Today, U.S. Congressman Anthony Gonzalez (R – Rocky River) introduced a new bill to provide Main Street investors additional opportunities to invest in growing private companies, while still maintaining appropriate investor protections.
“One of my goals on the Financial Services Committee is to help Main Street investors have greater access to investment opportunities into emerging companies during their growth stage. However, over the last 25 years, the number of publicly listed companies has significantly decreased, and more companies are waiting to go public later in their business life cycle. This has resulted in everyday Americans not having the same investment options as they once did,” said Congressman Gonzalez. “The Increasing Investor Opportunities Act will provide new options for all investors to access private markets and potentially attain stronger returns on their investments.”
“ICI deeply appreciates Rep. Gonzalez’s leadership to provide greater opportunity to Main Street investors,” said Investment Company Institute President and CEO Eric J. Pan. “The Increasing Investor Opportunities Act will allow closed-end funds to offer retail investors greater exposure to private investments with the protections that publicly offered, regulated funds provide under the Investment Company Act. It also will strengthen the closed-end fund structure by eliminating a loophole that activist investors have used to extract short-term profits to the detriment of Main Street investors.”
Closed-end funds are professionally managed by investment adviser fiduciaries and are subject to regulations that provide additional important protections for retail investors, making these investment vehicles a commonsense way to allow everyday Americans to have greater access to the private markets.
The Increasing Investor Opportunities Act would allow closed-end funds more flexibility to invest in private companies while still accepting investment from every day Main Street investors. Under current SEC staff guidance, closed-end funds may only invest up to 15% of net assets into private funds unless the shares are only sold to accredited investors—that is, typically well-off investors. This bill would eliminate that SEC staff position and make clear that all investors should have access to the private markets. Read the full text of the bill here.