SEC Commissioner Mark T. Uyeda told the Investor Advisory Committee on Thursday that recent redemption gates in private credit funds were not product failures, while warning that widespread investor confusion around those limits signals a disclosure and sales practice gap.
Uyeda said certain private credit funds had faced elevated redemption requests in recent months, prompting managers to cap withdrawals. The gates, he said, aligned fund liquidity with less liquid underlying portfolios and protected remaining shareholders from fire sales.
“The redemption gates are not evidence of product failures,” said Uyeda.
He said a “significant number of investors” appeared surprised by the caps, suggesting a mismatch between expectations and prospectus disclosures. That mismatch, he said, pointed to sales practice concerns already covered by existing SEC and FINRA rules.
Uyeda also flagged the concentration of voting power in passive index funds, citing John Coates’ The Problem of Twelve. The four largest index fund providers collectively control more than 20% of votes at S&P 500 companies, he said, raising questions about fiduciary obligations, board influence, and transparency. The committee’s agenda included discussion of pass-through voting and mirror voting as potential remedies.
Fellow Commissioner Hester Peirce also addressed the same meeting, questioning assumptions behind retail protections for private market funds.
