Article prepared by and republished courtesy of our colleagues Larry W. Nishnick, Bradley E. Phipps, and David Kurlander; originally published here: https://www.dlapiper.com/en/asiapacific/insights/publications/2020/01/sec-proposes-changes-to-accredited-investor-definition/.
The SEC recently proposed amendments to the long-standing definition of “accredited investor,” an important qualification standard under the securities laws that determines what types of investors may invest in certain kinds of private securities offerings, including securities offerings conducted pursuant to Rules 506(b) and 506(c) of Regulation D under the Securities Act of 1933 and other important federal and state securities law exemptions.
The current definition of “accredited investor” has been in place without any significant update since 1985. At a high level, the proposal would expand the number of natural person investors that qualify by adding categories of eligibility based on their professional knowledge, experience or certifications. The proposal would also expand the types of entities that qualify as “accredited investors.” The proposed changes would allow additional persons and entities to qualify as “accredited investors,” thereby allowing them to purchase securities through private offerings, including shares and interests in certain private investments funds.