The US Securities and Exchange Commission (SEC) has voted to amend its definition of accredited investors, meaning more people will soon be eligible to enter the private capital market.
The changes will do away with the historical restrictions that denied individual investors who failed to meet specific income or net worth tests the opportunity to invest in private markets even though they may have had the knowledge and skills to trade on these markets.
The new amendments will enable aspiring investors to qualify as accredited investors based on their level of professional knowledge, experience or certifications in addition to the existing tests for income or net worth.
The amendments also expand the list of entities that may qualify as accredited investors, including by allowing any entity that meets an investments test to qualify.
“Today’s amendments are the product of years of effort by the Commission and its staff to consider and analyse approaches to revising the accredited investor definition,” said Jay Clayton, chairman of the SEC.
“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 measures of financial sophistication.
I am also pleased that we have expanded and updated the list of entities, including tribal governments and other organisations, that may qualify to participate in certain private offerings.”
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