SEC Chairman Paul Atkins outlines 401(k) private market access plan

Securities and Exchange Commission (SEC) Paul Atkins said Tuesday that the Trump administration’s plan to open 401(k) retirement accounts to private market investments would give ordinary Americans safe access to opportunities that are currently restricted.

Atkins said that the SEC will work with the Labor Department to broaden access to investments in private funds for ordinary investors who currently wouldn’t meet regulatory thresholds that would provide them access.

“Individual investors need to be diversified and the private markets have developed so much because there’s a lot of capital available in the private markets,” Atkins said Tuesday on FOX Business Network’s “Mornings with Maria.”

“And frankly, it’s uncool to be a public company, or it has become so, and I want to make IPOs great again,” Atkins said. “Thirty or so years ago, when I was a young lawyer starting out in New York, companies like Apple and Microsoft – they had to go public to get capital to build their companies and new products.”

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SEC Chairman Paul Atkins said that regulatory guardrails will help ordinary investors safely invest in private funds. (Stefani Reynolds/Bloomberg via Getty Images / Getty Images)

“Today it’s [the] opposite. Companies can stay private longer, and there being so many issues in the public markets between litigation and the short-termism that we were talking about before, the weight of the regulatory apparatus on reporting and that sort of thing, compliance,” Atkins said. 

“Then finally, the weaponization of corporate governance, so those issues have really decreased the attractiveness of being a public company,” he said. “We aim to make that better again.”

Currently, investments in private companies are limited to people who satisfy the “accredited investor” threshold. The rule aims to protect unsophisticated investors from financial risks associated with investments in private companies, which can be illiquid and aren’t subject to public financial reporting requirements.

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The SEC and Labor Department are working on regulations to allow private market funds in 401(k) plans. (Reuters/Jonathan Ernst / Reuters Photos)

The rule stipulates that qualified accredited investors must have a net worth over $1 million excluding their primary residence, or income over $200,000 individually (or $300,000 as a couple) in each of the past two years, with the reasonable expectation of the same in the current year. 

It also includes professional criteria to satisfy the rule, including investment professionals with Series 7, Series 65, or Series 82 licenses, executives of the company selling…