The US Securities and Exchange Commission has intensified its scrutiny of firms selling special purpose vehicles (SPVs) that claim to give investors exposure to shares in private companies, according to the Wall Street Journal. SEC examiners have been requesting that registered investment advisers produce records confirming their SPVs genuinely hold, or are otherwise exposed to, shares of the private companies being marketed to investors. The examinations can involve document requests and in some cases an in-person component, and can run from several weeks to a year. This regulatory action follows a rise in investor complaints and a marketing push by such funds ahead of SpaceX's initial public offering and Anthropic's planned IPO. The agency's examination power covers SPVs tied to registered investment advisers, with the SEC able to pursue investigations whenever fraud may be at issue.
The SEC has published a notice to expand the scope of an exemptive order previously issued to a closed-end interval fund to permit, for the first time, a 1940 Act registered interval fund to simultaneously offer a class of shares listed on a national securities exchange, a separate tokenized class of shares, and its existing multiclass interval fund structure. This development signals the SEC's continued prioritization of initiatives that would expand retail investor access to private markets through registered products. The hearing-request period through September 18, 2026 has been initiated, with an order granting the requested relief expected unless the SEC orders a hearing. This hybrid structure represents a notable shift from recent SEC orders that generally prohibited interval fund shares from being listed or traded on secondary markets.
The proposed rule would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940 by 'modernizing' the performance fee framework' and allowing retail exposure to private markets through registered funds, as reported by Bloomberg. Currently, investment advisers are limited to charging performance fees to so-called qualified clients, according to Thoreau Bartmann, partner at K&L Gates and former SEC investment management division attorney. Bartmann noted that 'Through limiting performance fees, you're limiting access to that asset class.' The inclusion of tokenized share classes traded on ATSs also reflects the SEC's continued engagement with blockchain-based market infrastructure for registered fund products.
Investing in private markets has historically been restricted to institutional investors or wealthy individuals who possess specialized knowledge to assess investment opportunities, as reported by Bloomberg. SEC Chairman Paul Atkins has consistently opposed such restrictions, stating that fast-growing companies that are able to attract capital in private markets remain unavailable to most investors. At an SEC event in March, Atkins described broadening private market access as being about 'freedom and fairness.' The hybrid interval fund structure could help fund sponsors broaden retail and institutional access to private-market strategies while preserving the interval fund structure's ability to hold illiquid assets compared to retail mutual funds. The Financial Stability Board estimates the global private credit market at roughly US$1.5 trillion to US$2.0 trillion as of year-end 2024.
Cracks in the SPV market have already surfaced, with one recurring concern being whether buyers actually receive what they pay for. As reported by the Wall Street Journal, one SPV fund touted pre-IPO exposure to SpaceX but later told investors the stock had been sold before trading in the company began, limiting expected gains. A separate firm that sold pre-IPO stakes filed for bankruptcy last year, pointing to regulatory investigations and investor uncertainty over whether customers had actually received the securities they purchased. Firms selling private-company access through SPVs have at times charged layered fees — often 5% to 10% off the top plus 20% to 30% of any profit — stacked on top of what investors paid to get in. Some deals are resold multiple times before reaching the end buyer, with each intermediary taking a cut. Anthropic also moved to distance itself from the SPV market, revising a website notice in May to state that any stock transfers lacking board sign-off would go unrecognized, while specifically identifying a number of online platforms that distribute such interests.
