ICI Urges SEC to Broaden Access to Private Markets

Investment Company Institute President and CEO Eric J. Pan called on the SEC to lift restrictions on access to private markets by retail investors. 

Speaking at the ICI Leadership Summit in Washington, D.C., Mr. Pan urged the SEC to eliminate its informal 15% limit on alternative investments by closed-end funds, calling the restriction "an informal position taken by the SEC staff" and emphasizing that "regulators never intended the limit to be permanent."

Mr. Pan underscored that investments in private markets since 2013 have nearly quadrupled in the following decade from $4 trillion to $15 trillion, noting that to date, "private markets [may] have already hit the $25 trillion mark." He said that private fund growth is accelerating even faster than expected. He asserted that "individual investors are largely stuck with the declining number of publicly traded companies, unable to meaningfully participate in the dynamic rise of private markets." He said lifting the 15% cap would allow fund sponsors to offer "new products and tailor them to investors who want much more diversification and access to private markets." He defended regulated funds as a safe vehicle for broader access.

Mr. Pan also applauded the SEC's recent steps to improve co-investment flexibility. He noted that this change "will make it easier for funds designed for retail investors to access private markets opportunities." (See related coverage.)

Mr. Pan outlined four areas where ICI is seeking reform: expanding access, expanding flexibility, expanding options and expanding availability on retirement platforms. Mr. Pan said ICI is also advocating for passage of the Increasing Investor Opportunities Act, which he said would "close a loophole that activist investors take advantage of to harm closed-end funds."