Key Takeaways
- • The SEC has submitted a proposal to the White House Office of Management and Budget that would significantly expand retail investor access to private markets through registered investment vehicles, marking a formal regulatory step toward loosening decades-old restrictions.
- • The proposal would amend the Investment Advisers Act of 1940 and Investment Company Act of 1940, fundamentally altering the framework governing performance-based fee structures that investment advisers can charge to a broader client base beyond current "qualified client" definitions.
- • SEC Chairman Paul Atkins is championing the initiative as a matter of "freedom and fairness," positioning expanded private-market access as part of the administration's broader deregulatory agenda to reduce barriers between retail investors and alternative assets.
- • Investor advocates have flagged material risks including insufficient disclosure standards for private investments, valuation opacity, and potential information asymmetries that could disadvantage individual investors relative to institutional players.
- • The proposal remains subject to regulatory review and does not yet represent finalized rule-making, though its submission to OMB indicates the SEC views this as a priority initiative.
Summary
The US Securities and Exchange Commission is advancing a proposal that would grant retail investors broader access to private markets while permitting investment advisers to charge performance-based fees to a wider population of clients than current regulations allow. The SEC formally submitted the proposal to the White House Office of Management and Budget on Monday, September 1, 2026, advancing what the agency characterizes as an effort to democratize access to fast-growing private companies and alternative investments.
The proposed rule would amend two foundational pieces of securities legislation: the Investment Advisers Act of 1940 and the Investment Company Act of 1940. These changes would enable retail investors to gain private-market exposure through registered investment vehicles, a structural mechanism that does not currently exist at scale. The proposal also revises the fee framework governing investment advisers, relaxing restrictions that currently limit performance-based compensation to investors meeting the regulatory definition of "qualified client."
SEC Chairman Paul Atkins has positioned the initiative as fundamentally aligned with investor protection and market access principles. Atkins has argued that investors should not be categorically excluded from investment opportunities in privately-held companies simply because those businesses raise capital outside public markets. He has framed broader private-market participation as a matter of "freedom and fairness," language that reflects the current administration's broader deregulatory orientation toward reducing structural barriers between retail investors and alternative asset classes.
The proposal has generated immediate pushback from investor advocacy groups, which have raised substantive concerns about retail investor readiness for private-market exposure. Critics point to the relative lack of public disclosure in private markets, which complicates independent valuation and increases the difficulty of assessing embedded risks. The information asymmetry between institutional and retail participants in private transactions, combined with limited transparency, creates conditions that may disadvantage individual investors. These concerns echo longstanding SEC rationales for restricting retail access to private investments.
The proposal remains subject to OMB review and has not yet entered the formal SEC rule-making process, which would include public comment periods and formal deliberation. Its submission to OMB nonetheless signals that the SEC views private-market access expansion as a priority initiative.
The proposed rule would amend two foundational pieces of securities legislation: the Investment Advisers Act of 1940 and the Investment Company Act of 1940. These changes would enable retail investors to gain private-market exposure through registered investment vehicles, a structural mechanism that does not currently exist at scale. The proposal also revises the fee framework governing investment advisers, relaxing restrictions that currently limit performance-based compensation to investors meeting the regulatory definition of "qualified client."
SEC Chairman Paul Atkins has positioned the initiative as fundamentally aligned with investor protection and market access principles. Atkins has argued that investors should not be categorically excluded from investment opportunities in privately-held companies simply because those businesses raise capital outside public markets. He has framed broader private-market participation as a matter of "freedom and fairness," language that reflects the current administration's broader deregulatory orientation toward reducing structural barriers between retail investors and alternative asset classes.
The proposal has generated immediate pushback from investor advocacy groups, which have raised substantive concerns about retail investor readiness for private-market exposure. Critics point to the relative lack of public disclosure in private markets, which complicates independent valuation and increases the difficulty of assessing embedded risks. The information asymmetry between institutional and retail participants in private transactions, combined with limited transparency, creates conditions that may disadvantage individual investors. These concerns echo longstanding SEC rationales for restricting retail access to private investments.
The proposal remains subject to OMB review and has not yet entered the formal SEC rule-making process, which would include public comment periods and formal deliberation. Its submission to OMB nonetheless signals that the SEC views private-market access expansion as a priority initiative.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.