SEC Moves to Reshape Fund Access and Investor Qualification Rules
Draft measures would allow performance-linked fees for registered investment advisers and open new routes to accredited investor status, including a FINRA-administered assessment.
The US Securities and Exchange Commission has proposed regulatory changes governing investment vehicles and capital generation, with the stated aim of widening access for non-institutional participants, encouraging development in regulated fund structures, and retaining investor safeguards.
Performance-Linked Pay Enters the Draft
Under the draft measures, registered investment advisers would be permitted to receive performance-linked fees tied to capital growth or appreciation from specified client groups, including regulated funds. Corresponding updates to fund registration and reporting paperwork would make disclosure of these remuneration terms mandatory.
The change would align commercial incentives across the advisory sector, according to the Commission, and heighten transparency.
Interval Funds and Share Classes
The regulator plans to revise the operating structure for interval funds by permitting redemption timetables that correspond more closely with portfolio liquidity. In addition, existing case-by-case exemptive orders would be replaced with a standardised framework enabling regulated closed-end funds to issue multiple share classes.
The Commission states the changes are intended to expand public access to varied investment options, heighten transparency, and align commercial incentives across the advisory sector.
A Second Track: Who Qualifies as an Accredited Investor
In a separate consultation, the SEC is evaluating new routes for individuals to attain accredited investor status. One proposal under consideration is an assessment administered by the Financial Industry Regulatory Authority, offering a non-financial route for candidates to prove their knowledge of securities, investments, and commercial matters. The agency is also reviewing whether individuals can qualify by maintaining specified professional certifications, designations, or licences in good standing.
The Chairman's Framing
SEC chairman Paul S. Atkins said: “Investor demand for private market investment opportunities is growing, and 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 added that the Commission’s efforts are focused on expanding opportunities for investors’ post-tax, pre-retirement dollars and complement efforts undertaken pursuant to President Trump’s Executive Order on Democratising Access to Alternative Assets for 401(k) Investors.
What Happens Next
Interested parties have 60 days to submit feedback once the proposals and notices appear in the Federal Register.
