On Wednesday, December 18, the US Securities and Exchange Commission (SEC) announced its desire to “to update accredited investor definition to increase access to investments,” which will lead to more people joining SEC-regulated private capital markets.
SEC Chairman Jay CLAYTON specified:
“The current test for individual accredited investor status takes a binary approach to who does and does not qualify based only a person’s income or net worth … Modernization of this approach is long overdue.”
The proposal also amends the definition of “qualified institutional buyer” in rule 144A under the Securities Act of 1933. According to the SEC, the proposed amendments to the definition of an accredited investor will add new categories of individuals based on professional knowledge, experience and certificates. Private fund investments will also see new categories. Other proposed additions concern limited liability companies, registered investment advisers, etc. The SEC accepts public comments on the proposal within 60 days.