US regulator to propose new rules for retail access to private assets

The US Securities and Exchange Commission (SEC) is preparing to unveil new proposals on Wednesday that could broaden access for retail investors to private assets, such as private equity, private credit, real estate, and venture capital. These assets are often associated with potentially higher returns compared to traditional investments but also carry increased risks and complexities.

The proposals are part of an initiative by the Trump administration to "democratize" these markets. However, critics express concern that these changes could benefit Wall Street firms by exposing retail investors to unfamiliar fees and risks, particularly given the difficulty in pricing and redeeming these assets quickly.

SEC Chair Paul Atkins has previously stated the agency's intention to pursue such changes under the banner of "responsible retailization," aiming to balance access to higher returns with robust investor protections. The SEC's public meeting, scheduled for 10 a.m. EDT, will include votes on changes to performance fee structures for investment advisers and rules for share redemptions at closed-end funds. Additionally, the commission will consider allowing more individuals to qualify as "accredited investors," a designation currently based on wealth, income, or professional licenses, which grants access to a wider array of private investments.

Financial advisers have voiced concerns that allowing advisers to charge performance fees based on capital gains could create incentives to take on greater risk. The specifics of the closed-end fund proposal remain undisclosed, but a regulatory committee had previously suggested such modifications could improve retail access to private assets. The proposed changes will be subject to public comment before any final decisions are made.