Business & Markets
SEC votes to propose wider retail access to private-market strategies
The package would widen performance-fee eligibility, reshape interval-fund repurchases and permit multiple share classes at regulated closed-end funds. Separately, the SEC is seeking comment on professional credentials as a route to accredited status. The measures are proposals, not rules in effect.
Executive summary
- What the SEC voted on: The commission voted to propose changes that could let registered advisers charge performance-based fees to a broader set of clients, including regulated funds, and modernize interval-fund repurchases and closed-end fund share classes.[1][2]
- A separate comment process: The SEC is also seeking comment on whether credentials such as CPA, CFA, CFP, Series 79 and Series 86/87 licenses, or a future FINRA exam, should offer another way to qualify as an accredited investor. The notice invites feedback; it does not itself change eligibility.[1][2]
- Still proposals: The changes are not in effect. The SEC says comment periods will run for 60 days after the related releases and notices appear in the Federal Register. Reuters reported that advisers raised concerns about illiquid assets, difficult valuations and incentives to take more risk.[1][3]
The Securities and Exchange Commission voted Wednesday to propose a package of changes intended to make private-market strategies more available through regulated investment funds. The agency said the proposals would expand the categories of clients from whom registered advisers may receive performance-based compensation, require disclosure of those arrangements on certain fund filings, and revise rules for interval funds and closed-end funds.[1]
Performance fees, often associated with private equity, hedge fund and venture-capital strategies, can link an adviser's compensation to investment gains. The SEC said broader permission to use those arrangements could encourage advisers to offer private-market strategies through regulated funds. The proposal would not guarantee that new funds launch or that investors earn higher returns.[1][2]
The fund changes would allow interval funds to schedule repurchases at times that better match the liquidity of their portfolios and replace case-by-case exemptive orders with a rules-based framework for multiple share classes at regulated closed-end funds. The SEC described both as changes to regulated fund structures, not a promise of daily access to assets that may be difficult to sell.[1][4]
In a separate action, the commission is requesting comment on professional qualifications that might let individuals meet the accredited-investor definition without relying only on existing income or net-worth tests. The SEC listed a future exam developed by FINRA, a U.S. CPA license, the CFA charter, CFP certification, and FINRA Series 79, 86 and 87 licenses as possible designations.[1][2]
Accredited-investor status can open access to securities offerings that are exempt from SEC registration. The agency's request is for public comment on possible designations; it has not yet designated them or changed the current definition. The SEC says comment periods will remain open for 60 days after publication in the Federal Register.[1][2]
Private assets can be harder to value and sell than publicly traded stocks and bonds. In a report ahead of the vote, Reuters cited financial advisers who warned that paying advisers a share of gains can create incentives to pursue greater risk, and that investors need clear valuations and informed consent. The SEC says its proposals would preserve investor protections and add disclosure, but their practical safeguards will be assessed through the rulemaking process.[3][1]
Nothing in Wednesday's vote makes the proposals final. The SEC must publish the proposed texts and notices, receive comments and decide later whether to adopt any changes. Until then, the existing rules remain in place; the full effects will depend on the detailed releases and the commission's eventual decisions.[1]