Washington’s Proposed Rules to Protect Investors Could Widen the Wealth Gap

The Securities and Exchange Commission is pushing for significant changes in how private funded companies operate and who can invest in them, the agency said this week. The proposed changes probably won’t benefit rank and file American investors but will likely help people who are already rich get even wealthier.

While the details remain unclear, the SEC says it wants to increase the financial transparency of large companies which raise money away from the public markets. In addition, the regulator wants to limit the ability of people with less than $200,000 in annual income or $1 million in net worth to invest in non-public companies. In short, the current system, which already excludes the vast majority of Americans, could get more restrictive. In turn, the changes could widen income inequality, something which the Biden administration says it wants to reduce.