The Securities and Exchange Commission proposed amendments Wednesday to its accredited investor definition, expanding the entities that qualify based on an investment test instead of an asset test.
“The current test for individual accredited investor status takes a binary approach to who does and does not qualify based only a person’s income or net worth,” said Chairman Jay Clayton. “Modernization of this approach is long overdue. The proposal would add additional means for individuals to qualify to participate in our private capital markets based on established, clear measures of financial sophistication.”
Clayton said that he’s also pleased the plan “specifically recognizes that certain organizations, such as tribal governments, should not be restricted from participating in our private capital markets.”
Barbara Roper, director of investor protection for the Consumer Federation of America, stated on Twitter that the SEC argued that an investment test “is a better measure of sophistication than an asset test” for those qualifying to be an accredited investor.