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Bill

S 3671

Increasing Investor Opportunities Act

119th Congress Introduced by Steve Daines and 2 co-sponsors

The bill would let closed-end funds invest in private funds, expanding investment options while preserving fiduciary duties and market protections.

Introduced in Senate
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WeVote Research Nonpartisan
Bill Summary · S 3671

Overview

  • Bill: S. 3671, 119th Congress
  • Title: Increasing Investor Opportunities Act
  • Introduced: January 15, 2026, by Sen. Daines (with Sen. Rounds) and others
  • Purpose: Amend the Investment Company Act of 1940 to expand the ability of closed-end investment companies to invest in private funds, and related adjustments to enforcement and listing regimes.

Main purpose and intent

  • The bill would authorize closed-end funds to invest all or part of their assets in securities issued by private funds, subject to the Act’s general prohibitions unless otherwise restricted.
  • It seeks to facilitate greater investment opportunities for investors by enabling closed-end funds to access private fund investments, potentially expanding product choices and capital-raising capabilities for closed-end funds.

Key provisions and changes

  1. Expanded investment authority for closed-end funds (Section 5(d))

    • Adds a new subsection allowing the Securities and Exchange Commission (SEC) to permit, and not prohibit or unduly restrict, a closed-end company from investing in private funds.
    • Governs restrictions on offerings, sales, and exchange listings of closed-end fund securities when the fund invests in private funds. The SEC may not impose conditions or limitations on these activities solely due to the fund’s private fund exposure, except as allowed by the bill.
    • Allows the SEC to impose unrelated conditions or restrictions (not tied to private fund characteristics) if appropriate.

  2. Definition updates (Section 2(a))

    • Defines “private fund” by cross-reference to the Investment Advisers Act of 1940 (as “private fund” defined in 15 U.S.C. 80b-2(a)).

  3. National Securities Exchanges treatment (Section 6, amendment to the Securities Exchange Act of 1934)

    • Amends Section 6 to prohibit exchanges from banning or unduly restricting the listing or trading of closed-end fund securities solely because the fund invests in private funds, aligning exchange treatment with the new investment authority.
    • Such listing/trading protections apply to closed-end funds that invest in private funds or may invest in private funds.

  4. Investment limitations (Section 3(c))

    • Adjusts the restricted/limit structure to reflect the expanded scope, ensuring consistency with the new definition and added private fund investment authority (increasing or redefining permissible subparagraph references as needed).

  5. Rules of construction (Section 2(e))

    • Clarifies that the new provisions do not alter fiduciary duties or valuation, liquidity, or redemption requirements, preserving existing obligations under the Investment Company Act.

Who would be affected

  • Closed-end funds (CEFs): Primary beneficiaries, gaining the ability to invest in private funds and to offer and trade securities without undue restriction solely due to private fund investments.
  • Investors in CEFs: Potentially broader access to more investment strategies and private fund exposure through CEFs.
  • Investment advisers and fund sponsors: May experience new fiduciary and compliance considerations consistent with the expanded authority and ongoing protections.
  • Securities markets and exchanges: Exchanges would have clarified authority to list/trade CEFs with private fund investments, subject to the bill’s constraints.

Procedural and timeline aspects

  • Introduced by Senate on January 15, 2026.
  • Referred to the Senate Committee on Banking, Housing, and Urban Affairs for consideration.
  • No enacted timeline or effective date provided in the text excerpts; as a bill, it would require committee action, floor passage, and eventual enactment to become law.

Potential impact considerations

  • Could increase capital-raising flexibility for closed-end funds and broaden product offerings for investors.
  • May raise ongoing regulatory considerations for private fund investments within CEFs, including governance, valuation, liquidity, and disclosure standards.
  • The bill attempts to balance expanded investment opportunities with existing fiduciary and market integrity protections, though specific rules would emerge through future rulemaking by the SEC if the Act advances.

If you’d like, I can provide a side-by-side comparison with current law ( Investment Company Act of 1940) to illustrate exact legal differences and potential risk areas.

Compiled from official sources — confirm details with the bill’s official record.

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