US SEC preps plan to widen investor access to private markets

The US Securities and Exchange Commission (SEC) is considering a proposal to broaden retail investors' access to private markets and permit investment advisers to charge performance fees to a wider range of clients. The regulator's proposal was submitted to the White House Office of Management and Budget on Monday. The SEC views expanding access to private markets as a means of promoting "freedom and fairness" for investors, particularly given the historically limited availability of such opportunities to most retail investors.

The proposed rule would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940 by updating the framework for performance fees and enabling retail investors to gain exposure to private markets through registered funds. However, investment advisers are currently restricted to charging performance fees only to qualified clients.

SEC Chairman Paul Atkins has previously expressed concerns about such limitations, arguing that restricting performance fees hinders access to this asset class. The White House will review the SEC's proposal, and once completed, the commission is expected to release a draft for public comment, which will then be incorporated into a final rule.

The SEC's move aims to increase the dynamism of both public and private markets, ensuring that they are not solely reserved for wealthy insiders.