Private Equity Investing Now Allowed in 401(k) Retirement Funds

Post by pottertheotter » Sat, Jun 20, 2020, 2:15 AM UTC

airstrike wrote: post #26

mywittyname wrote: post #14

Can we now subject large "private" firms to the same scrutiny that "public" have to obey? I always thought it was ridiculous that you could call a trillion dollar company with millions of shareholder, "private." From the sounds of it, this ruling handwaves away the inherent risk of investing in a company whose finances you have no visibility into by claiming that putting it into a diversified private fund is the same…

I believe the assumption is the fund manager is the kind of investor that will have the ability and resources to do proper due diligence before investing, contrary to the case of public companies that can sell stock to the average Joe

Post by pottertheotter » Sat, Jun 20, 2020, 6:00 AM UTC

airstrike wrote: post #72

pottertheotter wrote: post #71

Earlier quoted context omitted.

But now the issue is due diligence of the GP, the fund manager. I think that's what OP is talking about. PE firms don't have the same level of disclosure requirements as public companies (with the exception of those that are now public companies), and you need to research a fund just as you would research a stock. Fund investors are usually family offices, endowments, foundations, fund of funds, secondaries funds, et…

But similarly, to my knowledge only accredited investors may invest in PEs / HFs, and shares in those funds are special kinds of securities that differ significantly from those covered by SEC / blue-sky laws and therefore are not subject to the same disclosure requirements. It's not in anyone's interest to treat these different types of investments as if they were similar. I'm not in PE per se, but would think invest…