Trump’s Order Sidesteps the Real Barrier to Investment Freedom
On August 7, 2025, President Trump signed an executive order directing the Department of Labor and SEC to explore allowing 401(k) investors access to alternative assets like hedge funds and private equity, potentially by revising accredited investor rules. People must be free to make their own investment choices, even risky ones. Current accredited investor rules, requiring a net worth of $1 million (excluding primary residence) or $200,000 in annual income, prioritize wealth over financial savvy, unfairly sidelining knowledgeable but less wealthy investors. While some may profit from access to these funds, others could lose big—but freedom includes the right to fail. Still, this order misses the point of a larger problem: the shrinking pool of public companies where everyday investors could more safely participate in economic growth.
Treating a Symptom, Not the Disease
The demand for private funds in 401(k)s reflects a deeper issue: the number of U.S. public companies has plummeted from over 7,000 in 1996 to about 4,000 by 2020, as documented by the Tuck School of Business and Blue Trust. This drop stems from the crushing costs of not only going public but also remaining a public company, driven by regulations like Sarbanes-Oxley, Dodd-Frank, and extensive SEC and government agency rules. These impose hefty compliance burdens—audits, disclosures, and executive liabilities—that push firms to stay private, channeling growth opportunities into private equity and hedge funds for the wealthy or institutional investors. Trump’s order may give 401(k) participants a shot at these riskier, less transparent investments, but it’s a Band-Aid. It fails to address the regulatory stranglehold that limits public market options, leaving everyday investors with fewer transparent choices.
Freedom Demands a Robust Public Market
A necessary solution would dismantle the regulatory barriers—Sarbanes-Oxley’s auditing mandates, Dodd-Frank’s oversight rules, and excessive SEC requirements—that deter companies from going public or staying public. Easing these costs would spur more IPOs and encourage firms to remain listed, creating a vibrant public market where all investors can access transparent, regulated opportunities. Trump’s order, while offering some benefits, misses this core issue. It may open new doors for 401(k) investors, but without reviving public markets, it leaves Americans stuck between limited public stocks and complex private funds. True economic liberty, as Tuck School and Blue Trust data underscore, requires a thriving public market where everyone can invest with clarity, not a workaround that sidesteps the decline of public companies.