Biden Administration Looks for Private Equity, Hedge Fund Transparency

The Biden administration is looking more into private equity and alternative investments like hedge funds, CNBC reported Wednesday (Feb. 16).

This comes as the Securities and Exchange Commission (SEC) and the U.S. Department of Labor have taken steps to bolster transparency for investors. They’ve also been looking more into ways to cut down on the pool of retirement savers who can buy private equity.

The private equity category is usually off-limits to those who aren’t accredited investors — someone who has a minimum level of income, wealth or expertise to buy in.

On Feb. 9, the SEC proposed a multi-pronged rule to boost transparency through making it so private equity funds have to issue quarterly statements that go into fees, performance and other details.

The SEC also made a rule that would limit the preferential treatment for some investors, making it so additional disclosures might get curbed. There would also be a yearly audit of private funds, with a prohibition of funds from engaging in some conflicts of interest.

In a separate action, the Labor Department published a notice on Dec. 21 to limit the scope of Trump administration guidance from June of 2020, which laid out parameters for employers to consider if they wanted to offer a 401(k) plan fund with an allocation to private equity.

The agency said employers already managing private equity for the company pension plan are likely the ones best suited to analyze whether private equity makes sense for the 401(k) department.

PYMNTS wrote recently that venture capital funding of U.S. FinTechs has almost doubled, both in transaction value and volume.

Read more: Report: VC Funding to U.S. FinTechs Doubled in 2021

The S&P Global Market Intelligence said the transaction value jump was “surprising,” though 2022 could possibly be a different story.

“U.S. FinTech funding had a banner year in 2021, but it will be a tough act to follow,” the report said. “Sagging valuations in the public equity market and potential interest rate hikes do not bode well for future investing activity.”

The company said private capital was still plentiful as of January, though the S&P said it’d be watching for a slowdown.