Former SEC Chairman Arthur Levitt Criticizes SEC's Private Market Retail Access Proposal

Arthur Levitt Jr., former Chairman of the U.S. SEC, published a statement criticizing the recently proposed private market retailization rule issued by the SEC. Under the proposal, managers of private equity, venture capital and other funds would face fewer barriers to accepting retail investor capital, and would be permitted to establish multiple share classes in closed-end funds without prior regulatory approval. Levitt pointed out that the proposal does not require managers to adjust or standardize arrangements related to fees, liquidity, transparency, governance and valuation, which could leave retail investors allocated to high-fee share classes. He recommended that the SEC mandate third-party valuation of assets used to calculate performance fees, and require funds to present the impact of fees on investment returns via graphical illustrations in their prospectuses.

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