Tomorrow (December 18, 2019), in a public meeting by the Securities and Exchange Commission (SEC), the Commissioners will review the definition of an accredited investor.
In a revised agenda, the public meeting outlined the specific topics to be addressed by the Commission, with the definition being in the mix.
According to the agenda:
| Item 5: | Amending the “Accredited Investor” Definition |
| Office: | Division of Corporation Finance |
| Staff: | Elizabeth Murphy, Jennifer Zepralka, Charles Kwon, Charles Guidry |
The Commission will consider whether to propose rule amendments to the definition of “accredited investor” in the Commission’s rules that are intended to update and improve the definition in order to identify more effectively institutional and individual investors that have the knowledge and expertise to participate in our private capital markets and therefore do not need the additional protections of registration under the Securities Act of 1933. The Commission will also consider whether to propose rule amendments to the qualified institutional buyer definition in Rule 144A under the Securities Act that would expand the list of eligible entities under the definition.
While the specifics of any update remain unknown, it is widely expected that any changes will incorporate a sophistication qualification as the current wealth metric is widely viewed as being ineffective and not qualifying individuals based on experience or investment acumen – a far better measure of the ability to assess investment risk.
The open meeting will be live-streamed on the SEC website commencing at 10AM ET tomorrow, December 18, 2019.