SEC issues relief to expand retail exposure to private capital; examines IPO frictions

SEC issues relief to expand retail exposure to private capital; examines IPO frictions

Author:

The Carta Policy Team

| Read time: 9 minutes |

Published date: 5 May 2026

SEC issues relief to open-end funds, expanding private market access. Meanwhile, frontier AI labs partner with PE firms, forming rival joint ventures that accelerate enterprise adoption of its tools.

Topline:

SEC expands co-investment relief to mutual funds and ETFs

The SEC’s Division of Investment Management issued a no-action letter allowing open-end funds—including mutual funds and ETFs—to participate in affiliated co-investment transactions by relying on existing exemptive orders that previously covered only closed-end funds and BDCs. Open-end funds can now participate in negotiated private-market transactions alongside affiliated funds or accounts managed by the same adviser as long as they follow existing investor-protection conditions.

Why it matters: This is a significant step in the SEC’s push toward “responsible retailization” of private markets. Co-investments provide institutional investors direct exposure to specific private credit or private equity deals. The letter closes access gaps that prevented mutual funds and ETFs from participating in these opportunities.

California puts private fund transparency back in focus

California is considering SB 1319, the Private Equity Sunshine Act, which would expand disclosure requirements for alternative investments held by public pension and retirement systems. The bill would require reporting on fund ownership, investor commitments, benchmarks, and more.

Why it matters: This move addresses a perceived transparency void left by federal regulators and seeks to ensure public pensions and retirement plans are informed about their investments.

What’s next: SB 1319 has already advanced through the Senate Judiciary Committee, despite opposition from key pension plans.

AI giants turn to PE as the new enterprise distribution channel

OpenAI and Anthropic are moving forward with competing private equity-backed ventures. OpenAI has reportedly raised more than $4B for “The Deployment Company,” a venture valued around $10B.

Why it matters: Private equity is becoming a crucial element in distributing enterprise AI by using sponsors’ networks to speed up adoption.

Inaugural Carta PE Policy Dinner in NYC

Last week, the Carta team hosted its first PE Policy Dinner in New York at Ci Siamo, focusing on regulatory outlook and challenges in private capital.

SEC small business committee examines IPO market frictions

The SEC’s Small Business Capital Formation Advisory Committee met to discuss challenges smaller companies face in pursuing an IPO. Policy ideas included:

Why it matters: There are significant structural issues hindering small companies from going public, necessitating a revisit of regulatory requirements.

Senate Banking releases compromise on stablecoin yield in advance of markup

Senate Banking is targeting a May markup for the CLARITY Act, focusing on stablecoin yield. The proposal aims to distinguish stablecoins that function like deposits from those that support transaction rewards.

The issue: Whether stablecoin yield can be clearly regulated remains contentious among stakeholders.

What’s next: The path forward for CLARITY could require further negotiation as bipartisan support remains uncertain.

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