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By Anne M. Madonia and Germain E. DeMartinis from US law firm Cozen O'Connor.

The Securities and Exchange Commission (SEC) recently released a staff report reviewing the definition of "accredited investor" in Rule 501(a) of Regulation D under the Securities Act of 1933 (Securities Act), as required at least every four years by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC previously reviewed the definition of accredited investor in 2015 and 2019, with significant amendments to the definition being issued in 2020.

While the staff report released on December 14, 2023, makes no recommendations for changing the definition of accredited investor, it does discuss several proposals to amend the definition and request comments from the public.

The Securities Act requires that all offers and sales of securities must either be registered with the SEC or fall within an exemption from registration. The definition of accredited investor in Regulation D of the Securities Act sets forth multiple categories of exemptions intended to demonstrate that qualifying investors have sufficient financial sophistication such that the Securities Act's registration process and related protections are unnecessary. The definition is not only a cornerstone of Regulation D but also plays an important role in other securities laws, including Regulation Crowdfunding, Regulation A Tier 2 offerings, the Uniform Securities Act of 2002, and the Financial......................

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