SEC Proposes Expanded Access to Private Markets for Retail Investors

Overview of the Proposed Amendments

The Securities and Exchange Commission voted on September 30, 2026, to propose rule amendments aimed at facilitating capital formation in both public and private markets. The changes seek to expand retail investor choice and promote innovation in regulated fund structures. At the same time, the proposals emphasize the preservation of appropriate investor protections and safeguards.

According to the SEC, investor demand for private market investment opportunities continues to grow. The proposals represent an effort to address this demand by enabling individual investors to participate more readily while guarding against risks such as fraud. These measures are described as complementing separate initiatives related to expanding access to alternative assets for retirement accounts.

Changes to Performance-Based Compensation

A central element of the proposals involves expanding the ability of registered investment advisers to receive performance-based compensation from certain categories of clients. This compensation would be calculated on the basis of capital gains or capital appreciation. The change applies to regulated funds among other clients.

Performance-based compensation has long been a defining feature of investment strategies used by private funds, including those focused on hedge funds, private equity, and venture capital. Because such arrangements have historically been tied to private funds, access has been limited in practice to a narrow group of eligible investors. The SEC anticipates that permitting similar incentive structures for advisers to regulated funds could encourage the offering of private market strategies within those vehicles.

Modernization of Fund Frameworks

The proposals include amendments to certain fund registration and reporting forms. These changes would require disclosure of performance-based compensation arrangements. The aim is to promote transparency across the advisory ecosystem and help align incentives.

In addition, the SEC is seeking to modernize the interval fund framework. This would involve allowing the scheduling of repurchases at times that more closely match the liquidity profile of the underlying portfolio. The changes are intended to make interval funds better suited to holding less liquid private market assets.

The proposals would also replace existing exemptive orders with a rules-based framework. This new approach would govern regulated closed-end funds that seek to issue multiple share classes. By establishing a clearer regulatory pathway, the SEC expects to reduce reliance on individualized exemptive relief and streamline operations for these funds.

Potential Expansions of Accredited Investor Qualifications

Separately from the rule amendments on funds and compensation, the Commission is requesting public comment on additional ways for individual investors to qualify as accredited investors. One avenue under consideration is the passage of an accredited investor exam to be developed by the Financial Industry Regulatory Authority.

Such an exam would offer a non-financial pathway for investors to demonstrate sophistication in securities, investing, and related financial and business matters. The goal would be to enable individuals to evaluate the merits and risks of prospective investments without relying solely on traditional income or net worth thresholds.

The SEC is also seeking comment on whether holding certain professional licenses, certifications, or credentials in good standing should qualify individuals as accredited investors. Among the designations under review are a U.S. certified public accountant license, the Chartered Financial Analyst charter, and the Certified Financial Planner certification. Certain FINRA licenses are also being considered, including the Investment Banking Representative license known as Series 79 and the Research Analyst licenses designated as Series 86 and 87.

Public Comment Period and Next Steps

The public comment periods for both the proposed rule amendments and the requests for comment on accredited investor qualifications will remain open for 60 days following publication of the proposing releases and notices in the Federal Register. Market participants and other interested parties will have the opportunity to provide input on the potential effects of the changes.

The proposals reflect a broader policy focus on balancing expanded access to private markets with the need to protect retail investors. While the SEC has outlined the intended benefits, including greater diversification opportunities and improved incentive alignment, the ultimate impact will depend on the final rules adopted after the comment process. Observers will watch closely to see how the balance between innovation and investor safeguards is struck in practice.

Source

U.S. Securities and Exchange Commission published this record on 2026-09-30. Pennington Financial accessed it on 2026-10-10.