertakes rulemaking consistent with its authorities and laws governing the administrative process." It added it will defend the new rules in court.

The changes require private funds to issue quarterly fee and performance reports and to perform annual audits. They also require that funds disclose certain fee structures, and bar them from offering some investors preferential treatment when it comes to their portfolio exposures and ability to cash out.

"The rules exceed the Commission's statutory authority, were adopted without compliance with notice-and-comment requirements, and are otherwise arbitrary, capricious, an abuse of discretion, and contrary to law, all in violation of the Administrative Procedure Act," the associations wrote in the lawsuit.

They asked the court to vacate the rules, according to the document.

Bryan Corbett, chief executive officer of the Managed Funds Association (MFA), said the rules will increase costs for investors and curb competition, he added.

The suit was filed in the 5th U.S. Circuit Court of Appeals. The other petitioners are the National Venture Capital Association, American Investment Council, Alternative Investment Management Association, National Association of Private Fund Managers and the Loan Syndications & Trading Association.

The suit is one of a growing number brought against Gensler's SEC. In a recent blow to the SEC, a judge panel ruled that the SEC was wrong to reject Grayscale Investments' proposed bitcoin ETF without explaining its reasoning.