WASHINGTON D.C. — The Securities and Exchange Commission voted on September 30, 2026, to propose rule amendments expanding retail investor access to private markets and altering performance-based compensation rules for advisers.

The proposals aim to facilitate capital formation in public and private markets by expanding retail investor choice. They seek to promote innovation in regulated fund structures while preserving investor protections.

The proposals would expand the ability of registered investment advisers to receive performance-based compensation from certain clients, including regulated funds. This compensation would be calculated on the basis of capital gains or capital appreciation.

The proposals would amend certain fund registration and reporting forms to require disclosure of performance-based compensation. Other structural changes include modernizing the interval fund framework by allowing the scheduling of repurchases at times that better match the liquidity profile of the portfolio. The proposals would also replace existing exemptive orders with an exemptive rules-based framework for regulated closed-end funds to issue multiple share classes.

The Commission seeks public comment on designating passage of a FINRA-developed accredited investor exam as a qualification method. It also seeks comment on designating holding certain licenses, certifications, or credentials in good standing as additional ways for individuals to qualify as accredited investors. Designations considered for accredited investor status include CPA, CFA, CFP, Series 79, and Series 86/87 licenses.

SEC Chairman Paul S. Atkins addressed the balance between access and safety. "Investor demand for private market investment opportunities is growing, and one of my priorities for the Commission is to explore ways to facilitate the ability of individual investors to participate in private markets, while at the same time protecting those investors from bad actors and fraud," Atkins said. Public comment periods will remain open for 60 days after publication in the Federal Register.

Why It Matters

The proposals follow a 2025 executive order titled 'Democratizing Access to Alternative Assets for 401(k) Investors,' which directly influenced the SEC's current proposals to expand retail investor access to private markets. In 2025, the Department of Labor proposed regulations related to the President’s executive order on democratizing access to alternative assets, indicating a coordinated effort across federal agencies to expand retail access to private markets. The SEC has previously considered proposals to expand retail access to private markets, including a 2025 report from the SEC Investor Advisory Committee that called for a recalibration of the regulatory framework to accommodate growing private capital markets.

Legislative action has also shaped the landscape. The INVEST Act of 2025 removed limitations on closed-end funds investing in private funds, allowing public funds to invest in illiquid assets, marking a precedent for expanding retail access to private markets. These developments reflect ongoing efforts to adjust how individual investors interact with private capital markets while maintaining regulatory oversight.

Timeline

On September 30, 2026, the Securities and Exchange Commission voted to propose rule amendments. The proposed amendments aim to facilitate capital formation in public and private markets by expanding retail investor choice. The proposals seek to promote innovation in regulated fund structures while preserving investor protections.

The performance-based compensation would be calculated on the basis of capital gains or capital appreciation.

What's New

Later reporting identified legal foundations for the changes. Section 205(e) of the Investment Advisers Act of 1940 authorizes the Securities and Exchange Commission to exempt any advisory contract from the performance compensation prohibition. Section 205(a)(1) of the Investment Advisers Act of 1940 generally prohibits an investment adviser from entering into, extending, renewing, or performing any investment advisory contract that provides for compensation to the adviser based on a share of capital gains on, or capital appreciation of, the funds of a client.

Additional context revealed prior regulatory and legislative steps. In 2025, the President issued an executive order titled 'Democratizing Access to Alternative Assets for 401(k) Investors,' which directly influenced the SEC's current proposals to expand retail investor access to private markets.

The SEC has historically regulated performance-based compensation through the Investment Advisers Act, with prior rulemaking efforts in 2018 focusing on aligning adviser incentives with client interests.

How Sources Differ

Sources differ on the specifics regarding private markets. According to sec.gov, in 2025, the President issued an executive order titled 'Democratizing Access to Alternative Assets for 401(k) Investors,' which directly influenced the SEC's current proposals to expand retail investor access to private markets. According to congress.gov, the INVEST Act of 2025 removed limitations on closed-end funds investing in private funds, allowing public funds to invest in illiquid assets, marking a precedent for expanding retail access to private markets.