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Alternative Market Briefing

SEC modernises accredited investor definition

Thursday, August 27, 2020

B. G., Opalesque Geneva:

The Securities and Exchange Commission (SEC) has adopted amendments to the "accredited investor" definition, one of the principal tests for determining who is eligible to participate in private capital markets. This follows a proposal done last year.

An accredited investor is a person or a business entity who is allowed to deal in securities that may not be registered with financial authorities. They are entitled to such privileged access if they satisfy one (or more) requirements regarding income, net worth, asset size, governance status or professional experience. Accredited investors include natural high net worth individuals (HNWI), banks, insurance companies, brokers and trusts.

Historically, individual investors who do not meet specific income or net worth tests, regardless of their financial sophistication, have been denied the opportunity to invest in our multifaceted and vast private markets, says the SEC. The amendments update and improve the definition to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in those markets.

"For the first time, individuals will be permitted to participate in our private capital markets not only based on their income or net worth, but also based on established, clear ......................

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