AMAC Meeting Focuses on ESG, Wider Access to Private Investments

The SEC’s Asset Management Advisory Committee addressed current topics at its most recent meeting, including ESG and the private investments market. AMAC continued its discussion on broadening investor access to the private investment market with presentations from academics and industry participants on the nature and potential of these investments. One presentation highlighted the potential diversification benefits for retail investors but also noted that the data on fees and recent performance show potential drawbacks. A recent memorandum from lawyers at Simpson Thacher observed that as regulators and industry experts continue to consider the best structures to accommodate increasing access to the private markets, consensus is emerging that registered closed-end funds of private funds may offer the best combination of diversification, liquidity and investor protections. The lawyers discussed a speech by the SEC’s IM Division Director Dalia Blass in which she stated that the Division is reconsidering its position that any closed-end fund that invests more than 15% of its assets in private funds can be offered only to accredited investors. Simpson lawyers wrote that removing the 15% limitation would be a significant step in offering retail investors more options to invest in private markets strategies but noted that the relief may not go that far.  “Based on the questions raised by Director Blass, it appears that the Staff is not considering a full retraction of the 15% limitation, but rather a more nuanced approach that would permit registered funds of private funds that meet certain criteria to be available to retail investors.”