Former SEC Chairman Arthur Levitt Jr. has criticized the commission's proposal to expand retail investor access to private markets, warning that the plan lacks essential safeguards. The proposal would allow private equity and venture capital fund managers to attract retail capital more easily and establish multiple share classes in closed-end funds without prior regulatory approval.
Levitt argues the framework fails to require standardization of fees, liquidity, transparency, governance, and valuation arrangements, potentially exposing retail investors to high-fee share classes. He recommends mandating third-party valuations for assets used in performance fee calculations and requiring funds to include charts in offering documents illustrating the impact of fees on investment returns.
Former SEC Chair Levitt Criticizes Proposal to Open Private Markets to Retail Investors
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