This Article will focus on the topic of opening the private equity markets to individual retail investors. Permitting retail investors to invest in private equity would allow investors to reduce the risks of their portfolio while retaining or even increasing their returns, which can make the middle-class investor better off. Additionally, the money that will flow into private equity will allow private equity firms to continue improving American businesses, which will allow American companies to grow and better compete in the international stage. Thus, allowing retail investors to invest in private equity can both help middle class Americans while bolstering overall economic growth. Part I of this Article will discuss the current regulatory framework that prohibits most individual investors from investing in private equity firms. This Part will explain why such polices—meant to help investors—serve to harm investors. Part II will discuss the steps that should be taken to allow investors to invest in private equity funds in their 401(k) retirement accounts. Finally, Part III will discuss the carried interest tax treatment that private equity managers benefit from. This Part will argue that the treatment should be reversed, which will raise revenue and allow for a political compromise to help encourage the passage of the proposals set out in Parts I and II.
Reduce Income Inequality: Allow Retail Investors to Invest in Private Equity,
14 J. Bus. Entrepreneurship & L.
Available at: https://digitalcommons.pepperdine.edu/jbel/vol14/iss1/11