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SEC considering opening up hedge funds & private equities to retail investors

The U.S. Securities and Exchange Commission (SEC) is considering softening restrictions around where “mom-and-pop” (or inexperienced) investors can put their funds, Bloomberg writes.

Under current regulations, retail investors cannot put money into hedge funds or private equities. Now, the SEC is considering allowing them to fund these areas, something that till now has only been available to accredited investors, who earn $200,000 annually or whose net worth is at least $1 million. According to SEC Chairman Jay Clayton, retail investors are missing out on investment opportunities.

“Our retail investors, people who aren’t qualified investors, aren’t having access to those investment opportunities… [which] perform better,” he said in an interview. “We want to make sure retail isn’t left behind.”

The SEC will first seek public comment regarding possible changes. The SEC’s inquiries include a possible revision of the definition of an “accredited investor” and altering crowdfunding rules. However, it is unlikely the changes will be introduced anytime soon.