SEC Expands Retail Access to Private Funds

The SEC has recently eliminated its long-standing limit on investments in private funds by retail closed-end funds and business development companies. In remarks during its SEC Speaks program, Natasha Greiner, director of the Division of Investment Management, noted, “… the staff as of yesterday will no longer provide comments limiting the ability of retail investors to invest in registered closed-end funds that invest in private funds. This decision was made based on the ever-evolving industry, and we hope that this shift will provide investors with new investment opportunities to the extent they align with their risk tolerance and investment objectives.

This shift is in alignment with the SEC’s stated goals of promoting financial innovation and expanding retail access to private markets.  Registered closed-end funds and BDCs now have greater flexibility to invest in private equity, private credit and other illiquid instruments as long as they meet relevant disclosure, liquidity and valuation requirements. Registered fund directors will want to be aware of this shift and monitor the private fund exposure of the applicable funds that they oversee. In particular, they should consider whether these investments are consistent with a fund’s investment strategy and principal risks.  Directors can also monitor the valuation of these investments, any potential conflicts of interest due to side-by-side management, fee structures and the ability of a fund to meet redemption requests.

Click here to access the SEC’s staffs remarks during the 2025 SEC Speaks Program.