The Securities and Exchange Commission said September 30 that it voted to propose rule changes for registered funds, and separately asked for comment on new ways to qualify as an accredited investor. All of it is proposed or under consideration.
What would change for fund investors
Performance fees. One proposal would widen advisers' ability to be paid a share of a fund's gains by registered funds and business development companies. Conditions: the fee could not exceed 20% of net gains over a specified period; the fund must meet SEC governance standards, including a majority-independent board; and the board, including a majority of independent directors, must find the arrangement is in the best interest of the fund and its shareholders and make specific findings. Funds would show performance fees as their own fee-table line. The release's economic analysis says shareholders of funds paying performance fees on unrealized gains "may be at risk of paying performance fees that do not correspond to future realized gains."
Interval funds offer to buy back shares at set intervals. The proposal would add a monthly option (the rule now allows 3, 6 or 12 months), let a fund wait up to two years before its first offer (a three-month fund can now wait six months), replace the rule that a fund hold 100% of an offer's amount in sellable assets with a principles-based liquidity approach, and allow deferred sales charges to be deducted at exit. The release says investors who need cash before the first offer could bear costs. Closed-end funds could also issue multiple share classes by rule, not exemptive order.
The accredited-investor notices
Today a person can qualify with net worth above $1,000,000 (excluding their primary residence), income above $200,000 ($300,000 with a spouse) in each of the last two years and expected this year, or certain securities licenses. The Commission says it is considering orders adding a FINRA exam still in development (as the notice relays FINRA's plans: open to anyone 18 or older, valid ten years, a fee similar to the $100 charged for its Securities Industry Essentials exam) and, held in good standing, a CPA license, CFA charter, CFP certification, a Series 79 license, or the Series 86 and 87 research analyst license. The notices say accredited investors may join investments generally closed to others, such as private companies and private funds.
The performance-fee proposal would also let advisers charge accredited investors performance fees, replacing "qualified client" tests of $1,400,000 managed or $2,700,000 net worth.
Dates, votes and comments
Each document's comment period runs 60 days after Federal Register publication; no publication date was listed as of late September 30. The press release says the Commission voted to propose the rule amendments but gives no vote count. Chairman Atkins' statement says the effort focuses on investors' "post-tax, pre-retirement dollars" and complements efforts under a separate executive order on 401(k) plans. Anyone may comment through the SEC's internet form or by email to rule-comments@sec.gov citing file numbers S7-2026-28, S7-2026-34 or 4-931 through 4-935.