Published on Aug 28th, 2020 |

On August 26th, the SEC made amendments to the “Accredited Investor” definition in attempts to modernize it. The definition is one of the principal tests to determine the eligibility of those looking to participate in private capital markets.

Previously, individual investors who did not meet specific income or net worth tests were denied the opportunity to invest in multifaceted and vast private markets despite their financial expertise and knowledge. That has now changed, and the definition now includes those who do have the extensive knowledge and expertise to participate in those markets.

SEC Chairman Jay Clayton shed light on the amendments and said, “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.”

The modernization of the definition will expand the list of entities that are qualified as accredited investors. It will allow more investors to qualify based on certifications and experience, in addition to just income testing. An important item to note is that the SEC chose not to index the definition for inflation, thus expanding the universe of investors.

Click here to read the Fact Sheet for all the details of the amendments to see if you may qualify.

If you have any questions or clarifications on how these amendments may impact you or your firm, the Vigilant Team is always happy to schedule a time to chat.

Contact us today!

 

Follow us on Linkedin and Twitter, as well as Subscribe to our blog for more updates and insightful tips like this.