SEC Open Meeting Advances "Responsible Retailization" Agenda with Three Proposed Rulemakings

At a Glance

On September 30, 2026, the SEC held an open meeting, at which it voted to advance three proposals under Chairman Atkins' "responsible retailization" initiative, designed to expand individual investor access to private markets while maintaining appropriate safeguards.

• Performance-Based Compensation Modernization: Proposed amendments to Rule 205-3 under the Investment Advisers Act of 1940 (Advisers Act) would expand the ability of registered investment advisers to charge performance-based fees, particularly for registered management companies and business development companies (Regulated Funds), subject to a 20% cap on net gains over a specified period, fund governance requirements, and enhanced disclosure.
• Interval Fund Modernization and Multiple Share Classes: Proposed amendments to Rule 23c-3 under the Investment Company Act of 1940 (1940 Act) would modernize interval fund operations — including extending the initial repurchase deferral period, permitting monthly repurchases, adopting a principles-based liquidity framework, and allowing regulated closed-end funds to issue multiple share classes without exemptive relief.
• Accredited Investor Designations: The Commission voted to issue five notices on additional nonfinancial pathways to qualify for accredited investor status under Rule 501(a)(10) of the Securities Act of 1933 (Securities Act), including a proposed FINRA-administered accredited investor exam; the CPA, CFA, and CFP designations; and certain FINRA licenses.

All three items were unanimously approved by Chairman Atkins and Commissioners Peirce and Uyeda. These proposals complement President Trump's Executive Order on Democratizing Access to Alternative Assets for 401(k) Investors.

Background

On September 30, 2026, the Securities and Exchange Commission (SEC) held an open meeting under the Government in the Sunshine Act, at which it considered and voted to advance three rulemaking proposals. The meeting was chaired by Chairman Paul Atkins, with Commissioners Hester Peirce and Mark Uyeda also present. All three items on the agenda were approved unanimously by the three commissioners.

Chairman Atkins framed the meeting around what he termed "responsible retailization" — the Commission's initiative to embrace investment growth and innovation across all asset classes while protecting individual investors with appropriate safeguards. As Chairman Atkins stated: "exposure to the full dynamism of our markets should not be reserved for the wealthiest or for those deemed to be the most sophisticated."

The three proposals considered at the meeting are discussed in detail below.

Item 1: Investment Adviser Performance-Based Compensation Modernization

Division of Investment Management | Vote: Approved

The Commission voted to propose amendments to Rule 205-3 under the Investment Advisers Act, which currently provides an exemption from the statutory prohibition on registered investment advisers receiving compensation based on a share of capital gains or capital appreciation in a client's account. The proposed amendments would expand the circumstances under which performance-based compensation arrangements are permitted and would introduce enhanced disclosure requirements.

Key Proposed Amendments

1. Expanded Access for Regulated Funds

   The proposal would amend Rule 205-3 to expand the definition of eligible persons who may enter into performance-based compensation arrangements. The amendments would permit Regulated Funds to enter into performance-based compensation arrangements with their advisers, provided that:

   • The performance-based fee does not exceed 20% of net gains over a specified period;
   • The fund satisfies Rule 0-1(a)(7) fund governance standards; and
   • The fund's board determines that the arrangement is in the best interest of the fund and its shareholders.



2. Enhanced Disclosure Requirements

   The proposal would also introduce a suite of new disclosure requirements for Regulated Funds that adopt performance-based compensation arrangements:

   • A new line item in the fee table specifically addressing performance-based compensation paid to the adviser or its affiliates
   • Cross-references in the fee table to more comprehensive disclosure elsewhere in the prospectus
   • An expense example reflecting the impact of performance fees
   • Management discussion to include a detailed description and graph illustrating the performance-based compensation arrangement
   • Amendments to Form N-CSR to mirror board findings related to the board's determinations regarding performance-based compensation



3. Modernization of the "Qualified Client" Definition

   The proposal would also modernize the "qualified client" definition by removing the separate net worth test and the assets-under-management test and including investors that meet the accredited investor definition in Regulation D under the Securities Act, along with conforming amendments to other related rules.

Item 2: Interval Fund Modernization and Expansion of Multiple Share Classes

Division of Investment Management | Vote: Approved

The Commission voted to propose amendments to Rule 23c-3 under the 1940 Act, which currently allows regulated closed-end funds to make repurchase offers to shareholders at net asset value (NAV) at periodic intervals. The proposed amendments would also expand the ability of regulated closed-end funds to issue multiple share classes.

Key Proposed Amendments

1. Extended Initial Repurchase Deferral. The proposal would extend the time for an interval fund to defer its initial repurchase offer for up to two years, allowing newly organized funds, particularly those with monthly, quarterly, or semi-annual repurchases, additional time to build diversified portfolios before facing repurchase obligations.
2. Monthly Repurchases without Exemptive Relief. Interval funds would be permitted to offer monthly repurchases without needing to obtain exemptive relief from the Commission, increasing repurchase flexibility and liquidity for shareholders.
3. More Frequent Discretionary Repurchases. The proposal would permit interval funds and other regulated closed-end funds to make discretionary repurchase offers once per year.
4. Modernized Liquidity Provisions. The proposal would amend the requirements that specify the amount of liquidity an interval fund must hold and replace them with a principles-based liquidity management approach that allows funds to hold assets in a manner more appropriate to their investment strategy.
5. Deduction of Deferred Sales Loads. The amendments would allow deduction of deferred sales loads in connection with repurchase offers.
6. Simplify and Clarify Provisions. The proposal addresses various outdated provisions in the current interval fund framework.
7. Multiple Share Classes. Critically, the proposal would allow regulated closed-end funds — including interval funds and business development companies (BDCs) — to issue multiple share classes without the burden of the exemptive application process, building on existing Commission rules and exemptive orders. The proposal would additionally rescind certain existing exemptive orders related to interval funds and multiple share-class arrangements for regulated closed-end funds.

Item 3: Rule 501(a)(10) Accredited Investor Designations

Division of Corporation Finance | Vote: Approved (each notice approved individually)

The Commission voted to issue five notices under Rule 501(a)(10) of Regulation D under the Securities Act informing the public that it is considering whether to designate certain certifications, designations, and credentials as qualifying natural persons for accredited investor status.

Proposed Qualifying Credentials

The five notices address the following potential qualifying credentials, all of which must be maintained in good standing:

1. Passing an accredited investor examination to be developed and administered by FINRA
2. Holding a license as a U.S. Certified Public Accountant (CPA)
3. Holding a charter as a Chartered Financial Analyst (CFA)
4. Holding a certification as a Certified Financial Planner (CFP) in the United States
5. Holding a FINRA Investment Banking Representative license (Series 79) or a FINRA Research Analyst license (Series 86 and 87)

These potential designations build on the Commission's 2020 adoption of Rule 501(a)(10) and its prior order designating the FINRA General Securities Representative license (Series 7), Private Securities Offerings Representative license (Series 82), and Investment Adviser Representative license (Series 65) as qualifying credentials.

The Proposed FINRA Accredited Investor Examination

Of particular note is the proposed FINRA-administered accredited investor examination, which would provide a new, knowledge-based pathway to accredited investor status. Key details include:

• Format: Modeled on the Securities Industry Essentials (SIE) exam; 75 multiple-choice questions over two hours
• Fee: $100
• Eligibility: Available to individuals aged 18 and older
• Topics Covered: Definitions and structures of securities, investment risks, disclosure and regulatory requirements, financial statements, conflicts of interest, and corporate governance
• Validity: 10 years from date of passing; individuals would need to retake the exam or qualify under another prong to maintain accredited investor status

Looking Ahead

Taken together, these three proposals represent a significant step in the Commission's effort to expand individual investor access to private markets through what Chairman Atkins has called "responsible retailization." The proposals reflect a coordinated initiative spanning the Division of Investment Management and the Division of Corporation Finance to modernize key regulatory frameworks while preserving investor protections through fund governance, disclosure requirements, and professional competency standards.

Each proposal is now subject to a 60-day public comment period following the date of publication of the proposing releases and the notices in the Federal Register. We will continue to monitor these developments and provide additional analysis as the rulemaking process unfolds. Investment advisers, fund sponsors, and market participants should carefully consider the potential impact of these proposals on their businesses and begin to formulate any comments they may wish to submit.

Legal clerk Noelle-Nadia A. Filali contributed to this update.