WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with Better Markets’ new Report, “There’s No Such Thing as Private Market Assets in the Hands of the General Public”:

“The private funds industry is desperate to get its hands on the $12 trillion in the retirement accounts of ordinary American investors. Although there are numerous issues with exposing retail investors to risky, opaque, and expensive private market assets, the most fundamental issue is that these assets should not be considered private if they are held by the general public. Securities sold to the general public are, almost by definition, part of a public offering, which means they should be registered with the SEC so investors get the protections they deserve.

“This point seems to have gotten lost in the discussion about bringing private market assets ‘to the masses.’ The debate about how to get private market assets into the hands of ordinary investors overlooks the fact that, once this is accomplished, the assets are no longer private. Assets that are sold to the general public are not part of the private markets.

“This understanding is crucial to the debate about ‘opening up’ the private markets. The private funds industry wants its assets to be sold to the public but still considered ‘private.’ This simply cannot be the case.

• What separates private securities markets from public securities markets is that private market assets are not sold as part of a public offering.
• Private market assets are sold to what are called ‘accredited investors’ who can fend for themselves without the protection of the federal securities laws.
• Once assets are sold to the general public, they must be considered to be sold as part of a public offering, and therefore cannot be part of the private markets.

“Sales of securities to the general public are by definition not private securities transactions. That’s why there is no such thing as private market assets in the hands of the general public.”

The report and a one-page summary are available online here and here.

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.