In recent years, the value of assets managed by the private funds industry has ballooned to a staggering $25 trillion, overtaking commercial banking in size. You know this sector already: it includes hedge funds, venture capital and private equity. But the clock is ticking down for a tough new set of regulations to take effect that do the one thing that “private” capital is designed to avoid: forcing firms to disclose more about their investments. It could also crimp those lucrative profits, too.
Last year, the Securities and Exchange Commission proposed new rules for the industry that it may adopt as soon as this month, the Wall Street Journal reported, citing people familiar with the matter. It would be a major change for private funds, which have, until now, enjoyed loose regulation. The private market has burgeoned and drawn investors because of its lack of regulation compared to the public market, which has become increasingly regulated over time, Steven Kaplan, a private equity researcher at the University of Chicago, said.
