Biden administration aims for private equity clarity
The Biden administration is leaning more into private equity and alternative investments like hedge funds, CNBC reported Wednesday (February 16).
This comes as the Securities and Exchange Commission (SEC) and the US Department of Labor have taken steps to increase transparency for investors. They also looked for more ways to narrow the pool of retirement savers who can buy private equity.
The private equity category is generally off-limits to those who are not accredited investors – someone who has a minimum level of income, wealth, or expertise to purchase.
On Feb. 9, the SEC proposed a multi-pronged rule to boost transparency by requiring private equity funds to publish quarterly statements covering fees, performance and other details.
The SEC also established a rule that would limit preferential treatment for certain investors, which would prevent additional disclosures. There would also be an annual audit of private funds, with a ban on funds engaging in certain conflicts of interest.
In a separate action, the Labor Department issued a notice Dec. 21 to limit the scope of Trump administration guidelines starting in June 2020, which set out the parameters employers must consider if they wanted to offer a job. 401(k) plan fund with a private equity allocation.
The agency said employers who already manage private equity for the company’s retirement plan are likely in the best position to analyze whether private equity makes sense for the 401(k) department.
PYMNTS wrote recently that US FinTech venture capital funding has nearly doubled, both in value and transaction volume.
Read more: Report: US FinTech Venture Capital Funding Doubled in 2021
S&P Global Market Intelligence said the rise in deal value was “surprising”, although 2022 could be a different story.
“U.S. FinTech funding had a banner year in 2021, but it will be a tough act to track,” the report said. “Falling public equity market valuations and potential interest rate hikes do not bode well for future investment activity.”
The company said private capital was still plentiful in January, although the S&P said it would watch for a slowdown.