The US Securities and Exchange Commission is preparing a proposal that could significantly widen retail investors’ access to private markets while allowing investment advisers to charge performance-based fees to a broader range of clients, according to a report by Bloomberg.
The proposed rule was submitted to the White House Office of Management and Budget for review on Monday, marking another step in the SEC’s efforts to loosen restrictions around private-market investing.
The agency said the initiative is intended to give investors greater access to both public and private markets. The proposal would amend provisions of the Investment Advisers Act of 1940 and Investment Company Act of 1940, potentially enabling retail investors to gain private-market exposure through registered investment vehicles.
It would also revise the framework governing performance fees charged by investment advisers. Under current rules, advisers are generally restricted to charging such fees to investors who meet the definition of a qualified client.
The SEC’s push for broader access has been championed by Chairman Paul Atkins, who has argued that investors should not be excluded from fast-growing companies simply because those businesses raise capital privately.
Atkins has described expanding private-market participation as a matter of “freedom and fairness”, reflecting the administration’s broader push to reduce barriers between retail investors and alternative assets.
However, investor advocates have raised concerns over whether individual investors have sufficient information to evaluate private investments and the risks associated with them. The relative lack of public disclosure can make private assets harder to value and potentially increase the risk of losses.
The proposal remains subject to regulatory review. Following the White House’s assessment, the SEC is expected to publish the measure for public comment. The commission would then consider feedback before voting on a final rule.
