Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
July 07, 2021 at 10:25 AM
What You Need to Know
- The Increasing Investor Opportunities Act allows closed-end funds to invest in private equity funds.
- It is sponsored by Reps. Anthony Gonzalez, R-Ohio, and Gregory Meeks, D-N.Y.
- Firms like Vanguard and JPMorgan have been expanding access to private equity investments.
In an effort to expand the access of ordinary retail investors to private funds, Reps. Anthony Gonzalez, R-Ohio, and Gregory Meeks, D-N.Y., have introduced a bipartisan bill that would allow closed-end funds to invest in them.
The new bill would override Securities and Exchange Commission regulations, based on the Investment Company Act of 1940, that restrict access private fund access to accredited investors only. The bill would also amend current regulations that limit closed-end funds’ investments in private funds to 15% of their net assets unless the fund sells shares to accredited investors with minimum initial investments of at least $25,000.
Accredited investors are currently defined as individual investors who earned $200,000 or more per year (or $300,000 for a couple) in each of the two prior years or have a net worth of over $1 million alone or with a spouse, excluding private residences, or are investment professionals in good standing holding Series 7, 65, or Series 82 licenses or are “knowledgeable employees” of a private fund.
The Increasing Investor Opportunities Act (H.R. 4262) is essentially the same bill that Gonzalez introduced in the last Congress, H.R. 8786, but the written text of the new bill is not yet available.
In the original bill, the amendments to the Investment Company Act would take effect two years after the bill is enacted or earlier if the SEC chose to adopt the changes earlier in the name of the name of public interest or for the protection of investors.
When Gonzalez introduced the bill in the 2019-2020 Congress, he explained that “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 … which has resulted in everyday Americans not having the same investment options as they once did.”
The number of publicly listed companies trading in the U.S. has fallen about 50% between 1996 and now, from roughly about 8,000 stocks to around 4,000. The Wilshire 5000 index, which had 5,000 stocks when it debuted in 1974, now has about 3,500 stocks.
