Paul Atkins testifies before the Senate Banking, Housing, & Urban Affairs Committee during his confirmation hearing to be Chairman of the U.S. Securities and Exchange Commission, on Thursday, March 27, 2025. Photo: Diego M. Radzinschi/ALM
Guardrails need to be put into place in making private investments available in 401(k) plans, Securities and Exchange Commission Chairman Paul Atkins said Thursday.
During a question and answer session at the Psaros Center for Financial Markets and Policy at Georgetown University's McDonough School of Business in Washington, Atkins said that the Labor Department and the SEC are in talks on how to move forward with President Donald Trump's executive order to encourage participants in defined contribution plans like 401(k)s to invest in alternative assets.
The SEC and Labor have "to work hand and glove," Atkins said, stating that he met Wednesday with Labor Secretary Lori Chavez-DeRemer.
The order, Democratizing Access to Alternative Assets for 401(k) Investors, tells Labor to examine existing guidance about investing in alternative investments, which includes private funds, and to consider writing new guidance. The SEC is tasked to work with Labor to consider revising existing SEC regulations and guidance relating to accredited investor and qualified purchaser status.
"I feel strongly that in this [process] we have to have good guardrails just because the way things go, bad things can happen so we have to lay down some ground rules," Atkins said.
"Private markets aren't necessarily private, there's just not the liquidity necessarily and valuation issues are there in both private equity and private credit," Atkins continued. "You have issues of transparency and fees ... and layering of fees if you look at these types of ways to get exposure. All this needs to be put into policies; I don't think one size fits all, but it has to protect people ... to make sure that things that are not necessarily the highest grade gets stuffed down the retail chain."
The SEC and Labor "need to get going" on the way forward, Atkins said, with town halls and round table discussions in various parts of the country a likely way forward.
The two agencies need to "articulate the guardrails, put down some rules and expectations, rely on the fiduciary duty of people who oversee these sorts of retirement funds and investments — they're going to be responsible," Atkins said.
Photo: Diego M. Radzinschi/ALM
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