- SEC Issues Staff Report On Accredited Investor Definition
- January 11, 2016
- Law Firm: Sutherland Asbill Brennan LLP - Washington Office
- The SEC published a report prepared by staff from the Divisions of Corporation Finance and Economic Risk and Analysis on the accredited investor definition on December 18th. The report, which was prepared in connection with the first review of the definition as mandated by the Dodd-Frank Act, examines the history of the accredited investor definition, considers comments on the definition received from a variety of sources, and provides staff recommendations for potential updates and modifications to the definition. In particular, the staff recommended that the SEC consider a number of potential methods of revising the accredited investor definition, and these recommendations included, among others, (i) leaving current income and net worth thresholds in place, but limiting investments to a percentage of income or net worth for those who qualify solely based on those thresholds; (ii) adding new inflation-adjusted income and net worth thresholds that are not subject to investment limitations; (iii) replacing the assets test in the current definition with an investments test to permit entities with investments in excess of $5 million to qualify as accredited investors; and (iv) revising the accredited investor definition to allow individuals to qualify as accredited investors based on other measures of sophistication (e.g., individuals with certain professional credentials or who have experience investing in exempt offerings). The SEC has requested comment on the report and staff recommendations.
The staff report can be found here: http://www.sec.gov/corpfin/reportspubs/special-studies/review-definition-of-accredited-investor-12-18-2015.pdf.