The Securities and Exchange Commission (“SEC”) has taken another step toward expanding retail investor access to private markets. On August 31, 2026, the SEC submitted its planned rulemaking, Enhancing Retail Exposure to Private Markets, to the White House Office of Information and Regulatory Affairs (“OIRA”) for review. The rulemaking would address both retail exposure to private markets through registered investment companies and the ability of investment advisers to charge performance fees to a broader group of clients.
As we previously blogged, the SEC’s Investor Advisory Committee (“IAC”) signaled support for expanded retail access to private market assets and recommended that the SEC consider ways to facilitate retail exposure through registered investment vehicles, including by revisiting restrictions applicable to registered funds investing in private funds and other illiquid assets. The current submission moves those IAC recommendations closer to formal regulatory action.
The Investment Company Act component would have significant implications for registered funds seeking to provide retail investors with private market exposure. The SEC will need to propose amendments to existing rules that would facilitate such investments through registered funds. The scope of those changes will need to address restrictions on investments in private funds, liquidity, valuation, affiliated transactions and board oversight. With respect to the Advisers Act, the SEC will need to propose amendments addressing the current restrictions governing performance-based compensation. Section 205 of the Advisers Act generally prohibits an investment adviser from entering into an advisory contract providing for compensation based on a share of capital gains or capital appreciation. The proposed amendments will need to expand the group of clients eligible for performance fee arrangements while maintaining appropriate investor protections.
These changes could be particularly relevant to permanent capital vehicles, including business development companies, closed-end funds and interval funds, that seek to provide retail investors with exposure to private equity, private credit and other illiquid investments. Greater flexibility under the Investment Company Act would expand the range of private market strategies available through registered funds, while broader performance fee eligibility could affect the economics and structuring of advisory relationships.
The OIRA submission is not itself a proposed rule but represents a significant procedural step with the publication of a proposed rule anticipated in October 2026. If adopted, the rulemaking could mark a meaningful shift in the regulatory framework governing retail participation in private markets. A link to the OIRA submission can be found here.