PE firms push SEC changes that could move assets into 401(k)s

Private equity firms push SEC rule changes to dump unwanted assets on 401K retirement savers

Weakened oversight of form PF and new cross-trading pressure could deepen “bailout” of private equity industry 

WASHINGTON, DC — The Private Equity Stakeholder Project (PESP) today warned that recent actions at the Securities and Exchange Commission (SEC) and further actions that private equity firms are pushing could increase risks posed by private markets at a time when when the Trump administration moves to limit 401K retirement savers’ ability to sue over poor private equity investments and high fees.

The SEC has proposed changes to Form PF, a key reporting tool used to monitor risks in private funds, while industry groups are simultaneously urging the agency to roll back restrictions on cross-trading between funds. Taken together, these developments could reduce transparency into private equity investments and create new pathways for firms to move assets between funds with less oversight.

These changes come as the private equity industry faces mounting pressure. According to industry data, firms are holding approximately 32,000 unsold companies worth an estimated $3.8 trillion, while distributions to investors have remained below 15 percent of net asset value for four consecutive years. At the same time, average holding periods have increased, underscoring the challenges firms face in exiting investments.

PESP warned that weakening reporting requirements while loosening restrictions on asset transfers could have significant implications if private markets expand into retirement accounts.

“Private equity firms are already under pressure from a backlog of unsold assets and declining distributions to investors,” said Jim Baker, Executive Director of the Private Equity Stakeholder Project. “At the same time, policymakers are giving private equity access to retirement savers’401(k) plans. Weakening oversight now raises serious questions about whether these investment risks are being shifted onto everyday retirement savers.”

Industry groups including the Alternative Investment Management Association, which represents firms such as Blackstone Inc. and Apollo Global Management Inc., are lobbying the SEC to halt rules limiting cross-trading between funds. These transactions allow firms to move assets between investment vehicles, raising concerns that private equity firms could shift underperforming or hard-to-sell assets to 401K savers.

Notably, concerns about expanding private market exposure to retail investors are not limited to outside critics. A co-founder of Apollo Global Management, one of the firms represented by AIMA, has publicly cautioned that broadening access to private market investments for retail savers may not end well, particularly given the complexity and liquidity constraints of these products.

“Allowing private equity firms greater flexibility to move assets between funds, while reducing regulators’ ability to monitor risk, creates a dangerous combination,” Baker said. “Workers’ retirement savings should not be used as a dumping ground for assets that private equity firms are struggling to sell.”

The SEC’s proposed changes to Form PF would reduce the amount and frequency of information reported by private fund managers, limiting regulators’ visibility into leverage, liquidity, and other potential sources of systemic risk.

“These reporting tools exist for a reason,” Baker added. “If regulators have less insight into what’s happening inside private funds, it becomes harder to identify risks before they affect investors and the broader financial system.”

PESP previously warned that the Department of Labor’s rule expanding private market access in 401(k)s could turn workers’ retirement savings into a bailout for private equity and private credit, as firms face fundraising pressures and struggle to exit a growing backlog of unsold assets. The organization said the latest developments at the SEC further underscore the risks of expanding access while weakening oversight.