Arthur Levitt Jr. Criticizes SEC Plan to Expand Retail Access to Private Funds

Former SEC Chair Arthur Levitt Jr. criticized an SEC proposal to broaden individual investors’ access to private-market funds, arguing it leaves key protections on fees and valuations unresolved. The proposal would make it easier for private equity, venture capital and other fund managers to attract money from individuals. It would also let closed-end funds offer multiple share classes without advance regulatory approval. Levitt argued the plan would not require managers to change or standardize their fee, liquidity, transparency, governance or valuation practices. He warned that individual investors could end up in share classes with higher fees. He urged the SEC to require a third party to value assets used to calculate performance fees. He also called for fund offering documents to include charts showing how fees affect returns.

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