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The SEC may be on the verge of cracking open one of Wall Street's biggest vaultsthe $31 trillion private fund market. In a move that could rewrite access rules set over two decades ago, Chairman Paul Atkins said he's asked staff to review regulations that have long fenced off private equity and credit from retail investors. Current thresholds, like the $25,000 minimum for closed-end mutual funds, have left everyday investors out of the game. It's time to rethink who gets to play, Atkins said, signaling support for a broader investing public. Private equity firms like Apollo Global Management (NYSE:APO), which recently teamed up with State Street on a retail-friendly private credit ETF, could be early winners if the SEC greenlights wider access.
But this isn't just about opening doorsit's about redefining the rules of engagement. Atkins emphasized that any shift would still aim to protect retail investors under the umbrella of registered fund safeguards. The move could unlock fresh capital from individuals hungry for returns beyond traditional public markets. Meanwhile, critics of the current accredited investor definition argue it's outdated, unfairly restricting who gets access to wealth-building tools. If new rules pass, the line between institutional and retail capital could start to blur, offering fresh fuel to firms ready to meet that demand head-on.
Alongside that, the SEC is also taking a hard look at its own systemsstarting with the Consolidated Audit Trail, or CAT. The trade monitoring program has ballooned to nearly $250 million a year in costs, drawing fire from both industry groups and Congress. Atkins is calling for a full-scale review: everything from the speed of trade reporting to the sheer amount of sensitive data being stored in one place is on the table. Cloud costs and unused options order data are two big culprits. A scaled-back CAT could reduce the compliance burden on brokers and exchangeswhile raising new questions about how to balance market transparency with operational efficiency.
This article first appeared on GuruFocus.