The US Securities and Exchange Commission’s Investor Advisory Committee has raised concerns over whether disclosure standards for retail-focused private markets products remain fit for purpose following recent redemption pressures across semi-liquid private credit funds, according to a report by Bloomberg.
During a recent committee discussion, participants questioned whether increasingly lengthy disclosure documents are helping investors understand liquidity constraints and product risk, or instead creating additional complexity.
SEC commissioner Mark Uyeda suggested the industry may need to reconsider whether simply expanding disclosure requirements continues to be the most effective approach. Several participants highlighted concerns that investors may not fully understand the implications of redemption gates and exit limits applied by some private credit vehicles.
SEC Engagement Advisor Stephen Deane told Bloomberg that investor testing could help assess whether retail participants understood liquidity terms and whether product risks were being communicated effectively.
Representatives from the investment and regulatory community also raised questions around how private markets products are marketed to retail investors, particularly where traditional public markets metrics are applied to less frequently valued assets.
