The SEC wants more retail money in private markets

The Securities and Exchange Commission has greenlit sweeping plans to widen access to private markets to individual investors — just as the industry’s rush into retail faces sharper scrutiny.

SEC chairman Paul Atkins said investor demand for private market investment opportunities is growing, adding that exposure to “one of the great engines of American enterprise” should “not be reserved for the wealthiest or for those deemed to be the most sophisticated.”

The proposals, approved Wednesday by the U.S. regulator, would seek to expand the number and type of ways for individuals to qualify as accredited investors.

“One of my priorities for the Commission is to explore ways to facilitate the ability of individual investors to participate in private markets, while at the same time protecting those investors from bad actors and fraud,” Atkins said in a statement.

The SEC proposals include permitting registered investment advisers (RIAs) to charge performance fees of up to 20% — a level comparable to fees historically used in the hedge fund and alternatives space — to draw more private asset managers into the retail wealth space.

The Trump administration has been keen to ease regulatory guardrails on private markets and expand access to ordinary investors. Last August, U.S. President Donald Trump signed an executive order, titled ‘Democratizing Access to Alternative Assets for 401(k) Investors’, which allows Americans to put more of their retirement plans into private equity and other alternatives.

But the move comes as the private assets industry’s push into the retail wealth space has drawn closer scrutiny, largely because the harder-to-sell, higher-yielding assets on offer do not fit neatly with retail investors’ expectations of easy access to their money.

Some so-called “semi-liquid” private credit business development vehicles saw a surge in redemption requests earlier this year, as investors — including retail clients — scrambled to withdraw their money amid concerns over risky software debt.

In February, Blue Owl Capital paused regular quarterly cash redemptions in its U.S. retail-focused Blue Owl Capital Corporation II fund, after a rise in investor withdrawal requests.

Other private credit managers, including Blackstone and Apollo, also received repurchase requests that exceeded their funds’ existing quarterly limits.

Blackstone’s Chief Operating Officer and President Jon Gray told CNBC in March that gating measures are “really a feature, not a bug” of private credit vehicles.