Ropes & Gray Attorneys Discuss the Potential Retailization of Private Equity

On June 18, 2019, the SEC published its Concept Release on Harmonization of Securities Offering Exemptions (the “Release”) to solicit public comment on exemptions from registration under the Securities Act. This issue has been of interest to sponsors of private funds because the Release suggests that the SEC is willing to consider expanding investment opportunities in private equity funds and venture capital funds to retail investors.

The issue of alternative investments gaining mainstream adoption in retirement plans is discussed in an article published by Pensions & Investments on May 27 titled “DC plans still slow on moving alts into lineups.” The piece includes insights from asset management partner Michael Doherty and ERISA partner Josh Lichtenstein. "There's a good chance, probably the best in a number of years, that we're going to get some movement," said Mr. Doherty in the article, adding "I think the SEC staff wants to move things along." 

In media coverage on the subsequent publication of the SEC’s Concept Release provides insights from Mr. Lichtenstein. “If the SEC ultimately decides to broaden investors’ access to private funds, this would have a dramatic impact on the entire retail market and would allow individual retirement savers to select investment options that have traditionally been limited to defined-benefit pension plans,” states in a piece published by The Wall Street Journal Pro Private Equity on June 18 titled “SEC Seeks Input on Retail Investment in Private Offerings.” 

If the SEC decides to broaden investors’ access to private funds, “this would have a dramatic impact on the entire retail market and would allow individual retirement savers to select investment options that have traditionally been limited to defined benefit pension plans,” Mr. Lichtenstein opined in an article by ThinkAdvisor titled “SEC Wants to Ease Access to Private Placements.” 

In an Ignites article titled “Private Funds in 401(k)s? SEC Considers It” published on June 20, Mr. Lichtenstein highlights that “This all comes in the context of Chairman Clayton having signaled since the start of his tenure that he thinks that Main Street investors should have broader access to private investments.”