Expanding Retail Access To Private Markets
Firms Must Adopt a Compliance-First Mindset
In a recent address, U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins laid out a bold vision for a more innovation-friendly SEC, one that facilitates progress rather than restrains it. Among the most significant takeaways was his call to expand retail investor access to private markets, a move that could reshape the landscape of investment opportunities for millions of Americans. But with greater access comes greater responsibility, particularly for the firms tasked with maintaining compliance in a more complex regulatory environment.
Chairman Atkins addressed a 23-year-old SEC staff position that has effectively limited retail investors from gaining exposure to closed-end funds that invest in private funds, such as hedge funds and private equity. With private fund assets having nearly tripled over the last decade from $11.6 trillion to $30.9 trillion, the time is ripe to reconsider this stance. Atkins emphasized that broadening access, when paired with robust investor protections, can create a fairer, more diversified marketplace.
But access is only part of the equation. As more firms expand offerings to include private funds, they must be prepared to handle increasing operational and compliance demands, including:
- Managing illiquidity and ensuring accurate valuation transparency
- Identifying and mitigating conflicts of interest
- Meeting enhanced disclosure obligations
- Overseeing complex fund structures
- Ensuring employees, especially those with access to material, nonpublic information, comply with evolving securities regulations
- Managing a potential increase in employee private security transactions and outside business activities
Chairman Atkins made it clear: the SEC’s role is not to hold innovation back but to guide it safely forward. As firms prepare for a new era of investor access, they must also commit to the systems and controls that uphold the integrity of the markets and the trust of those who invest in them.
This is where compliance technology becomes critical. A strong compliance infrastructure is essential not only to meet regulatory expectations but also to uphold investor trust as retail participation grows. Without the right tools, firms may struggle to track personal account dealings, monitor material nonpublic information, or manage conflicts of interest, all of which are magnified in private market environments.
Moving Forward with Confidence
StarCompliance (Star) helps financial firms meet these challenges head on. Our award-winning employee and firm compliance platform streamline the oversight of employee trading, outside business activity, private investment declarations, and more, all in real time. For firms expanding into private fund offerings or adapting to new investor eligibility rules, Star enables scalable, automated compliance workflows that protect both firms and their investors. As regulators push for transparency and access, we ensure your compliance program is ready to meet the moment.
To learn more about Star’s Employee Conflicts of Interest products that include Personal Trading, Private Investments and Firm Trade Surveillance, schedule a personalized demo here.
Riding the Regulatory Wave
