Sponsors (5)
2 meetings related to this legislation
Allows closed-end investment companies to buy and hold securities issued by private funds and limits the ability of the SEC and national securities exchanges to prevent those investments or to bar listings of such closed-end companies in most cases. The legislation updates Investment Company Act references to include a defined “private fund,” keeps existing fiduciary, valuation, liquidity, and redemption duties intact, and makes related technical changes to other securities-law provisions.
Last progress December 15, 2025 (1 month ago)
Introduced on May 14, 2025 by Ann Wagner
The SEC (the Commission) may not prohibit or otherwise limit a closed-end company from investing any or all of its assets in securities issued by private funds, except where the Investment Company Act or rules under it otherwise prohibit or restrict such investments.
The SEC may not impose any condition on, restrict, or otherwise limit the offer or sale of securities issued by a closed-end company that invests or proposes to invest in securities issued by private funds.
The SEC may not impose any condition on, restrict, or otherwise limit the listing of securities of a closed-end company (that invests or may invest in private-fund securities) on a national securities exchange, except as otherwise provided by the Act or rules under it.
The SEC may impose a condition, restriction, or limitation on the activities described above only if that condition, restriction, or limitation is unrelated to the underlying characteristics of a private fund or the status of a private fund as a private fund.
The subsection applies to closed-end companies that elect to be treated as business development companies (BDCs) under section 54, notwithstanding section 6(f) of the Act.
Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Who is affected and how:
Closed-end investment companies: Gain statutory authority to invest in securities issued by private funds, expanding potential strategies and asset types they may hold. Boards and advisers will need to assess suitability, valuation methods, liquidity plans, and disclosures when acquiring private-fund securities.
Shareholders of closed-end funds (including retail and institutional investors): May gain access to exposure to private-fund-style investments via listed closed-end vehicles, but will face potential increases in valuation uncertainty, liquidity risk, and NAV volatility tied to illiquid private assets.
Private funds and their managers: Could receive additional capital channels if closed-end funds can acquire their securities; may see increased demand and secondary-market liquidity for private-fund interests.
Securities and Exchange Commission and National Securities Exchanges: The legislation narrows their ability to prohibit listings or investments of closed-end funds in private-fund securities in most cases, though their broader enforcement authority over securities laws and disclosure obligations remains.
Investment advisers, custodians, auditors, and broker-dealers: Will face added operational and compliance tasks (valuation policies, liquidity management, reporting, and possibly new custody or transfer arrangements) when closed-end funds hold private-fund securities.
Potential benefits and risks:
Benefits: Broader investment options for closed-end funds and their investors; potential for more public-market access to private-asset returns and diversification opportunities.
Risks: Increased exposure to illiquid and hard-to-value assets for publicly listed funds; possible strain on redemption mechanics and market pricing; need for robust disclosure and governance to protect investors.
Administrative impact: