SEC Evaluating Facelift to Rules of Investment in Hedge Funds

November 27, 2019 James Heinsman Hedge Fund News

The qualifications for who can or can’t invest in riskier investment vehicles have been in place with no revisions since the 1980s, and some say its time for a change.

That change is being considered right now by the Securities and Exchange Commission, making some requirements stricter, and others less strict. Wall Street executives have long been advocating looser rules which would allow more people to invest in potentially more lucrative, but also more risky, private funds. And as demand for more choices for private investments continues to grow, easing the standards could help fill that demand.

The possible changes being discussed are allowing anyone holding certain types of licenses, or who work in finance, regardless of their net worth, should be allowed to put their money in hedge funds and other high-risk vehicles. There is also a proposal to index to inflation the lower limits of income and net worth. Currently anyone earning $200,000 per year, or $300,000 per couple per year, or those with net worth of $1 million, are allowed to invest in these funds.

While some say regular Americans should be allowed a stab at more profitable funds, others say financial firms could take advantage of less knowledgeable investors. In June the SEC requested the public to comment on the issue, and an answer from the SEC is expected soon.

Securities and Exchange Commission,

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