At today’s Practising Law Institute’s SEC Speaks program, Securities and Exchange Commission (“SEC”) Chair Paul Atkins shared his views on a wide range of topics. Chair Atkins touched on innovation at the SEC, FinHub and its role and, of course, crypto and the crypto markets.
Chair Atkins also spoke about financial innovation and specifically closed-end funds. He noted SEC Staff policy that has limited investments by closed-end funds in private funds and private securities or otherwise required that closed-end funds that invest 15% or more of their assets in private funds impose a minimum initial investment requirement of $25,000 and restrict sales to accredited investors. As a consequence, retail investors have been foreclosed from opportunities that might have existed to invest in private equity funds or private credit funds through registered funds.
Recently, Commissioner Uyeda commented on this as well during his remarks at the 2025 Conference on Financial Market Regulation, discussing investments in private securities through pooled funds.
Chair Atkins noted how much has changed since the SEC Staff first implemented its 15% limitation, citing the growth of private markets, as well as the increased oversight and enhanced reporting by both private fund advisers and registered funds. He concluded by announcing that he intends to have the “Commission address this situation and reconsider this 23-year-old practice concerning investments by closed-end funds in private funds.” Noting that there are disclosure issues and investor protection issues yet to be addressed, this is welcome news. Of course, this comes at a time when the House Financial Services Committee is considering proposed legislation that would address this issue—better, of course, addressed by the SEC.