The U.S. Securities and Exchange Commission proposed amendments intended to expand retail access to private market strategies through regulated funds. The package would permit performance-based adviser compensation for registered management investment companies and business development companies, modernize interval fund repurchases and liquidity requirements, and establish a rules-based framework for regulated closed-end funds to issue multiple share classes. It advances Chairman Paul S. Atkins’ previously stated focus on reconsidering closed-end fund investment practices while adding disclosure and governance safeguards. Performance fees could not exceed 20% of a regulated fund’s net gains over a specified period. The fund would have to meet governance standards, and its board, including a majority of independent directors, would have to determine that the arrangement is in the best interests of the fund and shareholders. The SEC also proposed related disclosures and would broaden the qualified client definition to include accredited investors, while removing its separate net worth and assets under management tests. For interval funds, the changes would provide greater flexibility over the timing and frequency of repurchase offers and replace the prescribed liquidity requirement with a principles-based approach. Separately, the SEC requested comment on allowing individuals to qualify as accredited investors by passing a FINRA-developed exam or holding specified credentials in good standing, potentially including CPA, CFA and CFP designations and certain FINRA licenses.

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