If you have ever wanted a piece of private deals usually reserved for institutions, the SEC wants to make that a bit more doable. The commission advanced several ideas to expand retail access to private markets, including private equity and early-stage companies. One item approved at the meeting on Wednesday would permit registered investment advisers to levy a performance-based fee of up to 20% of a fund's results, aligning more closely with how some hedge funds pay managers to encourage them to work with individual investors.
Chairman Paul Atkins called this a priority, saying, "One of my priorities for the commission is to explore ways to facilitate the ability of individual investors to participate in private markets while at the same time protecting those investors from bad actors and fraud." The public will be invited to submit feedback on all of the proposals for a 60-day period.
The SEC also proposed expanding the menu of professional credentials that qualify someone as an accredited investor by explicitly adding certified public accountants as well as chartered financial analysts. That status determines eligibility for certain higher-risk offerings. This is the second time during President Donald Trump's tenure that the commission has moved to broaden who qualifies as an accredited investor, following the easing of certain limits during his first term.
The SEC also introduced a proposal aimed at providing interval funds with greater leeway on redemptions. These vehicles let investors redeem only at predetermined times and are less liquid than typical open-end mutual funds. According to SEC Division of Investment Management Director Brian Daly, interval funds have "tremendous utility," yet the prescriptive nature of the rules is curbing their use.
These moves fit into a wider Trump administration effort to lower barriers to private markets that have long been out of reach for many individuals.
Supporters see more choice and potentially higher yields.
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Critics warn that the measures could expose everyday investors to more risk. Benjamin Schiffrin, the director of securities policy at the nonprofit Better Markets, said, "Given that many interval funds have faced heightened redemption requests from existing investors seeking to exit these funds in recent months, now hardly seems like the time to further expose retail investors to these funds." This year has brought increased redemption requests at private credit funds, prompting some asset managers to impose withdrawal limits.
If adopted, these changes would reset who can buy certain private-market products and could influence how those products are built and how liquid they are. That can filter down to what shows up in retirement plans and brokerage accounts, and how quickly investors can get cash back when markets get rough.
One more notable change at the regulator: Wednesday's vote marked the final meeting for Republican Commissioner Hester Peirce, who is departing for academia after eight years, and as a result the agency will be down to only two Republican members. Nominees have not yet been chosen by the White House to occupy the open seats on a five-member board that, by design, is bipartisan.
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