SEC Proposes Expanded Retail Access to Private Markets
SEC proposals would expand performance fees, modernize interval funds and add credential based paths to accredited investor status, subject to safeguards.
Summary
On Sept. 30, 2026, the SEC voted to propose amendments intended to expand retail access and capital formation across public and private markets while retaining investor safeguards. Release 2026-96 would let registered investment advisers receive performance based compensation from certain clients, including regulated funds, based on capital gains or appreciation. Fund registration and reporting forms would disclose those arrangements. The package also would modernize interval funds by allowing repurchases to be scheduled around portfolio liquidity and replace exemptive orders with a rules based framework allowing regulated closed end funds to issue multiple share classes.
Separately, the SEC requested comment on letting individuals qualify as accredited investors by passing an exam developed by the Financial Industry Regulatory Authority, or by holding a CPA license, CFA charter, CFP certification, Series 79 Investment Banking Representative license, or Series 86 and Series 87 Research Analyst licenses in good standing. Chairman Paul S. Atkins said the initiative targets investors’ post tax, pre retirement dollars, addresses growing private market demand and complements President Trump’s Executive Order on Democratizing Access to Alternative Assets for 401(k) Investors, while guarding against fraud and bad actors. Comments are due 60 days after the proposing releases and notices are published in the Federal Register.
Positives
- Registered investment advisers could receive capital gains or appreciation based compensation from certain clients, including regulated funds, potentially encouraging private market strategies in regulated vehicles.
- Fund registration and reporting forms would disclose performance based compensation, increasing transparency around adviser incentives.
- Interval funds could schedule repurchases to better match portfolio liquidity.
- Regulated closed end funds could issue multiple share classes under a rules based framework instead of relying on individual exemptive orders.
- A proposed FINRA exam could give knowledgeable investors a nonfinancial route to accredited investor status.
- CPA, CFA, CFP, Series 79, Series 86 and Series 87 credentials could become additional accredited investor pathways.
Risks & concerns
- The amendments remain proposals, with comments open for 60 days only after Federal Register publication.
- Performance based compensation has traditionally limited access to a narrow group of eligible private fund investors.
- Interval fund repurchase scheduling would remain linked to the liquidity profile of underlying portfolios.
- Chairman Paul S. Atkins explicitly identified bad actors and fraud as risks expanded individual access must continue to address.
- The FINRA exam and credential pathways are requests for comment, not adopted accredited investor qualifications.
- The press release provides limited detail about the proposed safeguards or eligibility boundaries for performance based fees.
