SEC Votes to Move Forward with Expanding Accredited Investor Definition
December 18, 2019 by Rita Raagas De Ramos
The SEC has voted 3-to-2 in favor of proposing rule amendments to the definition of “accredited investor” to enable more qualified individuals and institutions to participate in private markets.
For brokers and advisors, having more flexible accredited investor rules would mean having a bigger pool of investment products and strategies to offer retail investors who could qualify as accredited investors if the rules change.
However, state regulators have warned that relaxing the definition of accredited investors could end up hurting retail investors. Consumer advocates say the SEC’s actions could even lead to conditions like those that caused the U.S. stock market crashes of 1929 and 2008.
The SEC lets accredited investors participate in investment opportunities that are generally not available to non-accredited investors. These include investments in many private issuers and offerings by hedge funds, private equity funds and venture capital funds.