Next week, the Securities and Exchange Commission (SEC), Investor Advisory Committee (IAC) will meet to discuss several topics. Perhaps most interesting is the topic of “Mainstreaming of Alternative Assets to Retail Investors.”
The second issue is Examining the Use of Mandatory Arbitration Clauses by Registered Investment Advisers.
Regarding the topic of Alternative Assets, the description of the panel is as follows:
“Retail investors have increasingly been offered investments in alternative assets which encompasses non-traditional assets such as private equity, venture capital, private real estate, commodities, and private credit. Alternative assets potentially offer uncorrelated, less volatile returns to traditional investments in the stock or bond markets but also may face issues around valuations, fees, loss of invested capital, and conflicts of interest. This panel will examine those issues as well as the various ways retail investors, who typically are not able to directly invest in alternatives, are now able to do so through, among other vehicles, closed-end funds, interval funds, business development companies, non-traded REITs, and exchange-traded funds.”
Alternative assets have been on the rise for years now and have long been the stomping grounds of big money. Alts can generate outsized returns when compared to more traditional vehicles, but additional risk may accompany these investments. Part of the challenge is that private markets have boomed while publicly traded equity has declined – mostly due to overly aggressive regulation, which compels firms to avoid them. Additionally, new securities exemptions have opened up more access to alternative assets, and if Congress gets its way, an update to the definition of an Accredited Investor may open it up further. And, of course, there is crypto…
There is also the question of how far the government should save us from ourselves. This opens up an interesting polemic, as government officials really do not care about certain risky ventures, like gambling, but when it comes to investing in certain private securities, they slam the brakes. You get the government you elect, I guess.
As the IAC has historically been more interested in supporting regulators than in supporting what investors actually want, it will be interesting to hear how the discussion evolves.
The other notable topic is a brief discussion of Finfluencers and how they impact investors. This one is simpler, as most Finfluencers are about as sophisticated as a bag of rocks when it comes to investments.
The meeting will be live-streamed on the SEC website on December 10, 2024, commencing at 10 AM ET.
See the agenda below.
U.S. Securities and Exchange Commission
Investor Advisory Committee
Tuesday, December 10, 2024
| Time | Agenda |
|---|---|
10:00 a.m. – 10:05 a.m. |
Welcome |
10:05 a.m. – 10:30 a.m. |
Opening Remarks |
10:30 a.m. – 10:35 a.m. |
Approval of Previous Meeting Minutes |
10:35 a.m. – 12:30 p.m. |
Panel Discussion: Examining the Use of Mandatory Arbitration Clauses by Registered Investment AdvisersBuilding on a June 2023 report from the SEC’s Office of the Investor Advocate and the Office of the Ombuds, this panel will discuss the use and scope of mandatory arbitration clauses by Registered Investment Advisers (RIAs) and examine the impact of such clauses. This panel will continue the examination of this issue from the perspectives of various stakeholders and will compare the use of mandatory arbitration clauses by state-registered Investment Advisers and FINRA registered broker-dealers.Moderated by:
Panelists:
|
12:30 p.m. – 2:00 p.m. |
Lunch/Non-Public Administrative Session |
2:00 p.m. – 4:00 p.m. |
Panel Discussion: Mainstreaming of Alternative Assets to Retail Investors
|
4:00 p.m. – 4:30 p.m |
Discussion of a Recommendation Regarding the Protection of Investors in their Interactions with Finfluencers |
4:30 p.m. – 4:50 p.m. |
Subcommittee and Working Group Reports |
4:50 p.m. |
Closing Remarks |