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In a development consistent with the recent executive order allowing 401(k)s to invest in alternatives and crypto, the Securities and Exchange Commission (“SEC”) has dropped the requirement that a registered closed-end fund that invests more than 15% of its assets in private funds must (a) limit offers to accredited investors under Regulation D of the Securities Act and (b) require a minimum initial investment of $25,000.

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This new guidance appears in an Accounting and Disclosure Information (ADI) 2025-16 which was recently published by the SEC’s Division of Investment Management. The SEC’s guidance under ADI 2025-16 - Registered Closed-End Funds of Private Funds can be found <a href="https://www.sec.gov/about/divisions-offices/division-investment-management/fund-disclosure-glance/accounting-disclosure-information/adi-2025-16-registered-closed-end-funds-private-funds" target="_blank" rel="noopener noreferrer">here</a>. The guidance marks a significant shift from the SEC’s position over the last two decades.

Clients with existing registered closed-end fund of fund products should revisit their disclosures to address the SEC’s new guidance. Clients evaluating new products should view this as a very welcome development. The SEC’s attitude toward private funds continues to change and this guidance, which opens the door to retail investment in private fund of funds, continues that trend.

If you have any questions about this article, please contact <a href="/people/joseph-m-mannon/">Joseph M. Mannon</a> at <a href="mailto:jmannon@vedderprice.com">jmannon@vedderprice.com</a>, <a href="/people/deborah-bielicke-eades/">Deborah Bielicke Eades</a> at <a href="mailto:deades@vedderprice.com">deades@vedderprice.com</a>, <a href="/people/david-w-soden/">David W. Soden</a> at <a href="mailto:dsoden@vedderprice.com">dsoden@vedderprice.com</a>, <a href="/people/cody-j-vitello/">Cody J. Vitello</a> at <a href="mailto:cvitello@vedderprice.com">cvitello@vedderprice.com</a>, <a href="/people/waylon-m-bryson/">Waylon M. Bryson</a> at <a href="mailto:wbryson@vedderprice.com">wbryson@vedderprice.com</a>, <a href="/people/adam-s-goldman/">Adam S. Goldman</a> at <a href="mailto:agoldman@vedderprice.com">agoldman@vedderprice.com</a>, <a href="/people/matthew-r-keehn/">Matthew R. Keehn</a> at <a href="mailto:mkeehn@vedderprice.com">mkeehn@vedderprice.com</a>, <a href="/people/laure-sguario/">Laure Sguario</a> at <a href="mailto:lsguario@vedderprice.com" target="_blank" rel="noopener noreferrer">lsguario@vedderprice.com</a> or any other Vedder Price attorney with whom you have worked.

Significant Developments for Registered Closed End Funds of Private Funds

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