The chairman of the SEC, Jay Clayton, wants to level the playing field for retirement savers by letting 401(k) plan participants and holders of individual retirement accounts invest in private funds, according to news reports.
[Matt’s commentary: This is incredible news and if the SEC Chairman has his way, it could open more opportunities for anyone raising capital. It would wipe out the need to use Reg A+ to advertise to non-accredited investors.]
Clayton said that private equity and other types of illiquid investments can deliver superior returns but aren’t available to individual investors the way they are to managers of traditional defined-benefit pension plans, according to InvestmentNews.
“That retirement money in the defined-contribution plan doesn’t have the same investment opportunities that a defined-benefit plan has, even though they’re both retirement dollars,” Clayton said in an interview with David Rubenstein, co-founder and co-executive chairman of private equity firm the Carlyle Group, according to the publication.
Rubenstein slammed the SEC’s current accredited investor rule for allowing high net worth individuals to be eligible for private investments regardless of their financial literacy while excluding otherwise capable investors if they don’t meet income and net worth thresholds, InvestmentNews writes.
“You just outlined some of the problems with our current rule,” Clayton told Rubenstein, according to the publication. “We want to make sure retail is not left behind.” Jay Clayton The SEC is mulling redefining its accredited investor rules while Congress is likely to see the re-introduction of bills this year to allow investors with certain expertise and credentials to qualify as accredited investors without meeting income and net worth thresholds, InvestmentNews writes.
[Matt’s commentary: The biggest fight will come from two groups – congressman/women on the Wall Street payroll and state securities commissioners which feel the need to protect the “common investor” from dangerous investments.]
Matt Scott is in constant pursuit of incredible sashimi in each city he visits. He’s an investor, speaker, entrepreneur and proud C-student. He’s started many ventures since 1994 and exited one started on credit cards. Matt raised over $500M from Accredited Investors in the last 20 years for real estate syndications, funds, and private companies in the U.S, Caribbean, Canada, and Dubai in U.A.E.