“While a modest first step, these additions are welcome and a harbinger of bigger things to come” writes Mark Roderick crowdfunding attorney.
The Securities and Exchange Commission (SEC) this week announced their long-awaited expansion of the definition of an accredited investor. Although the changes might not seem significant, they are nevertheless important and underpin their continued support of private investment. For those who were already accredited investors nothing has changed, no new limits have been set and they can continue to invest as in the past.
The list of those who can be considered accredited has now expanded to include:
- individuals who hold Series 7, Series 65, or Series 82 licenses
- investment advisors who are registered in a state or with the SEC
- venture capital fund advisers
- exempt reporting advisers
- Entities, including Indian tribes, governmental bodies, funds, and entities organized under the laws of foreign countries, that own “investments” (as defined in Rule 2a51-1(b) under the Investment Company Act of 1940) in excess of $5 million and were not formed to invest in the securities offered
- rural business development companies
- family offices with at least $5 million in assets under management and their family clients, as each term is defined under the Investment Advisers Act of 1940
- knowledgeable employees of a private fund, but only with respect to investments in that fund
Definitions of spouses have also expanded to include spousal equivalents, “a cohabitant occupying a relationship generally equivalent to that of a spouse”.
In a new move, the SEC is inviting educational institutions and industry self-regulatory authorities (such as FINRA) to develop new “certifications, designations, or credentials” for accredited investor qualifications.
“If this leads to millions or tens of millions of Americans learning about securities and participating in the Crowdfunding market,” says Mark Roderick, “well, that’s a very good thing for everyone.” Read the original article here.
Image by Shane from Unsplash, licensed free to use