b'in co-investment transactions with other affiliatedin private funds. This measure builds on the actions investment vehicles. Given BDCs and other permanentdiscussed above by the SEC Staff stepping back from its capital vehicles are sponsored by private equity orhistoric policy of imposing a 15% limitation on the assets private credit sponsors that have multiple public andinvested in private funds. The legislation also ensures private vehicles, the ability to engage in co-investmentthat even if there were a change in administration, the and joint exit transactions is important.Staff policy could not be reinstated. Executive Order The Act would address aspects of Sections 3(c)(1) and In August 2025, the President issued an executive order3(c)(7) of the 1940 Act in the context of interpreting directing the Secretary of Labor to review and clarifySection 12(d)(1)(c) of the 1940 Act, which relates to anti-existing Department of Labor guidance concerningpyramiding. Specifically, it would make clear that the fiduciary obligations relating to the inclusion ofownership interests in a registered fund held by a hedge alternative assets in ERISA-governed defined contributionfund or other private fund that is under common control plans. The order directs the SEC to review and to revisewould be aggregated for this purpose. This is intended its rules and its guidance in order to improve access toto deter activist funds from targeting listed registered alternative assets for participant-directed retirementclosed-end funds.plans. The order also calls for interagency coordinationThe Act would direct the SEC to propose rules permitting among the U.S. Treasury Department, the SEC and otherelectronic delivery of prospectuses and other fund regulators so that they can evaluate the changes neededdocuments that required to be delivered by funds and to facilitate this.their advisers to investors. Support for Expanded Retail AccessThe Act also would allow registered investment to the Private Markets companies to exclude fees and expenses incurred In the months since this order, the SECs Investor indirectly from investment in a BDC from their calculation Advisory Committee has released a report, Retail of acquired fund fees and expenses (AFFE). These fees Investor Access to Private Market Assets, which and expenses could instead be disclosed in a footnote. observes that retail access may be expanded through If signed into law, this change would correct a disclosure registered funds. The report notes a number of investor requirement that overstates the cost of a BDCs operating protection concerns that should be addressed, and expenses, as they are currently double-counted in the also offers recommendations regarding potentialBDCs financials, both under the AFFE rule and in BDCs rulemaking changes that the SEC should consider.quarterly NAV reporting. This legislation has the potential For example, the committee suggested requiring moreto spur increased institutional investment in BDCs and robust disclosures related to valuation of securities andinclusion in indices.liquidity opportunities for registered funds that investThese are all important changes. Of course, there is more in private funds. More recently, in public remarks, SECto be done. There are aspects of the 1940 Act that have Commissioner Uyeda called for regulatory changes innot undergone significant review or revision in decades. order to expand access for retirement plan participantsParticularly as market participants use the interval to private equity, private credit, and other privatefund and tender offer fund structures more frequently, market strategies.some features of these ought to be reevaluated. For Proposed Legislation example, these entities could be allowed to function as series companies. Whether or not one is a proponent of Also in recent months, a bill was passed in the Housedemocratizing access to private equity, private credit, of Representatives, known as the INVEST Act, which, ifand other alternative investments through registered adopted, would modernize the regulation of registeredfunds, modernization of significant portions of the 1940 funds, and address some impediments to allowingAct is overdue. As this sector evolves, its important to broader retail access to private capital throughstay informed about developments. registered funds.The Act would authorize closed-end funds, including BDCs, to invest in private funds and limit the SECs ability to prohibit this in the future as well as to impose conditions on these investments and on the offer and sale of securities by registered funds that invest Mayer Brown|Conclusion 32'