U.S. Securities and Exchange Commission Commissioner Peirce questions proposed caps and added disclosure for retail access to private markets

The U.S. Securities and Exchange Commission published remarks by Commissioner Hester M. Peirce to the SEC Investor Advisory Committee that linked the Commission’s ongoing review of foreign private issuer (FPI) eligibility with the Committee’s draft recommendations on retail investor access to private market assets. Peirce argued that many retail investors understand private-market risks and want greater freedom to invest, and she pressed the Committee to justify proposals that would expand access primarily through registered funds while adding conditions on direct participation. Peirce highlighted that SEC accommodations for FPIs rest on the premise that these issuers face meaningful home-country regulation and disclosure, and she invited views on whether current FPI disclosure is adequate and what information investors may be missing. On private markets, she questioned whether requiring funds to provide additional, highly technical valuation disclosures would help retail investors, and whether it is an appropriate regulatory role for the SEC, FINRA, and state securities regulators to develop guidelines on when private-market investments are in an investor’s best interest given existing obligations under Regulation Best Interest and the Investment Advisers Act. She also warned that more onerous issuer disclosure requirements for Regulation D offerings could raise offering costs, shift issuers toward Section 4(a)(2) offerings, or effectively bar smaller issuers, and she challenged draft ideas to impose prudential investment limits and index income and wealth thresholds for inflation, reiterating her preference for full access for all investors. She noted that the meeting’s panel discussion on FPIs, convened in response to the SEC’s Concept Release on FPI eligibility, was intended to supplement the public comment file.