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SEC Proposes Changes to Accredited Investor Definition

The definition of “accredited investor” uses income and net worth thresholds to identify natural persons as accredited investors.

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On Dec. 18, 2019, the SEC proposed amendments to the definition of “accredited investor” in Rule 501(a) of Regulation D under the Securities Act of 1933 (1933 Act). See, Amending the “Accredited Investor” Definition, SEC Release 33-10734 (Dec. 18, 2019) (proposing release). The definition of “accredited investor” uses income and net worth thresholds to identify natural persons as accredited investors. The bright line standard also identifies entities with the financial sophistication and ability to bear the risk to participate in certain securities offerings including Regulation D based on their statutes alone.

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