The Securities and Exchange Commission is readying to issue rule proposals next year on a new accredited investor definition as well as an updated custody rule, according to the agency’s just-released fall Reg Flex agenda.
The agency’s Division of Investment Management states in the agenda that it’s considering recommending that the commission propose amendments to expand the definition of accredited investor under Regulation D of the Securities Act of 1933.
Such an expansion, however, is garnering mixed reviews.
Gail Bernstein, general counsel for the Investment Adviser Association, noted Thursday that IAA is “pleased to see that the SEC plans to propose changes to the types of investors that will be able to invest in the private securities markets.”
The trade group representing RIAs “has long asked” the SEC to revisit its ‘accredited investor’ definition “to allow all investors that are represented by SEC-registered advisors acting in a discretionary capacity to invest in private funds where that is consistent with the investors’ best interest,” Berstein said.
The Reg Flex agenda puts an accredited investor proposal out by September. However, those are projected dates that are not set in stone.
Barbara Roper, director of investor protection for the Consumer Federation of America, told ThinkAdvisor on Thursday that the SEC’s concept release on harmonization of private offering exemptions, which centered on expanding the accredited investor definition, “made clear” that the SEC “doesn’t currently have the data necessary to make informed policy regarding the accredited investor definition, certainly not to justify any expansion of that definition.”
What the agency does know “suggests that only a tiny percentage of current accredited investors actually choose to invest in private offerings. And there’s no evidence of demand from non-accredited investors.”
The SEC’s plan is “more evidence of an SEC that is acutely attentive to the demands of industry groups — in this case, private issuers who want expanded access to a broader population of investors — and is absolutely tone deaf when it comes to the needs of typical retail investors.”