Regulatory Update: SEC Proposes to Update the Definition of “Accredited Investor”
The SEC is proposing a update to the definition of accredited investor, which would add new categories of qualifying natural persons and entities and to make certain other modifications to the existing definition.
The proposed new categories include:
add new categories of natural persons that may qualify as accredited investors based on certain professional certifications or designations or other credentials or their status as a private fund’s “knowledgeable employee;”
expand the list of entities that may qualify as accredited investors and allow entities meeting an investments test to qualify;
add family offices with at least $5 million in assets under management and their family clients; and
add the term “spousal equivalent” to the definition.
The SEC’s proposal release states “The proposed amendments are intended to update and improve the definition in order to identify more effectively institutional and individual investors that have the knowledge and expertise to participate in our private capital markets and therefore do not need the additional protections of registration under the Securities Act of 1933. Specifically, the proposed amendments would add new categories of natural persons that may qualify as accredited investors based on certain professional certifications or designations or other credentials or their status as a private fund’s “knowledgeable employee;” expand the list of entities that may qualify as accredited investors and allow entities meeting an investments test to qualify; add family offices with at least $5 million in assets under management and their family clients; and add the term “spousal equivalent” to the definition. We are also proposing amendments to the qualified institutional buyer definition in Rule 144A under the Securities Act that would expand the list of entities that are eligible to qualify as qualified institutional buyers.” – SEC Release Nos. 33-10734; 34-87784; File No. S7-25-19
https://www.sec.gov/rules/proposed/2019/33-10734.pdf
